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‘Waiving’ Goodbye to Legal Professional Privilege

In Guest Supplies Intl Ltd v South Place Hotel Ltd and another [2020] EWHC 307 (QB), following an application for specific disclosure, Murray J held that communications between a party and its solicitor when referenced in a witness statement can constitute a waiver of legal professional privilege even where there is an express denial of a waiver of privilege. In reaching his decision, Murray J held that using the phrase “without waiving privilege” before referring to a privileged document is not an effective means of preserving privilege.

Applying PCP Capital Partners LLP and another v Barclays Bank plc [2020] EWHC 1393 (Comm), in Guest Supplies, the Court held that it must look at the purpose behind the privileged document being mentioned as set out in a previous blog. As a result of these decisions, it is all the more important for parties to weigh in the balance relying on a privileged document to bolster and strengthen one’s case on the one hand against the risk of this being found to constitute a waiver of privilege on the other given that if the Court determines that privilege has been waived, it must then consider the scope of any collateral waiver to avoid a misleading impression as a result of ‘cherry picking’.

Background

The Claimant supplied amenities to the South Place Hotel in London which was managed by the Defendant companies. In the proceedings, the parties agreed that they had entered into an oral contract, however the terms of the oral contract were in dispute as was the question of whether the oral contract had subsequently been set out in writing in a formal contract.

The Claimant sought damages for breach of the contracts, payment of outstanding invoices and loss of profits for the period of an exclusivity agreement that it says was part of the contractual arrangements between the parties. The Defendants denied the existence of the exclusivity agreement and asserted that the Claimant was only entitled to a small portion of what it claimed.

Specific disclosure

In the underlying claim, the Claimant contended that a document appended to its Particulars of Claim contained the written terms agreed by the parties which it asserted had been executed a few months after the oral agreement was entered into between the parties. During the course of the proceedings, however, it transpired that these written terms were actually recreated by the Claimant just six months before the proceedings were issued. When this came to light, the Claimant then asserted that the document appended to the Particulars of Claim was a reconstruction of an electronic original document containing the agreed written terms between the parties but that the original document had been lost as a result of the theft of a computer belonging to the Claimant.

In a witness statement from the sole director of the Claimant, Mr Aristos Aristodemou. he stated that, “without waiving privilege”, he had recreated the document from an earlier draft which he then sent to his legal representatives in order to ensure they had an accurate account of what the final written agreement, whilst lost, would have looked like between the parties.

The Defendants made an application for specific disclosure under CPR 31.12. The Defendants acknowledged that the material they were seeking was subject to legal professional privilege as it related to communications between the Claimant and its legal representatives. However, the Defendants contended that the Claimant had waived privilege in respect of the material and relied on in Mr Aristodemou’s witness statement in support of this assertion. The Defendants sought access to communications relating to the creation and authenticity of the alleged reproduction of the written agreement between the parties. 

Waiver

Murray J noted that the words “without waiving privilege” which Mr Aristodemou had adopted in his witness statement did not affect the position as to whether there was in fact a waiver of legal professional privilege. He held that the Court had to look at the purpose behind the reference to the document and the surrounding context.

In doing so, the Court held that Mr Aristodemou was relying on privileged correspondence between himself and his legal representatives in order to strengthen the credibility of his reproduction of the alleged written agreement. Murray J therefore ordered specific disclosure of certain communications between the Claimant and its legal representatives.

The scope of the specific disclosure ordered included all communications regarding the same “topic”, i.e. the alleged reproduction of the written agreement. This captured not only communications with the legal representatives regarding the creation of the alleged reproduction but also further communications relating to, for example, follow up points of clarification between the legal representatives and the Claimant.

Learning points

This case builds on the approach adopted by the High Court in PCP Capital Partners v Barclays Bank [2020] EWHC 1393 (Comm) in which Waksman J emphasised the dangers of the ‘cherry-picking’ rule and that the test to be applied regarding collateral waiver of legal privilege is fact dependant. The decision in Guest Supplies emphasises that legal representatives and their clients should take extreme care when relying on privileged material and carefully consider the potential benefits of the reliance against the risk of the reliance being found to constitute a collateral waiver of privilege. Simply asserting that privilege has not been waived will not in and of itself provide a blanket protection to parties.

Perspectives Re PCP Capital Partners LLP

Related Lawyers: Ellen Gracey, John McElroy
Related Practice Areas: Commercial Disputes

Related Lawyers