Serious Fraud Office (SFO) v Eurasian Natural Resources Corporation Ltd  EWHC 1017 (QB)
On 08 May 2017 Mrs Justice Andrews handed down judgment in this case which involved a challenge by the SFO to a claim to privilege advanced by ENRC.The SFO sought a declaration that certain documents generated during investigations undertaken between 2011 and 2013 (by solicitors and forensic accountants) into the activities of ENRC and its subsidiaries were not subject to legal professional privilege.
All the claims to litigation privilege failed completely (and emphatically), as the relevant hurdles were nowhere near crossed on the facts of the case. The critical date of 19 August 2011 was the latest date at which, on ENRC's pleaded case, criminal litigation was said to be reasonably in prospect. ENRC therefore had to establish that, as at that date, ENRC was `aware of circumstances which rendered litigation between itself and the SFO a real likelihood rather than a mere possibility'. The Court found that that test was not satisfied as by that date `nothing concrete had materialised', indeed the totality of the evidence established that criminal proceedings were not in reasonable contemplation at any material time, the prospect of criminal proceedings being brought against ENRC or its subsidiaries never being anything more than speculative. In any event, the Court held that the documents for which litigation privilege was claimed were not created with the dominant purpose of being used in the conduct of such litigation (which expression included obtaining legal advice pertaining to the conduct of such litigation). In short, the information was not being gathered to form part of a defence brief, and the avoidance of a criminal investigation could not be equated with the conduct of a defence to a criminal prosecution. Further, it was relevant that much of the information was intended to be shared with the SFO in such circumstances litigation privilege could not apply.
In respect of legal advice privilege, the Court held that there was no evidence that any of the persons interviewed were authorised to seek and receive legal advice on behalf of ENRC, and the communications between those individuals and the solicitors were not communications in the course of conveying instructions to the solicitors on behalf of the corporate client. The Court stated that the fact that the notes were made by the solicitors did not strengthen the claim - a document that is not privileged if it is created by a non-lawyer does not acquire a privileged status just because a lawyer has created it. A claim for privilege over lawyers' working papers will only succeed if the documents would betray the trend of the legal advice. However, slides prepared by the solicitors for the specific purpose of giving legal advice to ENRC were `plainly privileged'. The policy that underlies legal advice privilege is ensuring that solicitors and clients can speak freely in confidence, and any verbal elaboration (or record of it) would be privileged, even if referring to information which would not otherwise be privileged. In relation to an email exchange between a senior person within ENRC and the Head of Mergers and Acquisitions (who it was said acted as a lawyer) the Court found that the objective evidence established that that person was engaged by ENRC at the time of the communications not as a lawyer but as a `man of business'. Accordingly, legal advice privilege did not attach to communications with him even if legal advice was being sought and was given in the exchange - if the person sending the information had wanted privileged legal advice he should have sent it to General Counsel.
ENRC had made an optimistic submission that as a matter of discretion, no declaratory relief should be granted, a contention which the Court described as `utterly misguided'. The procedural points relied upon, even if good ones (which they were not), would have been no justification for refusing the SFO the declaratory relief to which it was otherwise entitled, as the ordinary approach of the court is that meaningful relief should follow when a litigant has made good his or her case.
The case largely turns on its own facts, but it is notable in that it contains (i) a detailed analysis of the main principles governing claims to both categories of legal professional privilege (see paragraphs - of the Judgement) (ii) some useful practical lessons about advancing a claim to legal professional privilege.
In the author's experience claims to legal professional privilege are often advanced on a basis which is not fully thought through. As this case shows, such an approach is dangerous. A successful challenge to the claim to privilege will almost certainly be costly worse still it may lead to the suggestion in due course that the claim to privilege was made with the intention of preventing relevant probative documents coming to light.
It is therefore necessary whenever advancing a claim to privilege to (i) consider what type of privilege is claimed (ii) think carefully about whether the relevant tests are passed in respect of each and every category of document (iii) give consideration to the factual evidence that would be used to justify such a claim if it is challenged.
As paragraphs - of the Judgment make clear:
- In most cases the evidence in support should come from the person whose motivation and state of mind is in issue. For example, it is only the person (or persons) who was or were ultimately responsible for the coming into existence of the document or documents in question who could explain, for example, why they contemplated litigation. Whilst there could be evidence from lawyers, that would only be of secondary value.
- Ultimately the Court can only act on the evidence before it and evidential difficulties might arise where (i) the relevant individuals have left the business; or (ii) the client has fallen out with the lawyers (e.g over fees) and so the lawyers are not willing to give evidence in support of the claim to privilege.
- The best evidence of what individuals thought at the time will come from contemporaneous documents - for example discussions at board level which can demonstrate what the business contemplated.
- A particular trap for the unwary is believing that communications seeking legal advice are automatically covered by legal advice privilege. It is common for `men of business' to give legal advice, particularly if they are trained lawyers. Such communications will not be privileged and will be disclosable in the normal way.