Mr Justice Hildyard :
Scope of this judgment
- This judgment concerns three
issues
arising in the context of
RBS's
claim for privilege in
respect
of two categories of document of which the Claimants now seek specific disclosure and inspection. There is no dispute as to the
relevance
of the documents in question. Only 'legal advice privilege' and 'lawyers' working papers privilege' are claimed.
- Broadly stated, the three
issues
are:
(1) Whether, if English law, as the lex fori, applies to the
issue,
the decision and
reasoning
of the Court of Appeal in Three Rivers District Council and others v Governor and Company of the Bank of England (No 5) [2003] QB 1556 ("Three Rivers (No 5)") applies to preclude the claim for privilege: I shall call this "the Three Rivers (No 5) Point";
(2) Whether
RBS
is entitled to
rely
on the federal law of the USA as the law applicable to the particular
issue,
and if so, whether under that law the claim of privilege is maintainable: I shall call this "the Applicable Law Point";
(3) Whether, if under US federal law
RBS
would be entitled to maintain a claim of privilege, the English Court has a discretion and should exercise it to order that disclosure or inspection may be withheld, even if the
issue
is governed by English law: I shall call this "the Discretion Point".
Context of these interlocutory applications
- These interlocutory
issues
arise in the context of what has become known as "the
RBS
Rights
Issue
Litigation".
- The
litigation,
which comprises various actions all subject to a GLO, concerns a
rights
issue
of shares in the Royal Bank of Scotland ("
RBS")
which was taken up between 15 May 2008 and 6 June 2008 ("the
Rights
Issue").
- By the various actions, shareholders in
RBS
seek to invoke statutory
remedies
against
RBS
under sections 87A, 87G and 90 of the Financial Services and Markets Act 2000 ("FSMA") whereby to
recover
substantial investment losses incurred further to the collapse of
RBS
shares on the grounds that the prospectus for the
Rights
Issue
was not accurate or complete.
- In some of the actions the Claimants also seek
recovery
against certain of the key
RBS
directors
responsible
for that prospectus.
- Many of those who had subscribed for shares pursuant to the
Rights
Issue
claim to have suffered losses amounting to most of the value of their investment in the
Rights
Issue
shares. The amounts claimed are very considerable indeed.
- The actions are due to be heard in March 2017.
The categories of documents for which the claim of privilege is made
- The two categories of documents of which disclosure and inspection are sought and the claims for privilege are made are as follows:
(1) Transcripts, notes or other
records
of interviews conducted by or on behalf of
RBS
with employees and ex-employees as part of 'Project Mortar', which was the name given by
RBS
to the investigation it undertook as part of
RBS's
response
to two US Securities and Exchange Commission subpoenas
relating
(broadly) to
RBS's
sub-prime exposures; and
(2) Transcripts, notes or other
records
of interviews conducted by or on behalf of
RBS
as part of its investigation into allegations made by Mr Victor Hong ("Mr Hong") concerning
RBS
Greenwich Capital's marketing of Super Senior CDOs and other matters of which Mr Hong became aware during his employment at
RBS
Greenwich (the "Hong Investigation").
- The transcripts, notes or other
records
("the Interview Notes") fall into two categories: (i) Hong Investigation
Review
Interview Notes and (ii) 126 Project Mortar Interview Notes.
- As part of Project Mortar and the Hong Investigation
RBS
interviewed 124 individuals across a number of divisions, locations and levels of seniority.
RBS
has provided a list of its interviewees to the Claimants.
RBS's
evidence is that the only documents in existence within these categories are Interview Notes prepared by
RBS's
in-house lawyers (in
respect
of the Hong Investigation) and variously by Wilmer Hale, Travers Smith (as agents for Wilmer Hale) and non-lawyers within the
RBS
Group Secretariat (also as agents for Wilmer Hale) in
respect
of Project Mortar, each of which is said to summarise those interviews.
- In the case of Mr Hong, the interview was carried out by Dickstein Shapiro LLP who were
retained
as external counsel by
RBS.
Mr Hong had his own attorney at the interview.
- There is no dispute that
RBS
authorised each of the interviewees to participate in the
relevant
interviews. That is so in the case of Mr Hong, who was obliged to participate at the
request
of
RBS
under the terms of the agreement
relating
to the termination of his employment, as it is in the case of the other interviewees.
- Nor is there any dispute that the interviewees were told that the Interview Notes would be, and be kept, confidential and would be subject to what was apparently described to them as "attorney-client privilege". (This was not initially expressly stated in the evidence; but evidence expressly confirming this was filed by
RBS
without objection on the second day of the hearing.)
The claim for privilege in outline
RBS
resists
the disclosure and inspection of the Interview Notes on the basis that they are subject to legal advice privilege, alternatively (in
respect
of all but those of the Interview Notes prepared by members of the
RBS
Group Secretariat, for which such privilege is not asserted) that the Interview Notes are lawyers' privileged working papers. No claim is made to
litigation
privilege.
- As previously indicated,
RBS
also
resists
disclosure on the basis that the Court ought to apply the federal law of the United States of America ("US law") under which the Interview Notes are said to be privileged.
RBS
submits, and it seems plain, that if (as the Claimants contend) the Interview Notes are not privileged under English law, then US law provides a wider protection which the Court should uphold.
The claims to legal advice privilege elaborated
- The basis of
RBS's
claim to legal advice privilege is that each of the Interview Notes
records
a communication between a lawyer and a person authorised by
RBS
to give instructions to its lawyers, and that as such those communications are privileged. As indicated above, those persons included both employees of
RBS
and ex-employees.
- In
relation
to 21 of the Project Mortar interviewees,
RBS
alleges that members of its Group Secretariat (who were not acting as lawyers) acted as agents or "channels of communication" through which the interviewees provided instructions to
RBS's
lawyers.
RBS
does not assert that the Interview Notes were part of a communication between
RBS
and its lawyers in which advice was sought or given. It does not suggest that the interviewees were themselves seeking or being provided with legal advice.
RBS
accepts that the Interview Notes and their communication comprised information gathered from employees or former employees at the instance of
RBS's
lawyers for the purpose of enabling
RBS
to seek legal advice from its external counsel. Thus, for example, in his witness statement dated 26 October
2016,
Mr Paul Robert Eckert ("Mr Eckert"), a partner in Wilmer Hale, described his firm's role in this context (and the connections with the US, which may be
relevant
in the context of the Applicable Law Point) as follows:
"Wilmer Hale's Washington DC office was instructed to advise
RBS
(including in the UK and in Connecticut) in
respect
of the first of these two investigations – Project Mortar. Without waiving privilege, Wilmer Hale's work in
respect
of this Project involved collecting
relevant
factual information from employees and former employees of
RBS
based in the United States of America and Europe. This information was collected for the purposes of advising
RBS
on their
response
to the two SEC subpoenas. Whilst Wilmer Hale were primarily
responsible
for advising
RBS,
RBS
also instructed Travers Smith LLP in England…
…
…in order to collect the factual information necessary to advise
RBS,
interviews were conducted with certain current and former
RBS
employees. These interviews were carried out by Wilmer Hale in the US…and by Travers Smith (sometimes accompanied by a member of Wilmer Hale's team) and
RBS
Group Secretariat in the UK. The interviews carried out by Travers Smith and
RBS
Group Secretariat were conducted on the instructions and under the supervision of Wilmer Hale. I note for completeness that Dickstein Shapiro conducted the interview of Victor Hong in New York and that the prior internal
review
was conducted by
RBS's
US legal team in Connecticut."
RBS
contends that, under English law as well as US law, any communication by an employee who is authorised to communicate with a legal adviser for the purpose of his or her employer seeking legal advice is privileged: and that it is no part of the test that the communication should consist of instructions rather than information.
- Accordingly,
RBS
submits that the communication of factual information (in this case, evidenced in the Interview Notes) gathered by or for the purpose of being provided to its lawyers is privileged, provided that the person providing and communicating the information was authorised to do so by
RBS.
Objection to
RBS's
claim to legal advice privilege
- The Claimants submit that
RBS's
claim to legal advice privilege is misconceived. They submit that communication of factual information by an employee of the company to the legal adviser is not privileged and that legal advice privilege only covers communications between a client and his lawyer for the purpose of the lawyer giving and that client seeking or
receiving
legal advice.
- Thus, the Claimants submit, the gathering and communication of information by a person who is not the client is not protected by privilege, even if the information is gathered and communicated by that person to his employer's lawyer with the authority and at the
request
of the client and/or its lawyers, and even if the client is that person's employer.
The
relevant
authorities on legal advice privilege
Three Rivers (No 5)
- It is common ground that the leading authority for the purposes of this application and the determination of
RBS's
claim to legal advice privilege under English law is the Court of Appeal's decision in Three Rivers (No 5).
- In Three Rivers (No 5) the Claimants, the liquidators and creditors of a bank ("BCCI"), brought an action against the Bank of England ("the Bank") for misfeasance in public office in
respect
of its supervision of BCCI before its collapse. The Claimants sought disclosure of numerous documents which had been produced for a private non-statutory inquiry into the Bank's supervision of BCCI conducted by Bingham LJ, as he then was ("the Bingham Inquiry").
- In that case, a special unit had been specifically established to deal with inquiries and to seek and
receive
advice from Freshfields, namely the Bingham Inquiry Unit ("BIU"). The BIU comprised three Bank officials who had been appointed by the Governor of the Bank to deal with all communications between the Bank and the Bingham Inquiry.[1] All the BIU's communications with the Bingham Inquiry were the subject of extensive legal advice from Freshfields and counsel instructed by them. This advice covered all aspects of the preparation and presentation of the Bank's evidence and submissions to the Bingham Inquiry.
- BCCI's application
related
to four categories of documents:
(1) documents prepared by Bank employees which were intended to be sent to, and were in fact sent to, Freshfields;
(2) documents prepared by Bank employees with the dominant purpose of the Bank's obtaining legal advice but not, in fact, sent to Freshfields;
(3) documents prepared by Bank employees without the dominant purpose of obtaining legal advice but in fact sent to Freshfields;
(4) documents prepared by Bank employees who by the date of the application for disclosure were no longer employed by the Bank.
- BCCI did not seek disclosure of documents passing between the BIU and Freshfields, or vice versa, or of any of Freshfields' internal memoranda or drafts. Counsel for BCCI (Mr Pollock QC) accepted that the BIU was, for the purpose of the inquiry, the client of Freshfields and that communications passing between the BIU and Freshfields were lawyer/client communications and thus covered by legal advice privilege.
- Accordingly (and it is a point much emphasised on behalf of
RBS),
the Bank's contested claim to privilege was in
respect
of what Counsel for
RBS
in this case described as "purely internal documents, that is, documents which Bank employees sent to other Bank employees (such as members of the BIU), not to Freshfields". The Bank's essential argument was that these internal documents were privileged because they had been prepared for the dominant purpose of obtaining legal advice.
- At first instance, Tomlinson J (as he then was) held (see para. 30 of the judgment,
reported
at [2002]
EWHC
2730 (Comm)) that:
"an internal confidential document, not being a communication with a third party, which was produced or brought into existence with the dominant purpose that it or its contents be used to obtain legal advice is privileged from production. The purpose must be that of the author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence. These internal documents were privileged because they had been prepared for the dominant purpose of obtaining legal advice."
- According to Tomlinson J, the privilege covered (see para. 33):
"…the continuing process of producing drafts or information
required
by the legal advisers to enable them to give advice to the Bank on the form of its submissions, evidence and
responses
to the Inquiry."
- Tomlinson J
recorded
(see para. 34) that he did:
"…not
regard
[his] decision as breaking any new ground…[it seeming to him]…likely that privilege has routinely been claimed and probably never challenged in
relation
to precisely similar or analogous exercises conducted in
relation
to statutory inquiries and other non-adversarial proceedings."
Nevertheless, he also noted (ibid.), lest it be thought that this opened floodgates, that:
"It is only on somewhat unusual facts and in the light of exceptionally cogent evidence that the dominant purpose test has in this case been satisfied in
relation
to a very considerable number of documents."
- BCCI appealed. The Court of Appeal (Lord Phillips of Worth Matravers MR, Sedley and Longmore LJJ) in a single judgment of the Court (given by Longmore LJ), concluded that the Bank was not entitled to privilege in any of the categories concerned, and allowed BCCI's appeal.
- As
RBS
has expressly acknowledged, that decision is, of course, binding on me and, on one view, it is sufficient to consider it and any cases subsequent to it. However, Three Rivers (No 5) is a controversial decision; and the controversy here is as to its proper scope. In determining whether the decision is a departure from previous authority or confined to its own admittedly quite special facts, I think it of assistance to consider briefly its antecedents and certain key authorities on which the Court of Appeal based their judgment.
- The substratum (if I may so describe it) of that judgment is its
reconfirmation
of the differences in English law, established in the nineteenth century and first clearly enunciated in Anderson v Bank of British Columbia (1876) 2 Ch D 644, between legal advice privilege and
litigation
privilege.
- Put shortly,
litigation
privilege protects the assembly and content of evidence for the purpose of
litigation
and thus focuses on the purpose for which the documentation has been obtained or assembled; whereas legal advice privilege applies only to the confidential communications between a party and his legal advisers for the purpose of enabling that party to obtain informed and professional legal advice, and thus is confined to confidential communications within that
relationship
and for the purpose of its fulfilment.
- Thus, in Anderson v Bank of British Columbia, Mellish LJ stated (at page 659) that potential evidence obtained in order to decide whether to bring or defend an action may be privileged:
"…but I cannot think that that ought to be held to apply to information which a principal asks his agent to give
respecting
the matters which the agent has done for and on account of the principal. That is information
respecting
matters which in point of law are the acts of the principal himself, and it is information
respecting
matters as to which the knowledge of the agent is the knowledge of the principal. In point of law, the principal is to be deemed to have known the facts before he has actually got personal information about them. I cannot but think that, as you are entitled to ask the principal what he knows
respecting
those facts, you must necessarily be entitled to the information which his agent has sent
respecting
them."
- The "very limited character" of the protection provided by legal advice privilege, and the differences between that form of protection and the protection afforded by
litigation
privilege "in a very different class of cases", were emphasised by all three judges in the Court of Appeal in Wheeler v Le Marchant (1881) 17 Ch D 675.
- They agreed that it was in substance "a rule established and maintained solely for the purpose of enabling a man to obtain legal advice with safety" (per Sir George Jessel MR at pp 682-683), and confined "entirely to communications which take place for the purpose of obtaining legal advice from professional persons" (per Brett LJ at p 683) and to "communicating with the solicitor to obtain legal advice" (per Cotton LJ at p 684). Cotton LJ added this:
"It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communications between the
representatives
of the client and the solicitor must be also privileged. That is a fallacious use of the word '
representatives'.
If the
representative
is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as
regards
protection, and his communications with the solicitor stand in the same position as the communications of his principal with his solicitor. But these persons were not
representatives
in that sense. They were
representatives
in this sense, that they were employed on behalf of the clients, the defendants, to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his
representatives
and the solicitor. In fact, the contention of the [Banks] comes to this, that all communications between a solicitor and a third person in the course of his advising the client are to be protected. It was conceded that there was no case that went that length, and the question is whether, in order fully to develop the principle with all its
reasonable
consequences, we ought to protect such documents. Hitherto such communications have only been protected when they have been in contemplation of some
litigation,
or for the purpose of giving advice or obtaining evidence with
reference
to it. And it is
reasonable,
because then the solicitor is preparing for the defence or bringing the action, and all communications he makes for that purpose, and the communications made to him for the purpose of giving him the information, are, in fact, the brief in the action, and ought to be protected. But here we are asked to extend the principle to a very different class of cases, and it is not necessary, in order to enable persons freely to communicate with their solicitors and obtain their advice, that any privilege should be extended to communications such as these."
- Turning to Three Rivers (No 5) itself, I agree with the Claimants that the key passage in the judgment of the Court of Appeal is at 1547G-H. There, having cited Wheeler v Le Marchant (1881) 17 Ch D 675 (in the Court of Appeal), and considered it in some detail, Longmore LJ said this:
"This case [Wheeler v Le Marchant (1881) 17 Ch D 675] makes it clear that legal advice privilege does not extend to documents obtained by third parties to be shown to a solicitor for advice. Mr Stadlen [counsel for the Bank], of course, accepted this but said that communications from an employee are different. The
reason
he gave is that a corporation can only act through its employees; whilst that is true, it is not a consideration that can carry Mr Stadlen home. Indeed the passage cited from Anderson's case 2 Ch D 644 shows that information from an employee stands in the same position as information from an independent agent. It may, moreover, be a mere matter of chance whether a solicitor, in a legal advice privilege case, gets his information from an employee or an agent or other third party. It may also be problematical, in some cases, to decide whether an individual is an employee or an agent and undesirable that the presence or absence of privilege should depend on the answer." [My emphasis.]
Regarding
that as the position settled by the end of the nineteenth century, the Court considered that it was not dislodged by any of the twentieth century cases, and was still appropriate for the present day.
- As summarised by Chief Master Marsh in his very
recent
judgment in Astex Therapeutics Limited v Astrazeneca AB [
2016]
EWHC
2759 (which was handed down on the second day of the hearing in the present case):
"The Court of Appeal concluded that the Bank is not entitled to privilege in any of the four categories summarised above and expressed the view that if the Governor himself of the Bank of England had noted down what he
remembered
in
relation
to the supervision of BCCI with the intention of giving it to the BIU for transmission to Freshfields, such a document would not be subject to legal advice privilege. Longmore LJ accepted the submission by Mr Pollock that on the evidence before the court … the BIU, which was established to deal with inquiries and to seek and
receive
Freshfields' advice, is for the purposes of this application, the client rather than any single officer however eminent he or she may be. It follows that no separate consideration need be given to the position of ex-employees who are, obviously, in no better position for the purpose of any claimed privilege.'"
- The nub of the Court of Appeal's conclusions in Three Rivers (No 5), therefore, was that, in a corporate context, information gathered from an employee is no different for these purposes from information obtained from third parties, even if the information is collected by or in order to be shown to a solicitor to enable fully informed advice to be given to that solicitor's client, the corporate entity (
represented
in the Three Rivers (No 5) case by the BIU).
- The Court of Appeal, in
reaching
those conclusions, thus
refused
to accept counsel for the Bank's primary argument that, in order to give full and modern effect to legal advice privilege in the context of a claim to it by a corporation, a corporation's employees cannot be
regarded
and should not be treated as third parties for the purposes of privilege: see page 1560E.
RBS's
submissions and attempt to distinguish Three Rivers No 5
- Having accepted that, at least at this level, Three Rivers (No 5) is binding authority,
RBS
had, inevitably, to focus its submissions on confining its application to its own particular facts, and demonstrating that the facts of the present case do not fall within it.
RBS
also sought in that context to justify confining its application by praying in aid academic criticism of the decision, and its disapproval in other jurisdictions, in particular in the Court of Appeal in Singapore.
RBS
accordingly sought to depict Three Rivers (No 5) as a "rather unusual case" which should be confined in its application to the particular context where a special unit had been specifically established to be the sole and exclusive conduit for communications between the client Bank and the solicitors (Freshfields), precluding any direct communications between any other bank employee and the solicitors.
- According to
RBS's
case, the distinguishing feature is that Three Rivers (No 5) concerned, and concerned only, communications within or internal to the client corporation (in that case the Bank of England) itself. It did not concern any communications directly with the corporation's lawyers: only the BIU could communicate with the solicitors, and none of the employees could or did or had any authority to do so.
- Thus, Three Rivers (No 5) concerned the collation of documents by
relevant
employees (including some now ex-employees) of the Bank for onward
reference
to the BIU, in order to assist the BIU in the preparation of a subsequent communication between the BIU and the Bank's legal advisers. It was for that
reason
and in that sense that the Court of Appeal described the material as "preparatory" to, rather than qualifying as, privileged communications: or, as Tomlinson J had put it at first instance, "information which constitutes the antecedents of or the acts preparatory to the creation of a communication".
- Accordingly, it is
RBS's
submission that the status in a corporate context of direct communication of information by an authorised employee (or ex-employee) to the corporation's legal adviser had not arisen and was not dealt with in Three Rivers (No 5).
- Further,
RBS
pointed out, in Three Rivers (No 5) the claimants had not sought to question the claim of legal advice privilege in
respect
of any documents passing between the BIU and Freshfields or vice-versa, nor of any of Freshfields' internal memoranda or drafts.
RBS
contrasted that with the present case, where the employees were interviewed by
RBS's
lawyers and they thus communicated directly; where legal advice privilege is challenged in
respect
of documents actually created by the corporation's legal advisers for the purpose of advising the corporation (
RBS);
and where the Interview Notes comprised, in terms of both process and effect, communications by or on behalf of a client, or an authorised emanation of the client, to its lawyer.
- Before discussing the more elaborate details of
RBS's
submissions on the case in hand, I think it is convenient to consider, first, whether
RBS
is
right
in its analysis that Three Rivers (No 5) is
restricted
in its application to the peculiar facts of the case, or whether it is authority of broader application, and secondly, whether, on its true application,
RBS
can maintain its claim to legal advice privilege.
Is Three Rivers (No 5) confined to its own facts? The tenor and effect of subsequent decisions and commentary
- It is true that the facts in Three Rivers (No 5) were out of the ordinary, especially in that the BIU was designated as the sole body to be treated as the 'client', and it is a truism that cases are decided on their own facts. However, in my view, the decision in Three Rivers (No 5) is not confined to its own facts but is based on principles of general application, which (despite considerable criticism in some quarters)
remain
binding law in England.
- This is confirmed by the way the decision was attacked by counsel and analysed by the House of Lords in Three Rivers District Council and others v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 ("Three Rivers (No 6)"), when a collateral attack was sought to be mounted against it.
- In light of the circumstances in which the arguments came before it and the House of Lords' acceptance of the
respondents'
argument that "the
issue
simply does not arise on this appeal" (per Lord Scott of Foscote at p654B), the House of Lords declined the invitation to it to express a view on these fundamental
issues.
- However, I would accept the Claimants' submission in this case that the way the House of Lords defined and approached the matter leaves no room for doubt as to its view of the meaning and status of Three Rivers (No 5).
- In particular:
(1) Lord Scott summarised (at §13) the decision of the Court of Appeal in Three Rivers (No 5) as having "accepted Mr Pollock's submission" that:
"it was only communications between solicitor and client, and evidence of the content of such communications, that were privileged. Preparatory materials obtained before such communications, even if prepared for the dominant purpose of being shown to a client's solicitor, even if prepared at the solicitor's
request
and even if subsequently sent to the solicitor, did not come within the privilege."
(2) Lord Carswell interpreted the decision in the following terms at §72:
"The Court accepted that Freshfields' client was the BIU, not the Bank itself or any individual officer, but its conclusions did not turn so much on the identity of the authors of the documents in question as on the more general point that in the court's view legal advice privilege, as distinct from
litigation
privilege, was
restricted
to communications between a client and his legal advisers, to documents evidencing such communications, and to documents that were intended to be such communications even if they were not in fact communicated… It
rejected
the Bank's argument that communications from an employee were so covered, even though it
recognised
that a corporation can only act through its employees."
- In my view, and even though counsel (Gordon Pollock QC) on behalf of BCCI submitted that Three Rivers (No 5) was "primarily concerned with the question whether a fact-gathering exercise that was undertaken for the purpose of an internal inquiry and where
litigation,
if contemplated at all, was certainly not the dominant purpose of the exercise could only be cloaked in privilege if subsequent
litigation
arose" (p 624A), the
reasoning
in Three Rivers (No 5) must be treated as
resting
on principles of general application.
- That view of the case, and in particular the insistence on strictly confining legal advice privilege to communications between a lawyer and his client for the purpose of giving or
receiving
legal advice which is its fundamental basis, is consistent also with the other cases in England in which Three Rivers (No 5) has been considered: and see United States v Philip Morris [2003]
EWHC
3028 (Comm) especially at para. 39 in the judgment of Moore-Bick J (as he then was) and the same case on appeal at [2004]
EWHC
Civ 330 at para. 81; Winterthur Swiss Insurance Co v AG (Manchester) Ltd (in liquidation) [2006]
EWHC
839 (Comm); and National Westminster Bank Plc v Rabobank Nederland [2006]
EWHC
2332 (Comm) (at para. 29). The most
recent
authority, the decision of Chief Master Marsh in Astex Therapeutics (see paragraph [44] above), has adopted the same view.
Criticisms of the decision in Three Rivers (No 5)
- As indeed
recognised
by both Simon J in National Westminster Bank Plc v Rabobank Nederland and Chief Master Marsh in Astex Therapeutics, there is no doubt that the decision in Three Rivers (No 5) has attracted disquiet and not a little academic criticism. A different position has been taken in at least one other jurisdiction with an otherwise comparable approach to legal privilege (in addition to the USA).
- Thus, the Singapore Court of Appeal in Skandanavia Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and others [2007] 2 SLR 367, encouraged to do so by its perception that "Three Rivers No 5 has been almost universally criticised and often trenchantly" (see para. 38), has taken a different position.
RBS
cited this extract from their judgment:
"[Three Rivers (No 5)] does not lay down a general principle that all communications between a company and its legal advisers must be made by a specially appointed committee or that no communication made by an employee to the company's legal adviser is privileged. In that case, the English Court of Appeal held…that 'the BIU, which was established to deal with inquiries and to seek and
receive
Freshfields' advice, is for the purpose of this application, the client rather than any single officer however eminent he or she may be (including presumably, the Governor of the Bank of England)'. Implicit in this finding would be that only the BIU was authorised to communicate with the Bank of England's lawyers. No other employee was authorised, including the Governor. The principle is that if an employee is not authorised to communicate with the company's solicitors for the purpose of obtaining legal advice, then that communication is not protected by legal advice privilege. We do not find this principle exceptional. When a company
retains
solicitors for legal advice, the client must be the company. But since a company can only act through its employees, communications made by employees who are authorised to do so would be communications made 'on behalf of his client'. The only
relevant
issue
is whether the communication is made for the purpose of obtaining legal advice, and if so, the communication falls within the privilege, provided that other
requirements
of the privilege are present, viz, that the communications are confidential in nature, and the purpose of the communication is for the purpose of seeking legal advice. Authorisation need not be express: it may be implied, if that function is
related
to or arises out of
relevant
employee's work. In our view, Three Rivers (No 5) should be
read
in the context of the court's finding that the BIU (and no one else) was authorised to communicate with the bank's solicitors."
- There is, to my mind, force in these criticisms and attempts to confine the application of the decision in Three Rivers (No 5). It may be that in a suitable case the Supreme Court will have to
revisit
the decision, and perhaps the fundamental question as to whether and to what extent the distinction between legal advice and
litigation
privilege on which Three Rivers (No 5) ultimately
rests
is
really
justified and appropriate (cf Mr Sumption QC's argument in Three Rivers (No 6) at pages 613 to 617).
- But, especially given the clear direction of the House of Lords (in Three Rivers No 6) and as Simon J also noted in the Rabobank case, there can be no
real
doubt as to the present state of the law in this context in England: Three Rivers (No 5) confines legal advice privilege to communications between lawyer and client, and the fact that an employee may be authorised to communicate with the corporation's lawyer does not constitute that employee the client or a
recognised
emanation of the client.
RBS's
submission that its case is not inconsistent with Three Rivers (No 5)
- The crux of
RBS's
case now is that even accepting it to be correctly decided and, in any event, binding at this level, Three Rivers (No 5) did not address, still less define, what is
required
in a corporate context, where the corporation is the 'client', for an employee or any other individual also to be treated as a 'client' or at least a qualifying emanation of the corporate client.
- It is
RBS's
submission that no English case does address that point: including the latest decision, that in Astex Therapeutics.
RBS
submits that its submission, to the effect that where the client is a corporation, statements made to the corporation's lawyer by employees authorised (as a matter of fact) by the corporation to make them on its behalf constitute lawyer-client 'communications' for the purposes of legal advice privilege, is consistent with authority and is, or should be, English law.
- This is a cogent submission, which (as indicated previously) has been espoused in more than one of the leading text books and which undoubtedly commands
respect
and
requires
careful analysis. I
return
to discuss it below.
- However, before doing so, it is convenient to clear away what I
regard
as some distractions introduced in what were otherwise well presented and impressive submissions, and also briefly to assess
RBS's
understandable, but ultimately inaccurate, depiction of the Claimants' case as contrary to or in some way inconsistent with Balabel and Another v Air India [1988] 1 Ch 317 ("Balabel").
- What I have described as distractions were
RBS's
peripheral submissions to the following effect:
(1) that Three Rivers (No 5) is (to quote Counsel's skeleton argument) "not authority for the proposition that only a specially constituted committee of the company can be the client in every case" and that "the Court of Appeal did not arrive at any universal definition or set out a test to be applied in all circumstances where the Court is asked to grapple with the
issue
of who the client is in a corporate context";
(2) that the Claimants were attempting to put an unwarranted gloss on what the Court of Appeal said in Three Rivers (No 5) by suggesting, in answer to
RBS's
case that any employee properly authorised as above described could be treated as a 'client', that in a corporate context the 'client' can only be a "small number of identified company employees".
- As to the first, the Claimants have never sought to maintain that in a corporate context only a committee may be 'the client': and to my mind such a proposition would be absurd, not least since (as is
RBS's
own case) such committees are, if not now a rarity, certainly far from invariable. The Claimants always accepted that 'the client' is the corporation, acting by its directors or other designated organ (including a committee constituted for that purpose).
- The second point is based upon a phrase in the Claimants' skeleton argument (para. 21) in which they contend that "The authorities are clear that a company may only claim privilege in
respect
of communications between the 'client' and its legal advisers where the 'client' is a small number of identified company employees who are authorised to obtain legal advice."
- I accept that the phrase may have been distracting; but I took it to signify (as Mr Nash QC confirmed in
reply
it was intended to signify) that a corporation would in the usual course only entrust the process of communication with a legal adviser for the purposes of seeking or
receiving
legal advice to a
restricted,
and in all probability small, number of persons. That seems plainly
right
in point of fact, even if it does not seem to me to assist in determining the scope of the privilege.
- I should note, however, a
related
point: the more fundamental submission on behalf of the Claimants that as a matter of law the only individuals whose communications for these purposes will be treated as 'client' communications for the purpose of legal advice privilege are those who (whether as a matter of ordinary corporate theory of 'attribution', or by special designation, as in the case of the BIU in the case of the Bank of England in Three Rivers (No 5)) can be treated as the "directing mind and will of the corporation". I
return
to that below.
- Turning to Balabel,
RBS
sought to contend that the Claimants' case involves artificially limiting the concept of 'communication' in Three Rivers (No 5) in order to distinguish between communications that provide instructions (which,
RBS
contends not entirely accurately, the Claimants accept are privileged) and communications that provide information (which the Claimants assert are not privileged).
- The depiction was perhaps understandable because the Claimants did appear to put as separate
requirements
(for a communication to attract legal advice privilege) (1) that the communication be from or to a 'client' and (2) that such communication should be for the purpose of the client giving or
receiving
legal advice, and not merely for the purpose of providing information. However, I do not consider it accurate.
- As Mr Nash clarified, the Claimants did not and could not dispute or distinguish the decision in Balabel and it was not in
reality
the Claimants' case to deny privilege to a communication of information between a client and its lawyer for the purposes of giving or
receiving
legal advice.
- Indeed, I do not think that the Balabel question arises in this context. The decision in Balabel goes to the question of what material travelling between lawyer and client is privileged, whereas the prior question raised here is whether the communications were in the context of a lawyer/client
relationship
at all.
- What I think the Claimants were truly getting at is that to warrant protection, where a corporation is the client, the communication must be to or from a person who on behalf of the corporation is authorised to seek and
receive
legal advice, and the communication must be for the purposes or in the course of that person giving or
receiving
legal advice. Such a communication is to be distinguished from the preparatory work of compiling information undertaken by persons with no authority to seek or
receive
legal advice for the purposes of enabling the client to seek and
receive
such advice: the Claimants' case being that communication of information, even at the
request
and with the authority of the corporation, by a person who is not the client and who has no authority (actual or implicit) to seek or obtain legal advice for the company, cannot be privileged; and that is consistent with Balabel.
RBS's
substantial case
- I
return
to what I consider to be the fundamental and most powerful part of
RBS's
case.
- This is its submission to the effect (the following formulation below is my own synopsis) that it is not contrary to Three Rivers (No 5) that where an individual, with the authority of a corporation which is seeking legal advice, communicates to the corporation's legal advisers at their
request
either instructions or factual information, in confidence and for the purpose of enabling that corporation to seek or
receive
legal advice, that communication (including any factual information) should be treated as if the individual were part or an emanation of the client and protected by legal advice privilege accordingly. Indeed,
RBS
contends that such treatment is necessary in order to fulfil the purpose of the protection afforded by legal advice privilege.
- Thus, breaking down each component, it is
RBS's
case that it is consistent with Three Rivers (No 5), and to provide full content in a corporate context to the protection of legal advice privilege it is necessary, that:
(1) Any confidential 'communication' between a client and a lawyer for the purpose of giving or obtaining legal advice (and any evidence of such a 'communication') is protected by legal advice privilege;
(2) Where the client is a corporation, statements made to the corporation's lawyers by employees authorised (as a matter of fact) by the corporation to make them constitute lawyer-client 'communications' for the purposes of legal advice privilege, rather than merely information gathering preparatory to such 'communications';
(3) That is so whether or not the employee concerned was authorised to seek or
receive
legal advice: it is the identity of the parties to the communication, not the nature of the communication which determines whether the material is 'preparatory' and whether in turn it is protected by legal advice privilege: as Ms Tolaney put it in her Speaking Note handed up to me on the second day of the hearing, "the moment the Court is satisfied that there was a communication directly to the solicitor from an authorised employee, the communication is by definition not preparatory material" [her emphasis], and on that footing, privileged.
RBS
contends that, in the present case:
(1) The interviews and the Interview Notes of them were confidential and their purpose was to enable
RBS
to obtain legal advice in
respect
of the matters to which they
related;
(2) Each of the interviewees was authorised by
RBS
to participate in the interviews and their answers and the Interview Notes comprise authorised 'communications' as distinct from an 'internal' communication between employees (of whatever status) which is preparatory to communication with the body corporate's legal advisers and to which such legal advisers are not a party;
(3) Each Interview Note comprises or
records
confidential communications by the employee concerned directly to
RBS's
lawyers accordingly. It is this direct communication to the solicitors which primarily distinguishes the case.
- As previously
rehearsed,
there is no dispute as to the authority of the employees (and Mr Hong as a former employee) to participate in the information gathering process, including their interviews. On the other hand, it is not contended that any of them had any authority to, or did, seek or
receive
legal advice on behalf of
RBS.
- The essential question becomes: does either the fact of authority to participate in an information gathering process, as in this case, or the fact that the Interview Notes
record
a direct communication, distinguish the present case from Three Rivers (No 5) and suffice to justify the employees and the former employee being treated in such circumstances as 'the client' or a qualifying emanation of the client, rather than 'third parties'?
- Astex Therapeutics is of particular interest in this
regard,
in that it concerned a claim for privilege over notes made by in-house and external lawyers. Chief Master Marsh noted (in para. 48) that the case before him differed from Three Rivers (No 5) since in that case none of the classes of documents held not to be privileged had been produced by a lawyer. After a careful
review
of both the authorities and textbook criticism of some of them, the Chief Master applied Three Rivers (No 5) and concluded that the claim to legal advice privilege could not be supported.
- The Chief Master held that notwithstanding the direct involvement of the corporation's lawyers in gathering the information, it not being suggested of any of the employees from whom the information was obtained that they "could be
regarded
as forming part of a class of persons authorised to give instructions to the lawyers" (see para.48), they could not be
regarded
as "the client" and in consequence had to "be treated as third parties for these purposes" (see paras. 48 and 49). The crux of his decision is at para. 49:
"In my judgment, none of these attendance notes can be the subject of legal advice privilege. They do not fall within the generally understood confines of legal advice privilege, even as extended by Balabel Air v India, because it is not apt to cover an information gathering exercise of the type which will normally be conducted in
relation
to
litigation
but undertaken before a dispute is
reasonably
in contemplation."
- In their Note on the decision provided (at my invitation) after the hearing,
RBS
pounced on the fact that in Astex Therapeutics the
respondents
did not argue that the employees and ex-employees who had been interviewed were authorised to give 'instructions' to lawyers and submitted that the case could be distinguished on this basis. Indeed,
RBS
went further, and submitted that Astex Therapeutics supports
RBS's
interpretation of Three Rivers (No 5): this on the basis that the Chief Master had (see paras. 48 and 54(iv) of his judgment) framed the test of whether someone was to be treated as a "client" as being whether he could be "
regarded
as part of a class of persons authorised to give instructions to the lawyers" [emphasis added].
- The fact that in Astex Therapeutics it was not contended that the employees were authorised "to give instructions" is appropriately noted: its significance is that the case cannot be taken as determining who is and who is not to be treated as, or as an emanation of, "the client". However, I do not think the Chief Master contemplated any such equation as
RBS
seem to suggest between the provision of information (in an interview or otherwise) and the instruction of lawyers for the purpose of obtaining legal advice.
- Contrary to
RBS's
submission, it is plain from the Chief Master's judgment that he did not consider that it would suffice if the individual had the company's permission to provide information; and I would interpret his
reference
to "a class of persons authorised to give instructions" as being a
reference
to persons authorised to seek legal advice by way of instructions on the corporation's behalf, whether as a matter of corporate governance or by express provision (as was the BIU in Three Rivers (No 5)).
- As the Claimants in their submissions on the case
responded,
although the Chief Master had not had to decide the point, he expressed his clear view (at §50) that it "is unlikely, in most circumstances" where a corporation is "seeking information" from employees and former employees that persons who merely provide that information will be the 'client' for the purposes of Three Rivers (No 5). Having dealt with the position under
litigation
privilege, the Chief Master held:
"By contrast, where there is no dispute, the
review
of a contract by seeking information from employees, and former employees, is unlikely, in most circumstances, to be protected by legal advice privilege. In one sense this conclusion is a surprising one because it might be though [sic] that the involvement of lawyers in the
review
clothes the
review
in privilege. But that is not the legal position if the lawyers are obtaining information from persons who are, for these purposes, third parties because they are not 'the client'."
- I agree with the Claimants that this conclusion must follow logically from the two facets of the decision in Three Rivers (No 5), namely (1) that the client for the purposes of privilege consists only of those employees authorised to seek and
receive
legal advice from the lawyer and (2) that legal advice privilege does not extend to information provided by employees and ex-employees to or for the purpose of being placed before a lawyer.
- Applied to this case, that
reasoning
is, in my judgment, fatal to
RBS's
claim of legal advice privilege for the Interview Notes in question.
- In summary, I consider and hold that the Interview Notes, albeit that they
record
direct communications with
RBS's
lawyers, comprise information gathering from employees or former employees preparatory to and for the purpose of enabling
RBS,
through its directors or other persons authorised to do so on its behalf, to seek and
receive
legal advice. It is clear from the judgment in Three Rivers (No 5) that "information from an employee stands in the same position as information from an independent agent" (see p1574H). The individuals interviewed were providers of information as employees and not clients: and the Interview Notes were not communications between client and legal adviser. I do not consider that any sufficient basis has been demonstrated for not applying Three Rivers (No 5). Further, I agree with the analysis in Astex Therapeutic.
- It may also be that in a corporate context only individuals singly or together constituting part of the directing mind and will of the corporation can be treated for the purpose of legal advice privilege as being, or being a qualifying emanation of, the 'client'. This is the 'attribution' argument foreshadowed in paragraph 73 above. It is supported by a footnote in a decision of Aikens J (as he then was) in Winterthur Swiss Insurance Company and others v AG (Manchester) Limited (in liquidation) and others [2006]
EWHC
839 (Comm), in which he interpreted Three Rivers (No 5) as follows:
"In Three Rivers (No 5) the Court of Appeal held that, in the case of a corporate client, in
relation
to 'legal advice privilege' the privilege could not attach to communications to the legal adviser by either employees who were not part of the directing mind and will of 'the client' or by others who were not 'the client'."
RBS
submitted that "introducing the
requirement
of being the directing mind and will for the purposes of
receiving
advice would impose an undesirable
restriction
on the scope of legal advice privilege available to corporate bodies, go beyond the findings in Three Rivers (No 5) and undermine the policy underlying legal advice privilege
restated
by the House of Lords in Three Rivers (No 6)". As to that latter point, Ms Tolaney QC on its behalf also submitted that the limitation implied by adopting the test would be inconsistent with Balabel, on the basis that "if communication of information satisfies the Balabel test, the availability of privilege should not depend on whether that communication was made by a natural person or a company".
- Since, for the
reasons
I have given, I have concluded that the nature of the authorised communications and the purpose for which they took place combine to preclude the availability of legal advice privilege in this case, I do not think it is necessary for me to determine whether a further corollary or implication of the decision in Three Rivers (No 5) is to
restrict
the meaning of 'client' in the manner suggested by Aikens J. However, I suspect that such a
restriction
will often
reflect
reality:
a corporation is unlikely to authorise an individual to seek and
receive
legal advice on its behalf to an individual or body which is not its directing mind and will. Further, in my view, there are good
reasons
for it not doing so, and for the law not extending privilege if it does. So I do incline to the view that only communications with an individual capable in law of seeking and
receiving
legal advice as a duly authorised organ of the corporation should be given the protection of legal advice privilege. (I appreciate that a different view has been taken in US law, where the "control group"
restriction,
which is probably analogous, has been
rejected
as being "unpredictable" and as tending to "frustrate the very purpose of the privilege": but then the US rules are different, as later discussed.)
- In any event, in my judgment, for the
reasons
I have given
RBS's
claim to legal advice privilege fails, at least if English law applies.
RBS's
alternative claim that the Interview Notes are privileged "lawyers' working papers"
- The next question is whether any of the Interview Notes fall within the category of "lawyers' working papers" and are privileged on that alternative basis:
RBS
claims privilege on that basis for all the Interview Notes except the 20 Project Mortar Interview Notes produced by
RBS
Group Secretariat.
The law as to the basis and scope of lawyers' working paper privilege
- It is common ground that in English law, lawyers' working papers are privileged under the legal professional privilege doctrine: see the Court of Appeal in Balabel and Three Rivers (No 5) at para. 30, although it does appear (as the Claimants noted) that in each case the point was assumed without any principled discussion.
- The justification for withholding such documents given by the Court of Appeal in Lyell v Kennedy (No 3) (1884) 27 Ch D 1 (itself taken by the Supreme Court of Victoria in Telebooth v Telstra [1994] 1 VR 337 to be the origin of the lawyers' working papers doctrine) was that disclosure of them would be (per Cotton LJ at 26):
"giving [the party
requesting
disclosure] a clue to the advice which had been given by the solicitor and giving them the benefit of the professional opinion which had been formed by the solicitor."
- The Court of Appeal in Ventouris v Mountain [1991] 1 WLR 607 considered the decision in Lyell, holding (per Bingham LJ at 615F) that the
"ratio of the decision is, I think, that where the selection of documents which a solicitor has copied or assembled betrays the trend of advice which he is giving the client the documents are privileged."
- Similarly Eady J in Imerman v Tchenguiz [2009]
EWHC
2902 (QB) held (at §16), in the context of a dispute as to whether annotations on a document held by counsel would be privileged, that the test was whether the documents if disclosed would "give a clue" to the trend of advice being proffered:
"I do not accept the proposition that underlining or highlighting of documents would, in themselves, give rise to legal professional privilege. The appropriate test to apply is that of whether or not the markings in question would 'give a clue' to the trend of advice being proffered to the clients by the lawyers."
- A particular feature to be noted in the present case (as was emphasised by the Claimants) is that if, as I have held for the
reasons
set out above,
RBS
is not entitled to claim legal advice privilege in
relation
to the Interview Notes, it must follow that the starting point of the analysis in
relation
to the lawyers' working papers point is that the interviews themselves were not privileged communications.
- It follows, and I did not take it to be disputed, that verbatim transcripts of unprivileged interviews would also themselves not be privileged. As Birss J
recently
held in Property Alliance Group v
RBS
(No 3) [2015]
EWHC
3341 (Ch) (at §24):
"a
record
of a non-privileged conversation, whether in the form of a verbatim note or a transcript, cannot itself be privileged if the underlying conversation was not privileged."
- Thus,
RBS
must demonstrate some attribute of or addition to the
relevant
Interview Notes which distinguishes them from verbatim transcripts or
reveals
from an evident process of selection the trend of legal advice being given, and is such as to trigger their protection as lawyers' working papers.
- In this context, Warren J in Stax Claimants v Bank of Nova Scotia [2007]
EWHC
1153 (Ch) contrasted (at §10) a note which "
records
the substance of a conversation" (which would not be privileged) with a note which also
records
"the note-taker's own thoughts and comments on what he is
recording
with a view to advising his client" (which almost certainly would be privileged).
- The claim thus involves proving facts which demonstrate that the documentation for which privilege is asserted does have some attribute or addition such as to betray or at least give a clue as to the trend of advice being given to the client by its lawyer.
- The burden of demonstrating this is upon
RBS.
It is axiomatic that the burden of proving privilege falls on the party claiming it. The
relevant
principles are found in West London Pipeline v Total [2008]
EWHC
1729 (Comm) per Beatson J (as he then was) at §86. In particular:
(1) A claim for privilege is an unusual claim in that the party claiming privilege and their legal advisers are judges in their own case, subject of course to the power of the Court to inspect the documents.
(2) For that
reason,
the Court must be particularly careful to consider the basis on which the claim for privilege is made.
(3) Evidence filed in support of a claim to privilege should be as specific as possible without making disclosure of the very matters that the claim for privilege is designed to protect.
The evidence put forward by
RBS
- Turning, then, to the evidence put forward by
RBS,
Mr Norris-Jones (a partner in Herbert Smith Freehills LLP ("HSF"), solicitors to
RBS)
explained in his witness statement (his ninth in these proceedings) that:
(1) All of the Interview Notes in
issue
had been "
reviewed
by HSF in the context of the assertion by
RBS
of privilege over them", and a number had also been
reviewed
"by members of
RBS's
senior counsel team in these proceedings";
(2) On the basis of their
review,
"
RBS's
legal team (both HSF and Counsel) consider the Notes to be privileged as a matter of English law both on the basis of the test set out in Three Rivers (No 5) and (with the exception of the interviews conducted by
RBS
Group Secretariat) on the basis that they are lawyers' working papers";
(3) The basis for the assertion of privilege had been addressed in correspondence, which was to the following effect as
regards
the head of privilege now under consideration:
a) The Interview Notes except for those in
respect
of interviews conducted by
RBS
Group Secretariat and Mr Hong's interview had been prepared by Wilmer Hale (
RBS's
US attorneys) and Travers Smith as their agents: Mr Hong's interview notes had been prepared by Dickstein Shapiro LLP also as external counsel to
RBS;
b) The purpose of the Interview Notes was "not to create transcripts of the interviews but rather documents that would assist in providing legal advice to
RBS";
c) Thus, the Interview Notes concerned "are not simply verbatim
recitals
of the interviews" but "evidence the impressions of the lawyer with a view to advising the client";
d) Further, Wilmer Hale had noted that the "notes state on their face that they
reflect
external counsel's 'mental impressions'" (it is not clear to me whether the same rubric is included in the notes of Mr Hong's interview);
e) "In broad terms, they
reflect
the lawyers' impressions in the sense that they
reflect
both the work undertaken in preparation for the interviews (i.e. they
reveal
the lawyers' train of inquiry), and in the sense that they are a note not a transcript, and therefore to some greater or lesser extent
reflect
a selection by the author of the points to be
recorded."
- In a further (tenth) witness statement, filed on the second day of the hearing (8 November
2016)
and admitted into evidence without objection, Mr Norris-Jones added to this (in
response
to matters raised on the first day of the hearing) that:
(1) Mr Hong had not (contrary to the suggestion of Mr Nash QC) given his interview voluntarily but under an obligation imposed on him as part of his severance or separation agreement ("the Hong Agreement");
(2) The Hong Agreement provided that his interview was not to be "
recorded
or transcribed in any manner" and no audio
recording
or verbatim transcript was prepared;
(3) As to the understanding of the interviewees, and in
response
to a question from the Court, a number of the Interview Notes (but not apparently all) "
record
that the attention of the
relevant
interviewee was drawn to the fact that the interview was subject to attorney-client privilege. The interviewee's acknowledgement of this is also often
recorded."
The Claimants' contention that
RBS's
evidence goes nowhere
- The Claimants contend that even taking
RBS's
case at its highest the Interview Notes do not fall within the lawyers' working papers principle. They sought to make this contention good by taking in turn each of the
respects
in which it is said by
RBS
that the Interview Notes
reflect
the work of lawyers:
- First, they submit that the assertion that the Interview Notes "
reveal
the lawyers' train of inquiry" (see paragraph [105](3)(e) above) "comes nowhere near to meeting the threshold established in the authorities, namely whether the [Interview] Notes if disclosed would give a clue as to the advice given". More particularly they submitted that:
(1) There is a principled distinction between a document which
reveals
the train of inquiry as at the time of interview (i.e. at a time at which the lawyers are collecting information with a view to later considering it and then providing advice to
RBS)
and a document which itself
reveals
that advice.
(2) This principled distinction has been expressly
recognised
by the Court in Sumitomo Corporation v Credit Lyonnais Rouse [2001] CP
Rep
72. The Court there was concerned with whether Sumitomo could claim privilege in English translations of disclosable Japanese documents on the basis that the selection of documents for translation would itself "give a clue to and betray the general trend of PW's advice in the sense that it would disclose the direction of their enquiries and their areas of focus and concern". Andrew Smith J
rejected
the claim to privilege on the basis (at §31) that "neither the legal advisers whose advice or thinking is in question, PW, nor the clients who are
receiving
the advice and assistance, Sumitomo, have asserted a belief that the advice or thinking might be betrayed". The distinction was noted by the Court of Appeal in Sumitomo [2001] EWCA Civ 1152 (per Jonathan Parker LJ at §68) in the course of upholding the first instance decision.
(3) Moreover, if the "train of inquiry" test (notwithstanding that the underlying conversation was unprivileged) were the appropriate one to apply, a verbatim transcript of the conversation which discloses the questions asked by the lawyers would attract privilege under the lawyers' working papers test; but the Court has expressly (per Birss J in Property Alliance Group v
RBS
(No 3))
rejected
the submission that such a transcript is privileged.
- Secondly, they submitted that
RBS's
assertion that the selection of material for inclusion in the Interview Notes brings the Note within the scope of the lawyers' working papers principle was not made good on either the facts or the law. As to the facts,
RBS
has provided no guidance as to how extensive that selection is. As to the law, the Claimants contended that in any event the claim is contrary to the authorities, submitting that:
(1) The Court of Appeal held in Sumitomo that a party cannot claim privilege in
respect
of a selection of documents that would otherwise fall to be disclosed by claiming that the fact of selection itself
renders
those documents privileged:
"We think that the question can be tested in this way. Imagine that a solicitor made a selection from his client's disclosable documents in order to obtain the advice of counsel on a point of particular concern. And imagine that the
remainder
of the disclosable documents were destroyed in a fire. We do not believe that it would be
right
to extend the principle in Lyell v Kennedy 27 Ch D 1 to cloak with privilege the
remaining
documents."
(2) It is not in dispute that, in circumstances where the legal advice privilege claim has failed, full transcripts of the interviews would be disclosable if they existed. Those documents fall directly within the scope of the Sumitomo decision as "own client documents" (per the Court of Appeal's definition at §71.)
(3) The effect of the Sumitomo decision is that
RBS
cannot claim privilege over the selection that its lawyers have made from those full interviews: the fact of selection itself is insufficient to "cloak" the selected information with privilege.
- The Claimants
relied
also on the decision of the Court of Appeal in Parry v News Group Newspapers [1990] 141 NLJ 1719 (CA) where, in the context of a discussion of a solicitor's note of an unprivileged conversation, Bingham LJ, having noted that a solicitor's memorandum "inevitably amounts to a précis of what was said and therefore involves a process of distillation or selection", stated that a
"bare
record
of what passed is in my view entitled to no legal professional privilege, whether it is a solicitor's memorandum, a transcript, or an exchange of letters."
RBS's
response
RBS
sought to answer these points as follows.
- First, Ms Tolaney submitted that Sumitomo did not suggest that there was the "principled distinction"
relied
on by the Claimants between a document which may
reveal
the trend of inquiry and one which
reveals
the trend of advice or gives a clue as to its content.
- She pointed out that in Sumitomo the claim for privilege
related
to the English translations of a selection from a pool of "unprivileged" Japanese documents and suggested that the true basis of decision was that the claim failed not only because such a selection could not logically without more
reveal
a clue as to advice given, but also because the evidence provided in that case was so deficient. She noted Andrew Smith J's statement that it was not even asserted that those claiming the privilege believed that the documents might betray the legal advice or thinking (see Sumitomo at first instance at para. 31) and his apparent view that the number and nature of documents for which privilege was claimed suggested that they may well have misconceived the scope and nature of the privilege (see para 34) and that they "had not addressed [their] mind with precision to whether a claim for privilege in
respect
of each of the 700 translations [was] justified" (see para. 39). In other words, she suggested that Sumitomo did not
reflect
or establish any "principled distinction" but was an exceptional case decided on its own peculiar facts.
- Secondly, she sought to distinguish Sumitomo on the basis that in this case the most careful thought had been given by HSF, Counsel and Wilmer Hale, and on the further ground that in that case all that in
reality
could be contended was that the choice of documents for English translation gave a clue as the trend of advice; whereas in the present case, she submitted,
"disclosing an interview note would
reveal
the trend of advice, give a clue, because of the contents of the note and the lawyer's own selection of which points to
record
…"
- Ms Tolaney submitted that Parry v News Group Newspapers is a very different case, since it
related
to an attendance note of communications between the two parties' solicitors which were not confidential. In the present case, the Interview Notes were of interviews which were accepted to be confidential vis-à-vis the Claimants. Further, the Defendants in that case accepted, and the basis of their application
rested
on the fact that the memorandum was no more than a factual
record
of what the solicitor believed to have passed on the telephone. Ms Tolaney drew attention to Bingham LJ's observation in that case that:
"Had that
record
formed part of a communication to the client, or had it contained [the solicitor's] analysis of, or views upon, his client's case, the defendant's contention might have some substance…"
Whereas in this case, Ms Tolaney stated, "the point is that they are a summary prepared by the lawyers, not a factual
record
…"
- On all these grounds, Ms Tolaney submitted that
RBS
had discharged the burden of demonstrating that the Interview Notes comprised working papers prepared with the input of competent legal advisers, and this input, and the process of selection inevitable where a note is an incomplete and personal account rather than a verbatim
record,
would be likely (and had been verified by legal advisers as likely) to offer a sufficient clue as to the lawyers' train of inquiry (which she suggested was ultimately little different from trend of advice, or at least "rather similar") to warrant the protection of privilege.
My assessment and decision on the working papers claim
- In my view, the question is ultimately an evidential one: has the likelihood sufficiently been demonstrated that the Internal Notes would by
reason
of the legal input they
reflect
give a clue as to legal advice (or some aspect of the legal advice) given to
RBS?
- In determining the answer, I accept that full account must be taken of the fact that
(1) Careful consideration has been given to the documents and whether they properly attract privilege by
responsible
and
respected
solicitors, attorneys and senior Counsel.
(2) Any notes of an interview, as distinct from a bare transcript, are likely to
reflect,
even if only to a limited extent, the particular interests, lines of inquiry and perception of the
relative
importance of the points covered (including those omitted) of the person making the note.
(3) To that extent at least, such notes may be taken to
reflect
the note-maker's "mental impressions".
(4) Wilmer Hale have expressly confirmed that (a) the purpose of the Interview Notes was not to create transcripts but rather documents which would assist in providing legal advice to
RBS
and that (b) the Interview Notes in question in this case state on their face that they
reflect
external counsel's "mental impressions".
- However, it must also be borne in mind that
(1) As was observed by Neuberger J (as he then was) in Bank of Austria Aktiengesellschaft v Price Waterhouse (unreported, 16 April 1997) as quoted by Andrew Smith J in Sumitomo (at para. 30),
"because a claim for privilege is an unusual claim in the sense that legal advisers to the party claiming privilege are the judges in their own client's cause, the Court must be particularly careful to consider how the claim for privilege is made out."
(2) As Andrew Smith J went on to observe in the same case (in para. 39):
"Any evidence in support of a claim for privilege may have to be couched in careful terms so as not to make disclosure of the very confidentialities that the claim for privilege is designed to protect. However, an affidavit of this kind should be specific enough to show something of the deponent's analysis of the documents and the claim for privilege."
(3) In other words, conclusory statements may well not suffice: and see also the most useful summary of the position in this
regard
at para. 86 in the judgment of Beatson J (as he then was) in West London Pipeline and Storage Ltd and others v Total UK Ltd and others [2008]
EWHC
1729 (Comm).
(4) Further, although the annotation that the Interview Notes
reflect
the "mental impressions" of Counsel is of
relevance,
the context in which such an annotation is routinely made in the US must also be appreciated. It appears plain from Upjohn Co et al. v United States et al. in the Supreme Court of the United States (1981) 449 U.S. 383 ("Upjohn") that the rubric is used to invoke the limited protection conferred by the US Federal Rule of Civil Procedure 26(b) (3) against the general rule in the US that a party may obtain discovery of any documents of which he "has substantial need…in the preparation of his case" in circumstances where "he is unable without undue hardship to obtain the substantial equivalent of the material by other means".
(5) Especially where the claim to privilege is maintained to a material extent on the assertion that the documentation of which disclosure is sought has been carefully considered by
reference
to the applicable rules, the Court is entitled to assume that the party claiming privilege has also considered carefully what evidence, cautiously framed, is
required
to justify and substantiate the claim, and has put it forward. Likewise, the Court in assessing the claim is entitled and obliged to scrutinise the evidence, not least as to what it does not say, as well as what it does.
- As it seems to me, that last consideration is of particular
relevance
in this case, as it was (albeit more unanswerably) in Sumitomo. In my view, the evidence put forward on behalf of
RBS
is
revealing
for what it does not cover or say, despite the care and attention to the
relevant
principles asserted.
- In particular, to my mind:
(1)
RBS's
evidence is conclusory in nature and based on the assumption that it follows from the fact the Interview Notes were not verbatim that therefore they must contain legal input or selection justifying the claim to privilege. It does not address the objection that it cannot be that the mere fact that a note is not verbatim, and therefore may betray some selection or line of enquiry (as
recognised
above), suffices. Something more is
required
to distinguish the case from the norm: and nothing beyond mere conclusory assertion is offered.
(2) For example,
RBS's
evidence does not show anything substantial of its legal team's "analysis of the documents" nor even in the most general and careful terms give examples of the sort of legal input said to justify and be capable of justifying the claim of privilege: as Mr Nash pointed out, examples of the sort of detail which might be offered are set out in footnote 8 of the Upjohn case as follows:
"Thomas described his notes of the interviews as containing 'what I considered to be the important questions, the substance of the
responses
to them, my beliefs as to the importance of these, my beliefs as to how they
related
to the inquiry, my thoughts as to how they
related
to other questions. In some instances they might even suggest other questions that I would have to ask or things that I needed to find elsewhere'."
(3) Even the
reliance
on the annotation that the Interview Notes
reflect
"mental impressions" is not backed up by any assertion that such Interview Notes do in fact, upon careful
review,
contain material that would or could
reveal
the trend of advice. This, as Mr Nash also emphasised, is of particular concern and
relevance
given that the Claimants' solicitors
repeatedly
sought a proper explanation of (the quotation is from a letter from Stewarts Law to HSF dated 28 September
2016)
"what is meant by the statement that the notes evidence the lawyers' impressions? Does this mean that they contain (for example) commentary on what was said, comparative analysis of what others have said or other kind of text other than a
record
of what was said?",
but
received
only the following by way of
response:
"In broad terms, they
reflect
the lawyers' impressions in the sense that they
reflect
both the work undertaken in preparation for the interviews (i.e. they
reveal
the lawyers' train of inquiry), and in the sense that they are a note not a transcript, and therefore to some greater or lesser extent
reflect
a selection by the author of the points to be
recorded
…
…
the
reflections
of the lawyers are integrated into the notes and the train of inquiry pursued by the lawyers as evidenced in the structure of the interview and the questions asked during the course of the interview."
(4) In short, all that has
really
been offered by way of discharging the burden on
RBS
is that (a) the Interview Notes carry the annotation as to "mental impressions" described above because (b) they
reflect
preparation which
reveals
the lawyers' "train of inquiry" and because (c) being a note not a transcript, some greater or lesser degree of selection is
reflected.
- This, in my judgment, is not sufficient: the evidence is not such as to substantiate the claim to privilege on the basis of "lawyers' working papers". My conclusion is
reinforced
by the consideration that there is a
real
difference between
reflecting
"a train of inquiry" and
reflecting
or giving a clue as to the trend of legal advice, and indeed that this difference was
recognised
and approved in Sumitomo in the Court of Appeal.
- I have considered whether in such circumstances it would be appropriate to permit
RBS
further to supplement its evidence, or take the "solution of last
resort"
(as it was described by Beatson J in the West London Pipeline and Storage Ltd case) of ordering inspection of the document (by the Chief Master or another judge). In the circumstances, I do not consider that fairness
requires
this, nor that it would be proportionate and appropriate. The matter has been argued out;
RBS
has been prompted by close questioning in the correspondence and had every opportunity to advance its case; and implicit in its general submissions is that it has carefully considered the position and what is
required
to substantiate it at the highest legal level.
- Accordingly, in my judgment, this alternative basis for
RBS's
claim to privilege under English law fails also.
RBS's
contention that the applicable law is not English but US law
- That brings me to the question whether, as
RBS
submits, the applicable law is not English law but US law, and that under US law the claim to privilege would be made out.
- Two primary questions arise:
(1) Whether there is a proper basis for the application of US law ("the choice of law question"); and
(2) What would be the effect if US law is applicable ("the US law question")?
The choice of law question
- Stressing the US law connections in this case (which I have indicated by
reference
to Mr Eckert's witness statement previously) and that under US law every person has a
right
to legal privilege arising out of the confidential
relationship
between lawyer and client, Mr Adam Johnson of HSF (who presented this part of the case for
RBS)
submitted that the modern concept of legal professional privilege as a fundamental human
right,
rather than an aspect of the law of evidence,
renders
inappropriate and obsolete the old established rule that it is the lex fori which governs
issues
of privilege.
- This is a bold submission. The rule has been generally thought to be well settled. In Dicey, Morris & Collins 'The Conflict of Laws' (15th ed.) the application of the lex fori is confirmed; and, for example, in Thanki 'The Law of Privilege' (2nd ed.) it is stated (at para. 4.84) that:
"The cases demonstrate that the English courts apply the simple rule under English conflict of law rules that it is the lex fori that applies to determine whether a communication is privileged."
- However, in the same work the author goes on to suggest (at para. 4.86) that:
"The basis for the general rule that the lex fori applies has never been properly explained or analysed by the courts."
- Charles Hollander QC, in his book 'Documentary Evidence' (11th ed), suggests (at para. 13-10) that
"…there are strong grounds for
reconsideration
of the principle."
RBS
submits, further, that the limited analysis in the case law has concerned the position, the obverse of the present case, where the foreign
right
is more limited or has been waived, and that a situation where a party has sought to
rely
on a broader foreign
right
to privilege, as in the present case, has never been considered.
- On that basis, it is
RBS's
position that the Court is not bound by authority to apply the lex fori to
issues
of legal professional privilege and there is no justification for it doing so in the present case.
RBS
proposes a new choice of law rule, which would apply the law of the place with which the engagement or instructions, pursuant to which the documents came into existence or the communications arose, have their closest connection, and would, in this case,
result
in the application of US law to the
issue
of whether the Interview Notes are privileged.
RBS's
proposed rule would
read
as follows:
"Save where to do so would be contrary to English public policy, the English court should apply the law of the jurisdiction with which the engagement or instructions, pursuant to which the documents came into existence or the communications arose, are most closely connected."
- In its well-presented submissions,
RBS
addressed the following
issues
in turn:
(1) Summary of US law on legal professional privilege;
(2) Proposed choice of law rule;
(3) Rationale for proposed choice of law rule;
(4) English authority
relating
to the
relevant
choice of law rule; and
(5)
Residual
relevance
of US law under the lex fori.
- As to
issue
(1), it does appear likely from the evidence of US law and in particular the decision of the US Supreme Court in Upjohn (which it has been confirmed to me is still binding), and for present purposes I am prepared to assume, that under US law the Interview Notes would be privileged. In Upjohn, as indicated previously, the US Supreme Court
rejected
the "control group test" as unpredictable, excessively
restrictive
of what in English law would be
regarded
as legal advice privilege, and preferred to extend its equivalent privilege to the process of information gathering and sharing within a corporation.
- However, the preliminary question is whether there is any proper basis for the application of US law in this case. I propose, therefore, to start with
issue
(4) in
RBS's
list: the English authority
relating
to the
relevant
choice of law rule. I shall deal with the other
issues
thereafter, but more briefly in light of my view that, although it is not entirely satisfactory, there is no sufficient basis for disturbing what I consider to be the well-established convention or practice of the English Court in proceedings in England as to the application of the lex fori, which can be mitigated in appropriate circumstances by the Court's discretion to decline to order inspection.
Relevant
English law authority on choice of law rule
- The first English case where it was decided that the English rules of privilege, being the lex fori, should be applied to determine whether a document is privileged from production in English proceedings is (so far as I am aware) Lawrence v Campbell [1859] 4 Drew 485.
- That case concerned an action by the claimant for the
return
of a sum of money allegedly held on trust for him, which had been transferred by the defendant (Mr Campbell) to a Scottish firm of solicitors (Robertson & Simson) practising in London (though not admitted as English solicitors). The claimant sought disclosure of the correspondence between Mr Campbell and Robertson & Simson, which he said would prove that the money had been held on trust for him. In support of his application for disclosure, the claimant
relied
on the fact that under Scottish law the communications, "containing as they did the
res
gestae of the
litigation"
(see page 187), would not have been privileged.
- The Court held, applying the English law on legal professional privilege, that the communications were privileged. Sir Richard Kindersley V.-C., at the conclusion of his judgment, stated this:
"A question has been raised as to whether the privilege in the present case is an English or a Scotch privilege; but sitting in an English Court, I can only apply the English rule as to privilege, and I think that the English rule as to privilege applies to a Scotch solicitor and law agent practising in London, and therefore the letters in question are privileged from production."
- Mr Johnson submitted that the case was not authority for any general proposition that the lex fori invariably governs
issues
of legal professional privilege in the English Court and is distinguishable on its facts. He
relied
on three main points.
- First, Mr Johnson submitted that a key factor in the determination, emphasised in submissions and
reflected
in the judgment, was the fact that the Scottish solicitor was practising in London and the
relevant
advice was given there. It was a case where the law applicable to the engagement and the lex fori coincided.
- Secondly, Mr Johnson
relied
on the fact that it was a case where the foreign law (Scottish law), on which the claimant in that case was seeking to
rely
was narrower than the English law of privilege; no one was seeking to
rely
on a foreign law
right
of privilege. Mr Johnson submitted that in such circumstances the Court may understandably be
reluctant
to apply the foreign law, since to do so would strip the client of
rights
which are commonly accepted as standard under English law and be contrary to English public policy.
- Thirdly, as well as describing the conclusion the learned Vice-Chancellor
reached
as being based on "very little explanation or analysis", Mr Johnson submitted that if the
real
rationale was that privilege was
regarded,
at that time at least, as a rule of evidence to be governed as such by the lex fori, the same rationale should not be applicable nowadays, now that it is
recognised
that legal professional privilege is a fundamental substantive
right,
rather than a mere rule of evidence. Mr Johnson also urged me to
remember
that the case was decided in the mid-19th century, a time when multi-jurisdictional
litigation
was not commonplace and the courts were less accustomed to applying foreign laws in English courts.[2]
- In my view, there is something in each of these points; but none is sufficient to upset the conventional understanding of its overall determination that in an English Court the lex fori applies to
issues
of privilege.
- As to the first point, Kindersley V.-C. does appear to have put some emphasis on the fact that the solicitor was practising in London and the advice was given there. However, the ultimate deciding factor appears plainly to have been the learned judge's conviction that sitting in England he could only apply English law. Furthermore, as on behalf of the Claimants Mr Nash pointed out, in the later case of
Re
Duncan (1968) P. 306 (as to which see further below) Ormrod J (as he then was) considered that the fact that the Scottish firm was practising in England "was clearly not a
relevant
consideration".
- The second point is well made: in Lawrence v Campbell the rival law of privilege, Scottish law, was narrower in its scope and its application would have
resulted
in the claim to privilege being denied. It is a point of distinction. However, that begs the question whether there is any less rationale for applying the lex fori where the privilege would not be available under English law; or, put the other way round, whether there is any logic for the application of the foreign privilege rule when it protects documents from disclosure, but not when it
requires
disclosure.
- The third point, as to the changing perception of privilege from
regarding
it as essentially a rule of evidence and thus a procedural matter to acknowledging its status as a substantive
right,
depends on an assumption for which there is less basis than might first appear. The assumption is that privilege was in days past
regarded
as a rule of evidence. But in truth there is little basis for it, and there is a
real
possibility that the assumption is derived from, rather than being the rationale of, the convention of applying the lex fori. Certainly the way in which, even in Lawrence v Campbell, the
issue
of privilege was described does not support any thesis that the perception of its importance has altered over time. After all, Kindersley V.-C. described privilege as follows (at page 188):
"The general principle is founded upon this, that the exigencies of mankind
require
that in matters of business, which may lead to
litigation,
men should be enabled to communicate freely with their professional advisers, and their communications should be held confidential and sacred, and that none should have the
right
to their production. The
reason
is that the exigencies of mankind
require
it…"
That is not the language of mere process; it is the language of basic
right.
- Moving on in time,
Re
Duncan (supra) begins the line of modern authority to the effect that the English Court will apply the English rules of legal professional privilege to communications with foreign lawyers.
- This case concerned a dispute between the claimant, who had been appointed as the executor of the first two wills of the deceased (Sir Oliver Duncan) and the defendant, who had been appointed as the executor of Sir Oliver Duncan's third will, which had been made in Rome by Sir Oliver Duncan. The claimant brought the action to
revoke
the defendant's grant of administration, on the basis that the defendant and her associates had persuaded Sir Oliver Duncan to execute the third will by fraud, undue influence and compulsion.
- The defendant applied to court for an order
requiring
the claimant to disclose inter alia correspondence between the claimant and his foreign legal advisers, touching the questions in
issue.
The documents were privileged under English law but were not privileged under the laws in the jurisdictions in which the foreign lawyers practised. The defendant argued (see page 310B) that "if a foreign lawyer's own court insists on disclosure of communications between him and his client in
litigation
in that country, this court will not
regard
such communications as privileged in
litigation
in this country".
- Ormrod J held (see page 310C) that the Defendant's argument was based on no authority and
"inconsistent with the tenor of the judgment of the decision of Sir Richard Kindersley V-C in Lawrence v Campbell."
- Mr Johnson, having submitted that the judgment contained no
real
analysis as to why Sir Richard Kindersley V.-C.'s decision was correct or why as a matter of principle the lex fori should be applied in such a context, sought to distinguish
Re
Duncan on substantially the same grounds as he had submitted distinguished Lawrence v Campbell. I do not think it is necessary for me to go beyond my previous assessment of those grounds.
- The next case to consider is Bourns Inc v Raychem Corp [1999] 3 All ER 154. Bourns Inc and Raychem Corp had been involved in
litigation
in England. Raychem Corp sought permission from the English Court to
rely
in proceedings in the US on documents produced by Bourns Inc in a taxation of their costs of the English proceedings, such as vouchers for counsel's fees and other professional fees and disbursements. Bourns Inc
resisted
the application on the basis that (i) the documents were privileged and (ii) privilege had only been waived to enable them to be used in the taxation proceedings, not for any other collateral purpose. The Court of Appeal dismissed Raychem Corp's appeal on the basis that it was possible to waive privilege for a specific purpose and in a specific context without waiving it for any other purpose or context.
- A number of grounds were advanced on behalf of
RBS
in support of the proposition that Bourns Inc v Raychem Corp is not
really
a decision on the application of the lex fori, even if sometimes
regarded
as if it were (as, for example, in Australia Crime Commission v Stewart [2012] F.C.A. 29 in the Federal Court of Australia). Beyond noting the point that no
reference
is made in the decision to "lex fori" or to the earlier cases of Lawrence v Campbell and
Re
Duncan, I need not
rehearse
them at length, since I think it is clear that neither party was seeking to
rely
upon a
right
to privilege under a foreign law, and the only question raising an
issue
of conflict of laws was whether privilege had been waived by Bourns Inc by the evidence of their expert witness in the US proceedings. As to this there was no substantial dispute, for, as explained by Aldous LJ (at page 167g-h), with whose judgment the other two members of the Court (Swinton Thomas LJ and Sir Stephen Brown P.) agreed:
"Raychem do not suggest that under English law privilege is lost in England because privilege cannot be claimed for documents in another country."
- However, I agree with the submission of the Claimants that what Aldous LJ went on to say immediately after that, in support of what had been agreed, is of
relevance.
At pages 167h – 168a he gave his
reasons
as follows:
"To suggest otherwise would mean that a court, when deciding whether to uphold a claim for privilege, would need to be informed as to whether privilege could be claimed in all the countries of the world. 'Our system of civil procedure is founded on the rule that the interests of justice are best served if parties to
litigation
are obliged to disclose and produce for the other party's inspection all documents in their possession, custody or power
relating
to the
issues
in the action.' (See Ventouris v Mountain, The Italia Express [1991] 3 All ER 472 at 476, [1991] 1 WLR 607 at 611 per Bingham LJ.) Privilege is an exception to that rule justified on the ground of public interest. It involves a
right
to keep confidential the document and the information in it. The fact that under foreign law the document is not privileged or that the privilege that existed is deemed to have been waived is irrelevant. The crucial consideration is whether the document and its information
remain
confidential in the sense that it is not properly available for use. If it is, then privilege in this country can be claimed and that claim, if properly made, will be enforced."
- Although I accept
RBS's
point that Aldous LJ's statement does not address the initial question of whether foreign law or English law is the applicable law to
issues
of privilege involving a foreign lawyer, nor is it authority for the proposition that whether a document is privileged under foreign law is always irrelevant in the English Courts, I consider (in agreement with the Claimants) that the statement is important for its
recognition
that the English law of privilege ultimately
reflects
a public policy decision as to how justice is best served between the parties and a balance between the conflict between a private
right
and the public interest in the determination of factual matters on the basis of full disclosure is best struck.
- British American Tobacco (Investments) Limited v United States of America [2004] EWCA Civ 1064, like Bourns v Raychem, was concerned with the
issue
of whether privilege had been waived; in particular whether privilege in certain documents included in the bundle of documents prepared for the examination of a witness in England (at the
request
of the US courts) had been waived in the course of proceedings in the US and/or as a
result
of the terms of a Consent Judgment in the Minnesota Court.
- The decision does not
really
go further than Bourns v Raychem, and in effect simply confirms the correctness of that decision, which is cited at paragraph 38 of Mummery LJ's judgment (with which the other two members of the Court, Brooke LJ and Sir Martin Nourse, agreed) as authority for the proposition that privilege is not lost under English law because it cannot be claimed in another country. Neither party had in fact contended to the contrary.
- However, there is one small passage, to which Mr Nash drew my attention, in Mummery LJ's judgment which neatly
reflects
the conventional attitude of the English Court that rules of privilege are matters for the court in which the protection is
relied
on. He said this (at para. 38):
"As for the ruling in the US courts and the Australian courts that privilege has been waived, that depends on the domestic law of those countries as interpreted and applied by their courts."
- The last of the cases specifically
referred
to is Rochester
Resources
Limited v Lebedev [2014]
EWHC
2185 (Comm).
- In that case, the defendant applied to exclude documents from evidence filed by the claimants in support of their application for an anti-suit injunction on the grounds that the document was covered by "without prejudice" privilege. The documents in question were draft proceedings headed "for settlement purposes only" for
issue
in the New York court and accompanying documents. The claimants argued that New York law was
relevant
to the English Court's decision, and that under New York law the documents were not covered by New York "settlement privilege".
- Blair J accepted that New York law was
relevant
to give meaning to certain of the
references
in the document. However, he held that:
"when the question arises in English proceedings, the rule is that the question of whether or not a document is privileged is to be determined by English law, for
reasons
which are partly practical (see Bourns v Raychem Corp…."
and accordingly:
"there was no
reason
…for [him] to decide whether or not the draft Complaint (and accompanying communications) would actually be privileged under New York law."
- Again, Mr Johnson sought on behalf of
RBS
to distinguish that case on grounds substantially similar to those
relied
on in
respect
of Lawrence v Campbell and
Re
Duncan, but adding the further point of distinction that Rochester
Resources
related
to without prejudice privilege, rather than legal professional privilege. In that latter context, Mr Johnson
referred
me to para. 13-12 in Hollander 'Documentary Evidence' (12th ed.) which notes that without prejudice privilege does not engage fundamental
rights
in the same way that legal professional privilege does. For example, whereas legal professional privilege can now generally be asserted in answer to any demand for documents by a public or other authority,[3] without prejudice privilege is generally accepted to be a rule of evidence.[4]
- I would accept that there may be such a distinction; but whilst it may provide some basis for distinguishing the case, it does not seem to me to go any distance towards undermining the more general convention or practice of treating
issues
of privilege as for the lex fori; and I note that the way Blair J stated his approach was not dependent on the particular basis of privilege claimed (see paragraph [152] above).
- To conclude my
review
of the
relevant
English cases, it seems to me clear that whether described as a rule, a convention or practice, it is the approach of the English Court to apply the lex fori to
issues
of privilege, and has been so since the mid-19th century.
- It is probably true that in each of the cases in which the rule, convention or practice has been applied, the context has been that the foreign privilege rule would have
required
disclosure while the English rule would have afforded protection, whereas the opposite is true in the present case. However, it does not seem to me implicit in any of the cases or rational or appropriate to have one rule in the one case and another in the other.
- I doubt myself that the lex fori has been adopted because the
issue
has accurately (if at all) been
regarded
as one of procedure, and in any event I doubt that that would be an accurate or
realistic
basis for it in the future. In my view, it is an aspect of English public policy, as I elaborate later: the balance to be struck between disclosure and privilege in the course of a trial is always a difficult one, and ultimately is a public policy decision.
- In any event, I do not think the
recognition
that legal professional privilege is a substantive
right,
nor the fact that multi-jurisdictional
litigation
is now a
regular
occurrence in a way that it was not previously (including at the time of
Re
Duncan), can justify a departure at this level from well settled rule, convention or practice.
- In my judgment, it would be altogether too drastic and unsupported a departure to adopt an entirely new "choice of law rule".
- In such circumstances it may be pretentious for me to attempt any analysis as to the justification and merits or otherwise of the (to my mind) settled position. However, at the risk of that, I would offer the following:
(1) As indicated above, I doubt that any answer lies to the conflict of law
issue
in seeking to determine whether privilege is to be
regarded
as a rule of evidence or a matter of substantial
right.
The difficulty of doing so, and the anomalies it involves, are amply demonstrated by efforts along those lines in other jurisdictions: in Garnett, 'Substance and Procedure in Private International law' (OUP), Kennedy v Wallace (2004) 213 ALR 108 (Fed Ct) in Australia is given as an example, where the court assumed the privilege was procedural despite describing it as a "substantive
right"
(and other similar cases in Canada and Hong Kong are also instanced).
(2) As mentioned above, the
reality
in my view is that the question of privilege has long been
recognised
to be a substantive
right,
based and justified on "the exigencies of mankind" and inevitably in conflict to some degree with the opposing policy that decisions should be based on the fullest available
record.
The conflict is such as to
require
a balance to be struck as a matter of public policy in the forum in which it arises.
(3) I do not myself see that this is, as it is sometimes suggested to be, hostile to comity: public policy has always been
recognised,
in many other jurisdictions as well as this, as a paradigm of a matter for the lex fori.
(4) Further, there are difficulties, both practical and theoretical, with other suggested approaches, including the newly fashioned rule proposed by
RBS
(which seems to me to be largely derived, though none the worse for that, from the "most significant
relationship"
test in the US).
(5) Even in a federal system such as the US, the application of the test has had its difficulties, not least because to some extent it simply
re-brands
the essential problem, which is as to which is to be given the greatest weight as between admission of evidence and a fully informed decision, on the one hand, and, on the other hand, privilege
rights.
(6) The practical difficulties of applying some other law than the lex fori are fairly obvious: it was
recognised
in
Re
Duncan that any solution but the application of the lex fori
requires
determination of the application and content of foreign law, and even the identification of the
relevant
foreign law may be difficult according to the stage and context in which the
issue
arises. Those difficulties are compounded where, in multi-jurisdictional cases involving several parties, there is the potential for a variety of different putatively applicable laws, and the prospect of having to determine them at an interlocutory stage, with cross-examination of experts if there is a disagreement.
(7) In short, a convention may often be a
reflection
of both pragmatism and overall policy. In my assessment, it may well be that application of the lex fori, with a discretionary override, is the least objectionable course.
The Discretion Point
- I turn, therefore, to consider what is in effect
Issue
(5) in
RBS's
list (see paragraph 138 above) in the context of the broader question in effect raised as to the discretion in the Court to
refuse
or place
restrictions
upon inspection (the Discretion Point as identified in paragraph 2(3) above).
- There is no doubt, as Bingham LJ explained in the conclusion of his judgment in Ventouris v Mountain [1991] 1 WLR 497, and as emphasised again by the Court of Appeal in Sumitomo (see para. 79), that:
"where a party
resists
production of a selection made from own client documents, it is a matter for the court's discretion whether to order production."
- Further, CPR 31.19 provides a procedure for objecting to disclosure and inspection. Although CPR 31.19(1)
reads
confusingly because it
refers
expressly only to "withholding disclosure…on the ground that disclosure would damage the public interest", the
rest
of the rule appears to be intended to deal compendiously with all objections to disclosure and inspection.
- CPR 31.19(3) provides:
"A person who wishes to claim that he has a
right
or a duty to withhold inspection of a document, or part of a document, must state in writing –
(a) That he has such a
right
or duty; and
(b) The grounds on which he claims that
right
or duty."
- Mr Johnson on behalf of
RBS
cited the decision of Neuberger J (as he then was) in Morris v Banque Arabe et Internationale d'Investissement SA [2000] C.P.
Rep
65 as confirming that the words "
right"
and "duty" in CPR 31.19(3) are broad enough to cover a
right
or duty under foreign law.
- He prayed in aid the rule and the inherent discretion of the Court, in urging the exercise of the Court's discretion to prevent inspection of the Interview Notes. He
relied
especially on the following
reasons:
(1) Under US law
RBS
has a
right
to withhold inspection of the interview notes. Ordering inspection would breach that
right.
(2) If a client instructs a lawyer qualified in a particular jurisdiction in
respect
of a matter governed by the laws of that jurisdiction, the client is likely to expect that communications which arise or documents which come into existence, pursuant to that engagement, which are privileged under the laws of that jurisdiction, will
remain
privileged in subsequent
litigation.
RBS
had a
reasonable
expectation that the Interview Notes would be and
remain
privileged. To order inspection would be contrary to that expectation and would prejudice
RBS.
(3) The US privilege rules in question are in
reality
closely aligned to the English rules, in the sense that they are directed towards the same basic end, and are not so far
removed
from our own conception of fairness and proper conduct as to be disregarded.
- The Claimants submitted that this argument is misconceived on the basis that the
right
to withhold a document must be determined by English law. It is simply irrelevant that under a foreign law a party might be entitled to withhold disclosure if that is not the case under the
relevant
applicable law (i.e. English law). Mr Nash submitted that to hold otherwise would be to say that the English Court has an inherent jurisdiction or discretion to disapply the law.
- I do not agree with Mr Nash on this point. There is no question of disapplying the law; only of exercising a
recognised
discretion to prevent disclosure or inspection notwithstanding that the document is disclosable. Furthermore, in my view, the discretion is a salutary one, not least in the context of a case where legitimate expectations may also need, in all fairness, to be taken into account in striking a balance. As Bingham LJ put it in Ventouris v Mountain (supra, at page 622C-E):
"[the party seeking disclosure's] argument appeared to assume that there was no choice between a finding of legal professional privilege and an order of immediate disclosure and inspection. In my judgment, this is not so. The process of discovery is not an uncontrollable juggernaut…
…
In Science
Research
Council v Nasse [1980] AC 1028 the House of Lords and in Dolling-Baker v Merrett [1990] 1 WLR 1205 the Court of Appeal made plain that production and inspection are not automatic once
relevance
and the absence of entitlement to privilege are established. While the court's ultimate concern must always be to ensure the fair disposal of the cause or matter, it need not be unmindful of other legitimate concerns nor is it powerless to control the terms upon which production and inspection may be ordered."
- Of course, any such discretion must be exercised judicially. It is worth noting that in Ventouris v Mountain it was being argued that production of the documents "could lead to violence, intimidation, interference with witnesses and destruction of evidence" (page 622B-C). The Court is likely to lean heavily in favour of disclosure unless compelling grounds are provided to suggest that the public interest and private entitlement to trial on all the disclosable evidence must yield to some exceptional concern.
- Where what is
relied
on is a particular and proven legitimate expectation under foreign law the hurdle is the higher if, as I think, it is primarily on public policy grounds that the Court has applied its own law in preference. But I do not think it inconceivable that, in a special case, the general public policy will yield to the particular private
right
albeit under another law.
- I must therefore consider whether this is such a special case. Although troubled by the apparent assurances given to the interviewees, and what may have been
RBS's
own expectations, I have concluded that it is not, and that I should not exercise what I have described as the 'overriding discretion.'
- The factual context is not quite clear; but it appears to tell against
RBS's
plea. It is true that the interviews were part of an investigation associated with two SEC subpoenas and/or allegations made by Mr Hong in March 2008. However, the subject matter of the subpoenas and Mr Hong's allegations
related
to
RBS's
2007 Accounts and in particular
RBS's
determination of its US sub-prime exposures and other matters central to the prospectus which is the subject-matter of these proceedings ("the Prospectus"). (Those US sub-prime exposures form a central part of the
Relevant
Exposures in dispute in the present proceedings and the 2007 Accounts form the baseline for the Credit Market Exposure ("CME") Table in the Prospectus.) The Prospectus was subject to English law and any dispute in
respect
of it would be likely to be governed by English law and the FSMA. It is not clear to me whether at the time of the interviews, the possibility of legal action in England in
relation
to the Prospectus was actively envisaged; but it cannot have been thought altogether unlikely. HSF accepted in correspondence that their initial assumption was that English rules of privilege would apply in any such dispute. Any legitimate expectations of protection under US law must be
read
subject to, and are in my view mitigated by, such considerations.
- Moreover, even if that were not so, I do not consider the circumstances such as to justify special
release
of the disclosure obligation. I decline, therefore, to exercise my overriding discretion to prevent disclosure and inspection or make conditions in
respect
of them.
RBS's
Points (2) and (3): proposed choice of law rule and its rationale
- In the light of these conclusions I do not think it necessary or appropriate to address at any length the
remaining
points in
RBS's
submissions on Choice of Law, that is to say points (2) and (3) which (
respectively)
elaborate
RBS's
proposed choice of law rule and its rationale.
- I have indicated above certain potential problems with the proposed rule, whilst acknowledging the rationale of the "most significant
relationship"
test in the US from which I surmise it is in part derived, and the usual and salutary objective of fulfilling the
reasonable
expectations of the parties.
- In terms of drafting, the opening saving provision, to the effect that the "most closely connected" test is not to be applied where to do so would be contrary to English public policy, is no doubt necessary, but its necessity confirms a conundrum given that the law of privilege is rooted in and justified by public policy. There is, in my view, something unsatisfactory and counter-intuitive about a proposed rule which seems intended to adopt a starting point of subordinating English public policy to the rules of another jurisdiction, whilst at the second stage enabling English public policy to be
reasserted
according, presumably, to the extent or severity of the other jurisdiction's departure from English norms.
- Further, as the Claimants have pointed out, the intended effect of the proposed rule is to permit the adoption of whichever is the "broader"
right.
That is a deeper inroad into English public policy, and inherently questionable.
- There are also difficulties, in my view, inherent in identifying the "
reasonable
expectations" of the parties, especially in the very sort of multi-jurisdictional cases the proposed rule is meant to provide an answer for, and where (as in the present case) the individuals whose expectations are being assessed may be working in one country,
resident
in another, and working for a corporation which is incorporated in a third country and is a subsidiary of a parent corporation incorporated in a fourth country or legal system. The US test or this derivation of it is easier and more logical to apply in a federal system, especially one where "interest analysis" is the guiding principle and is well known.
- The novelty of the proposed rule also tells against it, not by any means conclusively, but because it has no
real
root in authority and, as with any concept of its kind, is almost bound to give rise to uncertainty in its understanding and application.
- I have mentioned already, but
repeat,
my concern that the practical difficulties of the twin difficulty of measuring
reasonable
expectations of persons operating in different and possibly conflicting jurisdictions, and then of establishing the true public policy or established rule in such jurisdictions. It may call for findings of fact on the basis of expert evidence in an interlocutory context: that is by no means to be welcomed.
- As my last observation, the discretion vested in the English Court as I have described it would seem to provide a less controversial way of ensuring that the English rules of privilege, and the public policy on which they are based, may be mitigated in a special and deserving case.
Conclusion
- In conclusion, for the
reasons
I have attempted to state, my judgment is that
(1)
RBS's
claim to the protection of legal advice privilege for the Interview Notes fails.
(2)
RBS's
claim to the protection of the privilege extended to "lawyers' working papers" also fails.
(3) Although it seems likely, and my working assumption is, that US law would afford protection on either or both grounds, English law is the applicable law, as the lex fori.
(4) The choice of law rule proposed by
RBS
is intriguing; but there are arguments against it powerful enough that I do not consider it workable, even if there were justification and warrant for its introduction, which, in my view, there is not.
(5) I accept that the Court has discretion to prevent disclosure and inspection, or impose conditions, in an exceptional case where (in effect) it considers that there are such special features as to
require
a different striking of the balance, as a matter of overall justice and to prevent its process itself being the cause of
real
and serious harm. But I have not been persuaded that this is such a case.
(6) I do not think that in all the circumstances there is a need and justification for a further round of evidence or for Court inspection of the Interview Notes. The
issues
were well ventilated in correspondence;
RBS
was permitted to supplement its evidence previously. The present
record
must be the basis of adjudication.
- I am grateful to all Counsel for their (and their
respective
teams') valuable assistance.
- I would ask Counsel to seek to agree a form of Order.
- Any consequential matters can be dealt with at or (if there are contentious matter and a short interval for
reflection
is
required)
at a further hearing shortly after the hand-down hearing (though, given the urgency of the matter and the imminence of the PTR, I stress that any interval must be short).