Privilege update: accidental disclosure of privileged documents

The April 2014 newsletter considered one aspect of the disclosure process in the case of Rawlinson and Hunter Trustees SA & Others -v- Akers and another.¹ A further decision has seen the Court of Appeal consider the issues involved where privileged documents are disclosed and provided for inspection by mistake.² Given the size and complexity of disclosure exercises in high value litigation, and the consequent potential for mistakes to be made, the Court's decision that the mistake was not obvious may surprise many. It highlights the difficulty in establishing an "obvious mistake" and, consequently, the need to implement a robust disclosure process to ensure that privileged documents are identified and not made available for inspection.

Background

In the course of its investigations into the collapse of the Icelandic bank Kaupthing Bank hf, the Serious Fraud Office (SFO) obtained warrants for the arrest of Robert and Vincent Tchenguiz (Tchenguiz) to authorise the search of the Tchenguiz brothers' homes and business premises. Tchenguiz brought proceedings alleging that the execution of those warrants had caused them significant financial loss and reputational damage.

The case involved an extensive and wide ranging disclosure exercise. The SFO disclosed and provided for inspection three documents that it subsequently claimed had been inadvertently disclosed because they were subject to legal professional privilege and one document over which it subsequently claimed public interest immunity.

Rule 31.20 of the Civil Procedure Rules (CPR) provides that "Where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the Court". The case law on CPR 31.20 establishes that a party is generally entitled to assume that any privilege which might otherwise be claimed in a document has been waived if it is provided to the other side for inspection, but the Court can prevent the use of documents made available for inspection by mistake, or in the case of inspection procured by fraud.³

The decisions

Tchenguiz applied under CPR 31.20 for permission to use the documents. Eder J refused permission. He noted that the size and complexity of the disclosure exercise meant that mistakes were likely to be made and he was influenced by correspondence from the SFO's lawyers at the time the documents were provided for inspection which made it clear that the SFO did not waive privilege over any documents that were inadvertently disclosed.

The Court of Appeal overturned Eder J's decision in respect of the three documents that were subject to a claim of privilege. The Court placed particular emphasis on the fact that each of the documents in question had been read by a qualified lawyer employed by Tchenguiz during the inspection process and, in all three cases, they had believed the documents to have been intentionally disclosed.

However, the Court of Appeal upheld the finding that the document that was subject to a claim of public interest immunity should not be available for use in the proceedings. The Court of Appeal made it clear that the test to be applied for privileged documents disclosed by mistake did not apply to documents that were subject to public interest immunity and the Court was required to undertake a balancing exercise to consider what was in the public interest.

The privileged documents

The first document in question was a briefing note prepared for the SFO. It was common ground that this document was privileged. The question was whether it would have been obvious to a reasonable solicitor that it had been disclosed by mistake. The Court of Appeal held that the suggestion of an obvious mistake was unsustainable. It noted that parts of the document were redacted, suggesting that the SFO was content for the remainder of the document to be disclosed. It was also influenced by the fact that Tchenguiz's inspecting lawyer had not realised the mistake.

The second document was a statement setting out an account of a particular individual's involvement in the SFO investigation. Here the dispute centred on whether the document was actually privileged and in particular, whether it had been created for the dominant purpose of the litigation. The Court of Appeal found that the dominant purpose of the document had been to review the effectiveness of the SFO's investigation procedure and, only to a lesser extent, for the purposes of the litigation. Accordingly, the claim to litigation privilege was not sustained. In any event, the Court held that even if it had been privileged, it would not have been obvious to a reasonable solicitor that it had been disclosed by mistake.

The third and fourth documents were emails exchanged between the SFO and the Treasury Solicitor regarding the filing of a consent order. On the face of it, these documents appeared to be privileged. However, the Court of Appeal emphasised the need to examine the context. Tchenguiz had asked the SFO for information about the preparation of a particular witness statement used in the proceedings and the response from the SFO led Tchenguiz to believe that the answers would be given during the disclosure process. Against that background, the Court of Appeal found that it was reasonable for the solicitors reviewing these documents on inspection to assume that they had been disclosed deliberately. Moreover, as with the first document, the emails contained a number of redactions which suggested that the SFO were happy to disclose the remainder of the documents and the reviewing solicitors had not realised the mistake when inspecting them.

Document subject to public interest immunity

This concerned a powerpoint presentation provided to Tchenguiz by the SFO. The Director of the SFO subsequently issued a public interest immunity certificate in respect of this document which was not challenged by Tchenguiz. The issue was whether, given that it had been inadvertently provided for inspection, it could be used in the proceedings. Did the same "obvious mistake" test apply in the context of mistakenly disclosed documents that were subject to public interest immunity?

The Court of Appeal held that a different approach should apply. The Court emphasised that litigation privilege was a private right to withhold documents that was capable of being waived by parties to litigation. On the other hand, public interest immunity is essentially a public right that is concerned with maintaining the confidentiality of documents which would harm the public interest if allowed to enter the public domain. The Court must therefore consider whether the public interest was best served by restraining any further use of a document that had been inadvertently disclosed or by permitting it to be used. Applying that test, and noting that Tchenguiz had not questioned the public interest immunity certificate issued by the Director of the SFO, the Court held that Tchenguiz should be refused permission to use that document.

Comment

For practical purposes, the most important aspect of this judgment concerns the decision by the Court of Appeal in relation to the documents that were subject to litigation privilege but inadvertently disclosed. Although applying the reasoning established in the Al Fayed case, this decision highlights the difficulty of establishing an "obvious mistake" and, consequently, the need to implement a robust disclosure process to ensure that privileged documents are identified and not disclosed or made available for inspection. It also provides a warning that the scale of the disclosure exercise or pre-emptive attempts to guard against possible mistakes in correspondence will have limited, if any, value. Finally, although applications in civil litigation for public interest immunity are rare, and documents that are subject to public interest immunity being inadvertently disclosed are even rarer, the clarification of the correct approach is to be welcomed.

_Notes

^1. _{Rawlinson and Hunter Trustees SA & Others -v- Akers and another [2014] EWCA Civ 136}
^2. _{Rawlinson and Hunter Trustees SA & Others -v- Akers and another [2014] EWCA Civ 1129.}
^3. _{See the guidance in Al-Fayed -v- Commissioner of Police for the Metropolis [2002] EWCA Civ 780.}