In AL v SFO 2018 EWHC 856 the court considered the scope of the Serious Fraud Office’s (‘SFO’) obligations of disclosure in the context of a criminal trial of individuals following a Deferred Prosecution Agreement (‘DPA’). In an unusual judgment, the larger part of which is effectively obiter, Holroyde LJ and Green J set out in some detail their views on whether Legal Professional Privilege (LPP) attaches to first accounts of witnesses (it does not) and the duty of a corporate defendant in receipt of a DPA to cooperate with the SFO in any ensuing prosecution of individuals. The judgment is another blow to the longstanding practice of asserting privilege over notes of witness interviews taken during an internal investigation.
‘AL’ was a former employee of XYZ Ltd, a company which entered into a DPA with the SFO in 2016 in relation to suspected bribery and corruption. It was (and still is) a condition of the DPA that XYZ Ltd cooperate with the SFO’s ongoing investigation into individuals. Part of that obligation included a duty to disclose to the SFO all information and material in the possession or control of the company “…not protected by a valid claim of legal professional privilege…”. AL’s application centred around a request to the SFO for disclosure of the notes taken by XYZ’s lawyers during the interviews they conducted with certain key witnesses within XYZ Ltd (including AL himself), before any decision was taken by XYZ Ltd to report itself to the SFO. When the decision was ultimately made to self-report, XYZ Ltd had provided the SFO with ‘oral proffers’ which were recorded, but had declined to provide its lawyers’ contemporaneous notes of the interviews, claiming they were subject to legal professional privilege. It was accepted by all parties that the interview notes constituted material evidence, and the SFO conceded that it did not agree with XYZ Ltd’s position that the notes were privileged, which position it maintained notwithstanding the recent ENRC decision. However, the SFO took no action against XYZ Ltd to force it to disclose the notes. AL applied to the Crown Court for specific disclosure, but the Crown Court refused the application on the grounds that the material was not within the SFO’s possession. AL then sought to judicially review the SFO’s decision not to force XYZ Ltd to disclose the notes.
Although the High Court rejected the application on procedural grounds, it made a number of obiter comments which will give prosecutors and corporates some serious food for thought:
- The Court reiterated the principle long expounded by the SFO and, more recently, the courts that in the absence of proceedings reasonably contemplated on the facts, litigation privilege does not apply to first interview notes.
- In the context of a DPA, where the SFO has the benefit of a contractual obligation to cooperate from the corporate, its duty to any individual defendant requires it to enforce those DPA obligations to compel the provision of information held by the corporate, if it is material to the individual defendant’s case.
- That duty might include an obligation to challenge any claim to privilege, where the material in question is not believed to be privileged, if necessary by bringing the corporate back to court for breach of the DPA or, presumably, to apply to the High Court to determine the issue.
- The court was also critical of the SFO’s failure to consider whether privilege had been waived, or whether it ought in any event to require a waiver from XYZ as part of its duty of cooperation under the DPA.
In this case the interviews were conducted for the purpose of conducting an assessment of XYZ’s culpability, and to enable its lawyers to advise on whether or not to self-report. That seems to have placed it squarely within the scope of Mrs Justice Andrew’s judgment in ENRC, in which it was held that the dominant purpose of interviews conducted under such circumstances could not be said to be the conduct of existing or reasonably contemplated litigation. Equally instructive was the dismissal of the claim by XYZ’s lawyers that the ENRC decision should not be followed because it was subject to appeal and was wrong; such a position was simply untenable, the court said, and the ENRC decision bound the Crown Court.
While the judgment is obiter, the court left the SFO in no doubt as to how it expects it to behave in relation to future claims of LPP over such material, and gave an equally strong indication as to how it would adjudicate such claims in the future. This case is the clearest indication yet that the UK and the US are on divergent paths with regard to the ambit of LPP in internal investigations.