The UK High Court has held that references in witness statements and opening submissions to 'taking comfort' from legal advice and relying on and trusting internal lawyers constituted a waiver of privilege over all legal advice relating to that issue and that therefore that advice must be disclosed.
In doing so, Waksman J considered the traditional distinction that references to the content of legal advice will waive privilege and that references to its effect will not, but held that the deciding factor was reliance: whether there was reliance on privileged material, the purpose of that reliance, and the particular context of the case.
Although the references in the present case were to the effect of the legal advice, they were made to demonstrate that lawyers approved the transaction as lawful and that witnesses understood it to be lawful. These issues went to the heart of the case, and therefore constituted a waiver of privilege.
Waksman J also rejected an argument that collateral waiver could not apply because the documents in question had already been referred to by the SFO in open court in separate criminal proceedings, and were therefore no longer privileged. A once-privileged document did not become irrelevant from privilege considerations after that time, and collateral waiver could take place in two stages.
In PCP Capital Partners LLP and another v Barclays Bank Plc, which is currently being heard by the High Court, PCP alleges that following the 2008 financial crisis, Barclays represented to PCP that its Abu Dhabi investors would receive the same pro rata consideration for their investments in Barclays that other investors from Qatar would receive.
PCP is claiming that this was a false representation because Barclays entered into additional advisory services agreements (ASAs) with the Qatari investors, in order to increase their overall remuneration. PCP brought its application for disclosure of Barclays’ privileged documents one week before trial.
Prior to this civil case, the Serious Fraud Office (SFO) had brought related criminal charges against Barclays (which were dismissed) and certain of its senior executives (who were acquitted).
In advance of this criminal trial, Barclays had provided various privileged documents to the SFO pursuant to a limited waiver. Some of these documents were referred to in open court and so lost their privilege ('the open documents').
However, those documents which were provided to the SFO but were not referred to in open court retained their privilege outside the scope of the criminal trial ('the non-open documents').
Waiver by reference
The traditional view is that in order to waive privilege a reference to legal advice must normally be to its content rather than its mere effect.
However, Waksman J considered that an overly mechanistic application of this distinction 'has no logic nor any underlying principle', and held that courts should analyse whether there was reliance on the legal advice, and the purpose and context of this reliance, with an overriding objective of achieving a sense of fairness. He held that where one of the witness statements explained that the witness 'took comfort from and adhered to the lawyers’ advice', these words were equivalent to saying that the lawyers advised the witness that Barclays’ conduct was lawful, which went to the issue of whether there was a false representation.
Another statement, in which a witness explained that he 'relied on and trusted [Barclays’ internal lawyers] to identify any legal issues' with the ASAs, was interpreted to mean the same thing, as did passages in the opening submissions, which explained that 'the close involvement of lawyers (for both Barclays and Qatar) makes the allegation of sham still more improbable'.
The Court concluded that Barclays included these sentences to assist their case by suggesting that the conduct was lawful and was regarded in that way by the witnesses, and that therefore it was plain that waiver had occurred.
Collateral waiver over publicly available documents
Barclays argued that all of the references to legal advice concerned the Open Documents and that given they had already lost their privilege, a reference to them could not constitute a collateral waiver of privilege.
To prevent ‘cherry-picking’, it is not normally possible for a party to avoid giving rise to a collateral waiver by making a document public prior to relying on it. However, Barclays argued that:
- the SFO, and not Barclays, had made the open documents public; and
- PCP was not prejudiced by being unable to see the non-open documents, because the SFO’s decision to not refer to them in open court shows that they weren’t particularly important.
However, the Court held that:
- the privilege belonged to Barclays, and it was involved in the deployment having provided the documents to the SFO (albeit under a limited waiver); and
- PCP should not be bound by the SFO’s decision as to which documents were most relevant. Waksman J therefore held that Barclays’ references to the open documents could constitute a collateral waiver, including a waiver of privilege over the non-open documents.
Scope of the waiver
The Court held that Barclays was relying on all the references to legal advice that it received about the lawfulness of the ASAs and the waiver therefore applied to all of it. Waksman J considered that without knowing the 'full picture', PCP would be unable to properly cross-examine Barclays’ witnesses.
End of the content/effect distinction?
In light of this decision, it may be more difficult to rely on the content/effect distinction when drafting witness statements and submissions.
Depending on the circumstances, if a party is alleged to have waived privilege, it may be more prudent for that party to withdraw its reliance on the privileged material rather than disclose it.
The deciding factor was reliance: whether there was reliance on privileged material, the purpose of that reliance, and the particular context of the case.