Mid-East Sales v Engineering & Trading Co (2014)

This case will sound a warning bell to legal advisers. The High Court found that legal professional privilege in respect of legal advice given to a defendant had been waived as a result of the advice being mentioned in witness statements in such a way as to cross the line from reference to deployment.

In a witness statement on the second defendant’s (Islamic Republic of Pakistan (IRP)) behalf, it was stated that having received legal advice, IRP had returned the claim form after service for jurisdictional reasons. A later witness statement stated that IRP’s position had been based on incorrect legal advice. The claimant (Mid-East) applied for disclosure of  the legal advice mentioned. The issue was whether the statements made in those two witness statements amounted to a waiver of legal professional privilege in respect of the legal advice.

The High Court held that they did. The Court emphasised that there was a distinction between on the one hand, a reference to the fact of legal advice and on the other hand, reliance on its contents. That distinction reflected the established policy  of not finding a waiver without good reason and of confining waivers to situations where a party relies on the legal advice for some purpose. The overriding principle that the Court had to apply was fairness.

In this case, the legal advice was pertinent to the question of delay and whether the court should exercise its discretion  to set aside the default judgment. The Court held that the two witness statements crossed the line from reference to deployment of the legal advice. The statements made the case that IRP was acting on legal advice when responding to the claim form in the way that it did. The legal advice was relevant because IRP had relied on it as a factor relevant to the exercise of the court’s discretion whether or not to set aside  the default judgment. The Court commented, “Now that the second defendant has invited the court to exercise its discretion on the basis that it was acting on legal advice, it may be highly relevant to know what that advice was.” In light of this analysis, the Court concluded that there had been a waiver of privilege in the  legal advice referred to in the witness statements and fairness required that the Court and the claimant should have the opportunity to see it.

http://www.bailii.org/ew/cases/EWHC/Comm/2014/1457.html