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England and Wales High Court (Commercial Court) Decisions


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URL: http://www.bailii.org/ew/cases/EWHC/Comm/1999/832.html
Cite as: [1999] CPLR 425, [1999] Lloyd's Rep PN 919, [2000] 1 WLR 272, [1999] PNLR 852, [1999] Lloyds Rep PN 919, [1999] 2 Costs LR 10, [2000] HRLR 54, [2000] UKHRR 273, [1999] EWHC 832 (Comm), [1999] 3 All ER 673, [2000] WLR 272

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Neutral Citation Number: [1999] EWHC 832 (Comm)
Case No: 1995 No. 1111

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (Commercial)

Royal Courts of Justice
Strand, London, WC2A 2LL
19 July 1999

B e f o r e :

THE HON MR JUSTICE TOULSON
____________________

Between:
GENERAL MEDITERRANEAN HOLDINGS SA
- v
(1) RAMANBHAI MANIBHAI PATEL
(2) KIRIT KUMAR RAMANBHAI PATEL

____________________

Mr Michel Kallipetis QC and Mr Philip Bartle (instructed by Thomson Snell & Passmore for the applicants Magwells)
Mr James Munby QC and Mr Timothy Sisley (instructed by Royce & Co for the respondents RM and KR Patel)
Mr Adam Lewis (instructed by Herbert Smith for the Law Society)

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Toulson:

    Introduction

    The applicants (Magwells) are a firm of solicitors. They acted for Mr R M and Mr K R Patel (the Patels) in an action brought by the plaintiff (Gen Med), and are now respondents to an application by Gen Med for a wasted costs order. (There were other defendants in the action, Mr P R and Mr J C Patel, but they are not involved in the present application.) The amount of wasted costs claimed by Gen Med is about 500,000. Magwells now apply under Rule 48.7(3) of the Civil Procedure Rules for a direction that privileged documents containing statements made to them by the Patels should be disclosed to the court and, if the court so directs, to Gen Med.

    The Patels oppose the application. It was submitted on their behalf by Mr Munby QC

    (1) that Rule 48.7(3) is ultra vires;

    (2) that Rule 48.7(3) infringes Articles 6 and 8 of the European Convention on Human Rights (the Convention) and principles of European Community law, and therefore, even if it is intra vires as a matter of English statutory interpretation, I ought not to make an order under it as a matter of discretion; and

    (3) that the application is in any event premature and inappropriate.

    The Patels were supported in their first two objections by Mr Lewis appearing on behalf of the Law Society.

    It was submitted on behalf of Magwells by Mr Kallipetis QC that Rule 48.7(3) is intra vires and designed to meet the type of situation in which they find themselves, that there is no substance in any of the objections raised and that the discretionary factors favour granting the relief sought.

    The legislative framework

    The power of the High Court to make a wasted costs order in favour of one party to litigation against the legal representative of another is contained in section 51 of the Supreme Court Act 1981 and rules made under it. Until recently the relevant rules were contained in RSC Order 62 Rule 11. The Court of Appeal considered the scope of the power and gave guidance as to its exercise in a group of cases reported as Ridehalgh v Horsefield [1994] Ch 205. Sir Thomas Bingham M.R., delivering the judgment of the court, said at pages 236 to 237:

    Privilege

    Where an applicant seeks a wasted costs order against the lawyers on the other side, legal professional privilege may be relevant both as between the applicant and his lawyers and as between the respondent lawyers and their client. In either case it is the client's privilege, which he alone can waive.

    The first of these situations can cause little difficulty. If the applicant's privileged communications are germane to an issue in the application, to show what he would or would not have done had the other side not acted in the matter complained of, he can waive his privilege; if he declines to do so adverse inferences can be drawn.

    The respondent lawyers are in a different position. The privilege is not theirs to waive. In the usual case where a waiver would not benefit their client they will be slow to advise the client to waive his privilege, and they may well feel bound to advise that the client should take independent advice before doing so. The client may be unwilling to do that, and may be unwilling to waive if he does. So the respondent lawyers may find themselves at a grave disadvantage in defending their conduct of proceedings, unable to reveal what advice and warnings they gave, what instructions they received. In some cases this potential source of injustice may be mitigated by reference to the taxing master, where different rules apply, but only in a small minority of cases can this procedure be appropriate. Judges who are invited to make or contemplate making a wasted costs order must make full allowance for the inability of respondent lawyers to tell the whole story. Where there is room for doubt, the respondent lawyers are entitled to the benefit of it. It is again only when, with all allowances made, a lawyer's conduct of proceedings is quite plainly unjustifiable that it can be appropriate to make a wasted costs order.

    And at pages 238-239:

    Procedure

    The procedure to be followed in determining applications for wasted costs must be laid down by courts so as to meet the requirements of the individual case before them. The overriding requirements are that any procedure must be fair and that it must be as simple and summary as fairness permits. Fairness requires that any respondent lawyer should be very clearly told what he is said to have done wrong and what is claimed. But the requirements of simplicity and summariness means that elaborate pleading should in general be avoided. No formal process of discovery will be appropriate. We cannot imagine circumstances in which the applicant should be permitted to interrogate the respondent lawyer, or vice versa. Hearings should be measured in hours, and not in days or weeks. Judges must not reject a weapon which Parliament has intended to be used for the protection of those injured by the unjustifiable conduct of the other side's lawyers, but they must be astute to control what threatens to become a new and costly form of satellite litigation.

    The Civil Procedure Act 1997 introduced new rules with effect from 26 April 1999. Section 1 of the Act provides:

    1 Civil Procedure Rules

    (1) There are to be rules of court (to be called "Civil Procedure Rules") governing the practice and procedure to be followed in

    (a) the civil division of the Court of Appeal,

    (b) the High Court, and

    (c) county courts.

    (2) Schedule 1 (which makes further provision about the extent of the power to make civil procedure rules) is to have effect.

    (3) The power to make civil procedure rules is to be exercised with a view to securing that the civil justice system is accessible, fair and efficient.

    Paragraph 4 of schedule 1 provides:

    4 Evidence

    Civil Procedure Rules may modify the rules of evidence as they apply to proceedings in any court within the scope of the rules.

    CPR 48.7 deals with applications for wasted costs orders. Rule 48.7(3) provides:

    (3) For the purposes of this rule, the court may direct that privileged documents are to be disclosed to the court and, if the court so directs, to the other party to the application for an order.

    Background facts

    Gen Med's claim arose out of four agreements dated 9 August 1989, by which it acquired a majority shareholding in various companies owned by the defendants and their families. The Patels were parties to the agreement and gave warranties about the companies' accounts, assets and turnover.

    The companies were involved to a significant extent in obtaining credit from banks by discounting bills of exchange ostensibly backed by invoices and other documents evidencing sales, but in respect of which there were in truth no underlying transactions.

    Gen Med alleged that it knew nothing of this when it entered into the agreements and that the accounting warranties were given fraudulently. It complained to the Serious Fraud Office, which conducted an investigation. In the course of the investigation Detective Sergeant Padgham of the Kent Police interviewed the Patels in Bombay in September 1993 in the presence of Mr Prakash Patel of Magwells. No notice had been served on the Patels under section 2 of the Criminal Justice Act 1987 and they were interviewed as witnesses rather than under caution. The interviews took place under the terms of a written agreement between the Patels, through Magwells, and the Serious Fraud Office. The agreement stipulated, among other things, that any oral or written statements supplied by the Patels would not be used to prosecute them for any offence by the Serious Fraud Office within the United Kingdom and that, save for disclosure to any defendant's solicitors or under compulsion of the court, the Serious Fraud Office would not disclose the material to any other third party. During the Patels' interviews Mr Prakash Patel gave to Mr Padgham copies of statements made by each of them. In a statement made by Mr Prakash Patel for the purposes of the present application he has described what happened as follows:

    What I provided were privileged documents drafted by K R and R M Patel themselves for the purpose of notifying me of their position. I flew to India at the request of K R and R M Patel to be present at their interviews by DS Padgham and DC Hodge. They handed the privileged documents to me and, after I read them, on instruction I handed them to DS Padgham and DC Hodge as background information for their assistance only. I have in my file copies of these privileged documents.

    The police enquiry concluded with no charges being brought.

    In 1995 Gen Med began civil proceedings. Its statement of claim was served on 1 February 1996. The central allegations were that the defendants had been operating what was referred to as a "bills of exchange fraud", by reason of which the warranties given were false, and that Gen Med would not have bought the companies if it had known the true facts.

    In further and better particulars dated 7 June 1996 Gen Med amplified what it meant by the bills of exchange fraud as follows:

    The description "The bills of exchange fraud" is shorthand by which the plaintiff means that none of the underlying transactions to the bills of exchange existed. It is no part of the plaintiff's case to establish causes of action of deceit or fraudulent misrepresentation on behalf of third parties to whom representations may have been made in respect of the bills of exchange themselves or the sham transactions to which they related.

    Those particulars were given in response to a request by other defendants, but Gen Med sent a copy to the Patels' solicitors on 13 June 1996.

    The Patels' defence was served on 13 November 1996. It consisted largely of denials, including the following:

    5. It is denied that R M and K R Patel operated the bills of exchange fraud alleged at paragraph 24 of the statement of claim.

    6. No admission is made that any such fraud or any such practice (fraudulent or not) was carried on. If it was carried on, it was carried on by P R and J C Patel and without the knowledge of R M and K R Patel. R M and K R Patel cannot plead any better to that allegation of fraud until proper particulars are given of what exactly is alleged.

    Schedules attached to the statement of claim and the further and better particulars given in June 1996 contained details of around 350 bills of exchange for which Gen Med said that the underlying documents were fictitious.

    The action proceeded slowly towards a trial date ultimately fixed for November 1998. The matter came before me on 12 October 1998 on an application by the Patels and other defendants to vacate the trial date. It then transpired that the primary case which the Patels wished to advance was that Gen Med knew the truth regarding the bills of exchange at the time of the purchase agreements. On 10 November 1998 an amended defence was served on behalf of the Patels (and Mr J C Patel), which admitted for the first time that they had participated by signing documents in raising finance for the companies by bills of exchange not referable to any underlying trade in goods. It was alleged that this practice had gone on with the knowledge and encouragement of the banks, that the Patels had insisted on Mr P R Patel (who had handled all negotiations with Gen Med) making full disclosure of the practice to Gen Med, and that they had believed that he had done so. By this time Gen Med had incurred heavy legal costs in obtaining evidence from many witnesses to prove the fictitious nature of the invoices and bills of lading which ostensibly supported the bills of exchange.

    The trial of the action was due to start on 23 November 1998, but it never took place because the action was settled at the last minute.

    The basis of Gen Med's application for a wasted costs order against Magwells is that it is to be inferred from the available material that they must have known that the Patels were aware of and involved in the companies' practice of obtaining money on bills of exchange for which there was no underlying trade, but that they continued to conduct the Patels' defence up to the eve of trial on a false basis, causing Gen Med to incur huge unnecessary costs.

    Gen Med's solicitors have suggested that this would be confirmed by the records of the Patels' police interviews and have challenged Magwells to produce such evidence. Mr Kallipetis said at the start of his submissions that Magwells therefore felt constrained to make the present application, despite their natural reluctance to be drawn into a battle with their clients.

    Scope of the Rule

    Although the point does not arise for decision, there was some debate whether (subject to the ultra vires argument) Gen Med could itself have applied under Rule 48.7(3) for an order for disclosure of privileged documents. Mr Kallipetis suggested that it could not; Mr Munby that it could. I think that Mr Kallipetis is right and that it is only a respondent to an application for a wasted costs order who may apply for an order under Rule 48.7(3). I reach that conclusion for three reasons. First, the rule was clearly introduced in the light of the comments of the Court of Appeal in Ridehalgh v Horsefield. There was no suggestion in its judgment that an applicant for a wasted costs order should be entitled to embark on a process of discovery or to override another party's privilege. On the contrary, an application for a wasted costs order should only be made if the applicant is able, on the material which it has, to make out a sufficient case and to state plainly what is said to have been done wrong. The court did, however, identify a problem affecting respondent lawyers in defending themselves, because they may be inhibited in what they are permitted to say by the client's privilege.

    Secondly, the disclosure which the rule authorises the court to direct is "to the court and, if the court so directs, to the other party to the application for an order". It does not authorise disclosure to the party seeking the direction. If the party seeking the direction is the legal representative against whom the wasted costs application is being made, that is readily understandable. In the ordinary way he will already have any document for which he is seeking a disclosure direction. The court may first look at the document itself and, if it thinks fit, may authorise its disclosure to the applicant for the wasted costs order. If the court considered it proper that the document should be used in reaching a decision on the substantive application, it would doubtless make such an order, for it would be contrary to natural justice that a court should determine the application on evidence which had been seen by the court and by one party but not by the opposing party.

    If the rule was intended to enable an applicant for a wasted costs order to obtain a privileged document in the hands of the respondent to the application, its wording is incomplete and unsatisfactory. It gives power to direct disclosure to the court and to the other party (who would presumably already have it), but not to the applicant himself. Mr Munby suggested that this was an unintentional lacuna. I doubt it.

    Thirdly, where a client's privilege is being invaded, any doubt as to the extent of the permitted invasion should be resolved in favour of the client.

    Ultra vires: the arguments

    The rival arguments can be stated shortly. Mr Kallipetis emphasised the radical and revolutionary nature of the Civil Procedure Act and the Civil Procedure Rules, and submitted that their interpretation should be approached in that spirit. Paragraph 4 of schedule 1 of the Act stipulates that the rules "may modify the rules of evidence as they apply to any proceedings in any court within the scope of the rules". Those are deliberately wide words. The power is to be exercised within the constraints of section 1(3), i.e. with a view to securing that the civil justice system is accessible, fair and efficient, but that requirement goes to reasonableness and not to vires. I am concerned solely with the question of vires. Legal professional privilege, whatever other description it may merit, is part of the rules of evidence and may therefore be modified by the rules. The same applies to public interest immunity and to the privilege against self-incrimination. The Civil Procedure Rule Committee therefore has power under paragraph 4 of schedule 1 to abolish altogether legal professional privilege, public interest immunity or the privilege against self-incrimination, although it is obviously unthinkable that it would do so. However, on the unreal hypothesis that it did any of those things, it would be open to challenge by judicial review, but the basis of the challenge would be unreasonableness in the Wednesbury sense rather than lack of vires. What the committee may abolish it may equally limit.

    Mr Munby submitted that legal professional privilege is not a mere rule of evidence but is a product of a substantive legal right which it is beyond the power of the Civil Procedure Rule Committee to abolish or limit by the power to "modify the rules of evidence" contained in paragraph 4 of schedule 1. Such a right may, of course, be amended by statute, but not by subordinate legislation founded on an Act conferring a broad general power.

    These arguments make it necessary to examine more closely the right to legal confidentiality.

    Right to Legal Confidentiality

    There has been debate among scholars about the jurisprudential foundation of the law of confidentiality. (See, for example, Professor Gareth Jones' article "Restitution of benefits obtained in breach of another's confidence" (1970) 86 LQR 463 and the Law Commission's Report on Breach of Confidence, 1981, Cmnd. 8388, para 3.1) Contract apart, the principal views are either that it is founded on an equitable obligation, but for breach of which the court has inherent power to award monetary compensation in addition to or instead of other remedies (see, for example, the judgments of Deane J. in Moorgate Tobacco Co Ltd v Phillip Morris Ltd (no.2) (1984) 156 CLR 414, 437 to 438 and Gummow J. in Smith, Kline and French Laboratories (Australia) Ltd v Secretary to the Department of Community Services and Health [1990] FSR 617, affirmed [1991] 28 FSR 291) or that it is a branch of law sui generis, founded on a multi-faceted jurisdiction, under which the court may award a full range of equitable and common law remedies (see the judgment of Sopinka J. in LAC Minerals Ltd v International Corona Resources Limited [1990] FSR 441, 495 to 497). However, long before the modern law of confidentiality began to take shape, the courts recognised that a lawyer owed to his client a duty not to disclose the client's confidences to anyone else except with the client's express or implied consent. Lord Taylor, C.J. traced the history of the rule in R v Derby Magistrates' Court ex parte B [1996] AC 487, concentrating on the aspect which precluded such confidences being disclosed without the client's consent in legal proceedings (legal professional privilege). Another aspect, the actionability of a breach of confidentiality by a lawyer, is also well established. In Weld-Blundell v Stephens [1919] 1 K.B. 520, 544 to 545, Scrutton L.J. said:

    "But take the case of a solicitor. Under the decision in Reg v Cox and Railton (1884) 14 QBD 153, when the accused has consulted his solicitor after the commission of a crime for the legitimate purpose of being defended the communication is privileged, the privilege being that of the client. If then the solicitor in breach of this confidence and privilege announced his intention of informing the prosecution of the contents of his client's communication, I cannot believe that the court would not restrain him before communication or give damages against him for breach of his contract of employment after communication "

    That case did not concern a solicitor and Scrutton L.J. was in a minority, but the general principle stated in the passage cited is clear. The privilege to which he referred arises from the confidence, and the confidence will be enforced by whatever means is necessary, whether by an injunction, damages or prohibiting the deployment of the confidential material in court without the client's consent.

    Not every communication between lawyer and client will give rise to a duty of confidentiality. In Cox and Railton, to which Scrutton L.J. referred, Stephen J. stated that a communication in furtherance of a criminal purpose does not "come into the ordinary scope of professional employment" and therefore could not give rise to a duty of confidence. And as Diplock L.J. observed in Parry-Jones v Law Society [1969] 1 Ch 1, at page 9, a duty of confidence is subject to, and overridden by, the duty of any party to comply with the law of the land. A few statutes have overridden legal confidentiality (for example, sections 93A and 93B of Criminal Justice Act 1988 and sections 50 to 52 of the Drug Trafficking Act 1994 in relation to the suspected laundering of the proceeds of criminal conduct), but no reference has been made to any instance where this has been done by subordinate legislation.

    Generally, rights of confidentiality have been held to be subject to a qualification that the confidant may be required to disclose confidential information in the course of litigation if it is necessary for the fair disposal of the case (see D v The National Society for the Prevention of Cruelty to Children [1978] AC 171, Science Research Council v Nasse [1980] AC 1028 and British Steel Corporation v Granada Television Limited [1981] A.C. 1096). But for several centuries the courts have held that there is no such qualification in the case of a client's right to legal confidentiality. The unqualified nature of that right, once established, was recently affirmed in England and in Australia in R v Derby Magistrates' Court ex parte B and in Carter v Northmore Hale Davy and Leake (1995) 183 CLR 121. Both cases involved the same point and there is a striking similarity in the reasoning of the House of Lords and of the High Court of Australia. The question was whether a person's right to legal confidentiality could be ousted in favour of a defendant in a criminal trial. In R v Derby Magistrates' Court ex parte B the defendant was charged with murder. A prosecution witness had previously admitted being solely responsible for the murder but had withdrawn his confession and had been acquitted at a previous trial. The defendant wished to be able to cross examine the witness on what he had said to his solicitor. Mr Carter was charged with conspiracy to defraud. He had been the leader of a team of accountants who conducted the audit of a merchant bank and was accused with directors of the bank of conspiring to defraud the public. For the purposes of his defence he issued subpoenas duces tecum to solicitors acting for a third party involved in related civil litigation for the purpose of obtaining records relating to attempts to rescue the bank. Two English decisions (R v Barton [1973] 1W.L.R. 115 and R v Ataou [1988] Q.B. 798) and a New Zealand decision (R v Craig [1975] 1 NZ L.R. 597) were relied on by the defendants in both cases. In Carter the High Court of Australia declined to follow those decisions, and shortly afterwards the House of Lords in R v Derby Magistrates' Court ex parte B came to the same result (without Carter being cited), overruling Barton and Ataou.

    In R v Derby Magistrates' Court ex parte B Lord Taylor C.J. began by examining the history of "the rule that privilege is that of the client, which he alone can waive, and that the court will not permit, let alone order, the attorney to reveal the confidential communications which have passed between him and his former client" (pages 504 to 505). He then considered its modern foundation, citing extracts from a number of cases, including the following passage from the judgment of Sir George Jessel M.R. in Anderson v Bank of British Columbia (1876) 2 Ch D 644, 649:

    The object and meaning of the rule is this: that as, by reason of the complexity and difficulty of our law, litigation can only be properly conducted by professional men, it is absolutely necessary that a man, in order to prosecute his rights or to defend himself from an improper claim, should have recourse to the assistance of professional lawyers, and it being so absolutely necessary, it is equally necessary, to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating of his defence against the claim of others; that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him should be kept secret, unless with his consent that he should be enabled properly to conduct his litigation.

    In short, the rule has been regarded as an essential part of a person's right of access to justice. Lord Taylor expressed this at page 507 as follows:

    The principle which runs through all these cases, and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule or evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests.

    Lord Taylor then considered the argument that a client's right not to have his confidences revealed without his consent might in appropriate cases be overridden by the court in favour of someone else, applying a balancing exercise analogous to that which is called for where documents are withheld on the ground of public interest immunity. He rejected the argument, at page 508, for the following reasons:

    But the drawback to that approach is that once any exception to the general rule is allowed, the client's confidence is necessarily lost. The solicitor, instead of being able to tell his client that anything which the client might say would never in any circumstances be revealed without his consent, would have to qualify his assurance. He would have to tell the client that his confidence might be broken if in some future case the court were to hold that he no longer had "any recognisable interest" in asserting his privilege. One can see at once that the purpose of the privilege would thereby be undermined.

    As for the analogy with public interest immunity, I accept that the various classes of case in which relevant evidence is excluded may, as Lord Simon of Glaisdale suggested [in D v National Society for the Prevention of Cruelty to Children [1978] AC 171, 233], be regarded as forming part of a continuous spectrum. But it by no means follows that because a balancing exercise is called for in one class of case, it may also be allowed in another. Legal professional privilege and public interest immunity are as different in their origin as they are in their scope. Putting it another way, if a balancing exercise was ever required in a case of legal professional privilege, it was performed once and for all in the 16th century, and since then has applied across the board in every case, irrespective of the client's individual merits.

    Lord Taylor expressed sympathy on the facts of the case with the view expressed in the Divisional Court that if the disclosures sought were to suggest that B was the murderer and so damaged B's reputation, it would be a good thing in the interests of justice and of the defendant that B's reputation should be so damaged. Nevertheless he concluded, at pages 508 to 509:

    One can have much sympathy with McCowan L.J.'s approach, especially in relation to the unusual facts of this case. But it is not for the sake of the applicant alone that the privilege must be upheld. It is in the wider interests of all those hereafter who might otherwise be deterred from telling the whole truth to their solicitors. For this reason I am of the opinion that no exception should be allowed to the absolute nature of legal professional privilege, once established.

    Lord Nicholls in a concurring speech considered the argument that the interest of the client in non-disclosure should be balanced against the public interest in seeing that justice is done, and that, if disclosure were confined to truly exceptional cases, the public interest underlying legal professional privilege would not be at risk of serious damage. He said at pages 511 to 512:

    This is a seductive submission, but in my view it should be resisted. The end result is not acceptable. Inherent in the suggested balancing exercise is the notion of weighing one interest against another. On this argument, a client may have a legitimate, continuing interest in non-disclosure but this is liable to be outweighed by another interest. In its discretion the court may override the privilege against non-disclosure. In R v Ataou the Court of Appeal expressed the matter thus : "The judge must balance whether the legitimate interest of the defendant in seeking to breach the privilege outweighs that of the client in seeking to maintain it."

    There are real difficulties here. In exercising this discretion the court would be faced with an essentially impossible task. One man's meat is another man's poison. How does one equate exposure to a comparatively minor civil claim or criminal charge against prejudicing a defence to a serious criminal charge? How does one balance a client's risk of loss of reputation, or exposure to public opprobrium, against prejudicing another person's possible defence to a murder charge? But the difficulties go much further. Could disclosure also be sought by the prosecution, on the ground that there was a public interest in the guilty being convicted? If not, why not? If so, what about disclosure in support of serious claims in civil proceedings, say, where a defendant is alleged to have defrauded hundreds of people of their pensions or life savings? Or in aid of family proceedings, where the shape of the whole of a child's future may be under consideration? There is no evident stopping place short of the balancing exercise being potentially available in support of all parties in all forms of court proceedings. This highlights the impossibility of the exercise. What is the measure by which judges are to ascribe an appropriate weight, on each side of the scale, to the diverse multitude of different claims, civil and criminal, and other interests of the client on the one hand and the person seeking disclosure on the other hand?

    In the absence of principled answers to these and similar questions, and I can see none, there is no escaping the conclusion that the prospect of a judicial balancing exercise in this field is illusory, a veritable will-o'-the-wisp. That in itself is sufficient reason for not departing from the established law. Any development in the law needs a sounder base than this. This is of particular importance with legal professional privilege. Confidence in non-disclosure is essential if the privilege is to achieve its raison d'etre. If the boundary of the new incursion into the hitherto privileged area is not principled and clear, that confidence cannot exist.

    Lord Bingham C.J. summarised the position in Paragon Finance plc v Freshfields [1999] 1 WLR 1183, 1188 as follows:

    The nature and basis of legal professional privilege has been often and authoritatively expounded, most recently in Reg v Derby Magistrates' Court ex parte B [1996] AC 487. At its root lies the obligation of confidence which a legal adviser owes to his client in relation to any confidential professional communication passing between them. For readily intelligible reasons of public policy the law has, however, accorded to such communications a degree of protection denied to communications, however confidential, between clients and other professional advisers. Save where client and legal adviser have abused their confidential relationship to facilitate crime or fraud, the protection is absolute unless the client (whose privilege it is) waives it, whether expressly or impliedly.

    In Carter v Northmore Hale Davy and Leake [1995] 183 CLR 121 Deane J. Said at pages 132 to 134:

    "In the courts below, both Seaman J. and Rowland J. correctly pointed out that a majority of this Court in Baker v Campbell (1983) 153 CLR 52 at 88, 95 to 96, 116 to 117, 131 to 132, clearly accepted that legal professional privilege is not a mere rule of evidence but is a substantive and fundamental common law principle ...

    Where legal professional privilege attaches, there is no question of balancing the considerations favouring the protection of confidentiality against any considerations favouring disclosure in the circumstances of the particular case. The privilege itself represents the outcome of such a balancing process and reflects the common law's verdict that the considerations favouring the "perfect security" of communications and documents protected by the privilege must prevail. The common law's verdict in that regard was explained by Knight Bruce V.C. in a judgment [in Pearse v Pearse (1846) 1 De G & Sm 12, 28 to 29] which Lord Selborne L.C. was later to describe [in Minet v Morgan (1873) 8 Ch App 361, 368] as "one of the ablest judgments of one of the ablest Judges who ever sat in this Court":

    The discovery and vindication and establishment of truth are main purposes certainly of the existence of Courts of Justice; still, for the obtaining of these objects, which, however valuable and important, cannot be usefully pursued without moderation, cannot be either usefully or creditably pursued unfairly or gained by unfair means, not every channel is open to them. Truth, like all other good things, may be loved unwisely - may be pursued too keenly - may cost too much. And surely the meanness and the mischief of prying into a man's confidential consultations with his legal adviser, the general evil of infusing reserve and dissimulation, uneasiness, and suspicion and fear, into those communications which must take place, and which, unless in a condition of perfect security, must take place uselessly or worse are too great a price to pay for truth itself. [Deane J's emphasis.]

    Dean J. then considered the established "exceptions" to legal professional privilege in cases of communications made for the purpose of crime, fraud, abuse of statutory powers, etc, and contrasted such cases with the qualification to the doctrine for which Mr Carter was contending. He said at pages 134 to 136:

    For present purposes, a critical characteristic of those "exceptions" is that they are exclusions from the reach of legal professional privilege rather than exceptions to the scope of the protection which it affords. They are directed to circumstances in which the privilege does not attach with the result that the particular communication or document is not protected by legal professional privilege at all. They are not directed to circumstances in which, notwithstanding that legal professional privilege does attach, the courts will override the privilege and order that the privileged document be produced for inspection or that the privileged communication be disclosed. Nor, in accordance with what has been said above, are they directed to identifying circumstances in which the courts will embark upon a balancing process to determine whether the considerations favouring disclosure outweigh the considerations favouring confidentiality. In that regard, the established position in this country is that, in the absence of waiver or loss of confidentiality and subject to one apparent (and, in my view, anomalous) qualification in relation to wardship or custody proceedings, the protection which legal professional privilege accords to the communications or documents to which it actually attaches is, so long as that attachment persists, unqualified. And there is a powerful reason why that is so. I turn to identify it.

    As has been seen, the focus of the modern theory of legal professional privilege is upon the removal of "apprehension" of compelled disclosure: "the necessity of providing subjectively for the client's freedom of apprehension in consulting his legal adviser" [Wigmore para 2290, at page 543]. The achievement of that "necessity" is not frustrated by the established exclusions in the form of particular identified circumstances in which legal professional privilege will not attach. Those circumstances can be identified in advance and the client can be advised that, provided that they do not exist at the time when the relevant communication or document is made or comes into existence, legal professional privilege will attach to it and will, in the absence of waiver or loss of confidentiality, provide conclusive protection in the future subject only to the possible qualification in respect of wardship or custody proceedings. In contrast, if the privilege could be overridden by the courts by reason of the outcome of some subsequent balancing process or whenever particular circumstances arise in subsequent litigation, an assurance of confidentiality could never be given and the "necessity" for "the client's freedom of apprehension" could never be fully achieved. [Deane J's emphasis.]

    McHugh J. said at pages 159 to 160:

    Communications between legal advisers and their clients concerning contemplated or pending litigation cannot be disclosed without the consent of the client. Similarly, communications made to obtain or to give legal advice cannot be disclosed without the consent of the client. "Legal professional privilege" is the shorthand description of the right that protects these communications from being disclosed without the consent of the lay client. The right is a substantive rule of law and not a mere rule of evidence.

    He went on at pages 161 to 162:

    Now that this court has held that legal professional privilege is not a rule of evidence but a substantive rule of law, the best explanation of the doctrine is that it is "a practical guarantee of fundamental, constitutional or human rights" [AM & S Europe Ltd v Commission of European Communities [1983] QB 878, 941, and see Solosky v The Queen (1979) 105 D.L.R. (3d) 745, 760; R v Uljee [1982] 1 NZ L.R. 561 at 569; Descoteaux v Meirzwinski [1982] 1SCR 860, 880; (1982) 141 D.L.R. (3d) 590, 609 citing R v Littlechild (1979) 108 D.L.R. (3d) 340, 347; Geffen v Goodman Estate (1991) 81 D.L.R. (4th) 211, 232; Maurice (1986) 161 C.L.R. 475, 490]. By protecting the confidentiality of communications between lawyer and client, the doctrine protects the rights and privacy of persons including corporations by ensuring unreserved freedom of communication with professional lawyers who can advise them of their rights under the law and, where necessary, take action on their behalf to defend or enforce those rights. The doctrine is a natural, if not necessary, corollary of the rule of law and a potent force for ensuring that the equal protection of the law is a reality.

    The Court has accepted that, although the doctrine is based upon the requirements of the public interest, its application in particular cases does not depend upon balancing it against other rights that are grounded in the public interest. Not even the public interest in courts having all relevant evidence before them has been considered sufficient to override the public interest in maintaining the unqualified operation of the privilege. As Deane J. pointed out in Attorney General v Maurice (1986) 161 C.L.R. 475, 490:

    Its efficacy as a bulwark against tyranny and oppression depends upon the confidence of the community that it will in fact be enforced. That being so, it is not to be sacrificed even to promote the search for justice or truth in the individual case or matter and extends to protect the citizen from compulsory disclosure of protected communications or materials to any court or to any tribunal or person with authority to require the giving of information or the production of documents or other materials.

    The argument that any document that might assist a person to defend a criminal charge should be available to that person might seem instinctively to be unanswerable. But to uphold it would be inconsistent with the rationale of the doctrine of legal professional privilege and that privilege has been recognised since the reign of Elizabeth 1. Its "scope and conditions" (Holdsworth, A History of English Law, 3rd Ed (1944) Vol 9, page 202) were settled by the middle of the last century. To uphold it would undermine the right of the individual to consult a lawyer on legal matters secure in the knowledge that, in the absence of a statutory command to the contrary, what passes between them is confidential and for ever safeguarded from disclosure unless the communication is made to facilitate the commission of a crime or a fraud or the abuse of an exercise of public power or the frustration of an order of the court.

    In Descoteaux v Mierzwinski (1982) 141 D.L.R. (3d) 590 (one of the cases cited by McHugh J. in the passage set out above) Lamer J., delivering the judgment of the Supreme Court of Canada, said at pages 601 to 603:

    "It is not necessary to demonstrate the existence of a person's right to have communications with his lawyer kept confidential. Its existence has been affirmed numerous times and was recently reconfirmed by this court in Solosky v The Queen (1979) 50 CCC (2d) 495, at p.510, 105 D.L.R. (3d) 745 at p. 760, [1980] 1SCR 821 at p. 839, where Dickson J. stated:

    "One may depart from the current concept of privilege and approach the case on the broader basis that (i) the right to communicate in confidence with one's legal adviser is a fundamental civil and legal right, founded upon the unique relationship of solicitor and client, and (ii) a person confined to prison retains all of his civil rights, other than those supposedly or impliedly taken from him by law." [Lamer J's emphasis.]

    There is no denying that a person has a right to communicate with a legal adviser in all confidence, a right that is "founded upon the unique relationship of solicitor and client" (Solosky, supra). It is a personal and extra-patrimonial right which follows a citizen throughout his dealings with others. Like other personal, extra-patrimonial rights, it gives rise to preventative or curative remedies provided for by law, depending on the nature of the aggression threatening it or of which it was the object. Thus a lawyer who communicates a confidential communication to others without his client's authorisation could be sued by his client for damages; or a third party who had accidentally seen the contents of a lawyer's file could be prohibited by injunction from disclosing them ...

    There is no doubt that this right belonging to a person in his dealings with others, including the State, is part of our Quebec public law as well as of the common law ...

    The rule of evidence is well known; it has often been stated. This court referred to it again recently in Solosky, supra. That decision sets out the conditions precedent to the exercise of the privilege, as well as its limits and exceptions. It should be pointed out that the substantive conditions precedent to the existence of the privilege, which the judges have gradually established and defined, are in fact the substantive conditions precedent to the existence of the right to confidentiality, the former being merely the earliest manifestation of the latter ...

    Although the right to confidentiality first took the form of a rule of evidence, it is now recognised as having a much broader scope, as can be seen from the manner in which this court dealt with the issues raised in Solosky, supra.

    In summary, the common law (1) recognises the right to legal confidentiality which arises as between a person and his legal adviser (save where the client is trying to use the relationship for an unlawful purpose) as a matter of substantive law, and (2) regards it as a right of great constitutional importance, because it is seen as a necessary bulwark of the citizen's right of access to justice whether as a claimant or as a defendant. Legal professional privilege is an attribute or manifestation of that right. It is also, as Lord Taylor said in R v Derby Magistrates' Court ex parte B, much more than an ordinary rule of evidence, being considered a fundamental condition on which the administration of justice rests.

    European Community law

    In AM & S Europe Ltd. v Commission (155/79) [1982] ECR 1575 the European Court of Justice had to consider whether the protection of legal confidence is a principle of Community law. Mr. Advocate General Sir Gordon Slynn considered the law of the different member states and commented at page 1650:

    Because of these divergencies in procedure and practice, it is, in my view, important not to fasten too closely on a detailed comparison of particular labels or rules. What matters is the overall picture. Thus the question is not whether "legal professional privilege" (a misnomer and the right of the client) is identical with "le secret professionnel" (the duty, inter alia, of the lawyer), which plainly it is not, but whether from various sources a concept of the protection of legal confidence emerges, e.g. in England from the "privilege" and any rules as to the protection of confidentiality, in France from an amalgam of "le secret professionel", "les droits de la defense" and rules applicable to "le secret des lettres confidentielles".

    He went on to say at page 1654:

    From this it is plain, as indeed seems inevitable, that the position in all the Member States is not identical. It is to my mind equally plain that there exists in all the Member States a recognition that the public interest and the proper administration of justice demand as a general rule that a client should be able to speak freely, frankly and fully to his lawyer ...

    Whether it is described as the right of the client or the duty of the lawyer, this principle has nothing to do with the protection or privilege of the lawyer. It springs essentially from the basic need of a man in a civilised society to be able to turn to his lawyer for advice and help, and if proceedings begin, for representation; it springs no less from the advantages to a society which involves complex law reaching into all the business affairs of persons, real and legal, that they should be able to know what they can do under the law, what is forbidden, where they must tread circumspectly, where they run risks.

    The fact that this principle of confidentiality between lawyer and client may be given effect to in different ways, and that it is not coextensive in its application at any point in time, in all the Member States, does not mean that the principle does not exist. In my opinion it should be declared to be a rule of Community law.

    In its decision the court said at pages 1610 to 1613:

    18 ... Community law, which derives from not only the economic but also the legal interpenetration of the Member States, must take into account the principles and concepts common to the laws of those States concerning the observance of confidentiality, in particular, as regards certain communications between lawyer and client. That confidentiality serves the requirements, the importance of which is recognised in all of the Member States, that any person much be able, without constraint, to consult a lawyer whose profession entails the giving of independent legal advice to all those in need of it.

    25. Having regard to the principles of the Treaty concerning freedom of establishment and the freedom to provide services the protection thus afforded by Community law ... to written communications between lawyer and client must apply without distinction to any lawyer entitled to practice his profession in one of the Member States, regardless of the Member State in which the client lives.

    The court recognised that the principle was subject to two general conditions, the first being that the communications were made for the purposes and in the interests of the client's rights of defence, and the second being that the lawyers were independent (that is, not bound to the client by a relationship of employment). On the latter point the court said:

    24. As regards the second condition, it should be stated that the requirement as to the position and status as a independent lawyer, which must be fulfilled by the legal adviser from whom the written communications which may be protected emanate, is based on a conception of the lawyer's role as collaborating in the administration of justice by the Courts and as being required to provide, in full independence, and in the overriding interests of that cause, such legal assistance as the client needs. The counterpart of that protection lies in the rules of professional ethics and discipline which are laid down and enforced in the general interest by institutions endowed with the requisite powers for that purpose.

    On behalf of the Law Society and the Patels it was submitted that Rule 48.7(3) contravenes the general principle of legal confidentiality which is recognised as part of Community law. On behalf of Magwells it was submitted that there is good justification for Rule 48.7(3) for the same reasons as those referred to below in relation to the Convention.

    The Convention

    Article 6 provides:

    Right to a fair trial.

    1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law ...

    Article 8 provides:

    Right to respect for private and family life.

    1. Everyone has the right to respect for his private and family life, his home and his correspondence.

    2. There should be no interference by a public authority with the exercise of this right except such as in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

    On behalf of the Patels and the Law Society it was submitted that a necessary concomitant of the right to a fair trial under Article 6 is the right of a person to consult a lawyer secure in the knowledge that what he says will not be revealed without his consent, unless there is reasonable cause to believe that the communication involves abuse by the client of the purpose for which such protection ordinarily exists. In relation to Article 8, it was submitted that the right to respect for a person's private and family life, home and correspondence, includes the right to respect for communications between himself and his lawyer, this being important for the furtherance of a person's rights under Article 6; and that no interference should be permitted under Article 8(2) unless again there is reasonable cause to believe that the purpose for which the right exists is being abused.

    In support of those submissions Mr. Munby cited the decisions of the European Court of Human Rights in Silver v United Kingdom (1983) 5 EHRR 347, Campbell v United v Kingdom (1992) 15 EHRR 137 and Niemietz v Germany (1992) 16 EHRR 97.

    Silver and Campbell concerned control over prisoners' correspondence by prison authorities. In Campbell the court said at pages 160-161:

    46. It is clearly in the general interest that any person who wishes to consult a lawyer should be free to do so under conditions which favour full and uninhibited discussion. It is for this reason that the lawyer - client relationship is, in principle, privileged.

    48. ... the Court sees no reason to distinguish between the different categories of correspondence which, whatever their purpose, concern matters of a private and confidential character. In principle, such letters are privileged under Article 8.

    This means that the prison authorities may open a letter from a lawyer to a prisoner when they have reasonable cause to believe that it contains an illicit enclosure which the normal means of detection have failed to disclose. The letter should, however, only be opened and should not be read. Suitable guarantees preventing the reading of the letter should be provided, e.g. opening the letter in the presence of the prisoner. The reading of a prisoner's mail to and from a lawyer, on the other hand, should only be permitted in exceptional circumstances when the authorities have reasonable cause to believe that the privilege is being abused in that the contents of the letter endanger prison security or the safety of others or are otherwise of a criminal nature.

    Niemietz concerned a search of a lawyer's offices by police looking for information to reveal the identity and possible whereabouts of a person who was the subject of a criminal investigation. In holding that the search violated Article 8, the court recognised that activities of a professional character could fall within the notions of private life and correspondence. It also recognised that, where a lawyer was involved, an encroachment on professional secrecy might have repercussions on the proper administration of justice and hence on the rights guaranteed by Article 6.

    Mr. Kallipetis correctly pointed out that the court was not concerned in any of those cases with a situation in which the party seeking access to material ordinarily privileged was doing so in order to defend himself against a claim by another. In that situation he submitted that the boot was on the other foot in relation to Article 6, and that Rule 48.7(3) was a legitimate measure in order to further and protect the right under Article 6 of his clients (and others in a similar position) to a fair determination of their civil liabilities. He further submitted that the decision of the House of Lords in R v Derby Magistrates' Court ex parte B was itself in violation of the right of the defendant in that case to a fair trial for murder.

    Ultra vires: conclusion

    The argument advanced by Mr. Kallipetis that the general words of paragraph 4 of schedule 1 of the Civil Procedure Act 1997 ("Civil Procedure Rules may modify the rules of evidence as they apply to proceedings in any court within the scope of the rules") confer a general power on the rule-making body to abrogate or limit a person's right to legal confidentiality is to my mind quite unacceptable.

    It falls foul of two principles. The first was stated by Lord Hoffmann in R v Home Secretary ex parte Simms, 8 July 1999 (unreported) as follows:

    Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual.

    (The decision of the House of Lords in ex parte Simms was delivered after the argument in the present case. If it had led me to a different conclusion from that which I had already reached, I would have given the parties the opportunity to make submissions on it.)

    The second is similar. The presumption against Parliament intending to encroach on fundamental rights by general words applies still more strongly where the general words are merely delegating a power to legislate. In R v Home Secretary ex parte Leech [1994] QB 198 Steyn LJ., delivering the judgment of the Court of Appeal, said at pages 211 to 212:

    "Legal professional privilege is therefore based on an important auxiliary principle which serves to buttress the cardinal principles of unimpeded access to the court and to legal advice.

    It is not without significance that counsel could not refer us to a single instance where subordinate legislation was employed, let alone successfully employed, to abolish a common law privilege where the enabling legislation failed to authorise the abolition expressly. Parliament has frequently abolished the common law privilege against self-incrimination by primary legislation: see section 236 of the Insolvency Act 1986; section 2 of the Criminal Justice Act 1987 and section 72(1) of the Supreme Court Act 1981. When the provision for mutual disclosure of experts' reports was introduced, it was feared, wrongly we suggest, that such a provision might interfere with legal professional privilege. Accordingly, the necessary rule change was expressly authorised by section 2(3) of the Civil Evidence Act 1972. Subsequently, when the rule providing for exchange of witnesses' statement was introduced, it was done by a simple rule change. It was then argued that the new rule was ultra vires in interfering with legal professional privilege. In Comfort Hotels Ltd. v Wembley Stadium Ltd. [1998] 1 WLR 872 Hoffmann J. dismissed this challenge on the grounds that a mere procedural change was involved which did not interfere with the privilege. He described the privilege, at page 876H, as "a strong one" and it is clear from his judgment that he would have held the new rule ultra vires if it had interfered with legal professional privilege .... It will be a rare case in which it could be held that such a fundamental right was by necessary implication abolished or limited by statute. It will, we suggest, be an even rarer case in which it could be held that a statute authorised by necessary implication the abolition or limitation of so fundamental a right by subordinate legislation.

    There is also a strong presumption against Parliament intending a statute to operate so as to impair an existing substantive right (see Bennion, Statutory Interpretation (3rd ed.), pages 235 to 242).

    The applicability of these general principles is reinforced in the present case by more particular considerations.

    The commentary on the Act in Current Law Statutes includes the following references to statements made by the Lord Chancellor in Parliament when the legislation was introduced:

    Schedule 1, para 4. The Lord Chancellor said:

    The proposal that the rule-making powers should extend to the power to make civil procedure rules which impact on the rules of evidence attracted a large measure of support on consultation. I believe that the rules of evidence should facilitate and not hamper the early identification of the issues in the case and the evidence relevant to them. Recent developments in the field of civil justice have promoted relaxation of the strict rules of evidence in order to ensure that parties put their cards on the table at an early stage. This can be seen, for example, both in the provisions regarding the requirements for admissibility of witness statements, contained in Section 5 of the Courts and Legal Services Act 1990 and the further reform of the hearsay rule in the Civil Evidence Act 1995.

    He added:

    The Bill is about procedure and, although there are clearly blurred edges between the rules of procedure and rules of evidence, it has always seemed to me that, in principle, the rules of evidence play a much more significant role in our law, particularly with respect to the protection of individual rights. That of course is perhaps much more dramatically demonstrated in the criminal process than in the civil process, but nevertheless there are occasions in a civil trial when the rules of evidence can make all the difference to the rights of the litigant.

    And:

    the spill-over from procedure to evidence is a difficult boundary. Where is the boundary in a number of cases? I entirely agree that this is primarily concerned with giving the rule committee the power to make rules of procedure. But there are quite a number of examples in which the nature of evidence required can have a considerable effect on the rules of procedure. For example, any attempt to limit the situation so far as the number of experts are concerned could well have an effect on the procedure to be adopted. It is at the heart of the proposals of my noble and learned friend Lord Woolf that that kind of thing should carefully be considered in relation to the overall procedure.

    The framework of the Act, by which provision is made in section 1(1) for there to be rules of court governing practice and procedure, in section 1(2) for schedule 1 to have effect in making "further provision about the extent of the power", and in paragraph 4 of the schedule for modification of the rules of evidence, itself suggests that the primary purpose of the Act was to introduce new rules of procedure, to which the power to modify rules of evidence was intended to be incidental. The language and structure of the Act do not suggest that Parliament had in mind the abolition or limitation of the right to legal confidentiality.

    In the passage from R v Home Secretary ex parte Leech cited above, Steyn L.J. referred to Comfort Hotels Ltd. v Wembley Stadium Ltd., in which Hoffmann J. dismissed a challenge to the introduction of a rule providing for exchange of witness statements on the ground that the rule involved a mere procedural change and not an interference with legal professional privilege. In the course of the argument in the present case reference was made to the provisions of CPR Part 35 regarding experts. Rule 35.3 stipulates that it is the duty of an expert to help the court on the matters within his expertise and that this duty overrides any obligation to the person from whom he has received instructions or by whom he has paid. Rule 35.10 provides that an expert's report must state the substance of all material instructions, whether written or oral, on the basis of which the report was written, and that such instructions shall not be privileged against disclosure.

    Although the point does not arise for decision in the present case, it does not seem to me that those rules in any way infringe a person's substantive right to legal confidentiality. Rule 35.3 has in itself nothing to do with legal confidentiality, any more than the overriding duty of a solicitor or barrister to the court has anything to do with his duty of confidentiality towards his client. As to Rule 35.10, an expert can always be asked in cross examination to state the basis on which his opinion has been formed. A doctor, for example, in a personal injury action can be asked what the claimant said on being examined for the purposes of the doctor's report, insofar as that is material to the doctor's opinion, for the claimant necessarily waives any privilege in what was said at the examination when calling the doctor to give evidence as to the opinion which he formed as a result of it. Rule 35.10 requires such information to be contained in the report and therefore disclosed at the time when the report is disclosed. The effect of the rule is therefore analogous to that considered in Comfort Hotels Ltd v Wembley Stadium Ltd. It is essentially a matter of procedure. The client has a choice whether or not to disclose the expert's report (with the information which it contains). If he decides that he wants to rely on the expert's opinion, he must comply with the timetable set by the court for the disclosure of the report and the information on which it is based.

    Rule 35.10 is therefore different in kind from rule 48.7(3), which is not concerned with a mere matter of procedure or a mere rule of evidence, but limits a substantive right.

    The scope of the common law right to legal confidentiality has had its critics. In Carter (1995) 183 CLR 121, 156, Toohey J. proposed a qualification in the following terms:

    Where an accused facing trial satisfies the court that the production of documents subpoenaed by the accused is necessary for the proper conduct of his or her defence, then, subject to any proper objection that may be taken, other than on the ground of legal professional privilege, the court may order the production of those documents.

    If ever there was a case for such a qualification, R v Derby Magistrates' Court ex parte B might have been thought to be that case, but three connected factors caused the House of Lords to conclude that the principle of legal confidentiality should be maintained intact. One that was that to admit any exception to the general principle would undermine the lawyer's ability to give an assurance of confidentiality to the client. The second was that there was a difference between setting bounds to the circumstances in which a duty of confidentiality would arise and giving a discretion of the court to override a duty of confidence which had arisen; and that to leave the matter to the court's discretion would be unsatisfactory both in terms of the nature of the task which the court would have to carry out and in terms of the client's inability to foretell in advance which way such a discretion might be exercised. The third was that there was no satisfactory way of limiting in advance what might be regarded as exceptional cases.

    The difficulty referred to in Ridehalgh v Horsefield of a legal adviser faced with a wasted costs application being unable to refer to privileged communications with his client, except with his consent, might be considered small in comparison with the risk faced by a defendant in a murder trial of conviction and life imprisonment. Moreover the requirement that a judge invited to make a wasted costs order should make full allowance for the inability of a respondent lawyer to tell the whole story is itself a considerable protection for the lawyer. It is not without interest that in this case the Law Society is opposing, rather than supporting, Magwells' application to disclose confidential information, and that Magwells have themselves only made the application because they felt driven to pick up the gauntlet thrown down by Gen Med. The Law Society presumably regards the previous position as better on the whole for solicitors and their clients than Rule 48.7(3), under which solicitors may feel pressured to make applications against clients with whom they enjoy a good relationship, which they may fear might be jeopardised.

    I mention these considerations only for this reason, that if Parliament was contemplating some alteration in the law of legal confidentiality, one would have expected in the light of the decision and reasoning of the House of Lords in R v Derby Magistrates' Court ex parte B that it would have wanted to consider the matter on a broader basis than the introduction through subordinate legislation of a piecemeal change for the benefit of lawyers facing a particular form of civil claim.

    I accept that the Civil Procedure Act is a reforming Act, intended to introduce a radical new system of civil procedure, but I do not accept that Parliament intended by paragraph 4 of schedule 1 to create a power to cut down the substantive right to legal confidentiality. For those reasons I conclude that rule 48.7(3) is ultra vires.

    Discretion

    In view of that conclusion, the question of discretion does not arise; but, if it had, I would have declined to make an order under Rule 48.7(3) for two reasons. One concerns the Convention. The other concerns the evidence.

    As to the Convention, it was not suggested that the fact that the Patels have lived at all material times in India and that the documents whose production is sought were brought into existence in connection with their interviews by the police in Bombay affects their entitlement to the protection of the Convention in relation to the present application. The effect of the Convention on the administration of justice in the states who are parties to it does not vary according to the nationality of the persons affected. The Patels therefore have a right under Article 8 to confidentiality in respect of their communications with Magwells, unless there is justification under Article 8(2) for the court to interfere with the exercise of that right.

    The justification advanced for the measure is not the prevention of crime, as in Silver, Campbell and Niemietz, but the protection of the rights and freedoms of others, that is, the right of legal representatives to defend themselves properly against wasted costs applications.

    The approach of the European Court of Human Rights in those cases is relevant, because it shows the high value which the court accorded to legal confidentiality; but the distinctive feature of this case, which was absent from those cases, is the assertion of a rival claim under Article 6 by the applicants.

    Article 6 gives every person a right to a fair trial, but I do not accept that it follows as a general proposition that this gives a right to interfere with another person's right to legal confidentiality. If that were generally so, the right to legal confidentiality recognised by the court would be useless, since its very purpose is to enable a person to communicate with his lawyer secure in the knowledge that such communications cannot be used without his consent to further another person's cause. In the absence of a general right under Article 6 to make use of another person's confidential communications with his lawyer, I do not see how solicitors have a particular right to do so under that Article for the purpose of defending a wasted costs application.

    It may be argued that this is to adopt too inflexible an approach, and that in principle the proper solution in such cases would be to treat a person's right under Article 8 to confidentiality in respect of communications with his lawyer as subject to a qualification of the kind proposed by Toohey J in Carter. Toohey J. himself recognised that his proposal presented problems, even looking at the matter only in the context of a criminal trial. I have already cited the passage in R v Derby Magistrates' Court ex parte B in which Lord Nicholls considered the matter also in the context of other types of claim and concluded that there was no principled way by which judges could "ascribe an appropriate weight, on each side of the scale, to the diverse multitude of various claims, civil and criminal, and other interests of the client on the one hand and the person seeking disclosure on the other hand". I do not accept the submission that the approach of the House of Lords in that case was in violation of Article 6, or that the Convention requires a balancing exercise in individual cases of the kind which the House of Lords considered and rejected as a matter of English law.

    However if I am wrong, I have considerable doubt whether a general discretion to order the disclosure of privileged material on an application for a wasted costs order is necessary and proportionate for the purpose of doing justice to the legal professional, particularly bearing in mind the point that the courts have been used on hearing wasted costs applications to making allowance for the lawyer's inability to disclose privileged information without the client's consent. I repeat the comment that if such a discretion were perceived by legal practitioners as necessary for their protection, one might have expected the Law Society to be making opposite submissions to those which it has advanced on this application.

    On the material and arguments which I have heard, I would have felt driven to the view that an insufficient case had been made under Article 8(2) to justify the interference with the right to legal confidentiality which Rule 48.7(3) involves, and that for that reason the application should be refused.

    It is unnecessary to say more about Community law. The argument based on AM & S Europe Ltd v Commission was not fully developed; and, in any event, it is difficult to see how, if there were sufficient justification for Rule 48.7(3) for the purposes of the Convention, such justification would not apply equally under Community law.

    As to the evidence, the grounds of Gen Med's application for a wasted costs order were set out in an affidavit sworn by its solicitor, Mr Maton, on 23 March 1999. After referring to the circumstances of the Patels' police interviews in September 1993, he said at para. 38:

    In these circumstances, it is almost certain that the Defendants would have disclosed the true position and details of the false transactions to the Fraud Squad admitting that the bills of exchange were false in that they were not supported by any underlying trade. I believe that the records of these interviews will show this, and I ask Magwells ... or their clients to produce these or to procure their release from the Kent police.

    The same request was repeated in correspondence.

    Magwell's application under Rule 48.7(3) was supported by the statement of Mr Prakash Patel, to which I have referred. In it he said:

    In his fifth affidavit, Mr Maton proceeded on the basis of two assumptions. First, that the record of the interviews in Bombay would show that K R and R M Patel accepted that they knew that there was no underlying transaction in respect of the bills of exchange the subject of and referred to in this action ... Neither assumption was correct.

    His statement concluded:

    My firm is anxious to dispel the wrong assumptions which are the basis of the application for a wasted costs order, and if the Court considers that it is in the interests of justice so to do, I ask for an appropriate order under part 48.7(3) of the Civil Procedure Rules 1998.

    At the start of his submissions Mr Kallipetis said candidly that Magwells found themselves in a position of embarrassment in making the application against their former clients, and that their reason for doing so was because of Gen Med's requests, from which they foresaw that if they made no such application Gen Med would ask the court to infer that they had not done so because they had something to hide. He also said that the application was limited to the two documents which Mr Prakash Patel gave to the police in the course of his clients' police interviews.

    It cannot be the purpose of Rule 48.7(3) to encourage applicants for wasted costs orders to conduct a hunt for disclosure at one remove, by challenging the respondent to apply for leave to disclose privileged documents with the implied threat of asking the court to draw an adverse inference from the respondent's failure to do so.

    It would also not be right to make an order under Rule 48.7(3) unless the court was satisfied that it was necessary to do so in order to enable the legal representative properly to defend himself. Even if the documents were not privileged, the court would only order disclosure of confidential information if it were necessary for the purposes of a fair trial: see Science Research Council v Nasse [1980] AC 1028. I was invited to look at the two documents, but on the present evidence I would not have been persuaded of the necessity at this stage for the court to do so, or to make an order for their disclosure to Gen Med, in order for Magwells to be able properly to conduct their defence. They have achieved their purpose of displaying a willingness to disclose the documents by making the application; it does not follow that such disclosure is presently required. If at a later stage it appeared to the judge that such disclosure really was necessary, it would be open to him to reconsider the matter.

    That conclusion relieves me of the difficult task of considering to what extent it would otherwise have been right to balance the interests of the Patels against those of Magwells in deciding whether or not to make a disclosure order. In the case of documents which are confidential but not privileged, the decision whether or not to order disclosure is sometimes said to involve a balancing exercise, but that is a loose way of putting it for reasons explained by Lord Wilberforce in Science Research Council v Nasse at page 1067:

    It is sometimes said that in taking this element [confidentiality] into account the court has to perform a balancing process. The metaphor is one well worn in the law, but I doubt if it is more than a rough metaphor. Balancing can only take place between commensurables. But here the process is to consider fairly the strength and value of the interest in preserving confidentiality and the damage which may be caused by breaking it; then to consider whether the objective - to dispose fairly of the case - can be achieved without doing so, and only in a last resort to order discovery, subject if need be to protective measures. This is a more complex process than merely using the scales: it is an exercise in judicial judgment.

    Mr Munby submitted that not only the interest of the Patels, but also the general interests of anyone who may need to consult a lawyer in having his communications treated as confidential, should be potent factors to be taken into account when deciding whether to make such an order. But there are difficulties about that. If such wider interests are to be factored into the equation, the view of the common law as stated in R v Derby Magistrates' Court ex parte B is that they prevail - or, as Lord Taylor put it, that any balancing was done a long time ago. Mr Munby suggested that these factors should still be given considerable weight, but less absolute weight than at common law. In effect, he was elegantly advocating a kind of decaffeinated version of the common law approach, lacking its full strength but keeping its flavour. How one could give effect to such an approach is problematical. It may be that the only proper approach would be to apply the same test as in Science Research Council v Nasse. However, that is not a matter which I have to decide, because it follows from the reasons which I have given that the application fails.


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URL: http://www.bailii.org/ew/cases/EWHC/Comm/1999/832.html