A party that mistakenly discloses documents to its opponent can still assert privilege over those documents provided the mistake was obvious and the opponent has not yet made use of the documents. In a rare decision on what constitutes “use”, the Commercial Court has held that a party could not assert privilege over documents after it had mistakenly relied on those documents in correspondence, which had led to the opponent considering the relevance of the documents to the party’s case.

Background

In Single Buoy Moorings Inc v Aspen Insurance UK Ltd [2018] EWHC 1763 (Comm), the claimant shared certain technical documents with the defendant in pre-action correspondence. Some of the documents were sent to the defendant on multiple occasions in support of different points over a period of two years.

More than three years after the first disclosure, after serving its particulars of claim, the claimant appears to have realised that the documents might in fact be damaging to its case and asserted for the first time that they were subject to litigation privilege and had been disclosed by mistake. Under Rule 31.20 of the Civil Procedure Rules, this meant that the defendant would need the court’s permission to rely on the documents at trial.

The issue

When deciding whether or not to give permission to rely on privileged documents disclosed by mistake, the court applies a list of criteria set out in Al Fayed v Commissioner of Police of the Metropolis [2002] EWCA Civ 780. One of the factors in favour of granting permission is that the solicitor receiving the documents has made some use of the documents before appreciating that a mistake has been made; another, which operates as a “catch-all” provision, is that it would be unjust or unequitable not to give permission.

In the present case, the defendant’s solicitor had read the documents when they were first received in order to evaluate the extent to which they supported the claimant’s arguments, but had not made any reference to them in any statement of case or witness statement by the time the claimant asserted privilege. The claimant argued that simply reading and considering the documents in this way did not amount to “use” for the purpose of the criteria set out in Al Fayed, and therefore the defendant should not be allowed to rely on the documents at trial.

The decision

The Commercial Court held that the solicitor’s evaluation of the documents did amount to “use” and granted permission for the defendant to rely on them at trial. In reaching this decision, the court was heavily influenced by the fact that the documents had not simply been exchanged as part of routine disclosure, but had been deployed by the claimant as in an attempt to persuade the defendant that its arguments were correct. Teare J said that this amounted to inviting the defendant’s solicitor to read them and consider whether or not they supported the claimant’s case. By doing so, he had used them in the course of his professional duty as a solicitor.

Teare J went on to say that even if evaluating the documents was not sufficient to establish “use”, it would be unjust and inequitable to refuse permission for the defendant to rely on the documents in circumstances where the claimant had earlier relied on them in support of its own case. It was “not only fair but also common sense” that where the claimant had invited the defendant to read and consider the documents, the defendant should be allowed to argue that the documents in fact supported its own case.

Other issues

The court was also called upon to decide whether or not certain board papers mistakenly disclosed by the claimant were subject to litigation privilege. The claimant argued that the dominant purpose of the papers was to support a discussion of legal strategies in relation to an ongoing arbitration. However, Teare J held that on the face of the documents, their purpose appeared to be to consider ways of reducing project costs, which would not attract litigation privilege. The claimant’s witness statement in support of its assertion of privilege did not expressly assert that the dominant purpose was for use in the proceedings and did not give any details of the legal strategies that were under consideration. Teare J noted that the burden of proving that a document is privileged falls on the party asserting it and found that the assertion had not been made out.

Finally, the defendant applied for specific disclosure of certain documents relating to the claimant’s attempts to settle a dispute with a third party, and for the removal of certain redactions in the documents which had been disclosed. The claimant argued that these documents and redactions were subject to either litigation privilege or without prejudice protection. Based on an analysis of the timeline, the court accepted this argument in part, but rejected it in relation to a subset of approximately 5,200 documents, including 215 which had been redacted. The claimant was ordered to conduct a fresh review of these documents to determine whether any of them were covered by legal advice privilege; any that were not would have to be disclosed.

This case was somewhat unusual, both because of the long delay between the disclosure of the documents and the assertion of privilege, and because the documents were at one stage specifically relied on by the claimant in support of its case rather than simply being part of a routine disclosure exercise. However, it is particularly interesting in light of the proposed disclosure pilot that is expected to commence in the Business and Property Courts next year, which we previously reported on when it was first announced and when the consultation on the proposals closed. As part of this pilot, parties will be required to provide documents on which they rely to the other side along with their statements of case rather than awaiting the disclosure stage. Presumably this will trigger the professional duty to evaluate those documents and, following Teare J's judgment in this case, it will be difficult subsequently to assert privilege in the documents. This highlights the importance of ensuring that the selection of the documents to be enclosed with the statement of case is carried out correctly, by a lawyer of sufficient seniority to assess the risks of relying on a particular document at a time when the issues in the case may not yet be fully apparent.

The case also offers a useful reminder to parties that a witness statement in support of an assertion of privilege should be as specific as possible about the reasons for concluding that the documents are privileged, and in the case of litigation privilege, should state expressly that the dominant purpose of the documents was for use in litigation.