Nicola Sharp of Rahman Ravelli considers the principle of waiver of privilege.

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The issue of lawyers’ advice contained within witness evidence and the waiving of privilege was examined in the case of PCP Capital Partners LLP and another V Barclays Bank plc [2020] EWHC 1393 (Comm).

 Privilege is an absolute right and entitles a party to withhold evidence from production to a third party or a court. This right is intended to protect the relationship between lawyer and client. The general rule is that privileged documents cannot be ordered to be provided in litigation unless this is as a result of a waiver: a party may choose to waive privilege in a document or part of a document which is helpful to their case.

But the case of PCP Capital Partners LLP and another V Barclays Bank plc [2020] EWHC 1393 (Comm) demonstrated that choosing to waive privilege can have unexpected consequences. The courts may interpret the waiver as extending further than first envisaged by those who waived privilege.

Where a party makes an application for documents based on a waiver of privilege, the court must consider two questions:

·         Has there been a waiver of privilege?

·         If so, is it appropriate to order production of privileged documents other than those to which reference has been made, which amounted to the waiver in the first place?

In this case, the court was required to assess whether:

·         The allusion to privileged material was sufficient to amount to a waiver of privilege.

·         Whether the party waiving privilege was relying on the material in some way to support the merits of their case.

The Case

PCP Capital Partners LLP (PCP) brought a claim for losses up to £1.6 billion against Barclays in relation to its fundraising during the financial crisis of 2008. PCP alleged that Barclays had said that PCP would receive the same consideration for its investment as the state of Qatar and various related entities who had also invested. PCP contended that this representation was knowingly false because the Qatar entities received a further £280 million disguised as consideration payable for advisory services under written advisory services agreements (ASAs). PCP contended that all the ASAs were shams.

PCP issued an application for specific disclosure of contemporaneous documents related to the ASAs, which had been withheld by Barclays on grounds of privilege.

PCP’s application relied on two points:

·         That references to legal advice concerning the ASAs referred to in Barclays’ witness statements and opening submissions was sufficient to constitute a waiver of privilege (waiver by reliance),

·         As a result of that waiver, privilege had been waived over all of the otherwise privileged documents relating to the ASAs (collateral waiver).

Waiver by reliance: The judge confirmed a purely narrative reference to the giving of legal advice would not constitute waiver because there was no reliance on it in relation to an issue in the case. The judge found that the detailed references in the witness statements to the involvement of lawyers and reliance on their advice amounted to more than simply referring to the fact of the advice. Here, the witnesses were relying on the advice to improve Barclays’ case on the issues surrounding the ASAs.

Collateral waiver, also known as the “cherry picking rule”: The cherry picking rule says that a party who relies on privileged material to support its claim may be required to disclose other privileged material relating to the same issue or transaction. The principle is designed to avoid the unfairness which might result if the court were denied the full picture.

Although Waksman J noted that there is no succinct or clear definition of when waiver arises, the judge held in this case that there had been a collateral waiver and ordered Barclays to disclose the contemporaneous documents concerning the ASAs, as sought by PCP.

Conclusion

This judgment serves to emphasise that the test to be applied is highly nuanced and will depend on the facts and context of each particular case. As such, it makes it very difficult to predict the outcome of an application for disclosure on the basis of waiver of legal professional privilege.

In short, parties and their lawyers should carefully consider the potential impact of providing documents on a limited waiver basis, and assess whether the reference to legal advice is necessary at all, given the risk of collateral waiver over further documents.

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