An update from the Candy brothers litigation

Following the decisions in The RBS Rights Issue Litigation1 and SFO v ENRC2, one could be forgiven for describing the last 12 months as a turbulent year for the protection of legal professional privilege. Nugee J's interim ruling on the issue of collateral waiver (from February 2017, but only recently published), in the highly publicised dispute between Mark Holyoake and the Candy brothers3, will come as more reassuring news for legal professional privilege.

Parties to litigation may consider it in their interests to waive privilege over a document. However, if they do so, a court may determine that other privileged documents pertaining to the same issue should be disclosed so that the court is not left with an incomplete picture of that issue.

In Holyoake, the first claimant, Mr Holyoake, alleged that various threats had been made against him by the defendants. In rebutting the suggestion that he had fabricated certain of those allegations, Mr Holyoake relied on a number of emails between himself and his lawyers written shortly after the date of the alleged threats, which referred to these threats having been made, thereby waiving privilege in those documents (the "Disclosed Documents").

The question before the court was therefore whether privilege had also been waived over other claimantlawyer correspondence. Disclosure of four classes of documents was sought by the defendants:

  • Class 1: All other documents referred to in the Disclosed Documents containing factual instructions.
  • Class 2: All other documents containing factual instructions concerning the threats referenced in the Disclosed Documents, being those threats alleged to have been made prior to 16 April 2012 (the date of the latest email in the Disclosed Documents).
  • Class 3: All other documents containing factual instructions concerning threats alleged to have been made after 16 April 2012.
  • Class 4: All other documents containing factual instructions to other firms of solicitors in relation to threats allegedly made after 16 April 2012.

Nugee J held that there was no difficulty in relation to Class 1; the other documents specifically referred to in the Disclosed Documents amounted to an "incorporation by reference" and he ordered disclosure of those documents on that basis.

The remaining classes, however, required a more detailed application of the collateral waiver doctrine. Following a helpful summary of the previous case law, Nugee J conducted his analysis in three steps:

  • Step 1: What is the "transaction" (or "issue") in respect of which the Disclosed Documents have been disclosed? It was held that the transaction in this case was the communication made by Mr Holyoake to his lawyers in the Disclosed Documents. The transaction was not so wide as to cover all communications made by My Holyoake to his lawyers about the threats, nor was the transaction the underlying subject matter i.e. the threats in general.
  • Step 2: What is the purpose of the disclosure? The court was then entitled to consider whether the purpose for which the Disclosed Documents were provided altered the scope of the transaction. In this case, the purpose for disclosure was to rebut the suggestion that the alleged threats had been recently fabricated, by establishing that Mr Holyoake had mentioned those threats to his lawyers shortly after they were allegedly made. Nugee J held that this did not affect the scope of the transaction; the fact that limiting disclosure to the Disclosed Documents would not go to the question of, for example, whether Mr Holyoake made up the allegations when mentioning them to his lawyers, was not relevant.
  • Step 3: Does fairness require broader disclosure? Nugee J recognised that there are two competing principles in play: respecting the right of a party to select the material in which it wishes to waive privilege, on the one hand, and the need to ensure fairness for the other party, on the other (i.e. that the disclosed material, in the absence of related material being disclosed, does not create a misleading impression when deployed in court). When considering the concept of fairness, however, he suggested that it was more important to be consistent with previous case law. In Tanter4, Hobhouse J did not regard it as fair to require disclosure of later privileged communications on the same "topic", and Nugee J considered that he should follow this approach. However, had there been subsequent documents altering, amplifying or extending what was specifically said by Mr Holyoake in the Disclosed Documents, such documents would be disclosable in very specific circumstances (to quote Nugee J's example, if an email dated the day after a Disclosed Document said "I have just looked at what I wrote yesterday and its [sic] not quite right, here is a correction"). Nugee J was keen to point out, however, that this principle should not be interpreted so broadly as to require all later communications on the same topic (i.e. the threats generally) to be disclosed; to do so would undermine the process of defining the specific transaction in Step 1 above.

Accordingly, no disclosure of documents in Class 2 was ordered. Given their even wider ambit, it followed that there should also be no disclosure of Class 3 and Class 4.

Nugee J has therefore upheld the relatively narrow application of the collateral waiver principle by limiting the ambit of the transaction in question. The acknowledgment of the importance of being consistent with previous case law, particularly when dealing with inherently nebulous issues such as fairness, is also to be welcomed in the interests of legal certainty and the need for litigants to be able to predict the consequences of waiving privilege.

However, defining what the scope of the "transaction" will be in any given case is clearly open to different interpretations. Further, consideration of what is fair in relation to the facts at hand is unlikely to be eradicated in future judgments, given the need to balance the protection of privilege against not providing an incomplete picture of a particular issue to the court. As Nugee J put it, "what strikes one judge as fair in one case may not strike another judge as fair in another case". Litigants should therefore continue to be wary of the possible knock-on effects of waiving privilege and "pick their cherries" wisely.