LITIGATION PRIVILEGE, DECEPTION AND THE ACCIDENTAL DISCLOSURE OF PRIVILEGED DOCUMENTS

In Property Alliance Group -v- The Royal Bank of Scotland PLC [2015] EWHC 3341 (Ch) Mr Justice Birss made some important observations on the scope of litigation privilege when evidence was obtained by deceit. Significant guidance was given on the steps to be taken when privileged documents are obtained by mistake.

KEY POINTS

  • When a party records meetings with individuals in an attempt to gather evidence, but tells the individuals concerned that the meetings are for the purpose of business those  recordings do not attract litigation privilege.
  • A party who wishes to rely on privileged documents which have been accidentally disclosed must apply to court under CPR 31.20 as soon as possible.  Using the documents in the interim period, or applying late, is not permissible.
  • The fact that a party may later proven not to have complied with its obligation to disclose does not excuse a failure to apply promptly under CPR 31.20.

PRACTICE POINTS

This case emphasises:

  • The dangers in attempting to collect evidence by “deception”. Such evidence is unlikely to attract litigation privilege.
  • The importance of considering whether evidence is, in fact, privileged.
  • The fact that an application under CPR 31.20 must be made promptly. It is unwise to rely on any accidentally disclosed documents until the court has given permission.

THE CASE

The claimant was bringing an action against the bank alleging breach of contract and misrepresentation in  the provision interest rate swap contracts.

THE SECRET TAPE RECORDINGS

The managing director of the arranged meetings with two ex-employees of the bank. Ostensibly these meetings were to discuss the transfer of  business to the ex-employees. However, in reality, the claimant wanted to gather evidence in relation to the action against the bank.  The meetings with the ex-employees were, secretly, recorded.  Neither of the bank’s ex-employees knew that the recordings were being made, nor were they aware of the true nature of the reason why the claimants wanted to meet.

THE BANK’S APPLICATION FOR DISCLOSURE

The bank sought disclosure of the tapes of these meetings. The claimant argued that they were privileged.

THE JUDGE’S FINDINGS: DOCUMENTS OBTAINED BY DECEPTION IN THIS WAY ARE NOT PRIVILEGED

The judge considered the law relating to litigation privilege in some detail. He concluded:
  1. I have considered the parties legal submissions in some depth in deference to the argument but in the end I believe the answer is clear.
  2. Plainly, assessed objectively today, Mr Russell’s purpose in arranging the meetings was to gather evidence for the litigation. Equally plainly, assessed objectively today, the purpose of the ex-RBS employees in attending the meeting was to catch up and discuss possible future business. I am bound to say that starting from just these facts, it does not make a lot of sense to pretend that one can distil a dominant purpose from these two clear but entirely divergent purposes.
  3. In my judgment the critical point is that Mr Russell actively deceived Mr Jones and Mr Goldrick. Mr Russell induced them to attend and speak freely by representing to Mr Jones and Mr Goldrick that the meeting was a catch up and was concerned with possible future business. Mr Russell knew or it was obvious to him that they were only likely to attend and speak on that basis. It is the existence of this deception which distinguishes the circumstances from the example of the solicitor taking a proof of evidence relied on by PAG. In this case Mr Russell cannot complain if the court concludes that the fair and correct way of assessing what the dominant purpose of the meeting was, is to look at it from Mr Jones and Mr Goldrick’s point of view. If Mr Russell had not misled these two gentlemen then things might be different but that is not what happened.
  4. I find that the dominant purpose of the meetings was not for the purposes of the litigation. Therefore the meetings were not privileged and so neither are the recordings or the transcripts of the recordings. RBS is entitled to inspection.

THE USE OF DOCUMENTS DISCOVERED BY MISTAKE: THE STING IN THE TAIL FOR THE BANK

The bank had found out about the recordings in a documents that was disclosed by mistake in an email that was a privileged documents.

THE APPROPRIATE STEPS TO TAKE WHEN A PRIVILEGED DOCUMENT IS DISCLOSED BY MISTAKE
  1. CPR r31.20 provides:
“Where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court.”
  1. Before me RBS sought permission under this provision to use the email for the purposes of its application above relating to the recordings and transcripts whose existence came to its attention only as a result of the email. PAG did not seriously oppose the grant of permission and I dealt with that during the hearing. Clearly permission to make the application was appropriate.
  2. However that leaves open a dispute between the parties about what happened after the email was inadvertently disclosed. The circumstances are these. The email was included in disclosure provided for inspection on 15 June 2015 and discovered by Dentons in August 2015. On 28thSeptember RBS’s solicitors Dentons wrote at length to CYK about the email. The letter includes a statement that Dentons anticipated that PAG might wish to claim privilege. CYK confirmed privilege was claimed and correspondence ensued about its basis. In its application notice dated 22ndOctober, supported by a witness statement from Mr Coulthard of Dentons and also statements from Mr Jones and Mr Goldrick dated 14th and 18thOctober, RBS applied for permission under CPR r31.20.
  3. The problem, PAG submits, is that it is plain that RBS and its lawyers made extensive use of the privileged email without the court’s permission, contrary to CPR r31.20. In his witness statement Mr Coulthard admits that use was made of the email (which it plainly was). He states that the email indicated to RBS that there had been serious non-disclosure by PAG of relevant documents (that is of the recordings and transcripts, which I have held were not privileged) and that it was essential to speak to Mr Jones and Mr Goldrick. Mr Coulthard explains that the only use made was as part of the investigation into whether there was a proper basis for claiming relief under CPR r31.20. He states that RBS has made no other use of the email.
  4. The difficulty I have with the stance taken by RBS in this matter starts from the email itself. On its face the Kilty/Rubens email is an email between someone at PAG (Mr Kilty’s email address in the email is johnkilty@pag.local) to PAG’s solicitor with conduct of this case. The date is 15thNovember 2013, after the claim form was issued. The content of the email discusses evidence relating to the case with RBS.
  5. It is clear that the solicitor for one side does not owe a duty of care to the other party: Al-Fayed v Commissioner of Police for the Metropolis[2002] EWCA 780 (Clarke LJ at paragraph 16). Nevertheless considering this particular email, it would have been obvious to any reasonable solicitor that the email was likely to be privileged and that a mistake was likely to have been made. Mr Coulthard’s evidence does not address this at all. His evidence is focussed on what happened later, after the letter of 28th September 2015 was sent to CYK. The evidence does not state when Mr Jones or Mr Goldrick were first contacted but it is apparent from the 28th September letter that they had already been spoken to before it was sent to CYK. The email was obviously identified well before that date.
  6. It is true that after 28th September PAG’s position shifted and the claim to privilege was confused but this has nothing to do with what took place before 28th September and cannot retrospectively justify whatever took place, particularly when the claim to privilege in the email is now accepted.
  7. The fact that the email indicated that there may have been serious non-disclosure by PAG of relevant documents does not alter the fact that RBS needed permission under r31.20 to use the email in order to do what was done. Given the nature of the Kilty/Rubens email a letter should have been written about it as soon as it was identified and if RBS wished to do what they did do, an application for permission to use it ought to have been made at the earliest opportunity. Neither step was taken when it should have been. The legal team for RBS did not have permission to use the email in the manner in which they did at the time and the stance taken on this application does not face up to that. What was revealed by the email itself, and PAG’s subsequent change of position in correspondence, amount to mitigating factors but they do not justify the conduct of the RBS legal team in this matter. It seems to me that an appropriate sanction would be in costs and I will hear the parties about that when this is handed down.

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