Elisa Wahnon considers the issue of legal professional privilege in the light of the recent Post Office Horizon IT Inquiry and a dispute between the state of Qatar and Banque Havilland.

In litigation, withholding documents from disclosure on the basis of legal professional privilege is often a bone of contention between parties and can result in the court having to intervene.

Both the Post Office Horizon IT Inquiry and the Banque Havilland case dealt with circumstances where one of the parties assumed that documents under their control would be subject to legal professional privilege and would therefore not need to be disclosed to the other parties.

Waiver of privilege in the Post Office Horizon IT Inquiry

The Post Office Horizon IT Inquiry was established to ensure there is a public summary of the failings that occurred with the Post Office’s Horizon IT system, which led to thousands of subpostmasters being wrongly convicted of supposed accounting shortfalls that appeared on the Horizon system.

In November, the chair of the Post Office Horizon IT Inquiry requested parties involved in the inquiry (namely, Post Office Limited, Fujitsu, the Department for Business, Energy and Industrial Strategy (BEIS) and UK Government Investments (UKGI)) agree to waive privilege over legally privileged documents relevant to the inquiry.

The waiver of privileged material is particularly important to the inquiry because many of the relevant decisions made by the Post Office were made following legal advice. Such decisions span the 20-year period in which the Horizon system was in place and include the Post Office’s decisions to prosecute subpostmasters and vigorously defend the group litigation brought by subpostmasters.

The “terms of reference” (ie the scope of the inquiry) make clear that the inquiry intends to probe how the problems with Horizon resulted in civil and criminal proceedings. Significantly, with respect to legal professional privilege, the inquiry intends to establish a clear account of how the Post Office used information from Horizon when it took legal action against the subpostmasters.

Privilege and public policy

Given the intended scope of the inquiry, it appears contrary to the public interest to allow the parties to withhold documents relevant to the inquiry on the basis of legal professional privilege. However, this is a right enshrined in statute. The Inquiries Act 2005 states that legal professional privilege applies in the same way for inquiries as it does in litigation.

There are several policy reasons for allowing parties involved in a litigation or inquiry to withhold legally privileged documents from production to third parties. The Court of Appeal summarised the case law dealing with these reasons in Lee Victor Addlesee v Dentons Europe LLP [2019] EWCA Vic 1600. The Court of Appeal said:

• Legal advice privilege is a “fundamental human right” and a “necessary corollary of the right of any person to obtain skilled advice about the law”. A person cannot effectively obtain legal advice unless they can put all facts before their advisor without fear that they may be disclosed and used to their prejudice.
• It cannot be overridden by some supposedly greater public interest. In his judgment, Lord Justice Lewison quoted from a judgment in a previous case that said: “The public interest in a party being able to obtain informed legal advice in confidence prevails over the public interest in all relevant material being available to the courts when deciding cases.”
• It can only be waived by the person entitled to it or by statute. However, in the interests of the administration of justice, a party can give a partial or limited waiver of privilege when disclosing a document for a limited purpose only.

The four main parties have now agreed to a general waiver of privilege over documents relevant to the inquiry’s terms of reference. In its response to the chair’s request, BEIS specifically noted that it was its “firm position that the inquiry should not be obstructed by the assertion of legal privilege”.

However, the Post Office, which is owned by BEIS, took a more cautious approach. It agreed “as a general principle” to waive legal privilege for the purpose of the inquiry (ie a limited waiver) over relevant material but maintain privilege over documents relevant to ongoing litigation/remediation activities.

Specifically, the Post Office has maintained privilege over documents relevant to the ongoing group litigation claim in the Employment Tribunal concerning whether subpostmasters were considered “workers” in the context of certain employment legislation. It has also maintained privilege over legal advice related to the Historical Shortfall Scheme and to current and anticipated claims from individuals whose criminal convictions have or will be quashed. (The Historical Shortfall Scheme was set up to independently assess applications from current and former postmasters who believe they may have experienced shortfalls caused by previous versions of Horizon.)

The decision by the Post Office to maintain privilege over certain documents could have wide-reaching ramifications for the inquiry. The Post Office will no doubt have received legal advice connected with the prosecutions against the subpostmasters. If it withholds such advice on the basis that it is relevant to current and anticipated claims from those who have had their convictions quashed, this may lead to gaps in the inquiry.

Recent case law on privilege: State of Qatar v Banque Havilland

The recent judgment in The State of Qatar v Banque Havilland SA (and another) [2021] EWHC 2172 (Comm) also dealt with issues concerning privilege, including waiver of privilege.

This case concerns a presentation prepared by an employee of Banque Havilland about a strategy for trading Qatari currency and US dollar-denominated debt instruments issued by Qatar. This presentation was leaked to the press, which, in the context of the blockade imposed by its neighbours, led Qatar to bring a claim in conspiracy against the bank for attempting to manipulate the market.

The recent judgment dealt with whether a report prepared by the bank’s accountants (PwC) of a forensic/IT investigation it undertook to determine the origin and circulation of the presentation was subject to legal professional privilege. Qatar claimed the presentation was disclosable, but the bank said it was subject to litigation privilege as it was prepared when adversarial proceedings by the Luxembourg regulator, the Financial Conduct Authority and Qatar were expected.

To establish litigation privilege, the bank had to show that (a) litigation was in progress or in contemplation; (b) the report was produced for the sole or dominant purpose of conducting that litigation; (c) the litigation was adversarial, not investigative or inquisitorial.

Qatar argued that the report was not protected by litigation privilege because the bank did not instruct PwC to prepare the report for the dominant purpose of contemplated litigation. Instead, the dominant purpose was a factual investigation into the origin and leaking of the presentation and to satisfy the Luxembourg regulator’s questions. Qatar also argued that even if the report was protected by litigation privilege, such privilege was waived when the report was shown to the regulator.

The bank relied on the case of Property Alliance Group Ltd v Royal Bank of Scotland plc [2015] EWHC 1557 (Ch), which dealt with whether Royal Bank of Scotland (“RBS”) was obliged to disclose various Libor-related documents over which it claimed privilege. Property Alliance Group Ltd asserted that RBS had waived privilege over those documents when it handed them over to the regulator. RBS had shown the documents to the regulator pursuant to an express non-waiver agreement and for a limited purpose. The judge held that a disclosure under those terms did not amount to a waiver of privilege.

The judge’s view in Qatar v Banque Havilland SA was that the absence of an express non-waiver agreement between the bank and the Luxembourg regulator was not necessarily fatal. David Edwards QC, sitting as a judge of the High Court, said: “The question of whether there has been a general or only a limited waiver requires the court to have regard to all the circumstances, including what was impliedly communicated between the parties and what each must or ought reasonably to have understood.”

The judge held that the report was not protected by litigation privilege as it was not created for the dominant purpose of conducting litigation, so it was not necessary to deal with whether privilege had been waived. However, he noted that he would have needed a good deal of persuading that the circumstances in which the document was provided to the regulators meant that privilege in the report had been waived generally.

Conclusion

So, when and in what circumstances can privilege be waived?

In the Post Office inquiry, there was no question that the parties were entitled to maintain privilege over the legal advice they had previously received. However, they were asked to volunteer to waive it insofar as their privileged documents were relevant to the inquiry.

In Banque Havilland, the claimant asserted that the defendant had waived privilege over the report entirely because it had shown the report to a regulator. Although the judge was not required to decide on this point, he noted it would have been a difficult point for the claimant to succeed on despite the lack of an express non-waiver agreement.

Both the inquiry and the Banque Havilland case demonstrate that privilege is a fundamental aspect of being able to obtain legal advice, and unless done so voluntarily, it will be difficult to waive.

Partner Elaina Bailes comments:

“Parties to litigation can often find themselves in a similar position to Banque Havilland of struggling to assert litigation privilege over a report where a factual enquiry was commissioned well before court proceedings. There is danger in assuming that just because legal advice is taken, this is enough to attract privilege.

“The Post Office Inquiry is a more unique situation but serves as a helpful reminder that as events and litigation evolve over a long period of time, there are a broad range of circumstances where privilege can be lost or waived. Parties should always seek comprehensive legal advice at the outset of any factual investigation to fully understand how legal and litigation privilege will apply in each specific case.”

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