Introduction
Facts
Decision
Comment


Introduction

In the recent decision of Jinxin Inc v Aser Media PTE Ltd and others,(1) Mr Simon Salzedo KC (sitting as a Deputy High Court Judge) provided a helpful overview of the law on confidentiality and privacy where a claim to legal professional privilege is made, highlighting that the two should not be equated.

The claimant, Jinxin, applied for a declaration that certain defendants to its claim were not entitled to claim privilege over potentially relevant documents that Jinxin had collected from a third party. The application was dismissed. In reaching this decision, Mr Salzedo KC disagreed that a reasonable expectation of privacy was the "touchstone" of confidentiality, instead favouring the test that confidentiality arises when information has been imparted in circumstances importing an obligation of confidence (which is not a binary test).

Applying this to the present case, Mr Salzedo KC found that a right of access by an employer to an employee's documents held on an employer's systems did not result in a wholescale loss of confidentiality (and therefore privilege) as against the employer.

Facts

The claim itself has arisen from the insolvency of a company, MP & Silva Holding SA (MPS), of which Jinxin had purchased 65% of the issued shares from a group of vendors, which included certain of the defendants (the "tort defendants"). Jinxin alleges that those defendants had made various fraudulent misrepresentations inducing it to enter into the share purchase agreement, which resulted in loss. Jinxin seeks rescission of the agreement or, in the alternative, damages.

In around September 2018, Jinxin acquired (with the agreement of MPS) extensive information from MPS's email servers and computer drives. The data collected included the email mailboxes and other documents used by the tort defendants. To reduce the risk that Jinxin's legal team would review material that was legally privileged to the tort defendants, keyword searches were applied and approximately half of the 1.5 million documents collected were "quarantined".

Jinxin sought a declaration that the tort defendants were not entitled to claim privilege over those documents on the grounds that the tort defendants could not have a reasonable expectation of privacy over them and, therefore, the documents were not confidential as against Jinxin. This declaration was essentially on the basis that the tort defendants had used email and other IT facilities provided by MPS for personal purposes in circumstances where they could be taken to be aware that MPS might monitor their accounts and that other employees had access to their accounts.

Decision

Noting that confidentiality is a prerequisite for legal professional privilege, Mr Salzedo KC disagreed that a reasonable expectation of privacy was the "touchstone" of confidentiality. Privacy and confidentiality protect different legal interests and rest on different legal foundations so they should not be equated. When applying the test for confidentiality, Mr Salzedo KC found that it was more helpful to consider this directly on the basis of the established position in Coco v AN Clark (Engineers) Limited(2) – that is, for confidentiality to apply, that information must have been imparted in circumstances importing an obligation of confidence.

Summarising the authorities on confidentiality, Mr Salzedo KC noted that confidentiality itself is not simply a quality which information either has or does not have; it may be viewed as a relationship between information, persons and uses, which is to be identified from all the circumstances that indicate to a reasonable person what kinds of use a person is or is not entitled to make of the information.

Mr Salzedo KC determined that the circumstances of this case did not entail an automatic loss of confidentiality, and therefore of privilege, as against MPS and by extension Jinxin. Only the most fastidious would implement full segregation between work and private emails. While MSP had policies in place to intercept employee communications "where necessary", that would not reasonably have led staff to understand that the company could search the data on their servers for private information for any purpose whatsoever, including collateral gain. To do so would be to apply, wrongly, a binary test to confidentiality (ie, that something is either always confidential or it is not). Mr Salzedo KC held that confidentiality, and therefore any privilege, in the relevant documents had not been lost on a blanket basis simply by virtue of being held on MPS' systems, and Jinxin was therefore not entitled to review the entire pool of documents freely.

Mr Salzedo KC stated that, even if this conclusion was wrong, it was unsafe to make the declaration sought by Jinxin based on limited information and without evidence of the documents' actual content.

Comment

Although not cited in the judgment, the outcome is similar to that in Shepherd v Fox Williams LLP(3) in which access from and storage on a third party's servers was held not to waive privilege. It therefore reaffirms that a party's ability to access communications (such as an employer's ability to review employee communications on its servers) does not mean that those documents automatically lose confidentiality and therefore privilege. Although each case turns on its own facts, as the Mr Salzedo KC noted, the strong policy of the law in favour of legal privilege as a substantive right is rarely overridden.

As a result of the decision, the parties in this case will have to reconsider how the large pool of quarantined documents can be reviewed for the purposes of disclosure. As at the date of judgment, they had not reached agreement. More interesting decisions on privilege may be to come.

For further information on this topic please contact Nadia Asfour or Davina Given at RPC by telephone (+44 20 3060 6000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.

Endnotes

(1) [2022] EWHC 2856 (Comm).

(2) [1968] FSR 415 (at [419].

(3) [2014] EWHC 1224 (QB).