The Queen re Stewart Ford v (Def) The FSA and (Interested Parties) Peter Johnson and Mark Owen

[2011] EWHC 2583 (Admin)

Joint Privilege

The Facts

The Claimants and the interested parties were trying to assert joint interest legal privilege over various e-mails sent to them by their solicitor between February and June 2008. The case concerned legal advice privilege only. The Claimant and Mr Owen (one of the interested parties) were directors of Key Data Investment Services and Mr Johnson was its Compliance Officer. For convenience they were referred to in the Judgment as the “Executives”. They had retained a solicitor on behalf of Key Data to advise in connection with an investigation by the FSA. There was no doubt that the legal advice provided by the solicitor was privileged in the hands of Key Data. Key Data went into administration. The FSA were subsequently provided with e-mails and various attachments by the administrators of Key Data who waived the company’s privilege to those documents. The FSA had relied upon the contents of those e-mails and attachments in the formal investigation reports and warning notices served on the executives pursuant to the Statutory Regulatory Scheme. The administrators explicitly did not, indeed could not, waive any privilege in the documents attaching to the executives.

Various documents were attached to the E-mails and Advices given by the solicitors at the time. The E-mails which had simply forwarded documents from a third party (namely an accountant) had been headed “subject to legal professional privilege” but the argument that they were privileged was not seriously pursued. It was reiterated that the concept of legal professional privilege only applied to communications with a member of the relevant legal profession.

Once the FSA had the documents they apparently realised that some of them were subject to legal professional privilege. They raised the matter with the administrators of Key Data only. It was only when a report was sent to the executives that they realised that material that they claimed was privileged had been in the possession of the FSA.

The Issues

In what circumstances could legal professional privilege be said to be jointly held?

The Decision

Both the Claimant and the Defendant started their submissions from the premise that when two or more legal persons jointly retain the same lawyer, joint interest privilege can arise. Secondly, even when there is no joint retainer the parties have a joint interest in the subject matter of the communication in issue at the time that it comes into existence. It was agreed that only the second aspect was in play in this case because the original retainer letter was with Key Data only. The Judge gave a useful summary of the various authorities from different jurisdictions. Then he referred to the leading authority namely Three Rivers District Council and Others v Bank of England (No. 6) which, in summary, set out that it was clear that for legal advice privilege to be established the person claiming privilege must have the relationship of client with the lawyer concerned. The communications claimed as privilege must be confidential; the question of privilege must be determined by reference to the circumstances which obtained at the time of the communication; assuming the relationship to be confidential, the question is whether the person concerned was the client of the lawyer at the time; if the relationship of lawyer and client is established, the legal advice given will be privileged and inviolate from disclosure in the absence of waiver, or attenuation by statute; the common law of England recognises no balancing exercise of competing public interests in the determination of whether such communications remain privileged.

Mr Justice Burnett said,

“The same principles apply to joint legal privilege but because the interests of persons other than the individual claiming privilege are in play their position must be taken into account when determining whether the joint privilege exists. I do not accept that the test whether the individual concerned “reasonably believed” that he was the client of the lawyer provides a satisfactory test for joint interest privilege. It begs too many questions. Is it to be judged subjectively or objectively? And what are the factors which must be established before belief can be reasonable? Does the belief have to be shared by the others entitled to joint privilege and by the lawyers?”

The Learned Judge went on to say that of course it would be good practice for the retainer letter to set out who the client was and, if the client changed during the course of proceedings, for a fresh letter to be written. However, in default, the relevant facts would need to be demonstrated in order to show there was a sharing of privilege. His Lordship continued, “for joint privilege to arise it is necessary for the facts to demonstrate that all those sharing a privilege and the lawyers concerned knew, or from the objective evidence ought to have known, that they enjoyed legal professional privilege with the others. Evidence of an understanding by the lawyer of potential conflicts of interest may provide some evidential support for joint privilege, but it is not a necessary ingredient. It is not unknown for conflicts of interest to arise but those advising to be slow to appreciate their significance. In my judgment, apart from those cases in which there is no legal distinction between those claiming joint privilege[,] .... an individual claiming joint privilege with others in a communication with a lawyer, when there is no joint retainer, will need to establish the following facts by evidence:-

i) That he communicated with the lawyer for the purpose of seeking advice in an individual capacity;

ii) That he made clear to the lawyer that he was seeking legal advice in an individual capacity, rather than only as a representative of a corporate body;

iii) That those with whom the joint privilege was claimed knew or ought to have appreciated the legal position;

iv) That the lawyer knew or ought to have appreciated that he was communicating with the individual in that individual capacity;

v) That the communication with the lawyer was confidential. The conclusion in this case was that on the evidence there was joint legal advice privilege in the two communications and therefore the FSA could not rely upon those communications in regulatory proceedings against Key Data or the executives.

Comment

Accordingly, if the letter of retainer does not make it clear there must be an investigation as to the factual matrix surrounding the issue. What is clear however is that a lawyer cannot cloak the report of, say, an expert with legal professional privilege simply because the lawyer is the person who sends the document or expert’s report out to the client

TEDR Volume & Issue

TEDR Volume: 
16
TEDR Issue: 
3