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To be, or not to be privileged: that is the question

16.10.2018 Energy & Infrastructure

Simon Hems

Simon Hems Head of Energy & Infrastructure, Partner

Danielle Robinson

Danielle Robinson Associate

Generally speaking, clients have the right to speak freely and openly with their lawyer(s) without fearing any repercussions, which is why the law on privilege is so important. But what happens when lawyers make a mistake and privileged information is disclosed to the other side? Here we look at how the court exercised its equitable jurisdiction in Single Buoy Moorings Inc v Aspen Insurance UK Limited [2018] EWHC 1763 (Comm) upon hearing two applications by the Defendant relating to disclosure and privilege.

In 2006, the Claimant contracted with Talisman to design, build and erect a mobile offshore production unit (MOPU). After the MOPU’s topside was damaged, an indemnity claim was brought against several insurers, including the Defendant who contested the insurance claim. The applications in question were made in an action which is due to be tried in October, November and December 2018.

First application: the “March 2012” documents

The courts are well versed in dealing with applications to remove privileged documents that have been inadvertently disclosed, and the Civil Procedure Rules (CPR) provide at CPR 31.20 that where a party has inadvertently allowed a privileged document to be inspected, the inspecting party may only use the document (or its contents) with permission of the court. When considering its power under CPR 31.20 the court should consider the principles established in Al Fayed v Commissioner of Police of the Metropolis [2002] EWCA Civ 780, including that:

“A mistake is likely to be held to be obvious and an injunction granted where the documents are received by a solicitor and: a) the solicitor appreciates that a mistake has been made before making some use of the documents; or b) it would be obvious to a reasonable solicitor in his position that a mistake had been made; and, in either case, there are no other circumstances which would make it unjust or inequitable to grant relief.”  (Emphasis added.)

In SBM v Aspen, the Defendant sought permission, pursuant to CPR 31.20, to rely on five documents, collectively referred to as the "March 2012 documents". These documents, which consisted of minutes from a “without prejudice” meeting, had been previously disclosed, and relied on by the Claimant. However, following witness interviews, the Claimant's solicitor formed the view that the whole, or at least parts, of the documents were privileged and requested their return, relying on the principles in Al Fayed.

The court considered the circumstances in which these documents were first provided to the Defendant. It was noted that the documents were provided in mid-2014 as part of a report labelled “confidential”, and then again by way of early disclosure in mid-2016. On both occasions, these documents were deployed openly in support of the Claimant's legal position.

Whilst in this particular context there is no definition under common law of what “use” of the documents means, the High Court found that it would be too narrow to suggest that it required the Defendant to have tendered them in evidence. It was satisfied that the documents had already been used by the Defendant when evaluating the Claimant’s arguments. Notwithstanding its interpretation of the word “use”, the court held that under the Al Fayed principles it would be unjust and inequitable to allow the Claimant to rely on the documents in support of a legal argument and yet deny the Defendant’s request for permission to do the same. Accordingly, the Defendant was granted permission to rely on the documents.

Second application: the “January 2012” documents

The Defendant's second application was in respect of a number of internal documents which had been disclosed by the Claimant, collectively referred to as the “January 2012” documents. Again, the Claimant sought to retrieve them on the grounds that they were privileged and a witness statement was filed by the Claimant’s solicitor in support, explaining that the documents in question contained confidential information about a separate dispute between the Claimant and Talisman. 

Although a witness statement claiming privilege is usually conclusive, Mr Justice Teare held that, on face value, the documents were more focused on the ways in which project costs could be reduced than considering the Claimant’s available legal strategies. He also found that the Claimant’s solicitor’s witness statement lacked detail on what the documents’ dominant purpose was and did not explain what legal strategies were under consideration. He concluded that the character of the documents had been misconceived and, since the burden of proving privilege falls on the party asserting it, he concluded that the documents were not privileged and could be used by the Defendant.

Conclusion

The court’s overarching objective is to ensure a just outcome via a fair process. It will not, therefore, countenance the prospect of one party “testing the water” with evidential material that it may then seek to exclude on grounds of privilege if convenient to do so. Privilege is a vital veil to legal practitioners and clients when it comes to the ability to advise, prosecute and defend claims or seek to resolve them amicably. It is not something to be abused.

But mistakes are mistakes and, to some extent, parties can take comfort that their inadvertent errors should not prejudice their position.  Where the line gets crossed is after positive decisions are taken to disclose material that lawyers should be capable of recognising as privileged. In those situations, the message is clear:  once privilege is waived, it is a permanent waiver, unless exceptional circumstances apply.

In this respect, parties would do well to make sure they have an understanding of what is contained in the material being disclosed and if it does attract privilege, to understand all of the likely consequences of making those documents available before they are handed over.

Article authors:

Simon Hems Danielle Robinson