Privileged few

Two recent High Court decisions have considered the rules on privilege asserted over a selection of documents and the rules on waiver '“ issues which arise relatively frequently in practice, but far less frequently in case law.

Selection of documents

The general principle and starting point is that documents do not become privileged just because they are submitted to lawyers for the purpose of advice or litigation. There are, however, a number of small exceptions to this general rule.

One is the rule in Lyell v Kennedy (No 3) (1884) 27 Ch D 1 CA, which was considered recently by Mr Justice Eady in Imerman v Tchenguiz and others [2009] EWHC 2902.

The Lyell case, as subsequently interpreted, decided that where a selection of documents which a solicitor has copied or assembled betrays the trend of the advice which he is giving the client, the documents are privileged.

In Imerman, an order had been made requiring the return of certain hard copy documents and the deletion of certain electronic documents. The order did not require delivery or deletion of privileged documents. One of the issues was the status of hard copy documents returned by counsel to solicitors and whether those documents, or any of them, were privileged under the rule in Lyell.

The judge held that the principles in Lyell did not apply because the documents did not come into the defendants' possession by a process of selection; they were in their possession anyway (applying Sumitomo Corp v Credit Lyonnais Rouse Ltd [2001] EWCA Civ 1152).

The judge also did not accept the proposition that underlining or highlighting documents would in themselves give rise to legal professional privilege. The appropriate test to apply was whether or not the markings in question would 'give a clue' to the trend of advice being proffered to the clients by the lawyers. There were, he said, all sorts of reasons why solicitors or counsel might underline or highlight a document.

The judge did accept, however, that counsel's annotations on the papers might be privileged. The appropriate way to deal with this would be to return the documents with the annotations redacted.

The decision in Imerman is further confirmation that the rule in Lyell is going to be of very narrow application in a modern context. The case also makes it clear that just because documents have been sent to '“ or received back from '“ counsel, does not make them privileged per se, although counsel's annotations can be redacted.

Waiver

Dore and others v Leicestershire County Council and others [2010] EWHC 34 is a recent decision of Mr Justice Mann in the Chancery Division on whether there had been collateral waiver of privilege.

The case concerned a dispute over use of a school's premises between a community association, a county council and the governors of the school. During the course of the dispute, the community association had been provided with copies of legal advice taken from time to time by the other parties as to the legal relationship between them. The initial advice had favoured the association's position, while later advice took a different view.

Mann J took as his starting point the basic principles set out in his judgment in Fulham Leisure Holdings Ltd v Nicholson Graham Jones [2006] EWHC 158: it was first necessary to identify the 'transaction' in respect of which disclosure had been made. When that had been done, further disclosure would be necessary to avoid unfairness or misunderstanding of what had been disclosed. The association's argument at its widest was that three sets of legal advice over more than a year had been disclosed and the 'transaction' ought to be treated as all the legal advice received and surrounding documents.

The judge rejected that argument as too broad brush '“ it was necessary, as the defendants argued, to examine each of the relevant acts of waiver and put them in their context. He decided there had been no waiver, in each case the transaction was limited and there was no evidence on which he could conclude that fairness required the production of more documents.

Although cases of waiver will always be fact-dependent, the following points can be taken from the decision:

• If alleging that waiver has taken place, detailed evidence should be put before the court as to why the 'transaction' includes the documents sought and why unfairness will result if disclosure is not ordered. This will involve looking at the circumstances and context of the disclosure, not just at the documents themselves.
• Notwithstanding the court's decision in this case, careful consideration should be given before disclosing privileged material in the first place, given the uncertainty as to what will amount to the relevant transaction and unfairness. In this case, the judge placed emphasis on the fact that the defendants had no purpose in disclosing the documents '“ they were not asserting a positive case in reliance on them.

These cases do not establish new principles but are a useful reminder of how the principles can operate. While the factual background to each was relatively unusual, the particular facts '“ the status of counsel's papers and the effect of referring to legal advice '“ can arise in any case.