By Jane Larner
One of the more controversial aspects of the CPR was the provision under Part 48 for privileged communications between parties and their lawyers to be disclosed to the other side in the context of the assessment of costs. Part 48.7 contained a wide provision that in wasted costs proceedings against a party's legal representatives "the court may direct that privileged documents are to be disclosed to the court and, if the court so directs, to the other party to the application for an order".
Case Report
In General Mediterranean Holdings SA v Patel & Another an application was made against the defendants solicitors for a wasted costs order (on the basis that the defendants had raised unreasonable points in their defence, and the claimants had therefore wasted costs in having to counter those points by means of admissible evidence). The solicitors then applied under Part 48.7 for disclosure of certain privileged statements made by the defendants to the Serious Fraud Office in the course of other investigations. The defendants argued that the relevant provision of Part 48 of the CPR was "ultra vires" (ie, made beyond the powers of the legislature), and infringed Article 8 of the European Convention on Human Rights. The documents were privileged and should not be disclosed.
The Commercial Court upheld these arguments. The court set out that common law recognises the right to legal confidentiality which arises between a person and his legal adviser as a matter of substantive law. Legal professional privilege is an attribute of that right. While the Civil Procedure Act 1997 (under which the CPR were enacted) gave the Lord Chancellor's Department a general power to "modify the rules of evidence", it did not give a general power to limit a person's right to legal confidentiality. To the extent that the relevant part of Part 48 cut down the substantive right to legal confidentiality, it was therefore outside the powers of the Lord Chancellor's Department.
Moreover, the court found that the defendants had a right of confidentiality under Article 8 of the European Convention on Human Rights in respect of their communications with their solicitors, unless there was justification for the court to interfere with that right. No such justification existed here.
Comment
Following this decision, it is not clear how the courts will be able to assess applications for wasted costs. The judgment given is sufficiently wide to make it clear that a simple re-drafting of the relevant rules will not suffice. The court found that there was no power at all to modify legal professional privilege in the way sought under Part 48. It would appear that this will remain the position, unless legislation is put forward in due course, specifically to remove the right of privilege in those circumstances. However, such a statute may well fall foul of the Human Rights Act 1999, which although not yet in full force, does contain a provision requiring certification by the proposer of new legislation that its provisions comply with those of the Human Rights Act.
This note is intended to provide general information about a recent development which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.
