England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBENI 98/1458/1

COURT OF APPEAL (CIVIL DIVISION )

(MR JUSTICE BUCKLEY )

Royal Courts of Justice

The Strand

London

Thursday 11 March 1999

B e f o r e:

THE LORD CHIEF JUSTICE OF ENGLAND AND WALES

(Lord Bingham of Cornhill )

LORD JUSTICE BROOKE

and

LORD JUSTICE CHADWICK

B E T W E E N:

(1) PARAGON FINANCE PLC (formerly known as

NATIONAL HOME LOANS CORPORATION PLC)

(2) COLLATERALISED MORTGAGE SECURITIES (No 4) PLC

(3) COLLATERALISED MORTGAGE SECURITIES (No 5) PLC

(4) COLLATERALISED MORTGAGE SECURITIES (No 6) PLC

(5) COLLATERALISED MORTGAGE SECURITIES (No 7) PLC

(6) COLLATERALISED MORTGAGE SECURITIES (No 8) PLC

(7) COLLATERALISED MORTGAGE SECURITIES (No 9) PLC

Plaintiffs/Appellants

and

FRESHFIELDS (a firm)

Defendant/Respondent

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J U D G M E N T

(As Approved by the Court )

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(Computer Aided Transcription by

Smith Bernal, 180 Fleet Street, London EC4A 2HD

Telephone 0171 421 4040

Official Shorthand Writers to the Court)

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A P P E A R A N C E S :

MR STEWART BOYD QC and MR CHARLES HOLLANDER (instructed by Messrs

Slaughter & May, London EC2V 5DB) appeared on behalf of

THE APPELLANTS

MR SIMON BROWNE-WILKINSON QC and MR BANKIM THANKI (instructed by

Messrs Barlow Lyde & Gilbert, London EC3A 7NJ) appeared on behalf of

THE RESPONDENT

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THE LORD CHIEF JUSTICE: The plaintiffs in these proceedings appeal against an interlocutory decision of Buckley J made on 6 November 1998. The appeal raises a question of some importance and novelty: if a client sues his former solicitors claiming damages for alleged negligence in the handling of a commercial transaction between the client and a third party, does the client’s waiver of legal professional privilege (implied from the bringing of the proceedings against the former solicitors) apply not only to confidential communications between the client and those former solicitors relating to that transaction but also to confidential communications between the client and different solicitors whom he later instructed to pursue and settle his claim against the third party? The judge answered that question affirmatively. The plaintiffs, to whom the decision was adverse, say that he was wrong to do so.

The plaintiffs, of whom there are seven, claim damages against Freshfields, who formerly acted as their solicitors. The relevant facts may be conveniently taken from the defendants’ skeleton argument. The first plaintiff carried on business as a substantial centralised mortgage lender. In order to raise capital it entered into transactions whereby pools of its mortgages were securitised. The transactions were complex, each involving several thousand mortgages and raising several million pounds. For the purpose of each transaction, a special purpose vehicle company was set up (named CMS Nos. 1 to 9) each of them independent of the first plaintiff. A pool of mortgages was selected and sold to each CMS company pursuant to a mortgage sale agreement. The CMS company raised the purchase price by issuing loan notes which were purchased by investors. Each transaction was preceded by an offering circular to potential investors. Freshfields acted as solicitors to the first plaintiffs and the relevant CMS companies in respect of the securitisation transactions.

In order to enable the loan notes to obtain an AAA security rating, in respect of transactions 4-9 inclusive, a pool insurance policy was issued by either Sun Alliance or Eagle Star. By those policies the insurers agreed to indemnify each CMS company against loss arising from default by the mortgagor if the property in question proved to be inadequate security for the monies advanced. Each pool policy provided, as a condition precedent to the insurer’s liability, that the mortgages had been made in accordance with the first plaintiff’s lending guidelines referred to in the pool policies.

In the early 1990’s there were many defaults by mortgagors on the mortgages in question and, as a result of a fall in the property market, the CMS companies sustained heavy losses. They looked to insurers to indemnify them. Insurers declined to indemnify the CMS companies in respect of a significant number of securitised mortgages. One of the grounds on which they refused to pay was that the lending guidelines had not been complied with. In particular, insurers alleged in the case of some rejected claims that the deferred interest loan-to-value ratio lending guideline referred to in the pool policies had not been complied with when the mortgages were made.

Freshfields acted as the plaintiffs’ advisers until about July 1993, and initially advised on the plaintiffs’ claims against the insurers. Then, however, recognising the possibility of conflict, they withdrew and Slaughter and May thereafter acted for the plaintiffs. In July 1995 the plaintiffs began proceedings against Sun Alliance, and about a year later the plaintiffs settled their claims with both Sun Alliance and Eagle Star. Under these settlements the CMS companies, in consideration of a large payment, gave up their rights to make any claim pursuant to the pool policies. As part of their claim against Freshfields, the plaintiffs claim the costs of both the negotiations and the proceedings. The plaintiffs claim that the restructuring and refinancing of the CMS companies was a necessary consequence of the settlements.

The plaintiffs complain that Freshfields were negligent, in particular in incorporating into the pool policies lending guidelines which were stricter than the first plaintiff’s actual guidelines, thereby affording the insurers a ground of non-payment when these stricter guidelines were not complied with. The plaintiffs claim as damages the shortfall which they claim to have suffered in recovery under the pool policies. They also claim as damages the fees charged by Slaughter and May in effecting recovery against the insurers and in restructuring the CMS companies. Freshfields strongly contest the allegations of negligence, denying that they were supplied with the first plaintiff’s guidelines and contending that all the relevant documentation was specifically approved by the plaintiffs. They also contest the causation and quantum of the plaintiffs’ alleged loss, allege contributory negligence by the plaintiffs and contend that the plaintiffs failed to take reasonable steps to mitigate their loss. At this stage the court is in no way concerned with the merits of the parties’ respective contentions.

For purposes of the present proceedings, there have no doubt been confidential communications between the plaintiffs and Slaughter and May and counsel concerning the merits of the plaintiffs’ claim against Freshfields, tactics, pleadings, evidence and so on. Such communications are plainly protected by legal professional privilege, and there is no suggestion that that privilege has been waived whether expressly or impliedly. The present issue concerns, and concerns only, confidential communications between the plaintiffs and Slaughter and May and counsel concerning claims made by the plaintiffs against the insurers and the pursuit and settlement of those claims. The documents now in issue are referred to in paragraph 5 (a) to (m) of the first schedule to a summons issued by Freshfields dated 8 June 1998. Nothing turns on the details of those documents. It is common ground that they are relevant to issues in these proceedings, and it is common ground that some of them are protected from disclosure by legal professional privilege unless that privilege has been impliedly waived. There is no question of express waiver.

In the course of a careful judgment Buckley J reviewed the authorities cited to him and concluded that there was no real distinction between the situation in which the solicitor sued had acted for the client in a number of different transactions previously and the situation in which the solicitor sued had acted in some transactions and a different solicitor in others. He said (at page 14 of the transcript of his judgment):

“The answer is clearest where the client seeks to sue his solicitor and at the same time hide from the court relevant communications between them (under the guise of privilege). I do not lose sight of what appears to be the more protective nature of legal professional privilege compared with privilege arising from without prejudice communications. However, the various dicta in the cases to which I have referred, all seem to identify the same evil, namely, a defendant being deprived of relevant material with which to defend himself against a party who chooses to bring proceedings against him whilst withholding that material from the court. That would not be justice and no concept of privilege could make it so. The court is not taking away the privilege in the sense of a mandatory order the breach of which would amount to a contempt, as where an injunction is granted. The court is simply directing that if the party claiming the privilege wishes to obtain a court decision he must, at least in circumstances such as these, be prepared to disclose relevant material.”

Then, after referring to a passage in the judgment of Parker J in Hayes and Another v Dowding and Others [1996] PNLR 578 at 591B, Buckley J continued:

“Neither that passage, in context, nor what I have said above, undermines, nor is intended to undermine, the most common and fundamental operation of legal professional privilege, namely, that one party to a dispute cannot obtain communications between the other party and his lawyer in respect of it. Of course, the privilege goes further than that. But, to my mind, it is not significantly undermined by holding that the implied waiver that arises when a client sues his lawyer for professional negligence extends to any privileged communications touching the transaction which gives rise to the charge of negligence and which are relevant to the just determination of issues between them. To borrow a phrase from a different legal concept, privilege is essentially a shield not a sword. I do not believe that concept would be difficult to explain to a client or that it would work against the public interest in question.”

The plaintiffs criticise the judge’s decision as contrary to principle and contrary to the balance of authority. The defendants uphold the judge’s decision. They draw an analogy between express and implied waiver: just as a party cannot cherry-pick by expressly waiving legal professional privilege in part of a document and asserting it in relation to another part, so (they argue) a party who sues his solicitor alleging negligence in relation to a given transaction impliedly waives legal professional privilege not only in relation to communications between him and the solicitor sued but also in relation to communications between him and any other solicitor whom he may have instructed in relation to the same transaction.

The nature and basis of legal professional privilege have been often and authoritatively expounded, most recently in R v Derby Magistrates’ Court ex parte B [1996] AC 487. At its root lies the obligation of confidence which a legal adviser owes to his client in relation to any confidential professional communication passing between them. For readily intelligible reasons of public policy the law has, however, accorded to such communications a degree of protection denied to communications, however confidential, between clients and other professional advisers. Save where client and legal adviser have abused their confidential relationship to facilitate crime or fraud, the protection is absolute unless the client (whose privilege it is) waives it, whether expressly or impliedly.

A client expressly waives his legal professional privilege when he elects to disclose communications which the privilege would entitle him not to disclose. Where the disclosure is partial, issues may arise on the scope of the waiver. Practical difficulties occur in determining such issues, as in Nea Karteria Maritime Co. Limited v Atlantic and Great Lakes Steamship Corporation and Cape Breton Development Corporation and Others (No.2) [1981] Com. LR 138, General Accident Fire and Life Assurance Corp. Ltd. and Others v Tanter and Others [1984] 1 WLR 100 and R v Secretary of State for Transport ex parte Factortame and Others (1997) 9 Admin LR 591. But the law is clear. While there is no rule that a party who waives privilege in relation to one communication is taken to waive privilege in relation to all, a party may not waive privilege in such a partial and selective manner that unfairness or misunderstanding may result.

When a client sues a solicitor who has formerly acted for him, complaining that the solicitor has acted negligently, he invites the court to adjudicate on questions directly arising from the confidential relationship which formerly subsisted between them. Since court proceedings are public, the client brings that formerly confidential relationship into the public domain. He thereby waives any right to claim the protection of legal professional privilege in relation to any communication between them so far as necessary for the just determination of his claim; or, putting the same proposition in different terms, he releases the solicitor to that extent from the obligation of confidence by which he was formerly bound. This is an implication of law, the rationale of which is plain. A party cannot deliberately subject a relationship to public scrutiny and at the same time seek to preserve its confidentiality. He cannot pick and choose, disclosing such incidents of the relationship as strengthen his claim for damages and concealing from forensic scrutiny such incidents as weaken it. He cannot attack his former solicitor and deny the solicitor the use of materials relevant to his defence. But, since the implied waiver applies to communications between client and solicitor, it will cover no communication to which the solicitor was not privy and so will disclose to the solicitor nothing of which he is not already aware.

Thus, on the present facts, by bringing these proceedings the plaintiffs impliedly waived any claim to legal professional privilege in relation to confidential communications between them and Freshfields concerning the transactions briefly described above, up to the moment when Freshfields ceased to act. That is not in issue. The question is whether the plaintiffs have also impliedly waived any claim to legal professional privilege in relation to confidential communications between them and Slaughter and May relating to the pursuit and settlement of claims arising from those transactions. Approaching this question as one of pure principle, we conclude that they have not. The plaintiffs have not sued Slaughter and May. They have not invited the court to adjudicate on any question arising from their confidential relationship with Slaughter and May, and so have not brought that confidential relationship into the public domain. They have done nothing to release Slaughter and May from the obligation of confidence by which they are bound. They have chosen to subject their relationship with Freshfields to public scrutiny, but not their relationship with Slaughter and May. They are not seeking to pick and choose among the confidential communications passing between themselves and Slaughter and May: none of them is (so far) in the forensic arena. It is open to Freshfields, by way of defence, to rely on any communication passing between themselves and the plaintiffs; to hold that the plaintiffs have impliedly waived privilege in relation to confidential communications between themselves and Slaughter and May would be, not to enable Freshfields to rely on communications of which they are already aware, but to disclose to them communications of which they now have no knowledge. We consider that the plaintiffs are correct in submitting that the judge’s conclusion is inconsistent with the principles which govern implied waiver of legal professional privilege.

It must, however, be tested against the decided cases. In Lillicrap v Nalder and Son [1993] 1 WLR 94 property developers sued their solicitors for negligence in failing to advise of a problem relating to title in a conveyancing transaction. The solicitors admitted negligence but contended that even if they had given the advice which they should have given the plaintiffs would still have gone ahead with the transaction. They accordingly denied that their admitted negligence was causative of loss to the plaintiffs. In support of this contention, they sought to rely on other cases in which they had acted for the plaintiffs and given adverse advice, which had not deterred the plaintiffs from proceeding. The issue before the Court of Appeal was whether documents relating to these earlier transactions were protected by the legal professional privilege which ordinarily obtains between solicitor and client, or whether the plaintiffs by proceeding had impliedly waived that privilege even though the solicitors had acted in relation to the earlier transactions under separate and particular retainers. The court held that the plaintiffs’ implied waiver extended to those earlier transactions. Dillon LJ (at 99A) approved the statement of the judge to the following effect:

“A client who sues his solicitor invites the court to adjudicate the dispute and thereby, in my judgment, waives privilege and confidence to the extent that is necessary to enable the court to do so fully and fairly in accordance with the law including the law of evidence. I suspect that at the fringes each case will depend on its own facts. Normally the waiver will extend to facts and documents material to the cause of action upon which the plaintiff sues and to the defendant’s proper defence to that cause of action. The bringing of a claim for negligence in relation to a particular retainer will normally be a waiver of privilege and confidence for facts and documents relating to that retainer, but not without more for those relating to other discrete retainers.”

Dillon LJ observed:

“I agree with that. The waiver can only extend to matters which are relevant to an issue in the proceedings and, privilege apart, admissible in evidence. There is no waiver for a roving search into anything else in which the solicitor or any other solicitor may have happened to have acted for the clients. But the waiver must go far enough, not merely to entitle the plaintiff to establish his cause of action, but to enable the defendant to establish a defence to the cause of action if he has one. Thus, it would extend to matters under earlier retainers, as in the hypothetical example I have given, which established that the experience of the client was, to the knowledge of the solicitor, such that the solicitor was not in breach of duty as alleged.”

The hypothetical example referred to was one in which a solicitor, during transactions earlier than that on which a client had sued, had gained knowledge, relevant to the discharge of his duty of care, of steps routinely taken by the client to check the accuracy of conveyancing plans. Russell LJ agreed with Dillon LJ and (at 101E) said:

“However, in my judgment, once it is conceded that there is implied waiver of privilege when proceedings are instituted against a solicitor, I can see no warrant for the submission that the waiver is confined to the documents and communications between solicitor and client within the specific retainer forming the subject matter of the proceedings. The parameters of the retainer, to my mind, erect an artificial barrier. In my judgment, by bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done.”

Farquharson LJ also agreed. He said (at 102H):

“The defendants seek to show in the particulars of the six other transactions that, even if proper advice had been tendered, the plaintiffs would have ignored it as they had done in the past; in other words, the issue is one of causation. For my part, I would have difficulty in holding that the defendants should, as a matter of principle, be prevented from adducing evidence which is relevant to that issue. A proper interpretation of the waiver in this case is, in my judgment, one that embraces not only the documents and advice arising from the Heligan Manor transaction, but also documents or information otherwise subject to privilege which are relevant to the issues between the parties and which it would be unfair to exclude.”

Both sides relied before us on this authority. The defendants relied on the references to justice and fairness, and contended that these considerations (as in the case of express waiver) provided the correct test. But the language of Russell and Farquharson LJJ cannot be read without some limitation; otherwise, legal professional privilege would disappear altogether, even as between plaintiffs and solicitors advising them in their proceedings against former solicitors, where the interests of justice call for disclosure. The ruling of the court must, in our judgment, be read with reference to the subject matter of the appeal before the court. We have no doubt that the court was right to rule that the plaintiffs’ implied waiver extended to earlier transactions handled for them by the same solicitors. We do not understand the court to have gone further than that, and it was quite unnecessary for it to do so.

The plaintiffs in Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow (a firm ) and Others [1995] 1 All E.R. 976 had bought the share capital of three insurance companies from the companies who had owned it. In doing so they had acted on actuarial, accounting, financial and legal advice. They later sued their advisers other than their legal advisers, including particularly their accountants. The accountants sought disclosure of confidential communications between the plaintiffs and their legal advisers relating to the purchase. The plaintiffs claimed the protection of legal professional privilege, any waiver of which they denied. This privilege was upheld. The application could have been decided for the short reason given by Colman J at 987E, when he pointed out that there could be no question of waiving privilege in an action to which legal advisers were not a party. He did however explore the matter more fully, and consider the effect in particular of Lillicrap. He said (at 986c):

“The true analysis of what the courts are doing in such cases of so-called implied waiver of privilege is, in my judgment, to prevent the unfairness which would arise if the plaintiff were entitled to exclude from the court’s consideration evidence relevant to a defence by relying upon the privilege arising from the solicitor’s duty of confidence. The client is thus precluded from both asserting that the solicitor has acted in breach of duty and thereby caused the client loss and, to make good that claim, opening up the confidential relationship between them and at the same time seeking to enforce against that same solicitor a duty of confidence arising from their professional relationship in circumstances where such enforcement would deprive the solicitor of the means of defending the claim. It is fundamental to this principle that the confidence which privilege would otherwise protect arises by reason of the same professional relationship between the parties to the litigation. The underlying unfairness which the principle aims to avoid arises because the claim is asserted and the professional relationship opened for investigation against the very party whose duty of confidence is the basis of the privilege. It is against the unfairness of both opening the relationship by asserting the claim and seeking to enforce the duty of confidence owed by the defendant that the principle is directed.”

The defendants criticised this passage as an incorrectly restrictive reading of Lillicrap. We do not agree. The passage may well have been obiter; but it is in our view a correct explanation of the principle on which implied waiver of legal professional privilege rests.

We gain no assistance from Muller v Linsley and Mortimer [1996] 1 PNLR 74. This case concerned “without prejudice” privilege, and the leading judgment of Hoffmann LJ made no reference to waiver. Swinton Thomas and Leggatt LJJ did make reference to waiver, and Leggatt LJ referred in passing to Lillicrap. We cannot, however, derive from these judgments any statement of principle relevant to the present issue.

Kershaw v Whelan [1996] 1 WLR 358 raised a limitation issue. The plaintiff in these proceedings complained of negligence by his former solicitor in advising on the distribution of the estate of the plaintiff’s intestate father. The plaintiff had previously issued proceedings concerning this estate in the Queen’s Bench and Chancery Divisions. The plaintiff’s proceedings against the solicitor had been brought after expiry of the normal limitation period, and he contended that the limitation period should be postponed under section 32 (1)(b) of the Limitation Act 1980 as a result of the solicitor’s deliberate concealment of facts from him. The solicitor sought disclosure of documents relating to the plaintiff’s previous actions, which had been conducted on his behalf by other solicitors although the documents were held by the solicitors now acting for him. The plaintiff claimed the protection of legal professional privilege in relation to these earlier documents, and the question for decision was whether that claim should be upheld or whether the plaintiff by bringing the proceedings before the court had impliedly waived his privilege. Ebsworth J considered the case and the authorities at some length and with care, and concluded that the plaintiff had impliedly waived his undoubted privilege. She placed particular emphasis on the statement by Dillon LJ in Lillicrap that “there is no waiver for a roving search into anything else in which the solicitor or any other solicitor may have happened to have acted for the clients” and said that this passage was critical to the case. She concluded (at 370E):

“Waiver is not lightly to be inferred; although privilege is an aspect of the law of evidence and not of constitutional rights it is firmly established in our law for sound reasons of public policy. The wording of section 32 of the Limitation Act 1980, unlike section 14, does not contain any reference to legal or other advice but I adopt the passage in the judgment of Dillon LJ in Lillicrap v Nalder and Son [1993] 1 WLR 94, 99 I have already quoted and conclude that the plea of deliberate concealment has had the effect of waiving privilege in respect of such documents as go to the issue. As Russell LJ said in Lillicrap v Nalder and Son [1993] 1 WLR 94, 101:

“By bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done.” (Emphasis added).

In Lillicrap v Nalder and Son the material was held in files of the same solicitors in respect of discrete transactions; I can see no difference in principle where his present solicitors hold files of the clients’ earlier solicitors in relation to discrete but essentially related factual matters.”

The defendants naturally relied on this ruling which, if correct, concludes the present issue in their favour. We would not wish to exclude the possibility that there may be factual situations in which a plaintiff who sues his solicitor may be taken to have impliedly waived privilege in respect of written legal advice from other lawyers which he agreed to that solicitor seeing for the purposes of the matter on which he was currently seeking advice from him. But, with respect to the judge, we ourselves do see a difference in principle between the two situations which the judge was considering. On the facts of the present case, the plaintiffs have undoubtedly brought their previously confidential relationship with Freshfields into the public domain, and fairness requires that Freshfields should be free to rely on any communications passing between them and the plaintiffs relevant to their defence of that claim. They are already privy to those communications. But, as already pointed out, the plaintiffs have not brought their relationship with Slaughter and May into the public domain. That relationship remains confidential. The plaintiffs have done nothing to breach it. And far from enabling Freshfields to rely on material to which they are already privy, the ruling for which Freshfields contend would make documents available to them of which the contents are unknown.

If the question were one of balancing the requirements of fairness and justice in the instant proceedings against any legitimate interest a plaintiff might have in maintaining the confidentiality of a confidential relationship, there might be much to be said for the result reached by the judge in Kershaw but R v Derby Magistrates’ Court ex parte B, above, makes plain that in the context of legal professional privilege no such balance is involved. This authority is important, not only for its clear restatement of principle, but also as illustrating in graphic terms the all but absolute nature of this privilege in the absence of waiver. If ever there was a case in which the interests of justice militated in favour of disclosure, that surely was it.

In Banque Bruxelles Lambert SA v Simmons and Simmons (a firm) (unreported, 23 November 1995), a client sued its former solicitors claiming damages for negligence in relation to a particular transaction. Among the solicitors’ defences were allegations of contributory negligence on the part of the client. In support of its defences the solicitors sought disclosure of the files of the client’s in-house legal department relating to the disputed transaction insofar as those files had come into existence before legal proceedings against the solicitors had been contemplated. The client contended that those files were privileged, and that there had been no waiver of the privilege. Blackburne J upheld the client’s claim. He said (at page 40 of the transcript of his judgment):

“In my judgment the waiver applies only to communications between the client and the solicitor whom he is suing and not to privileged communications between the client and some other solicitor, and I do not consider that the decision in Lillicrap, properly understood, is intended to establish any wider principle. Mr Hart submitted that the touchstone is that the waiver extends, to take the words of Russell LJ, to “all matters .......relevant to the suit ......to enable justice to be done” or, to take the words of Farquharson LJ, “to documents and information ......relevant to the issue between the parties and which it would be unfair to exclude” so that it can extend to privileged communications between the client and another solicitor (unconnected with the defendant solicitor) bearing on the issue in the suit. If that were correct it is difficult to see why the waiver should not equally extend to privileged communications between a client and his solicitor where the client is suing someone who was not his solicitor and who owed no duty of confidence in relation to any communication passing between them.”

In our view the judge was right, both in his reading of Lillicrap and in his understanding of the relevant principle.

We need not linger on Hayes and Another v Dowding and Others [1996] PNLR 578, a case in which the plaintiffs were held to have impliedly waived their right to legal professional privilege by bringing proceedings even though the proceedings were not against any legal adviser. In reaching that conclusion the judge relied heavily on Australian and United States authority. Neither party before us sought to contend that this case was correctly decided, and we are satisfied that it was not. The authorities on which the judge principally relied do not represent the law in this country, and the decision must be overruled.

Lastly, we briefly mention X Corporation Limited v Y (a firm) (unreported, 16 May 1997). In that case the plaintiffs sued their former solicitors for alleged negligence in a commercial transaction, and the solicitors sought disclosure of documents passing between the plaintiffs and legal advisers in this country and elsewhere. Moore-Bick J concluded that the documents in issue were not relevant to any issue in the action, and that was a conclusive answer to the application. He went on, however, to consider whether the plaintiffs had waived their privilege in relation to these other documents, and would appear in the course of considering that question to have accepted that privilege might be taken to be waived if it would be unfair to allow a client to maintain it. If that is a correct reading of the judge’s decision, we consider that he went too far. Fairness is an important part of the reason why a solicitor who is sued cannot be required to respect the confidentiality of his relationship with the client who is suing him; but, save as between the client and the solicitor he is suing, fairness is not the touchstone by which it is determined whether a client has or has not impliedly waived his privilege.

Plainly, the authorities do not speak with one voice. There is, however, nothing in Lillicrap, properly understood, which throws doubt on the principles we have endeavoured to state, and that is the only authority on implied waiver binding upon us. We remain of the clear opinion that those are the principles which govern this matter, and we are fortified in our view by the very clear statements of principle in NRG v Bacon & Woodrow and BBL v Simmons and Simmons. We would accordingly allow the plaintiffs’ appeal and dismiss the defendant’s application for disclosure of the disputed documents, in relation to which the plaintiffs have not impliedly waived their right to legal professional privilege.

This is the judgment of the court.

ORDER: (Not part of judgment)

Plaintiffs' appeal allowed; respondent's application for disclosure of disputed documents dismissed; plaintiffs to have costs of appeal and 65% of costs attributable to the argument on privilege issues before the judge; leave to appeal refused.

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