Privilege vs open justice (Dechert v ENRC)

door lockThe Court of Appeal in Dechert LLP v Eurasian Natural Resources Corporation Ltd [2016] EWCA Civ 375 has dismissed an appeal and upheld a decision that a detailed assessment of client-solicitor costs under section 70 of the Solicitors Act 1974 (SA 1974) be held in private under CPR 39.2(3). In doing so, it found that, in the circumstances of this case, protecting ENRC’s fundamental right to legal professional privilege (LPP) outweighed the fundamental general principle of open justice.

It also found ENRC’s waiver of privilege in relation to these taxation proceedings had been for a limited purpose only. This case is of particular interest to practitioners in its consideration of the extent to which privilege is waived by a client bringing proceedings against their former solicitors (whether they be costs assessment or professional negligence proceedings) and for its discussion of the distinction between waived and lost privilege.

Four practical implications

  1. As the 'recipient' of privileged material, be aware of the extent to which such privilege may have been waived for a limited purpose and the restrictions this may place on your ability to use this material for other purposes
  2. Consider alternatives to a private hearing, including:
    • a hearing which is part public and part (namely when dealing with the privileged documents) private
    • restricting or prohibiting the subsequent use of disclosed documents under CPR 31.22(2)—see Practice Note: Disclosure—subsequent use of disclosed documents — Rule 31.22(2)—protecting disclosed documents
  3. Where your reasons for a public hearing are to seek to protect your reputation and/or clear your name over allegations made in the proceedings, consider requesting the court to order the publication of any judgment (even where that hearing took place in private)
  4. Consider the distinction between privileged and confidential information and the impact that distinction could have on, for example, an application for a private hearing.

The appeal—background facts

ENRC had applied for a detailed costs assessment of Dechert's bill of costs to be held in private under CPR 39.2(3). Initially, the application had been dismissed by a Master but was subsequently allowed by Roth J on appeal. This judgment is of the further appeal in which Dechert sought to overturn Roth J's decision that the detailed costs assessment be heard in private.

For a detailed analysis of the parties’ arguments and the judges’ findings in this decision, see link at the end of this article.

Summary of key findings

In dismissing the appeal and upholding Roth J's decision that the taxation be heard in private, the Court of Appeal considered the following key issues:

Private hearing—court's inherent jurisdiction

Lady Justice Gloster 'had no difficulty in concluding that the judge's conclusion, namely that these proceedings should be heard in private, was correct' (para [40]) and found, among other things:

  • in the circumstances of this case, the fundamental human right of privilege outweighed the fundamental principle of open justice
  • a private hearing was necessary where 'the public deployment' of those privileged documents could risk:
    • ENRC incriminating itself leading the Serious Fraud Office to a line of enquiry, and/or
    • ENRC's entitlement to rely on a presumption of innocence
Extent to which privilege may be waived for a limited purpose

Lady Justice Gloster found 'the authorities clearly demonstrate that there is a concept of waiver for limited purposes and that this is clearly what happened in this case'. More particularly:

  • an application for detailed assessment of inter partes costs 'may necessarily entail some waiver of privilege'. However, applying Goldman (and, post CPR, Hollins), any such waiver is:
    • limited
    • temporary, and
    • extends only to the opposing party and the judge
  • there was ‘no reasoned basis for drawing a distinction' in the context of limited purpose privilege between solicitor-client and inter partes taxation
  • this form of implied waiver is limited such that it would be disproportionate for the 'recipient' to use the 'otherwise confidential material' for purposes other than for the limited purpose (ie the relevant proceedings) for which the privilege was waived (NatWest v Bonas).

Further Guidance

Lexis®PSL Dispute Resolution subscribers enjoy a wealth of more expert analysis:

Click here for a free trial to access if you are not a PSL subscriber.

 

Filed Under: News , Privilege

Relevant Articles
Area of Interest