Legal professional privilege - Solicitor and client - Communications between legal adviser and client

JSC BTA Bank v Shalabayev and another: CD (Mr Justice Henderson): 10 November 2011

As part of ongoing proceedings, a search order was granted in February 2011. Among the material seized were 14 boxes of documents that appeared to contain solicitor client files relating to the defendants.

The question arose of how to deal with possible claims for privilege over the documents. A review conducted by a leading counsel led to the release of less than half the documents to the claimant bank as being clearly not privileged. The remaining documents were retained on the basis that there was a possibility they could be subject to a valid claim to privilege.

In July 2011, the court ordered the defendants’ solicitors (Clyde & Co) to identify those documents for which it claimed privilege and to provide sufficient particulars of the claim so as to enable the claimant to decide whether or not to challenge it (the July order). Clyde & Co sought two extensions of time. The court then made an unless order providing that, unless Clyde & Co complied with the July order by 20 September 2011, its clients would be debarred from claiming privilege over those documents. Clyde & Co served a schedule on 20 September (the 20 September schedule) claiming privilege for more than 2,000 documents.

The claimant complained that this schedule was inadequate and made an application to the court for a declaration that the unless order had not been complied with. Clyde & Co then served further schedules which reduced the number of documents subject to claims for privilege. On 7 October, the court held that the 20 September schedule had failed to comply with the unless order and issued directions for an application for relief from sanctions. Before that application came before the court, Clyde & Co served a final schedule claiming privilege for only 221 documents (the 221 schedule).

The issues were whether: (i) the 221 schedule complied with the July order; and (ii) the defendants should be granted relief from the sanction of the unless order.

The court ruled that: (1) Although it still suffered from serious defects, the 221 schedule contained enough detail to satisfy the relatively unexacting standard laid down by the July order (see [28] of the judgment).

(2) It was well established that if a communication or document qualified for legal professional privilege, that privilege was absolute. It could not be overridden by a supposedly greater public interest. It could be waived by the person entitled to it and it could be overridden by statute, but otherwise it was absolute.

There was no balancing exercise that had to be carried out. Although the possibility existed that, without waiving the privilege, a person could nonetheless indirectly forfeit the right to claim privilege, such as if the person had been given every chance to claim privilege within a reasonable period and had failed to do so, the court should be very wary of allowing a potentially valid claim to privilege, however late it was made, to be indirectly overridden by the exercise of a case management power.

Otherwise there was a danger of a litigant’s substantive right to legal privilege being forced to yield, indirectly, to just the kind of balancing exercise that the highest authority had said was impermissible (see [33]-[34] of the judgment).

In the instant case, given that the substantive right of a party to claim legal professional privilege was afforded a very high level of protection by the law, and the fact the claimant could not be said to have been seriously prejudiced by the delay in the product of the final schedule, it was appropriate to grant the defendants relief from the sanction imposed by the unless order (see [35], [41], [44] of the judgment).

Philip Marshall QC and Emily Gillett (instructed by Hogan Lovells International) for the claimant; Brian Doctor QC and James Duffy (instructed by Clyde & Co) for the defendants.