Hellard & Anor v Mitchell (Rev 1)

By this application the defendant - a firm of solicitors sued for alleged professional negligence - seeks a declaration that, by bringing these proceedings, the claimants (who are the trustees in bankruptcy of a Mr. Clifford Jude Shore) have impliedly waived the obligations of Mr. Shore’s former counsel (Mr. Michael Soole QC and Mr. Ben Elkington QC) to uphold Mr. Shore’s legal professional privilege in respect of the matters in issue in this action, and the confidentiality in the relationship between Mr. Shore, Mr. Soole, Mr. Elkington and the defendant or any of them has been lost.

In accordance with normal practice, the counsel in question were instructed on behalf of Mr. Shore by the defendant solicitors, who had been retained by Mr. Shore to act on his behalf in relation to an allegation of professional negligence against a financial adviser. The claim was dismissed with costs at trial upon limitation grounds. It is alleged that the defendant acted negligently in failing to advise Mr. Shore properly on the limitation issues. The quantum of the claim is approximately £1.3 million, largely representing costs, both Mr. Shore’s and the other side’s.

Both parties to the present proceedings refer to the advice of counsel in their pleadings. The defendant wishes to approach counsel with a view to preparing witness statements. There are a number of matters in issue, the most important being whether or not the defendant was negligent on the limitation issue. That in turn involves whether it was proper for the defendant to rely upon the advice of counsel, and what that advice was. In addition there are issues as to causation, which raises the issue of what Mr. Shore’s attitude would have been had he received certain advice. Light on the causation issue may be shed by what Mr. Shore’s attitude in fact was to the advice he did receive.

Mr. Khangure, who appears for the claimants, accepts that the mere bringing of these proceedings operates as a waiver of privilege in relation to the entirety of the solicitors’ file in the previous proceedings including all advice given by the solicitors or relayed to the client through the solicitors by counsel. The waiver extends, as is conceded, to solicitors’ attendance notes of conferences with counsel and to the deliberations of the solicitor, including deliberations with counsel, which may or may not be recorded on the solicitors’ file.

That concession was inevitable in light of the fact that the claimants have chosen to sue Mr. Shore’s solicitors in respect of the advice that they gave him. This automatically results in waiver of privilege. It is now accepted that the claimants as Mr. Shore’s trustees in bankruptcy have power to waive privilege. Moreover, the waiver of privilege extends, as is also conceded, to the entirety of the solicitors’ advice. That is because fairness requires that, once there has been a waiver, the client cannot in circumstances like the present cherry-pick between the bits of privileged material to be revealed.

These concessions were based upon the Court of Appeal’s decision in Paragon Finance PLC & Others v. Freshfields [1999] 1 WLR 1183. In that case, the defendant solicitors, who had acted for the claimants in entering into a series of transactions, were sued by the claimants for alleged professional negligence. That operated as a waiver of privilege in relation to all communications between the parties relating to the pursuit and settlement of claims arising from those transactions. However, what was sought was disclosure, not of communications between the parties, but between the claimants and new solicitors who took over the claims when a conflict was perceived. It was held that the waiver did not extend to the communications with the new solicitors. There had only been a waiver in respect of communications with the defendant solicitors until they ceased to act. Though it was accepted that all relevant communications between client and solicitor were impliedly waived by the bringing of proceedings, that did not extend to the communications with the new solicitors, because they were not sued. The privilege was absolute and, in the absence of waiver, there was no discretion, whether on fairness or other grounds, to override that privilege.

That case therefore reaffirms both the implied waiver of privilege that results from proceedings by the client against the solicitor, and the inability of the client, in the context of that implied waiver, to cherry-pick and disclose only some of the relevant communications or other material covered by privilege and confidentiality as between the client and solicitor being sued. Subject to implied waiver, the absolute nature of privilege is also reaffirmed.

Mr. Khangure (who appears for the claimants) asserts that privilege attaching to any papers still in counsel’s possession but to which the clients and solicitors were not necessarily privy (such as counsel’s working papers), or counsel’s own note of any conferences, or his recollections of what occurred during the course of advising and preparation, remain privileged - notwithstanding the bringing of these proceedings - because counsel have not been sued and the waiver of privilege in relation to the solicitor’s file, or what remains in the solicitor’s mind, does not extend to what is amongst counsel’s papers, and what counsel may now recall.

The point, curiously, does not seem to be governed directly by any authority, possibly because the point has not been taken in quite that form before. In my judgment, Mr. Khangure’s approach is, with respect to him, erroneous. Privilege attaches to confidential communications between solicitors, counsel and their clients. Once there has been a waiver in relation to those communications, any evidence as to those communications can be adduced, including the evidence of anyone who was privy to the giving of the advice in question. The actual decision in Paragon does not cover this situation, as the new solicitors were not acting jointly with, or as agents of, the former solicitors. There was a new and separate retainer.

I can demonstrate the soundness of my conclusion by an example. In the present case, let us suppose that the critical advice is the subject matter of an attendance note on the solicitors’ file. It is accepted by Mr. Khangure (as I have said) that that attendance note is not privileged. The bringing of these proceedings has had the effect of waiving privilege in relation to that attendance note, but what is the attendance note? The attendance note is merely a record of what was said at (let us suppose) a particular conference by counsel, by the solicitors and by the client. Let us now suppose that there is an issue as to whether the attendance note is accurate. The solicitor and the client can give evidence about it. But, according to Mr. Khangure, counsel cannot be approached by the defendant to give evidence about it, because the client is entitled to maintain privilege in relation to what counsel recalls, or in relation to what may be in any attendance note which counsel may have made.

In my judgment, Mr. Khangure is confusing the privilege which attaches to the communication in question with the evidence that is available once privilege is waived. It is not the evidence, but the communication, which is privileged. Once the privilege attaching to a privileged communication is waived, any available evidence may be called which proves or is relevantly connected to the particular communication. That communication has lost its confidentiality and its privileged character. The only limiting factor to the evidence that may be called then is, as is in the case of all other evidence, relevance. Once that is accepted then, in my judgment, the rule or presumption against cherry-picking applies not just to what is in the solicitors’ file and mind, but to what is in anyone else’s file and mind who was party or privy to the communication in question. Privilege has been waived in relation to counsel’s advice, and counsel can therefore be asked about it, including before the trial itself, by any party to the proceedings, and may give a witness statement to that party.

Having waived privilege in relation to counsel’s advice, the claimant cannot, in my judgment, pick and choose which bits of counsel’s advice or deliberations can properly be withheld from the court. The waiver, as a matter of fairness, must extend to the entirety of counsel’s recall - working papers and notes - and not just to the bits of it that the claimant may hereafter choose to reveal or the bits of it which he has already chosen to reveal by referring to counsel’s advice in the pleadings.

I was subjected to a close analysis of the Paragon and other decisions. In my judgment, the point for me is one of first principle and should be answered in the way that I have indicated. Some support for my conclusion is also derived from the judgment of Mr. Justice Coleman in Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow and Others [1995] 1 All E.R. 976 where he said (cited at para.119(1)(b) to (f) of Paragon):

“The true analysis of what the courts are doing in such cases of so-called implied waiver of privilege is, in my judgment, to prevent the unfairness which would arise if the plaintiff were entitled to exclude from the court’s consideration evidence relevant to a defence by relying upon the privilege arising from the solicitor’s duty of confidence. The client is thus precluded from both asserting that the solicitor has acted in breach of duty and thereby caused the client loss and, to make good that claim, opening up the confidential relationship between them and at the same time seeking to enforce against that same solicitor a duty of confidence arising from their professional relationship in circumstances where such enforcement would deprive the solicitor of the means of defending the claim. It is fundamental to this principle that the confidence which privilege would otherwise protect arises by reason of the same professional relationship between the parties to the litigation. The underlying unfairness which the principle aims to avoid arises because the claim is asserted and the professional relationship opened for investigation against the very party whose duty of confidence is the basis of the privilege. It is against the unfairness of both opening the relationship by asserting the claim and seeking to enforce the duty of confidence owed by the defendant that the principle is directed.”

Mr. Flenley (who appears for the defendant solicitors) relies upon the reference to the unfair exclusion of evidence. This, he rightly says, demonstrates that it is not just documents or particular pieces of evidence which are affected by waiver, but all evidence of or reflecting privileged communications and material is opened up, once privilege is waived generally by the bringing of proceedings.

For similar reasons, in my judgment, the waiver extends to working papers and deliberations of counsel to which the solicitor may not have been directly privy. Those working papers and deliberations - which must, if privileged at all, have been based upon or reflected the instructions received by counsel or legal advice given or to be given by him - are equally subject to implied waiver because fairness requires that by the bringing of these proceedings, which include references in the claimants’ own pleadings to the advice of counsel, the defendants should be entitled to rely upon all evidence concerning relevant privileged communications.

I emphasise that I am not saying that fairness alone is a reason for overriding privilege. Fairness is relevant to determining the extent of the waiver, once waiver is established. Fairness requires the avoidance of cherry-picking in circumstances such as the present, and justifies Mr. Flenley’s submission that the confidentiality and privileged nature of the relationship between the client, solicitors and counsel has (at least as between these parties) gone in its entirety. I will therefore, subject to any argument as to wording, make the declaration sought by Mr. Flenley and will hear counsel on any consequential matters.