Protection of the Fruits of Advice by Privilege

11/18/2017

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Introduction

The doctrine of legal professional privilege will most commonly arise where a party is requested to produce documents in the course of litigation, but may also arise in other specific circumstances, for example under the Confidential Information Disclosure Law, 2016.

There are a number of situations where document disclosure can arise in the Cayman Islands, including an array of statutes such as the Freedom of Information Law, the Data Protection Law, the Proceeds of Crime Law, and the Whistleblower Protection Law. However, such orders are beyond the ambit of this article, which will focus on the principles of legal professional privilege as it applies to document disclosure in litigation, pursuant to the Grand Court Rules (“GCR”), which govern civil procedure. In particular GCR Order 24, which provides for discovery of documents in a party’s ‘possession, custody or power’.

Importance of English Law

It must first be noted that the Cayman Islands is a British Overseas Territory under the jurisdiction and sovereignty of the United Kingdom, and as such the Judges are frequently referred by Cayman counsel to decisions of the English Courts. The Judges will take note of and are guided by those authorities and will adapt them to local circumstances. This procedure is advantageous to the Cayman courts because they can draw upon a well-developed system of jurisprudence to aid them in any particular case. The ultimate appellate court for the Cayman Islands is the Privy Council in London.

Discovery

When an order for document disclosure is made under GCR Order 24, the parties must file a list of documents, which will indicate those documents over which privilege from production or inspection is claimed.

There are four categories of documents, as follows:

  1. Documents protected by legal professional privilege;
  2. Documents tending to incriminate or expose to forfeiture the party who would disclose them;
  3. Documents privileged on the grounds of public policy; and
  4. Documents whose disclosure would breach the law (as in the case of confidentiality laws).

Legal Professional Privilege 

This article considers the first category, which can be further divided into communications which are privileged:

  1. where there is no litigation pending: ‘legal advice privilege’’; and
  2. when litigation is pending, which is referred to as ‘litigation privilege’.

Legal Advice Privilege 

The English case of Three Rivers District Council[1]spoke to the privilege which can exist even where there is no pending litigation. Lord Scott noted that the framework of society was built upon “a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for assistance of the lawyers’ legal skills in the management of their [the clients’] affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive bodies or anyone else”.

Litigation Privilege

When litigation is pending, the application of the ‘legal professional privilege’ principle can be complicated because it involves two separate sets of communications: firstly, those between the legal adviser and third parties when the attorney is seeking information or evidence to formulate the legal proceedings; and, secondly, communications between a party themselves and the third party.

This latter category only attracts privilege if the dominant purpose of the documentation was for submission to the legal adviser in view of contemplated proceedings. The ‘dominant purpose’ approach, which is rooted in the English cases, was followed in the Cayman Islands by Smellie CJ in the case of Johnstone v. Arbitium (1997)[2].A party cannot assert legal professional privilege over documentation which has been made in furtherance of fraud. The case of Argentine Holdings[3]is authority for the proposition that privilege could not be asserted over documents which came into existence as a step in furtherance of an unlawful scheme, which has been restated in a line of further Cayman Islands cases.

Case Law in the Cayman Islands

In the case of Attorney General vs. Bridger (2015 (1) CILR 206)[4]the plaintiff applied for an injunction to prevent the defendant from relying on a number of privileged documents in defence of an action for misfeasance in public office. The defendant was a well-respected officer in the Metropolitan Police in London who was brought to the Cayman Islands as a senior investigating officer in a case called “Operation Tempura”. As part of the defendant’s defence, he wished to show that he had received legal advice at every stage of the investigation. He, therefore, showed the plaintiff several documents, which had been created during the operation, which the defendant retained. The Attorney General alleged that he had emphasised that the documents were privileged and that the defendant was not entitled to retain the documents or to disclose them to any other party. The defendant changed his legal representation and then sought to rely upon the documents in his defence.  The Attorney General applied for an injunction to prevent him from relying on these documents because they were subject to legal advice privilege. On the subject of privilege, Williams J in reaching his decision noted that the defendant had “failed to address the issues in question” and had filed an affidavit “not directed to the specific issue of legal privilege and who was entitled to waive it”.

A case worth noting is JP Morgan Multi-Strategy Fund et al vs. Macro Funds Limited (2003) CILR 250[5], where it was held that certain communications between solicitor and client remained privileged even though they were obtained by theft or fraud.

In the JP Morgancase, the defendants applied for an injunction requiring the plaintiff to return all copies of a fax sent by the third defendant to its London solicitors and preventing them from using it at trial. The plaintiff sought to redeem investments in the defendant’s funds without penalty. They claimed that the investments had been made on the strength of a special arrangement, evidenced by a side letter, which allowed early redemption without penalty in certain circumstances. Those circumstances had arisen. Kellock J held that the fax was protected by legal advice privilege, which prevented the plaintiff from relying upon it at trial. The judge found that privilege had not been waived and the fact that the plaintiff obtained a copy of the fax by theft did not allow them to override the privilege. The judge referred to authorities, which asserted that “privilege cannot be revisited by the court as a purported exercise of the discretion to grant or withhold equitable relief. The existence of discretion is unquestioned and there is little discussion of its importance”. The judge also referred to balancing of conflicting interests, in particular between the public interests and private rights.

Privilege in England

Some commentators in England are concerned that recent cases, such as the decision in SFOvs. ENRC[6], have left them in little doubt that privilege is “under attack”.  Enforcement authorities such as the Serious Fraud Office (“SFO”) are taking an increasingly combative approach to claims to legal professional privilege.  In the case of ENRC, for example, the SFO successfully challenged claims to privilege by a company over several documents that were produced by lawyers and forensic accountants during an internal investigation into allegations of bribery and corruption.

It is uncertain how the Cayman Courts would react to such situations. It certainly can be said that privilege is an area of law which is still developing in the Cayman Islands, and which is of great practical importance.

It may be the view of the Cayman Courts as a reputable Offshore Financial Centre that the rule of law requires that individuals can obtain legal advice in private and this should remain sacrosanct. As Lord Hoffman described it in Morgan Grenfell[7], it is a “fundamental human right long established in the Common Law”.

Arguments regarding legal professional privilege will no doubt continue to be brought before the courts and will continue the development of the doctrine in this jurisdiction. Hopefully, raising the issue of privilege will not be an afterthought but will be uppermost in the minds of legal advisers where the discovery or disclosure of documents is required. In the case of Governor vs. Information Commissioner[8], Owen J criticized counsel for not putting the legal professional privilege point earlier in the case, especially as he seemed to think it was a good argument.  Further Owen J cited a passage from Passmore on Privilege (3rdEdition):

“Privilege does not operate to put beyond the reach of the law documentary or other material, which has an existence apart from the process of giving or receiving legal advice or the conduct of litigation. Accordingly, privilege does not protect documents that are the means of carrying out, or are evidence of, transactions which are not themselves the giving or receiving of advice or conduct of litigation. Such documents may be outside the privilege because instructions to do a particular thing, such as prepare a legal document, do not necessarily amount to a request for advice. But even where advice has been given, the end product, or the ‘fruits’ of the legal advice given by the lawyer, will usually not be privileged”.

The courts of the Cayman Islands in well-reasoned decisions will continue to decide when the “fruits” of legal advice should be privileged, and by doing so will continue to enhance the jurisprudence of the jurisdiction.

[1]Three Rivers District Council and others vs. Governor & Company of the Bank of England (No 6 [2005] 1 AC 610 [HL]).

[2]Johnstone v. Arbitium (1997) CILR 36.

[3]Argentine Holdings (Cayman) Ltd vs. Buenos Aires Hotel Corp SA 1997 CILR 70.

[4]Attorney General vs. Bridger (2015 (1) CILR 206).

[5]JP Morgan Multi-Strategy Fund et al vs. Macro Funds Limited (2003) CILR 250.

[6]Serious Fraud Office vs. Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB).

[7]R (Morgan Grenfell & Co, Ltd) vs. Special Commissioners of Income Tax [2003] IAC 563.

[8]Governor vs. Information Commissioner (2015) (1) CILR 2015.

ABOUT THE AUTHOR
Philip Boni is Of Counsel with the firm and has almost 40 years of civil litigation experience with a concentration on Banking, Employment, confidentiality matters, and Law of Trusts.

*Article first published in TerraLex Connections – Special Edition on Privilege, November 2017

The information contained in this article is provided for the general interest of our readers, but is not intended to constitute legal advice. Clients and the general public are encouraged to seek specific advice on matters of concern. This article can in no way serve as a substitute in such cases.
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