1. Secreting the evidence: investigations, privilege and pre-termination negotiations Patrick Halliday
14 May 2018

2. Recent developments in law of privilege
Internal investigations: are interviews of employees by external lawyers privileged?
Litigation privilege: are documents created for investigations by regulators covered?
“Iniquity” exception: is privilege disapplied when lawyer gives advice in furtherance of (a) unlawful team move and/or (b) discrimination?

3. Relevant types of privilege
Legal professional privilege:
Legal advice privilege
Litigation privilege
“Without prejudice” privilege

4. Working definitions
Legal advice privilege: (1) communication (2) between client and lawyer (3) made in confidence (4) for purposes of giving or receiving legal advice
Litigation privilege: (1) communication (2) between client & lawyer or client & 3P or lawyer and 3P (3) when litigation reasonably in prospect (4) with sole or dominant purpose of obtaining legal advice or preparing for adversarial litigation
Without prejudice privilege: communications for purposes of attempting to settle an existing dispute

5. Legal advice privilege: post Three Rivers litigation
Applies only to communications between lawyer and identified “client”; does not apply to communications between lawyer and third party, or between client and third party
Applies to legal advice widely construed, including “presentational” advice

6. Legal advice privilege: recent decisions on internal investigations
Three first instance decisions over last year or so: Astex Therapeutics Limited v Astrazeneca [2016] EWHC (Ch); In re RBS Rights Issue [2017] 1 WLR 1991; and SFO v ENRC [2017] EWHC 1017 (QB)
Where client is a corporation, an employee is the “client” only if authorised to seek and receive legal advice
Hence interviews of employees by external lawyers during course of internal investigations not covered – employees’ authority to give information to lawyers insufficient to make them the “client”
Note that in RBS, Hildyard J left open question of whether there is a further restriction, namely that only those who are part of “directing mind” of corporation may count as client

7. Litigation privilege: ENRC again…
SFO v ENRC [2017] EWHC 1017 (QB)
Litigation privilege does not extend to documents created in order to avoid contemplated litigation, but does cover documents created in order to settle litigation … is this a workable distinction?
Criminal investigation by SFO does not constitute adversarial litigation; it is merely investigative or inquisitorial, so documents created for dominant purpose of SFO investigation are not privileged
Criminal prosecution (which is adversarial litigation) was not a ‘real likelihood’ merely because criminal investigation was on foot
…. now on appeal to Court of Appeal …

8. The iniquity principle (aka the “crime/fraud” exception)
Advice sought or given “for the purpose of effecting iniquity” or “in furtherance of iniquity” is not privileged
Principle founded upon public policy: no public policy in favour of lawyers advising on how to commit iniquity
“Strong prima facie” case of iniquity required
Key question: what is “iniquity”? Historically, crime or “fraud”; but it has been broadened….

9. What counts as “iniquity”?
Helpful synthesis of law in BBGP Ltd v Babcock & Brown Global Partners [2011] Ch 296:
Does not apply to all civil wrongs
Applies to “all forms of fraud and dishonesty such as fraudulent breach of trust, fraudulent conspiracy, trickery and sham contrivances”
“Fraud” used “in a relatively wide sense”
High water mark is Barclays Bank Plc v Eustice [1995] 1 WLR 1238: client obtained a lawyer’s help in order to enter transactions at an undervalue, in order to prejudice his creditor bank, by trying to take assets out of the creditor bank’s reach; held to be “sufficiently iniquitous for public policy to require that the communications between him and his solicitor in relation to the setting up of those transactions to be discoverable”

10. The employment context: are unlawful team moves or discrimination “iniquity”?
Crescent Farm v Sterling [1972] Ch 553: torts of interference with contract and conspiracy held not to be covered by iniquity principle
Gamlen Chemical Co (UK) Ltd v Rochem Ltd (unreported), 7 December : Court of Appeal agreed with Goulding J that: “For servants during their employment and in breach of their contractual duty of fidelity to their master to engage in a scheme, secretly using the master's time and money, to take the master’s customers and employees and make profit from them in a competing business built up to receive themselves on leaving the master's service, I would have thought that commercial men and lawyers alike would say that that is fraud”
Gamlen followed in Walsh Automation (Europe) Ltd v Bridgeman [2002] EWHC 1344 (QB) (disloyal employees setting up a rival business)
Imminent EAT decision on whether discrimination counts as iniquity

11. Without prejudice privilege: exceptions
Uniliver v Proctor & Gamble
Proof of settlement agreement
Agreement vitiated by fraud, misrepresentation or undue influence
Estoppel
Explanation of delay/acquiescence
Unambiguous impropriety
No policy justification for exclusion
Costs (where “without prejudice save as to costs”)

12. Without prejudice privilege: unambiguous impropriety in employment context
BNP Paripas v Mezzotero [2004] IRLR 508
No “dispute” during grievance process – controversial
Using WP meeting to discriminate flagrantly is unambiguous impropriety
Woodward v Santander [2010] IRLR 834:
Discrimination not a special category of “impropriety” – must still be “unambiguous”

13. Without prejudice privilege: applying to exclude material
Apply early
Do not refer to material in pleading
Have issue determined before trial at PH