A recent decision reminds litigants about the dangers of referring to legal advice in witness statements.
By Oliver E. Browne and Alex Cox
The English courts have recently taken an expansive approach in finding waivers of privilege when legal advice is referred to in witness statements, pleadings, and submissions.[i]
The High Court’s recent decision in Paul Clements v. Adam Frisby[ii] further reminds litigants about the dangers of referring to legal advice when advancing their case. However, it also demonstrates the nuanced and fact-specific approach the court will take in determining whether there has been a waiver and, if so, how widely that waiver extends.
The proceedings relate to the company In The Style Fashion Limited (the Company).
The claimant, Paul Clements, alleges that he conceived the original idea for the Company in early 2013, and engaged the defendant, Adam Frisby, to assist with developing the Company shortly afterwards. He also claims to have invested £10,000 in the business. Clements asserts that Frisby led him to believe that the plan for the Company had no future, and that Frisby then developed the Company himself through his own business.
Frisby denies that the idea for the Company originated with Clements, and also denies that Clements invested in the business or had any involvement in it.
One of Frisby’s arguments is that Clements’ lack of involvement is demonstrated by the fact that he took no steps to pursue any claim against him for a number of years. The parties disclosed documents relevant to this argument and then exchanged witness statements.
Clements’ witness statement explained that he had only discovered that Frisby had incorporated the Company in 2016 and that it took him until June 2019 to select a law firm, David Blank Furniss (DBF), to advise him on a potential claim. In explaining the gap between the instruction of DBF in mid-2019 and the letter before action on 22 December 2020, Clements stated:
“DBF… took time to make progress with my claim, primarily because they felt that the business… did not look at all valuable and did not appear to present a target worth pursuing”.
Frisby argued that this sentence refers to legal advice given by DBF regarding the value of the Company. Frisby contended that Clements apparently relied on this advice in his witness statement to explain the delay between instructing DBF and pursuing the claim. Frisby argued that Clements therefore had waived privilege over the advice and any other privileged materials relating to why DBF took time to make progress with the claim. Frisby applied for disclosure of the relevant documents.
The Legal Landscape
Frisby’s application gave rise to two questions:
- Did the reference in Clements’ witness statement constitute a waiver of privilege over DBF’s advice?
- If Clements had waived privilege, how wide was the waiver and what was the scope of the waiver — in particular, did it extend to all privileged documents relating to the delay in commencing the claim?
In relation to the first question, the law on waivers of privilege has featured in a number of recent cases, in particular PCP Capital Partners LLP v. Barclays Bank plc,[iii] Guest Supplies Intl Limited v. South Place Hotel,[iv] and PJSC Taftnet v. Bobolyubov.[v]
The judge in this case summarised the key principles confirmed by this line of case law:
- There is no succinct and clear definition of when a waiver occurs. Historically, the case law has drawn a distinction between: (a) purely narrative references to legal advice or references to the “effect” of legal advice; and (b) references to the “content” of legal advice. However, the judge stressed that the court will not “mechanistically” apply the effect/content distinction, and it cannot be said that a mere reference to the subject matter of a privileged communication (as opposed to its contents) will never amount to a waiver.
- The judge adopted the framework set out in PCP, which held that the central questions for the court to consider are: (a) whether a party is seeking to rely on privileged material; (b) what the purpose of that reliance is — in particular, whether a party is relying on the privileged material to advance its case; and (c) how that reliance fits with the context of the case. Each of these questions is fact-sensitive and will turn on the particular issues in each case.
In relation to the second question about the scope of any waiver, the judge noted that the court’s “essential task” is to identify the issue or “transaction” which the waiver is concerned with. If the privileged material that a party relies upon forms part of “some bigger picture”, and the complete picture cannot be ascertained from a subset of the privileged documents alone, then fairness requires the disclosure of all documents relating to the issue.
The Judge’s Rulings on Frisby’s Application
The judge held that Clements had made a “clear reference” to the content of DBF’s legal advice by stating that DBF did not think the Company was a target worth pursuing. The judge also found that Clements specifically relied upon this reference to explain why DBF took time to commence the claim, in order to bolster his response to Frisby’s argument that his inactivity proved his lack of involvement in the Company. Given these factors, the judge was satisfied that “the line had been crossed” and privilege had been waived.
However, the judge found that the scope of the waiver was narrower than the position argued by Frisby. He held that the “transaction” at issue was the correspondence and other documentation relating to DBF’s opinion that the Company did not look valuable and did not present a target worth pursuing, which was the specific point that Clements had relied upon in his witness statement. The judge was not persuaded by Frisby’s arguments that fairness required wider disclosure of communications between Clements and DBF, since Clements did not rely on any other reasons to explain the delay. Accordingly, finding any wider waiver would give Frisby a “speculative advantage rather than a principled one”.
This case highlights the dangers of referring to legal advice in litigation proceedings, adding to a growing body of case law illustrating that the English courts are prepared to find waivers of privilege in these circumstances.
However, the case is also a useful example of the nuanced and fact-sensitive approach the courts will adopt in considering both whether there has been a waiver, as well as the scope of that waiver. As the judge emphasised repeatedly, the crucial question is whether a party has sought to rely upon references to legal advice in order to advance its case. This issue must be determined on the particular facts and in the particular context of each case.
[i] For more information, read Latham’s previous post summarising the decision in Guest Supplies Intl Limited v. South Place Hotel Limited, D&D London Limited.
[ii]  EWHC 3124 (Ch).
[iii]  EWHC 1393 (Comm).
[iv]  EWHC 3307 (QB).
[v]  EWHC 3225 (Comm).
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