Privilege preserved, privilege lost - two recent decisions on privilege

Privilege preserved, privilege lost - two recent decisions on privilege

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Although as a general concept the principle of legal privilege is relatively straightforward (see two recent videos we have recorded here and here as part of our “Dispute Resolution: A Survivor’s Guide” series), knotty issues can arise that require the court to determine if privilege has been lost.

The court is regularly required to deal with requests for disclosure of privileged materials. Below are two recent examples of how the court has approached such requests, arising from very different situations.

ConocoPhillips Co v Chrysaor E&P Ltd [2021] 3 WLUK 524

ConocoPhillips sold certain subsidiary companies engaged in the North Sea oil industry to Chrysaor. Because of that transaction, Chrysaor received wholesale access to emails and documents in the email accounts of the subsidiaries. Following the sale, the subsidiaries’ employees became employees of Chrysaor and the email accounts – some of which contained privileged communications - were copied across to Chrysaor’s systems.

A dispute arose between ConocoPhillips and Chrysaor in relation to rectification of the sale contract. Only a few weeks before the start of the trial, Chrysaor applied to the court for disclosure of emails and documents that had been transferred as part of the transaction that ConocoPhillips had previously said were protected by privilege. Chrysaor argued that ConocoPhillips could no longer assert privilege in relation to these documents as any confidentiality in such documents had been lost as a consequence of the transaction. Chrysaor had not looked at the material for the purposes of the litigation.

In a short judgment, the judge addressed the key question as to whether confidentiality (a key tenet in establishing privilege) in the documents had been lost. Whilst he acknowledged that there was a high risk it had done so, he was ultimately unpersuaded.

Relevant to his decision was the fact that, although Chrysaor had been given wholesale access to the email accounts as result of the transaction, the sale contract provisions were not sufficiently broad as to allow access “for any purpose, or for use in the instant type of litigation between a buyer and seller”. Accordingly the judge dismissed Chrysaor’s application for access to these privileged materials.

Whilst the judgment is specific to its facts, it illustrates that in certain circumstances privilege contained in materials provided to another party may still be “live”. As a practical point, a party in a similar situation should be cautious about providing email accounts to a counterparty on such a wholesale basis. Consideration should be given to removing privileged material before doing so, or, if this is not possible, providing any documents with a clarification that they are being made available on a confidential basis and that there is no intention that privilege is being waived. 

Scipharm Sarl v Moorfields Eye Hospital NHS Foundation Trust [2021] EWHC 2079 (Comm)

On 10 August 2020 we reported on the case of PCP Capital Partners LLP v Barclays Bank Plc in which the court determined that privilege in legal advice had been waived after more than a “mere reference” was made to it in a witness statement, and therefore such advice should be disclosed (see our article here).

In the recent decision of Scipharm Sarl v Moorfields Eye Hospital NHS Foundation Trust the court ordered disclosure and inspection of attendance notes of conversations between the claimant's solicitors and one of the defendant's employees, which were referred to in a witness statement made by a witness on behalf of the claimant.

The case involved an allegation by the claimant that the defendant had breached a pharmaceutical development agreement. The witness statement in question referred to conversations between the claimant’s solicitors and the witness about the terms of a work-sharing agreement, and attendance notes of those conversations between that solicitor and the witness.

Under CPR 31.14 a party is entitled to inspect a document that is “mentioned in” a witness statement, statement of case, witness summary or affidavit. The defendant sought disclosure of the agreement and the attendance notes under this provision.

The court held that the express reference to the work-sharing agreement engaged CPR 31.14 and therefore ordered that it be disclosed. The more contentious issue was the attendance notes. Although there was no direct reference in the statement to a particular attendance note or notes, the inference was that the content of the statement had been taken from the attendance notes. On the basis that the passages in the statement were “an attempt to rely on the material rather than a passing reference”, the court considered that privilege in those attendance notes had been impliedly waived.

On the issue of fairness - the court determined that it would be unfair to allow the claimant to rely on assertions in the witness statement without disclosure of the underlying attendance notes, particularly given the content of those documents was contradicted by the defendant’s employee.

Again, this judgment is specific to the particular facts of the case. However it is noteworthy given the court’s finding that it was not necessary to identify particular documents for privilege to be waived and CPR 31.14 to be triggered, but that a “sufficient” mention of the existence of those documents is enough.

Although they are contrasting decisions from cases with different subject matter, they highlight how the courts continue to grapple with nuances of legal privilege. The ConoccoPhillips case is particularly interesting as it indicates how parties in corporate transactions need to be alert to issues of privilege, even though a dispute may not be on the horizon.

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