WAIVING PRIVILEGE BY MENTIONING LEGAL ADVICE IN A WITNESS STATEMENT: A CASE IN POINT

A case reported on Lawtel this morning demonstrates the dangers of referring to legal advice in witness statements. The decision of Males J in Mid-East Sales -v- Engineering & Trading Co [2014] EWHC 892 (Comm)  was made on 14/03/2004.

THE FACTS

The defendant had returned a claim form after service. In a witness statement it was stated, on the Defendant’s behalf, that this was done on the basis of correct legal advice.

THE ISSUE

The advice was relevant to the issue of delay and whether a court should set aside a default judgment.  The defendant’s statements crossed the line between mentioning the advice and attempting to deploy it. The defendant was attempting to rely on that advice in persuading the court to exercise a discretion.  There had been a waiver of privilege and fairness dictated that the court, and the claimant, have the opportunity to see it.

THE JUDGMENT ON DISCLOSURE OF LEGAL ADVICE MENTIONED IN THE WITNESS STATEMENT

LATER:
“Ruling on claimant’s application for disclosure of legal advice
13 This is an application for disclosure of legal advice given by either a firm of
solicitors called IA Solicitors or a Mr. Ahmed, who was at one time a member
of that firm. It appears that at the time when the advice was given the firm had
been disbanded and therefore Mr. Ahmed was the person who was acting.
14 The issue is whether privilege in the documents has been waived. Although
the application relates to advice received by the second defendant from IA
Solicitors and/or Mr. Iftikhar Ahmed during the entire lengthy period of this
litigation, in my judgment that is too widely framed. The only advice which
has been referred to in the evidence concerns to the second defendant’s
response to service of the claim form and related documents on it in 2009.
15 The law on waiver of privilege is conveniently set out in chapter 23 of
Hollander on Documentary Evidence, where the author notes that there is a
distinction to be drawn between (a) a reference to the fact of legal advice and
(b) reliance on the content of that advice. That distinction reflects a policy not
to hold that there has been a waiver without good reason and to confine cases
of waiver to cases where the party said to have waived is relying on the content
of the legal advice for some purpose. Sometimes the distinction is drawn
between reference to legal advice and deployment of it. The overriding
principle is one of fairness, that if the content of legal advice is deployed or
relied upon in order to advance a party’s case, then fairness may require that 
disclosure of that advice be made available so that the court can properly assess
that assertion.
16 In the present case the legal advice which is said to have been given has been
referred to in the context of the question of delay by the second defendant in
responding to the service of the claim form. It appears to be relevant to the
question whether, if other conditions are satisfied, the court should exercise its
discretion to set aside the default judgment which has been obtained. The
principally relevant evidence is given by Mr. Zahid Mumtaz Piracha in two
witness statements served on behalf of the second defendant. He is a Pakistani
advocate employed by Dr. AQ Khan Research Laboratories (known in the
proceedings as KRL). At p.227 of the bundle, para.27 and following of his
witness statement, he describes what happened when the claim form was
served on the second defendants. He says that having obtained advice from
Mr. Iftikhar Ahmed of IA Solicitors, in which he liaised directly with Mr.
Ahmed, the claim form and enclosures were returned to the British High
Commission. He says at para.29:
“Acting on the advice of IA Solicitors, the claim form and enclosures
were returned to the British High Commission on 27th March 2009 by
the Minister of Law on the basis of Article 13 of the Hague
Convention”.
He then sets out the letter pursuant to which that was done.
17 In his second witness statement, dated 26th February 2014, he goes into further
detail, responding to the eighth witness statement of Mr. Dudley for the
claimant. He says at para.7:
“In addition, the thrust of Dudley 8 is that the second defendants’
conduct was premised on incorrect legal advice from IA Solicitors.
Again I will address this point and demonstrate that it was as a result of
IA Solicitor’s advice that the second defendant took the steps it did in
responding to the claim form”.
18 It seems to me that those two statements, taken together, do cross the line from
reference to deployment. They make a case that the second defendant was
acting on legal advice in responding to the claim form in the way that it did.
That can only be relevant because the second defendant seeks to rely on that as
a factor going to the exercise of the court’s discretion. I can see no other reason
why the reference to acting on legal advice should have been included in the
witness statement. Now that the second defendant has invited the court to
exercise its discretion on the basis that it was acting on legal advice, it may be
highly relevant to know what that advice was. To take two extreme examples,
it is at least possible that the court’s discretion would be exercised very
differently according to whether the legal advice in question was (a) that the
proceedings had not been validly served as a matter of English law so that any
judgment would be invalid or (b) that even though they had been validly
served, any judgment against the second defendant could safely be ignored
because it could not be enforced.

19 At para.15 of the second statement, Mr. Piracha explains not what the advice
was but in what documents the advice was provided. He says:
“Shortly after service of the claim form, on 6th March 2009 I was
provided by IA Solicitors with written communications on 17th and 24th
March 2009. Having considered those communications, I requested the
second defendant’s Ministry of Law and Justice to respond to the claim
form”.
It seems clear, therefore, that that is the advice to which he was referring in the
earlier passages which I have set out. He goes on to say that the response of
27th March 2009 by the second defendants was made in good faith having
taken legal advice.
20 In my judgment, therefore, there has been a waiver of privilege in those two
written communications and fairness does require that the claimants and the
court should have the opportunity to see those communications so that the
evidence about them which has been given can be fairly assessed. Mr. Layton
made the point that those were documents in KRL’s possession rather than the
possession of the second defendant, which is the Islamic Republic of Pakistan,
but he ultimately accepted that they were nevertheless under the control of the
second defendant and, in any event, in my judgment, there should be an order
for their disclosure.”

 

THE VERY REAL DANGER OF INADVERTENTLY WAIVING PRIVILEGE IN A WITNESS STATEMENT

It is very dangerous even to mention legal advice in a witness statement. There is a fine line between mentioning that advice had been received and “deploying” that fact.   Unless the client (and the lawyer) is happy to waive privilege the most prudent course of action is not to refer to legal advice at all. There are cases when legal advice has to be mentioned. In these circumstances considerable care has to be taken.

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