In-house lawyers and litigation specialists know to keep legal advice confidential to maintain privilege within it. However, a recent case suggests that mere reference to legal advice could render it disclosable. Although the decision needs to be considered in context parties will now need to be particularly careful when referring to the fact that legal advice has been taken and, importantly, relied upon.
PCP Capital Partners LLP and another v Barclays Bank Plc [2020] EWHC 1393 (Comm) - The facts
Following the financial crisis in 2008, Barclays sought to raise at least £6.5bn through private investors. The state of Qatar and related entities offered to invest £2bn. PCP, an investment consortium, agreed to invest £3.25bn.
PCP subsequently brought an action against Barclays for c. £1.6bn, alleging that Barclays had misrepresented to it that PCP would derive the same benefits from the investment as the Qataris. PCP asserted that the Qatari investors had received further sums from Barclays under a number of advisory services agreements (ASAs) which it contended were sham agreements. Barclays replied that it had obtained legal advice that such agreements were lawful.
Separately, the Serious Fraud Office had brought criminal charges in relation to the same matters against Barclays and four senior Barclays executives. In those proceedings certain documents were provided by Barclays under a limited waiver of privilege, and referred to in open court, thereby losing their privileged status.
Barclays’ witness statements and Barclays’ written opening submissions stated that legal advice had been taken as to whether the ASAs were sham agreements. Based on that, PCP brought a late application for disclosure of the legal advice Barclays had received asserting that any privilege had been waived. Pursuant to CPR 31.14 (a useful tool in the armoury of a litigation lawyer) an opponent in litigation is entitled to see documents referred to in any statements of case or witness evidence.
In response, Barclays submitted, amongst other arguments, that (i) there had been no such waiver and (ii) in any event the references were to documents that had already been disclosed as part of the SFO investigation.
The decision
The Court made the disclosure order sought by PCP.
Mr Jenkins for Barclays had said in his witness statement “Without any waiver of privilege by me, I can say that I took comfort from and adhered to the lawyers' advice in these matters”. The judge held that by saying this, Mr Jenkins was doing more than simply referring to the fact of advice – in the context of this particular case, it amounted to a general statement that he followed the lawyers' advice, or that lawyers approved of it, or that they had advised that it was lawful. The judge also held that Mr Jenkins was relying on that advice because he was saying that he followed it in connection with the ASAs.
Summarising the law on waiver of privilege Mr Justice Waksman indicated that trying to define definitive circumstances where a waiver has occurred was impractical. He expressed the view that the typical ingredients of waiver will be where (i) the reference to the legal advice is sufficient and (ii) the waiving party must be relying on that reference to support their case on an issue before the court. In his words:
"I give two examples of what is clearly not waiver. First, a purely narrative reference to the giving of legal advice does not constitute waiver. This is because, on any view, there is no reliance upon it in relation to an issue in the case. Nor does a mere reference to the fact of legal advice along these lines, 'My solicitor gave me detailed advice. The following day I entered into the contract'. That is not waiver, however tempting it may be to say that what is really being said is 'I entered into the contract as a result of that legal advice'. The corresponding point is that if that latter expression is used, then there will be waiver."
He also went on to consider the point that has troubled practitioners for some time, namely that waiver cannot arise if the reference to legal advice is limited only to the effect of that advice, as opposed to the content of the advice where it will (as set out in Marubeni v Alafouzas [1986] WL 408062).
The distinction between reliance on content and reliance on effect is not an easy one to draw, and the judgment shows that such a “mechanistic” test is not always a logical approach. Nevertheless, the Court considered that there was much to support the basic position that had been espoused in Marubeni. In its view, the content of the Barclays’ statements had gone further than simply referring to the fact that advice had been received. Even though the content of the advice had not been set out, the detailed references to the involvement of lawyers and the fact that “comfort” had been taken from the advice that the ASAs were lawful and legitimate, in the context of the issues before the Court, were sufficient to establish a waiver of privilege.
The Court also rejected Barclays’ argument that there could not have been a waiver of privilege as the documents referred to were no longer privileged in any event, having lost their privileged status as a consequence of being disclosed in the SFO action. Its view was that it was wrong to suggest that a once-privileged document is always treated as “no longer privileged”. To do so would allow a party to circumvent the consequences of a waiver by intentionally making public the documents to which the waiver relates.
Impact of the decision
This decision highlights that a party who refers to receiving and relying on legal advice walks a fine line between (i) such a reference waiving privilege in that advice, and (ii) it remaining protected from disclosure. Because of the risk of waiver, it is unusual for practitioners to prepare documents as part of litigation that openly reference the fact that advice has been received, let alone the content of that advice and that it was relied upon. Parties intending to do so will have to weigh up the benefits to their case of making such a reference as against the risk of waiving privilege in that advice.
Sarah Murray
Catherine Penny