In The National Crime Agency -v- Perry  EWHC 3759 Mr Justice Wilkie considered the issue of when mention of legal advice in a witness statement leads to waiver of privilege so the legal advice should be disclosed.
The claimant had issued and discontinued a civil recovery claim against the defendants. The defendants obtained an order that the claimant pay the costs of the claim. the defendants sought indemnity costs arguing that the action had been conducted unreasonably.
THE STATEMENT MADE
- In the evidence filed by the NCA, resisting the application for costs on an indemnity basis, Ms Oakley filed a witness statement on 19th September 2014. That witness statement includes the following passages, which have been the focus of the argument before me (emphasis added):
“23. SOCA was made aware of the [additional hearing] judgment by the Israeli prosecutors on 31st May 2011. They provided the judgment in its original Hebrew, an English translation of the decision was obtained by SOCA on 22nd June 2011. Having received Israeli legal advice (in respect of which privilege is not waived) SOCA considered that the Procaccia judgment [i.e. the additional hearing judgment] left the factual findings of the Judge Caspi [i.e. the Judge who gave the District Court judgment] including the findings in respect of the amounts stolen by Mr Perry and the organisation unchanged. Subsequently through articles in the Israeli press in respect of the arguments made by Mr Perry in defence of a class action suit in Israel brought against him, the civil recovery legal team at SOCA became aware in broad terms of Mr Perry’s arguments in relation to the impact of the Procaccia judgment; namely that the Supreme Court had determined that only the “Delta” … had been stolen. SOCA discussed this argument with legal advisors in Israel. Given (a) the rejection of the appeal and Mr Perry’s “insurance evidence” (including the argument that no sums had been stolen at all); (b) SOCA’s own reading of the English translation of the judgment and (c) having received Israeli legal advice (as to which, again, privilege is not waived), SOCA considered that the Procaccia judgment did not alter the findings of Judge Caspi …“
“It was SOCA’s view that, certainly prior to receipt by the civil recovery team of Dr Leshem’s report, it had an adequate understanding of the Israeli judgments, including the Procaccia judgment. When the report was received by the civil recovery legal team in November 2012, the points of claim had already been filed (on 25th September 2012) and SOCA was awaiting the points of defence. It was considered the appropriate course would be to await the service of the defence and directions in the normal course before undertaking further Israeli law advice so that an expert could opine on both the defence and Dr Leshem’s report at the same time. That was particularly so given that SOCA had already considered in more general terms whether the arguments raised by Mr Perry in the context of the class action claim in Israel impacted upon Judge Caspi’s factual findings in respect of the amounts stolen, and it had been satisfied that those findings remained unaltered by the Procaccia judgment. This again was in the context of the previous Israeli advice regarding the Procaccia judgment and the seemingly plain wording of the judgment itself.” [The emphasis in this text were in the original judgment].
THE PRINCIPLES GOVERNING WAIVER OF PRIVILEGE
- I have been taken, carefully, by both counsel, through the extensive authoritative case law giving guidance on the concept of waiver of privilege.
- In the light of the way the argument has proceeded, it is unnecessary for me to refer in any detail to that detailed examination of the authorities. In my judgment, the principles have most conveniently and recently been summarised by Mr Justice Elias in certain passages in the judgment of the EAT which he gave in Brennan v Sunderland City Council  ICR 479:
“63 … The fundamental question is whether, in the light of what has been disclosed and the context in which disclosure has occurred, it would be unfair to allow the party making disclosure not to reveal the whole of the relevant information because it would risk the court and the other party only having a partial and potentially misleading understanding of the material. The court must not allow cherry picking, but the question is: when has a cherry been relevantly placed before the court?
64. Typically, as we have seen, the cases attempt to determine the question whether waiver has occurred by focusing on two related matters. The first is the nature of what has been revealed; is it the substance, the gist, content or merely the effect of the advice? The second is the circumstances in which it is revealed; has it simply been referred to, used, deployed or relied upon in order to advance the parties’ case? As Waller LJ observed in the Dunlop Slazenger case  EWCA Civ 901. The principles are not altogether easy to discern, partly perhaps because of the vagueness of the language adopted – for example, sometimes reliance and deployment are used as separate terms and sometimes they appear to mean much the same thing – and partly because the cases are necessarily fact sensitive …
66. Having said that, we do accept that the authorities hold fast to the principle that legal advice privilege is an extremely important protection and that waiver is not easily established. In that context something more than the effect of the advice must be disclosed before any question of waiver can arise.
67. However, in our view, the answer to the question whether waiver has occurred or not depends upon considering together both what has been disclosed and the circumstances in which disclosure has occurred. As to the latter the authorities in England strongly support the view that a degree of reliance is required before waiver arises, but there may be issues as to the extent of the reliance…”
APPLYING THE PRINCIPLES TO THE CURRENT CASE
- The Defendants contend that, by necessary implication, paragraphs 23 and 30 of Ms Oakley’s witness statement not only refer to the fact that independent Israeli legal advice was sought on two occasions in 2011 on the effect the Procaccia judgment had on the findings of fact about the amounts stolen by the District Judge, but, by implication, her evidence reveals the content of that advice and seeks to deploy it in rebutting the contention that the NCA conducted the various legal proceedings against the Defendants unreasonably and, in particular, between 23rd May 2011 (the date of the additional judgment of the Israeli Supreme Court) and 15th May 2014 (the service of the notice of discontinuance on the Defendants).
- The Claimant’s position is one which has been carefully formulated. It is to the effect that the evidence of Ms Oakley “is what it is”. Her evidence, it is said, reveals the fact that independent Israeli legal advice was sought and “received” on two occasions in 2011 and that having “received” that legal advice SOCA considered that the Procaccia judgment left the factual findings of the District Court, including the amounts stolen, unchanged. On the second occasion the sources of information accumulated, which resulted in SOCA forming that view, included: the rejection, after that additional hearing, of the Defendant’s appeal; the argument of Mr Perry that no sums had been stolen at all; and SOCA’s own reading of the English translation of the Procaccia judgment.
- The Claimant contends that the evidence of Ms Oakley does not reveal to the reader what the Israeli advice was, and/or with what degree of firmness any such advice might have been given. Nor does Ms Oakley’s witness statement indicate, one way or the other, whether, and if so to what extent, that Israeli advice was consistent with, or contradictory to, the view which SOCA took as to the effect of the Procaccia judgment on the findings of fact of the District Court on the amount stolen.
- The Claimant, therefore, contends that Ms Oakley’s evidence does not even make reference to or reveal “the effect of” the Israeli advice received by SOCA, let alone its contents, nor does it reveal whether, or not, SOCA had regard to that advice and whether, or not, it adopted it or acted, to any extent, consistently with it, in adopting the view which it did on the effect of the Procaccia judgment on the amount stolen (until it took the opinion of Mr Horesh).
- The Claimant, therefore, says that the contents of Ms Oakley’s witness statement, as highlighted, fall short of amounting to waiver of legal privilege. Accordingly, legal privilege being an absolute right if asserted, it follows that I do not have any power to order disclosure or inspection of any document containing or recording that Israeli advice.
- In my judgment, the Claimant is correct in its analysis of Ms Oakley’s witness statement. She goes no further than to state that independent Israeli advice was “received” and that its receipt was part of the context in which SOCA formed, for itself, the view that the Procaccia judgment did not affect the District Court’s findings of fact on the amount stolen.The Claimant has adopted a very careful formulation in Ms Oakley’s witness statement, which falls short of even identifying for the reader the effect of the independent Israeli legal advice received, let alone deploying it. By so doing the NCA has chosen to limit, in this way, the evidence upon which Mr Justice Popplewell will have to consider, in this respect, whether to make an order for costs on an indemnity basis. That is a choice the NCA has made and it is fully entitled to make it.Accordingly, in my judgment, this application for disclosure and inspection of any document containing or recording the advice received by SOCA from the Israeli legal expert in June and November 2011 fails and is dismissed.
OTHER POSTS ON WAIVER OF PRIVILEGE
The defendant was not so fortunate in Mid-East Sales -v- Engineering & Trading Co  EWHC 892 (Comm) where privilege was waived. See Waiving Privilege by mentioning legal advice in a witness statement: a case in point