There have been a number of significant cases relating to privilege throughout the last six months.

Collateral waiver

The case of Kasongo v Humanscale UK Ltd UKEAT/0129/19/LA serves as a useful reminder of the risks associated with collateral waiver.

On the facts of this case, an employer embroiled in an unfair dismissal dispute waived privilege over certain documents (“Documents A”). These documents contained notes of legal advice from the employer’s lawyer and were felt by the employer to assist its case (by suggesting that, at the time of dismissal, the employer did not know that the employee was pregnant).

Even though the employer had only intended to waive privilege over the comments contained in one set of documents, as a result of the doctrine of collateral waiver, the employer inadvertently waived privilege over the redacted legal comments in an entirely separate document (“Document B”) (a draft dismissal letter). This is because Documents A and Document B were “all part of the same transaction which [was] the giving of the legal advice about the dismissal of the claimant… the [employer] having chosen to waive privilege in respect of [Documents A] is precluded from withholding the inextricably linked redactions to [Document B] containing the lawyer’s comments about dismissal”.

Legal practitioners should be mindful of the risks associated with collateral waiver when deciding whether to waive privilege.

Privilege survives the dissolution of a company

The case of Addlesee & Ors v Dentons Europe LLP [2019] EWCA Civ 1600 makes it clear that privilege survives the dissolution of a company.

In this case, attempts by claimants to obtain documents that passed between a company and its solicitors failed, notwithstanding the fact that the company had since dissolved.

The court noted that “once privilege has attached to a communication, it will only cease if waived by the client (or someone otherwise entitled to waive it) or is overridden by statute”.

Without prejudice privilege

In Sternberg Reed Solicitors v Harrison [2019] EWHC 2065, the court grappled with a “novel” point of law, namely whether an offer of settlement, which (as a result of an oversight) was not labelled as being “without prejudice”, could be taken into account for the purpose of deciding costs. The practical implications of the judgment are as follows:

• if a lawyer does not want correspondence made in the course of settlement discussions to be taken into account for the purposes of deciding costs, then it should be explicitly labelled as “without prejudice”;
• if a lawyer does want correspondence made in the course of settlement discussions to be taken into account for the purposes of deciding costs, it should be explicitly labelled as being “without prejudice save as to costs”;
• if a lawyer forgets to label correspondence made in the course of settlement discussions, there is (as a result of this case) a risk that the court will regard the correspondence as being only “impliedly” without prejudice and conclude that it should be taken into account for the purposes of costs (i.e. in practical terms it will be treated as if it had been marked “without prejudice save as to costs”).

Privilege and iniquity

The case of Curless v Shell International LTD 2019 EWCA Civ 1710 underscores how difficult it is for parties to argue that a claim to privilege should be defeated by equitable principles.

On the facts of this case, it was held that correspondence from a lawyer who advised a company that it may wish to use a genuine redundancy exercise as an “opportunity” to dismiss an employee who had repeatedly raised allegations of discrimination was subject to legal advice privilege. Arguments to the effect that this advice was underhand and that the inequity principle should apply to defeat the claim to privilege were unsuccessful, with the court noting that the iniquity exception is usually “confined to dishonesty”.

Settlement agreements and privilege

In the case of BGC Brokers LP and others v Tradition (UK) Ltd and others [2019] EWCA Civ 1937, the court made it clear that:

1. settlement agreements entered into pursuant to “without prejudice” negotiations do not attract “without prejudice” privilege; and
2. emails, subject to without prejudice privilege at the time of creation, can lose their privileged status simply by virtue of having been referred to in a settlement agreement (i.e. they do not have to be appended to it for this to happen).

Parties should take care not to refer to correspondence marked as being “without prejudice” for the purpose of (for example) giving warranties in a settlement agreement. Warranties should be drafted from scratch, without reference to privileged documents.

This article was written by Angela Milner (Senior Associate, Knowledge Development Lawyer).