Legal Professional Privilege: an update

13/12/2011

In a recent case based on the failure of a party to comply with an “unless order”, the court reviewed the principles of legal professional privilege.  An unless order, as its name suggests, is an order providing that a certain act must be done by a party to proceedings by a certain date or a specified result will follow (often the entry of judgment against the defaulting party).  

There are two main categories of legal professional privilege, namely litigation privilege and legal advice privilege: litigation privilege applies to documents brought into existence for the purpose of litigation; legal advice privilege may apply to communications between a client and lawyer in which legal advice is sought or given.

The Facts

The Defendants, S and A, applied to the Court for relief from sanctions under Part 3.9 of the Civil Procedure Rules (which sets out the grounds for relief from sanctions) in relation to their failure to comply with an unless order.  The unless order related to the disclosure of materials seized from a storage facility belonging to S’ brother pursuant to a search order.  At that facility there were fourteen boxes containing what appeared to be client files of S and A’s solicitors, together with some loose papers.  Those documents were kept by the “supervising solicitor” (the independent solicitor who monitors search orders).

Leading Counsel instructed by the supervising solicitor carried out an initial review of the documents for potential grounds of legal professional privilege.  In relation to the documents Leading Counsel found may potentially be privileged S and A were ordered to identify which documents they asserted privilege over with sufficient particularity of the claim to privilege. 

S and A’s solicitors applied for and were granted two extensions in which to comply, although the second order was in the form of an unless order, pursuant to which if they did not comply they would be debarred from claiming privilege over all of the documents in respect of which there had been no claim to privilege.  If there was only partial compliance, they could still claim privilege over those documents where a proper claim to privilege had been made.

S and A served a schedule claiming privilege over initially 2,069 documents (subsequently reduced to 243) with only a generic description of the nature of the claim to privilege.  The Claimant successfully applied for an order that S and A had failed to comply with the unless order.  The consequence of this was that the unless order automatically took effect (and hence S and A could not claim privilege over any of the documents).

Subsequently S and A again revised their schedule reducing the claim to privilege to 221 documents with fuller details provided as to the privilege claimed (known as the “221 Schedule”).  They applied to the Court for relief from sanctions for failing to comply with the unless order. 

The Claim for Privilege

When reviewing the issue of privilege the Court noted (and both parties agreed) that the right to assert legal professional privilege is a substantive legal right.  The burden of proof being on the party which claims privilege to establish that privilege applies.  In this regard a party claiming privilege set out something of its analysis of the documents or, in the case of litigation privilege, the purpose for which they were created.

In determining whether a document is subject to litigation privilege, the Court noted that it needed to make an objective assessment of the purpose of the person who created it.  This involves the Court determining the following questions: (1) at the time the document was created was litigation contemplated; (2) was the document created for the dominant purpose of obtaining legal advice for that litigation or in aid of that litigation; and (3) under the direction of which person or entity, objectively, were those communications created?

After reviewing the law on legal professional privilege, the Court considered whether the 221 Schedule complied with the disclosure order.  It did so in relation to each document for which privilege was claimed.  The standard set out in the order was deliberately not a high one – that any claim for privilege should be sufficiently particularised to enable the Claimant to decide whether to challenge the claim or not.  The Court held that although there were serious defects in the 221 Schedule it did contain enough detail to satisfy the order. 

Relief from Sanctions

The Court then considered whether it was appropriate to grant relief from sanctions.  It considered the checklist of relevant factors set out in CPR Part 3 (Part 3 deals with the Court’s case management powers).   

The Court noted that it could not envisage any circumstances where legal professional privilege could be directly overridden by a court order made in exercise of its case management powers, as the unless order was.  Although a party may indirectly forfeit the right to claim privilege (for instance by failing to claim privilege after being given the opportunity to do so within a reasonable time) a court should be very wary of allowing a potentially valid claim for privilege (however late it is made) to be indirectly overridden by the exercise of a case management power.  The right of a party to claim legal  privilege is afforded a very high level of protection by the law. 

Having reviewed the relevant factors in the checklist and noting that the Claimant was not seriously prejudiced by the lateness of the disclosure, the Court granted relief from sanctions, despite S and A’s “lamentable history of failure to comply with court orders”.

JSC BTA Bank v Shalabayev and another [2011] EWHC 2915 (Ch)

Contact: clarkhood@city-law.net

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