England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT, CHANCERY DIVISION
THE HONOURABLE MR JUSTICE ROTH
CH/2014/0273

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/04/2016

Lady Justice Gloster:

Introduction

1. This is an appeal by the appellant, Dechert LLP ("Dechert"), against a decision of Roth J, whereby he ordered that the application by the respondent, Eurasian Natural Resources Corporation Limited ("ENRC"), for a detailed assessment of the bills of its former solicitors, Dechert, pursuant to section 70 of the Solicitors Act 1974 ("the 1974 Act"), should be held in private.
2. Roth J allowed ENRC's appeal against the previous order of the costs judge, Master Haworth, dated 24 April 2014, in which the master dismissed an application by ENRC for an order under CPR 39.2(3) that the costs assessment proceedings should be heard in private. Roth J held that the effective protection of ENRC's right to legal professional privilege ("LPP") required the matter to be heard in private, pursuant to CPR rule 39.2(3).
3. The main dispute between the parties on this appeal is the extent of the waiver of LPP by ENRC by reason of its commencement of assessment proceedings under section 70 of the 1974 Act.
4. The issue is clearly of importance for both parties. On the hearing of this appeal, Dechert was represented by Mark Howard QC, Simon Browne QC leading Tony Singla, and ENRC was represented by Lord Pannick QC, leading Richard Lissack QC, Benjamin Williams QC and Tamara Oppenheimer.

Factual background

5. The relevant background to this appeal is set out in the judgment of Roth J at paragraphs 3 to 9, which I set out below:

"The factual background

3. In December 2010, ENRC received a report from a whistleblower indicating that there may have been fraud involving some of its overseas operations. ENRC was at that time listed on the London Stock Exchange and it instructed outside lawyers to conduct an investigation. Initially, DLA Piper UK LLP was instructed but in April 2011 the partner there with conduct of the matter moved to Dechert and ENRC instructed Dechert to take over the investigation.

4. Following a leak of the whistleblower report and resulting articles in the press, the Serious Fraud Office ("SFO") contacted ENRC and reminded it of the so-called self-reporting process which they operate in such circumstances. ENRC and Dechert, together with ENRC's general corporate law advisors, Jones Day, held meetings with the SFO in late 2011, and ENRC thereafter agreed to a considerable expansion of the scope of Dechert's investigation as part of a possible self-reporting process. ENRC entered into a formal written retainer with Dechert in April 2011.

5. The scale and range of the expanded investigation is apparent from the level of Dechert's fees. In total, Dechert has billed ENRC over £16.3 million, of which some £11.7 million was invoiced in the period from 23 July 2012 to 11 April 2013. ENRC became increasingly concerned about the level of Dechert's fees and what it perceived to be serious over-charging. On 27 March 2013, ENRC terminated Dechert's retainer and instructed other lawyers. It is unnecessary to decide to what extent the decision to terminate Dechert's retainer was due to the level of its fees or made for other reasons.

6. Subsequent to termination of its retainer, Dechert submitted invoices in the total amount of some £5.1 million. ENRC agreed to pay those invoices in order to obtain a release of Dechert's lien over its files, in return for the express agreement by Dechert that it would not object to a detailed assessment of those costs. The balance of the £11.7 million had been paid prior to ending the retainer, and Mr Ehrensberger, the General Counsel of ENRC, explains in his witness statement that this was because the company was concerned not to do anything that might delay or jeopardise the self-reporting process with the SFO, or be perceived to be obstructing that process.

7. ENRC's application under sect 70 SA 1974 was issued on 18 October 2013. In opposition to that application, Dechert served in February 2014 detailed evidence from two partners and two associate solicitors employed by the firm. Those four witness statements, which in themselves exceed 220 pages, are accompanied by 13 lever arch files of exhibits. Altogether, Dechert's evidence gives what purports to be a very full account of the various practices at ENRC being investigated, identifying many of the individuals involved and describing the way they conducted themselves in response to Dechert's investigations.

8. It is not in dispute that much of Dechert's evidence comprises a mass of otherwise confidential and sensitive information which had come into its hands only as a result of its instruction by ENRC and the work done on ENRC's behalf. Subject to the considerations discussed below, this is information and comprises documents that would be covered by legal professional privilege ("LPP").

9. The SFO investigation has since developed into an active criminal inquiry. It is clear that if ENRC's application for taxation, and the detailed evidence served, were heard in public, the SFO would attend that hearing in order to glean information of assistance to its inquiry. For present purposes it can be assumed, and Dechert does not seriously dispute, that at least some of the material set out in Dechert's evidence could potentially and significantly prejudice the interests of ENRC in the SFO inquiry. Indeed, so concerned is ENRC about the disclosure of this information that it has made clear that if its application for taxation is not heard in private it will rather withdraw the application than proceed."

6. Dechert submits that the following additional facts, or alleged facts, are also relevant:

i) The report received by ENRC in December 2010 from a whistleblower indicated possible wrongdoing on the part of its executive management in Kazakhstan.

ii) ENRC delegated the authority and power in respect of the investigation of the whistleblower complaint to a Special Investigations Committee ("SIC") which was comprised of independent board members.

iii) In April 2011, Dechert was retained by ENRC to conduct an investigation into that complaint. As a consequence of the delegation of authority to the SIC, Dechert's instructions were provided by the SIC at all times throughout its retainer.

iv) In August 2011, following a leak of the whistleblower report, ENRC initiated a possible self-reporting process to the SFO.

v) On 27 March 2013 Dechert's retainer was orally terminated. The termination was confirmed in writing on 1 April 2013.

vi) Immediately subsequent to Dechert's termination, the SFO instituted a formal criminal investigation into ENRC's affairs. That investigation continues.

vii) On 22 October 2013, ENRC issued a detailed assessment application under section 70(3) of the Solicitors Act 1974.

viii) Mr Ehrensberger, whose first witness statement supports the application, was not a member of the SIC after 9 July 2012 (at the latest) and he was not privy to its workings as he was identified as having been personally involved in transactions in Africa then being investigated. Despite this, Mr Ehrensberger was responsible for the filing of the section 70 proceedings and, as explained below, in his evidence filed on behalf of ENRC, Mr Ehrensberger makes a number of very serious allegations against Dechert.

7. It is clear that the allegations made by ENRC, through Mr Ehrensberger, against Dechert, are very serious. I would not regard them as "unexceptional in the context of a section 70 assessment" as described by ENRC in its skeleton argument on this appeal. Master Haworth described them as being "serious, even put at its lowest". By way of example, Mr Ehrensberger's first witness statement makes allegations of "systematic and gross overcharging" and of costs having been incurred by Dechert unreasonably; it also includes an allegation that Dechert failed to comply with its professional obligations. Mr Ehrensberger's first witness statement concludes as follows:

"… Dechert made decisions regarding the methods and scope of the investigation for the principal purpose of expanding the work to generate higher fees rather than to serve the interests of the investigation, or indeed ENRC as Dechert's client."

8. Mr Ehrensberger's second witness statement lists nine new allegations of overcharging not made in his first witness statement. Mr Ehrensberger also alleges that individuals reported to him that, during the time the SFO first contacted ENRC, Mr Neil Gerrard said that he was "in rape mode" in respect of fee charging.' It is also of relevance that Mr Ehrensberger makes clear in his witness statements that ENRC is actively considering whether to bring professional negligence proceedings against Dechert.
9. On 14 February 2014, Dechert served four witness statements in response to ENRC's evidence. Dechert contends that, in order for it properly to defend the section 70 proceedings and to rebut the very serious allegations made against it by ENRC, it was necessary for it to refer to documents and information belonging to ENRC, some of which were, at least before the institution of the section 70 proceedings, protected by LPP.
10. ENRC disputes much of the relevance - and indeed accuracy - of what it claims is highly confidential material contained in Dechert's evidence. I emphasize that in reciting the above background facts this court is not making any findings on matters which might be controversial as between the parties.
11. ENRC's special circumstances application was originally due to be heard on 29/30 May 2014. However, on 16 April 2014, ENRC issued an application under CPR rule 39.2(3) for an order that the section 70 proceedings should be heard in private.

Procedural history

12. ENRC's application came before the Master on 24 April 2014. Before the Master, ENRC's primary contention was that section 70 proceedings were always heard in private de iure prior to the entry into force of the CPR and that they had continued to be heard in private de facto post-CPR, such that they should be regarded as falling outside the scope of the general rule in CPR 39.2.
13. That argument was rejected by the Master. The Master also rejected ENRC's argument that a private hearing was necessary because a hearing in public would prejudice ENRC's rights in the ongoing SFO investigation, stating as follows at paragraphs 17 and 18 of his judgment:

" ... The situation is the claimant terminated its retainer with the defendant. It has sought in the witness evidence to make a number of serious, allegations, against the defendants, even put at its lowest, looking at some of the schedule to which I was provided by the defendant in this case.

It has chosen to bring these matters before the public arena and in doing so must therefore accept the consequences of that position. In those circumstances the claimant's application is dismissed."

14. The Master did, however, grant ENRC permission to appeal to the High Court.
15. Before Roth J, ENRC did not renew its argument that section 70 proceedings fell outside the scope of the general rule in CPR 39.2. Instead, the thrust of its argument was as set out by Roth J at paragraph 20 of his judgment:

"Here, ENRC relies in particular on CPR 39.2(3)(c) and (g) together, on the basis that the greater part of the material in Dechert's evidence is subject to LPP and therefore confidential. ENRC submits that whilst LPP has by implication been waived to enable Dechert to place relevant material before the costs judge to resist the challenge to its bills, that waiver is limited to that particular purpose and does not constitute a general waiver of LPP. On the facts of the present case, it is in the interests of justice to preserve the confidentiality from any wider disclosure and thus protect the documents and information from scrutiny by the SFO."

16. That argument was accepted by Roth J and accordingly he allowed ENRC's appeal. In particular Roth J held:

i) Where there was an implied waiver by reason of proceedings brought against a solicitor, the solicitor must be entitled to use any relevant privileged documents

"in such a manner as he fairly requires for the purpose of his defence. That will therefore include showing them to potential witnesses, experts, and his professional indemnity insurers":

see paragraph 35 of the judgment.

ii) Although the Court of Appeal's judgment in Paragon Finance plc v Freshfields [1999] 1 WLR 1183 ("Paragon") established that, where a client started professional negligence proceedings against its solicitor, it would be held to have impliedly waived privilege in respect of all relevant materials, that waiver was of limited scope. Paragon was not dispositive of ENRC's application in favour of Dechert because neither in Paragon nor in any of the other cases on implied waiver was there:

"any suggestion that use of the documents by the solicitor in proceedings in open court would damage the legitimate interests of his former client, or that all or part of the negligence action should therefore be heard in private. The issue simply did not arise".

See paragraph 37 of the judgment.

iii) He rejected Dechert's arguments that all the cases dealing with limited waiver concerned the provision of privileged documents to a third party, where that provision was expressed, or implied, to be for a limited purpose, and that was recognised as a special circumstance; that none of those cases concerned privileged documents which were already in the possession of the party prior to the waiver; and that, in the latter circumstances, the waiver could not be limited but was complete. In rejecting this argument, Roth J said at paragraph 45:

"However, in my judgment there is no reason as a matter of principle, practicality or authority why the circumstances giving rise to a limited waiver should be restricted in the manner which Mr Hollander [leading counsel for Dechert] suggested. Although the leading cases concerning professional negligence actions against a solicitor speak of an implied waiver of privilege in general terms, in my view, that simply reflects the fact that in none of those cases was this question [the question of whether the hearing should be in private] raised for consideration. In none of them was there any issue about holding the hearing in public. More significantly, the authorities which have directly considered limited waiver do not suggest that the concept has an inherently restricted application. The words of Lord Millett, speaking for the Privy Council in B v Auckland District Law Society, set out above, are of general scope ("It must often be in the interests of the administration of justice…."). Since it is established that a waiver of privilege may be express or implied, I consider that in appropriate circumstances an implied waiver can be limited in the same way as an express waiver."

iv) Notwithstanding that ENRC's waiver of privilege was only limited, so that the relevant documents remained privileged as against third parties, the question of whether the hearing should take place in public or private was ultimately a matter of discretion under CPR 39.2(3). Exercising his discretion, Roth J held that "there is the potential for very real prejudice to ENRC if the matter were heard in public" and that, because ENRC had stated that it would not proceed with its section 70 proceedings if the hearing were in public, the "effective protection of ENRC's rights therefore requires that the matter be heard in private": see paragraph 66 of the judgment.

v) Whilst Dechert has an "understandable concern to vindicate its reputation", that concern would "be entirely met by a public judgment determining the costs application" and therefore there was no need for the hearing itself to be in public: see paragraph 68 of the judgment.

vi) There was no public interest on the facts of this case for holding the hearing in public, in which context it was relevant that "this is not adversarial litigation but the exercise of a supervisory jurisdiction by the court over its officers": see paragraph 69 of the judgment.

17. The section 70 proceedings were stayed pursuant to various orders of the court pending the determination of the present appeal.
18. In the first instance Lewison LJ refused permission to appeal on the papers for two reasons. First, he took the view that, although the bulk of Roth J's judgment was concerned with LPP and its waiver, that issue was not directly relevant to the question whether the hearing should be in private. Lewison LJ took the view that the essence of the judge's reasoning on that question was that putting the material (whether subject to continuing LPP or not) in the public domain would prejudice ENRC as against the SFO in its criminal investigation. That finding by the judge was a sufficient basis for his decision. In balancing the prejudice to ENRC of potential disclosure to the SFO, against prejudice to Dechert and the public interest in open justice, the judge was entitled to make the order that he did. Second, Lewison LJ took the view that he was not persuaded that the judge's decision had the wide implications for the conduct of professional negligence actions that Dechert suggested.
19. Arden LJ granted permission to appeal at a renewed oral hearing. She took the view:

"that the question whether or not there has been an implied waiver, and more particularly whether or not a waiver is limited, is, in my judgment, a matter of considerable importance because, for instance, the person who is involved in the proceedings and who is not the client, namely Dechert LLP, may wish to use the documents for some other purpose,"'

Dechert's submissions

20. Dechert submitted that, in allowing ENRC's appeal against the decision of the Master and holding that the section 70 proceedings should be held in private, Roth J erred in two related respects:

i) First, Roth J misunderstood the principle that was established by the Court of Appeal in Paragon and the rationale of the dicta of Lord Bingham in that case.

ii) Secondly, Roth J wrongly held that the principle which stems from Paragon can be qualified by reference to the line of authority concerning limited waiver.

21. In support of these contentions, Mr Mark Howard QC made the following submissions.

In relation to the judge's alleged misunderstanding of the Paragon principle

22. The general rule in CPR 39.2 that hearings were to be in public reflected the fundamental principle of open justice as a number of well-known authorities emphasised.
23. There was no doubt that section 70 proceedings such as those brought by ENRC against Dechert fell within CPR 39.2 and accordingly were to be heard in public unless they were ordered to be in private in the particular circumstances of a given case pursuant to CPR 39.2(3): see the Senior Court Costs Office Guide, section 11.1.
24. The fact that legal professional privilege was a fundamental right was not disputed by Dechert. However, it was well established that: (a) by commencing proceedings against a solicitor who formerly acted for him, a client impliedly waived any right to claim privilege in respect of any documents which were relevant to the determination of his claim; and (b) the implied waiver was general and for all purposes.
25. The position was authoritatively set out and explained in the judgment of Lord Bingham CJ in Paragon at page 1188D-G; this reflected a statement to similar effect made previously by the Court of Appeal in Lillicrap v Nalder & Son [1993] 1 WLR 94.
26. If there was no implied waiver upon the commencement of proceedings by a client against his solicitor in relation to all documents within the solicitor's possession, a solicitor would be unfairly hampered in the defence to his former client's claim. Until the commencement of proceedings against him, a solicitor had no right or authority from his client to use privileged documents belonging to his client for his own purposes: see Quinn Direct Insurance Ltd v Law Society [2010] EWCA Civ 805 per Sir Andrew Morritt C at paragraphs 23 -24 and 28 -29. It was the waiver of privilege which arose upon the commencement of proceedings by the client against the solicitor which freed him from such restrictions and entitled him to deploy privileged materials in support of his defence. This included, submitted Mr Howard in answer to a question put to him by the court, the ability to publish such materials on the Internet or otherwise in the press.
27. Lord Bingham's reasoning in Paragon was not simply that a solicitor must be entitled to use privileged documents to defend himself against a claim by the client. Lord Bingham went further and clearly relied on the open justice principle as being an important reason why the commencement of proceedings by a client against his solicitor constitutes a general waiver of privilege for all purposes. By commencing proceedings, the client was inviting the court to adjudicate in public on issues relating to the relationship and, accordingly, putting into the public domain that which would otherwise have remained confidential.
28. Thus, submitted Mr Howard, it was the necessary consequence of the decision in Paragon that there could be no question of a client who had sued his solicitor subsequently seeking to have those proceedings heard in private in order to preserve the confidence in the relationship. By the very act of commencing the proceedings, the client had released the solicitor from the obligation of confidence. Accordingly, ENRC's application for a private hearing under CPR 39.2(3) was misconceived because there was no longer any confidentiality to protect.
29. Mr Howard further submitted that Roth J was wrong to reject this contention on the basis that in Paragon there was no issue before the Court of Appeal as to whether the relevant professional negligence proceedings should be heard in private. His implicit suggestion that the Court of Appeal in Paragon might have ordered a private hearing if an application had been made in that case was misconceived. Indeed, if Roth J's interpretation of Paragon were correct, the effect would be that all professional negligence cases could be heard in private if the client so chose.
30. Mr Howard submitted that there were two answers to ENRC's contention that a public hearing would stifle its ability to pursue the section 70 proceedings, because it did not want its confidential information to be disclosed to the SFO:

i) First, the point was irrelevant. According to the Paragon principle, clients had to make an election. If they pursued proceedings against their solicitors they had to live with the consequences, namely that, by commencing proceedings, whether pursuant to section 70 or in a professional suit, they would lose the right to assert any confidence in the relationship. As Morgan J correctly held in V v T [2014] EWHC 3432 (Ch), the mere fact that a hearing in open court might be "painful, humiliating, and a deterrent" to a party was not a proper basis for departing from the open justice principle. That was because the principle was concerned with the public interest in the administration of justice as opposed to the private interest of individual litigants.

ii) Second, even leaving aside Dechert's admitted desire to vindicate itself at a public hearing, there was a public interest in section 70 proceedings being heard in public (and not merely that judgments should be in public). In the vast majority of cases brought under section 70 a solicitor would need to refer to privileged documents for the purposes of his defence. If Roth J's conclusion were correct, the effect, therefore, would be that in all such cases a hearing in private could be obtained by the client. But that would be to turn the general rule in the CPR on its head.

In relation to the judge's erroneous conclusion that the principle which stems from Paragon can be qualified by reference to the line of authority concerning limited waiver

31. Mr Howard submitted that the second error made by the judge was wrongly holding that the Paragon principle could be qualified by reference to the line of authority concerning limited waiver. Thus, submitted Mr Howard, the judge was wrong to conclude that ENRC had only waived privilege for the limited purpose of pursuing the section 70 proceedings and had not waived privilege generally and for all purposes: see paragraph 45 of the judgment. In reaching this conclusion Roth J erroneously conflated the principles of implied waiver and limited waiver. Those principles were entirely separate and distinct.
32. As to implied waiver, that was the principle which emerged from cases such as Paragon. As the authorities made clear, the principle of implied waiver had two limitations: (a) the waiver only extended to those documents which were necessary for the solicitor to defend himself; and (b) the waiver did not entitle the solicitor to see any documents which he had not previously seen in the course of his relationship with the client. But these were the only limitations; in all other respects the waiver was general and for all purposes – those aspects of the relationship relevant to the proceedings ceased to be confidential.
33. In contrast to implied waiver, limited waiver arose in a variety of different factual situations: see for example: Bourns Inc v Raychen Corp [1999] 3 All ER 154; B v Auckland District Law Society [2003] 2 AC 736. The principle of limited waiver was engaged in any case where party A provided privileged documents to party B for an express or implied limited purpose; in such cases, party B had not seen the documents previously and so a new relationship is created between A and B in respect of the documents. It followed that party A might impose express or implied limitations on the use to which the documents might be put by party B.
34. But, Mr Howard submitted, there was a fundamental distinction between the principles of implied and limited waiver. Whereas in cases of limited waiver the party receiving the documents had not seen the documents previously, in cases of implied waiver the solicitor being sued had seen the privileged documents previously (and indeed may even have created some of them) but he was prevented from using them for his own purposes until the client commenced proceedings. For those reasons Dechert submitted that the judge erred as a matter of principle in amalgamating implied waiver and limited waiver.
35. Further, the approach adopted by the judge was unsupported by authority. The existing lines of case law concerning implied waiver and limited waiver were entirely separate and, insofar as the judge purportedly derived support for his approach from Goldman v Hesper [1988] 1 WLR 1238 and National Westminster Bank Plc v Bonas [2003] EWHC 1821 (Ch), he was wrong to do so. In particular the relevant part of the Bonas decision relied upon by the judge constituted one paragraph in a long judgment and no cases in relation to implied waiver other than Lillicrap were cited to the Court in Bonas (not even Paragon). Moreover, Bonas was not referred to in any of the numerous textbooks covering this area. Mr Howard submitted that the case was wrongly decided on this point.
36. Accordingly ENRC's application for a private hearing under CPR 39.2(3) was misconceived because there was no longer any confidentiality in its documents that fell to be protected. In the circumstances, there was no relevant discretion for the Court to exercise and the appeal should be allowed.

ENRC's submissions

37. In summary Lord Pannick submitted as follows.

i) The common law sought, wherever possible, to proceed by way of open hearings. But there were exceptions where it was necessary to protect other public interests. An important public interest recognised by the common law was the protection of LPP.

ii) Because of the importance of LPP, the common law has recognised the principle of limited waiver of documents which were otherwise protected by LPP; see Lord Millett for the Judicial Committee of the Privy Council in B v Auckland District Law Society [2003] 2 AC 736, 761-762, at paragraph 68 .

iii) In the present context, because of its issue of the section 70 proceedings, there had been a limited waiver of LPP by ENRC. But that waiver was only to the extent necessary to enable Dechert to defend such proceedings. LPP remained valid for all purposes other than as needed by Dechert for that purpose. A private hearing was necessary to protect the LPP of ENRC. A hearing in private did not impede Dechert's ability to defend the section 70 proceedings. As the judge held (see paragraphs 65-69 of the judgment), Dechert had no legitimate interest in a public hearing. On the contrary, the public interest required a private hearing. ENRC had made clear that because of the need to protect its LPP, if the section 70 proceedings were to be heard in public, ENRC would abandon those proceedings.

iv) It was well established that, for the purposes of an inter partes detailed assessment of costs, the waiver of LPP by the applicant was limited and for the purpose of the assessment only: Goldman v Hesper [1988] 1 WLR 1238 (Court of Appeal) and Bourns Inc v Raychen Corp [1999] 3 All ER 154 (Court of Appeal). There was no principled basis for adopting a different approach in the context of a solicitor client detailed assessment.

v) Paragon did not establish that when a client commences professional negligence proceedings against a former solicitor the implied waiver of LPP is absolute. Paragon recognised an implied waiver "so far as necessary for the just determination of his claim" (p.1188E G). An implied waiver was limited in order to serve that purpose whilst also protecting the interests of the client (and the legal system) in LPP. That issue was not addressed by the Court of Appeal in Paragon.

vi) In any event, this appeal was concerned with the approach to waiver of LPP and privacy in the context of detailed assessment proceedings, not with the approach to these issues in the context of professional negligence proceedings.

vii) For those reasons, which reflect those given by the judge, the judgment should be upheld.

Discussion and determination

38. There was rightly no dispute between the parties as to the importance of the fundamental principle of the common law system that a court should normally sit in public. Likewise it was equally common ground that the principle of open justice was subject to exceptions in appropriate circumstances and for good reasons. Thus in A v BBC [2015] AC 588, Lord Reed for the Supreme Court stated at paragraph 23 that:

"It is a general principle of our constitutional law that justice is administered by the courts in public, and is therefore open to public scrutiny."

He added, at paragraph 27, that it is for the courts, exercising their inherent jurisdiction, to decide on the ambit and application of this principle. At paragraph 29, he referred with approval to the recognition by Viscount Haldane LC in Scott v Scott [1913] AC 417, 437-438 that the principle of open justice is subject to exceptions. Viscount Haldane said:

"As the paramount object must always be to do justice, the general rule as to publicity, after all only the means to an end, must accordingly yield. But the burden lies on those seeking to displace its application in the particular case to make out that the ordinary rule must as of necessity be superseded by this paramount consideration. The question is by no means one which, consistently with the spirit of our jurisprudence, can be dealt with by the judge as resting in his mere discretion as to what is expedient. The latter must treat it as one of principle, and as turning, not on convenience, but on necessity."

39. Having stated at paragraph 40 that the categories of exceptions were not closed, Lord Reed concluded at paragraph 41 that:

"Whether a departure from open justice was justified in any particular case would depend on the facts of that case. ... Central to the court's evaluation will be the purpose of the open justice principle, the potential value of the information in question in advancing that purpose and, conversely, any risk of harm which its disclosure may cause to the maintenance of an effective judicial process or to the legitimate interests of others."

40. These principles of open justice, subject to exceptions, are recognised by CPR rule 39.2(3) which provides in its material parts as follows:

"A hearing, or any part of it, may be in private if -

(a) publicity would defeat the object of the hearing;

...

(c) it involves confidential information ... and publicity would damage that confidentiality;

...

(g) the court considers this to be necessary, in the interests of justice".

As the Court of Appeal said in X v Dartford and Gravesham NHS Trust [2015] EWCA Civ 96, paragraph 10, CPR Part 39:

"seeks to encapsulate both the general rule of open justice and the particular cases in which it may be appropriate to depart from it."

41. It was likewise common ground that legal professional privilege was fundamental to the administration of justice and was a fundamental human right: see for example: R v Derby Magistrates' Court ex parte B [1996] AC 487, per Lord Taylor at page 507D; R (Morgan Grenfell & Co Ltd) v Special Commissioners [2003] 1 AC 563, 606-607 per Lord Hoffmann at paragraph 7; Three Rivers DC v Bank of England (No. 6) [2005] 1 AC 610, 646D, per Lord Scott at paragraph 25.
42. Despite Mr Howard's submissions, I have had no difficulty in concluding that the judge's conclusion, namely that these proceedings should be heard in private, was correct.
43. Unlike Lewison LJ, as stated in the reasons which he gave for giving permission to appeal, I am not clear that Roth J decided that, irrespective of whether continuing LPP had been lost, nonetheless the hearing should be in private. However, like Lewison LJ, I regard that as the actual issue which the judge had to decide. Let us assume, for example, that the confidential information which Dechert had acquired in relation to ENRC's alleged criminality had been acquired by ENRC's tax advisers or accountants, in which case such information would not have been subject to legal professional privilege, but only to contractual duties of confidence. In circumstances where ENRC was sued by its accountants/tax advisers for outstanding fees, and ENRC counterclaimed for overcharging or negligence, a similar issue might very well arise in circumstances where the accountants/tax advisers wanted to refer in supporting their bill to highly confidential materials relevant to the client's alleged criminality, which had been disclosed to the accountants/tax advisers in confidence, in order to demonstrate the value of the work which they had carried out.
44. In my view, in such circumstances, the court might well take the view that, if there was any risk as to ENRC incriminating itself through the public deployment of such documents at trial, or leading the prosecuting authorities to a line of enquiry, any such hearing (either in whole or in part, in so far as it referred to the relevant documents) should be heard in private in order to protect the rights of ENRC, as the subject, or potentially the subject, of criminal proceedings to a fair trial, to the right not to incriminate itself and to the presumption of innocence under article 6 of the European Convention of Human Rights.
45. Likewise, in the present case, and irrespective as to whether ENRC has waived LPP absolutely, or merely to a limited extent, I take the view that the judge was right to exercise his discretion pursuant to CPR rule 39.2(3) to order that the hearing of the costs application, and any subsequent assessment pursuant to section 70 of the 1974 Act, should be heard in private in the interests of justice for the reasons which the judge gave in paragraphs 65 to 69 of his judgment. His conclusion that putting the material (whether subject to continuing LPP or not) into the public domain would prejudice ENRC as against the SFO in its criminal investigation cannot be faulted. There can be no doubt that the hearing "involves confidential information ... and publicity would damage that confidentiality;" and that a hearing in private was "necessary, in the interests of justice," to preserve ENRC's entitlement to rely upon the presumption of innocence. Simply because there has, or might have, been an implied waiver of LPP does not mean that ENRC should be deprived of all protection for its previous confidential dealings with its solicitor. That is particularly so, where, despite Mr Howard's submissions in relation to the seriousness of the allegations raised by ENRC against Dechert, in my judgment Dechert has no substantial legitimate interest in having the section 70 proceedings heard in public that could possibly outweigh ENRC's entitlement not to incriminate itself through disclosure of confidential communications with its solicitor. Moreover, in my view, the fact that, if LPP had been lost, the SFO might theoretically have been able to obtain an order against ENRC for production of all relevant documents, would not have been an answer to the need to protect ENRC's confidentiality or right to the presumption of innocence.
46. But this conclusion would not predicate that any judgment should not be published. On the contrary, in the event that Dechert were to win, it would be a matter for the judge to decide if, and to what extent, he should publish a judgment explaining why he had concluded that ENRC's challenges to Dechert's fees had failed.
47. However, ENRC did not argue the case, either below, or before us, on this broader ground, namely, that irrespective of whether LPP had been lost, the hearing should be in private. Accordingly, and in the absence of argument directed to that broader issue, I do not consider that it is appropriate for this court to decide the case on such a basis.
48. I turn, therefore, to consider the submissions which were presented to us to challenge, or support, the judge's ruling in relation to the issue as to whether LPP has been waived by ENRC on a limited or an absolute basis. I find the answer a simple one. In my judgment the authorities clearly demonstrate that there is a concept of waiver for limited purposes and that this is clearly what happened in this case.
49. In B v Auckland District Law Society [2003] 2 AC 736, the issue was whether a firm of solicitors had waived legal professional privilege (both its own and that of its clients) in relation to documents which had been supplied to the Auckland Law Society's investigating officer (a Mr Ennor) on the express terms that privilege was not waived and that the documents would not be furthered copied by the recipient. The Judicial Committee clearly recognised the concept of limited waiver. At paragraphs 66 to 75 of the judgment of the Board, Lord Millett stated:

"Limited Waiver.

66. The Court of Appeal rejected the Society's contention that privilege could not be waived for a limited purpose and continue to be maintained as an objection to any wider use. The Society renewed its argument before the Board. Privilege, the Society submitted, is merely a right to resist compulsory disclosure. Once disclosure has occurred, it is no longer a question of privilege. Ex hypothesi a right to resist disclosure cannot be invoked against the person to whom disclosure has already been made. If he is to be restrained from making use of the information, it must be on the ground that the information is confidential. But the equitable right to the protection of confidential information may be outweighed by a countervailing public interest in having the information made available. In the present case the Judge held that the public interest would have prevailed over the firm's rights to preserve confidentiality.

67. Their Lordships agree that privilege is a right to resist the compulsory disclosure of information. It has been so characterised in numerous authorities. It is sufficient to cite a passage from the judgment of Hoffmann J in Black & Decker Inc v Flymo [1991] 1 WLR 753, 755:

"It is not possible to assert a right to refuse to disclose in respect of a document which has already been disclosed. Once the document has passed into the hands of the other party the question is no longer one of privilege but of admissibility."

68. The Society's argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once it is out of the bag, however, privilege cannot help to put it back. Their Lordships observe that this arises from the nature of privilege; it has nothing to do with waiver. It does not follow that privilege is waived generally because a privileged document has been disclosed for a limited purpose only: see British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113: Bourns v Raychem Corporation [1999] 3 All ER 154. The question is not whether privilege has been waived, but whether it has been lost. It would be unfortunate if it were. It must often be in the interests of the administration of justice that a partial or limited waiver of privilege should be made by a party who would not contemplate anything which might cause privilege to be lost, and it would be most undesirable if the law could not accommodate it.

69. The Society argued that, once the documents were produced to Mr Ennor, they ceased to be privileged. Their Lordships consider that this is playing with words. It confuses the nature of the documents with the rights to which the arrangements with Mr Ennor gave rise. The documents are privileged because they were created for the purpose of giving or receiving legal advice. If they are not produced voluntarily, production cannot be compelled. If they are produced voluntarily, the right to withhold production no longer attaches to them. In that sense the privilege may be said to be lost. But they are the same documents, and it is not inappropriate to describe them as privileged. Their inherent characteristics are the same. The policy which protected them from unauthorised disclosure is the same. The cat is still a cat. It can be put back in the bag.

70. There is another confusion also. The appellants want to recover the documents because they are privileged. But they do not rely on privilege to found their cause of action. A party who has parted with possession of documents may have a right to recover possession on any one of a number of grounds. He may reclaim them because they belong to him; or because he has a contractual right to recover them; or because they are confidential; or because he has parted with them for a limited purpose and equity will not permit the recipient to retain them once that purpose is fulfilled. In the present case the documents are both privileged and confidential, but the appellants do not rely on privilege or confidentiality to found their claim to recover them. They rely on the terms of the arrangements under which they were supplied and the limited purpose for which they permitted use to be made of them. Their case is that there is no legal basis on which the Society can retain and make use of the documents free from the limitations which Mr Lusk imposed and Mr Ennor accepted.

71. The fact that the claim to recover the documents is made on equitable grounds does not mean that it must yield to an overriding countervailing public interest. The documents are both confidential and privileged. Whether a claim to the return of such documents is based on a common law right or an equitable one, the policy considerations which give rise to the privilege preclude the Court from conducting a balancing exercise. A lawyer must be able to give his client an unqualified assurance, not only that what passes between them shall never be revealed without his consent in any circumstances, but that should he consent in future to disclosure for a limited purpose those limits will be respected: see Goddard v Nationwide Building Society [1987] 1 QB 670, per Nourse LJ at p 685.

The arrangements with Mr Ennor.

72. The majority of the Court of Appeal accepted that it was possible to waive privilege for a limited purpose only, but held that Mr Lusk had not done so. They considered that he had waived the privilege for all the purposes of the Complaints Committee's investigations. They reasoned that, when reaching his agreement with Mr Ennor, Mr Lusk could not have believed that privilege applied in an investigation by a complaints committee or he would not have disclosed the documents to Mr Ennor at all. He must therefore have intended to preserve privilege for a quite different reason connected with the bloodstock litigation.

73. Their Lordships cannot accept this reasoning. It is inconsistent with the primary facts found on unchallenged evidence by Paterson J and with the express terms of Mr Lusk's letter, which offered to make the documents available "on the express basis that, in doing so, privilege is not waived". The limitations which Mr Lusk imposed were limitations on the use which Mr Ennor might make of the documents, not on the extent of the waiver. Save in respect of the agreed use, privilege was expressly reserved. It is true that a reason for maintaining the claim to privilege was that not all the litigation relating to the bloodstock partnerships had been resolved when the letter was written. But this was not necessarily the only reason, nor would it make any difference if it were. If on the true construction of Mr Lusk's letter, objectively ascertained, privilege was not waived, that is the end of the matter. It does not matter what his reasons were, nor whether they were wholly logical.

Conclusion.

74. Their Lordships are not disposed to leave this case without expressing their dismay that a professional body representing solicitors, who have the most solemn professional obligation to honour their undertakings, should have seen fit to argue that it was free to disregard the obligations which Mr Ennor undertook on its behalf. The Society may wish to consider whether the most honourable course would be for it to return the documents without an order requiring it to do so.

75. Their Lordships will humbly advise Her Majesty that the appeal should be allowed, the order of the Court of Appeal set aside, and the orders of Paterson J restored. The appellants should have their costs in the Court of Appeal and before the Board.

76. The parties have agreed that, in the event of the appeal succeeding, certain documents should be removed from the Record and returned to the firm and that the identity of the first appellants should not be disclosed. Their Lordships order accordingly. The documents to be removed from the Record should be listed in a minute to be agreed between the parties; failing agreement either party may seek a further order from the Board."

50. One of the cases cited with approval by Lord Millett (at paragraph 68) in support of the principle of limited waiver concerned the detailed assessment of costs inter partes, namely Bourns Inc v Raychen Corp [1999] 3 All ER 154, approved in the subsequent case of Goldman v Hesper [1988] 1 WLR 1238. Those cases establish that, while an application for detailed assessment of costs inter partes may necessarily entail some waiver of privilege, that waiver is (i) limited; (ii) temporary; and (iii) extends only to the opposing party and the judge. Thus in Goldman v Hesper Taylor LJ (as he then was) for the Court of Appeal stated at pages 1244C-H:

"once a party puts forward privileged documents as part of his case for costs some measure of their privilege is temporarily and pro hac vice relaxed ... Any disclosure of privileged documents which does have to be made in the exercise of the taxing officer's discretion would in my judgment be only for the purposes of the taxation."

This principle was approved by Aldous LJ for the Court of Appeal in Bourns Inc at page162c where a submission that the above passage from Goldman was obiter was rejected. Aldous LJ added:

"It is possible to waive privilege for a specific purpose and in a specific context without waiving it for any other purpose or in any other context. Documents disclosed on taxation ... are disclosed for the purposes of that taxation and, perhaps absent special circumstances, the privilege is only waived for the purpose for which the documents are disclosed."

Aldous LJ also noted (at pages162j-163a):

"There is good reason to encourage voluntary disclosure of relevant documents in taxation proceedings. A party who claims payment may have to elect whether to pursue that claim in the light of knowledge that it might require disclosure of privileged documents. If he decides to pursue such a claim with the result that natural justice requires disclosure, he should not lose his right of confidentiality more than justice requires. Justice only requires that right to be lost for the taxation proceedings."

51. In its skeleton argument Dechert appeared to suggest that the Goldman and Bourns approach to limited waiver on a detailed assessment might not have survived the CPR. But there was no support for this in the authorities and indeed the Goldman and Bourns approach was specifically affirmed by the Court of Appeal post the introduction of the CPR in Hollins v Russell [2003] 1 WLR 2487, at paragraphs 56 and ff.
52. Dechert also contended that the principle articulated in Goldman and Bourns was limited to inter partes detailed assessment, and inapplicable to detailed assessments as between solicitor and client. But, as Lord Pannick submitted, that contention has no support in the authorities, and there is no reasoned basis for drawing such a distinction. For example, there is no reason why implied waiver should not be limited in scope: an implied waiver is for a specific and limited purpose (such as to enable a solicitor to defend the proceedings brought by a former client), and LPP is so important a principle of the legal system that an implied exclusion of it should be confined in scope. Nor is there any justification for there to be a more expansive approach to the loss of LPP in the context of a detailed assessment concerning own solicitor costs than in the context of the detailed assessment concerning inter partes costs. The client is entitled to at least as much protection of LPP if it is the client's own solicitor with whom there is a dispute. And indeed, as the judge recognised at paragraph 15 of his judgment, solicitor-own client assessment disputes are in one sense more supervisory than the adversarial context of inter partes assessment.
53. In support of Dechert's argument that limited waiver does not apply as between solicitor and own client, Mr Howard emphasised that, where the client brings proceedings against his own solicitor, the solicitor has seen the privileged documents previously, but was prevented from using them for his own purposes until the client commenced proceedings. In my judgment this is a distinction without a difference. In both types of assessment (solicitor-own client and inter partes) it is necessary to reveal to the court the confidential relationship between solicitor and client in order for the reasonableness of the charges to be examined. I do not see how there can be any logical justification for the disclosure to be to the whole world, and for all purposes, in solicitor-own client costs disputes, when that is not the case in costs disputes with the opposing party.
54. As the judge observed in paragraph 45 of his judgment, there is nothing in the authorities on limited waiver which indicates that the concept has a restricted application such that it cannot be applicable to solicitor-own client relations. On the contrary, as Lord Millett explained in B v Auckland District Law Society, supra, the concept of limited waiver is of general application, designed to ensure that the loss of LPP (given its fundamental importance) is limited to that which is necessary to protect other interests.
55. Moreover, in my judgment there is nothing in the law relating to solicitors' negligence proceedings which points to a different conclusion. The relevant principle with respect to waiver of LPP was stated by Lord Bingham CJ for the Court of Appeal in Paragon at page 1188E-G:

"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." [My emphasis.]

Thus the language used by Lord Bingham supports the concept that the implied waiver of privilege of the client by bringing a negligence claim against a former solicitor is only: "so far as necessary for the just determination of his claim". To similar effect is the statement of Dillon LJ for the Court of Appeal at page 99A in Lillicrap v Nalder & Son, supra where he accepted the formulation by May J that:

"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 it is necessary to enable the court to do so fully and fairly in accordance with the law including the law of evidence."[My emphasis.]

Dillon LJ added at p.99D:

"The waiver can only extend to matters which are relevant to an issue in the proceedings ...."

56. I cannot accept Mr Howard's submission that in Paragon, Lord Bingham was deciding that, in accordance with the principle of open justice, all proceedings where a client challenged his solicitor's bill would need to be held in public. As the judge pointed out, Lord Bingham was not considering a dispute about whether proceedings should be in private, or partly in private, or in public. That issue was simply not before the Court. Lord Bingham was actually addressing the issue, in proceedings as between the client and its former solicitor, Freshfields, of whether LPP was impliedly waived in those proceedings in relation to communications between the client and his present solicitor for the purpose of enabling the previous solicitor to defend a negligence claim brought by the client. The court simply did not address the question of whether the waiver of privilege in relation to communications as between the client and its past solicitor was limited, with LPP preserved as against persons other than the solicitor defendant. Nor was there any consideration of the issue as to whether in solicitor and own client cost assessment proceedings the implied waiver was more limited than in negligence proceedings.
57. The decision of Lindsay J in National Westminster Bank v Bonas [2003] EWHC 1821 (Ch) at paragraph 130, cited by Roth J at paragraphs 46-47 of the judgment, supports this approach. Mr Bonas had issued a Part 20 claim against his former solicitors alleging breach of confidence in acting for a fellow borrower in proceedings brought against both of them by the claimant bank. The solicitor had acted for Mr Bonas in ancillary proceedings resulting from his divorce but Mr Bonas had refused to pay the firm's fees. In response to the firm's claim for their fees, Mr Bonas alleged in his defence that the solicitors had been negligent in their conduct of the ancillary relief proceedings. Those fee proceedings were then compromised. An argument advanced by the solicitors in the Part 20 claim was that by reason of Mr Bonas' defence to the fee proceedings, he had waived privilege and that the solicitors were therefore free to use that material in the Part 20 proceedings. Lindsay J rejected that argument and held at paragraph 130:

"Mr Gadd, basing himself on Lillicrap v Nalder [1993] 1 WLR 94 argues that by reason of his entering a defence to the Fee Proceedings Mr Bonas thereby waived confidence and that Mr Brice thereafter became free to use against Mr Bonas material which otherwise would have been denied him under solicitor-and-client confidence and under the rules under which solicitors practice. I do not doubt that if the Fee Proceedings had been fought further Mr Brice would have been able to use otherwise confidential solicitor-and-client material in those proceedings. The reason would have been that without such an implied waiver justice would not have been capable of being done in that suit. But it would be quite disproportionate to achievement of that end to enlarge that limited form of implied waiver in such a way as to free Mr Brice to use the otherwise confidential material wherever he might choose, including in these proceedings. I reject Mr Gadd's submission on this point and, to do Mr Brice justice, I add that he had never had this possibility in mind as the events unfolded."

58. Nor can I accept Mr Howard's submission to the effect that, if the judge were right, the consequence would be that in all detailed assessment proceedings a hearing in private could invariably be obtained by a client (as in most cases reference would be made to privileged documents), and such a result "would be to turn the general rule in the CPR on its head." The CPR expressly allow for hearings in private whenever that is justified. Moreover there are all kinds of alternative procedures available which the court might adopt, rather than deciding to have the whole proceedings heard in private. For example, the court might decide to hear the case in public but to hear certain aspects of the proceedings (i.e. those parts concerning privileged documents) in private; further, or alternatively, if it heard the case in public, it could nonetheless make an order under CPR Part 31.22(2) restricting or prohibiting the use of a document which had been disclosed, even where the document had been read to or by the court, or referred to, at a hearing which had been held in public. As Lord Pannick submitted, and indeed, as was common ground, the reality is that in the vast majority of cases only the solicitor and his client, and their respective lawyers, are present at such hearings and only in exceptional cases does a detailed assessment concern, or attract the attendance of, any person other than the solicitor and client. In my judgment we do not need to decide in this case whether the absolute nature of LPP predicates that in every case involving a detailed assessment of solicitor and own client costs the client would be entitled to insist that any reference to privileged material would have to be heard in private. In my judgment that would not necessarily be the case since the wording of CPR Part 39.2 clearly involves the exercise of an appropriate discretion by the court if the general rule is to be departed from. One can imagine many situations where there would be no necessity whatsoever for a solicitor and own client costs assessment to be heard in private, notwithstanding the deployment of legally privileged materials. But this, as I said, this is not an issue we need to decide in this case. This was a case where, because of the ongoing criminal investigations into ENRC's operations, the judge was clearly correct to conclude that the hearing should be in private under CPR rule 39.2(c) and (g).

Disposition

59. For the reasons set out above I would dismiss Dechert's appeal.

Lady Justice King:

60. I agree.

Lord Justice David Richards:

61. I agree that the appeal should be dismissed, for the reasons given by Gloster LJ in paragraphs 46 and following of her judgment.
62. The application by ENRC was advanced before Roth J solely on the basis of legal professional privilege in the documents which Dechert wished to deploy at the hearing of the costs assessment and it was on that basis that the judge made the order for the hearing to be in private. In paragraph 66 he bases his decision on the "effective protection of ENRC's rights", which, as I read his judgment, refers to ENRC's rights in respect of legal professional privilege in the relevant documents.
63. Lewison LJ, when refusing permission to appeal on paper, regarded the decisive issue as resting not on legal professional privilege but on preserving the confidentiality of the documents, whether or not they were privileged, so that the SFO would not gain access to them. ENRC chose not to pursue that argument on this appeal and did not file a respondent's notice supporting the judge's decision on that alternative ground. The submissions of Lord Pannick QC on behalf of ENRC were confined to legal professional privilege and to the balance to be struck between the two competing public interests of open justice and the protection of legal professional privilege.
64. Neither the judge nor this court heard any submissions from either party on an alternative basis, whether of protecting the confidentiality in the documents or protecting the rights of any party to a fair trial in the event that the SFO's investigations lead to criminal charges. These would raise distinct issues, requiring submissions both on the relevant legal principles and directed at the particular circumstances of this case. On any footing, an order that the hearing should be in private would have to be justified as being necessary in the interests of justice. The application would require a focus on the right of potential defendants to a fair trial in criminal proceedings and to the damage, if any, which might realistically, in the circumstances of this particular case, result from a public hearing of the costs assessment.
65. The application in this case was advanced by ENRC on the basis that, unless the hearing was held in private, the SFO would have access to the documents in question. Provided that those documents remained privileged, as the judge and this court have held, the SFO could not in any other way gain access to the documents. If, however, the documents were not privileged but were subject only to duties of confidentiality, the SFO would be in a position to obtain access to the documents, subject to satisfaction of the relevant criteria, by exercise of their statutory powers to require the production of documents. In that case, a hearing of the costs assessment in private would not provide the protection sought by ENRC and any application for the hearing to be in private would have to be made on quite different grounds from those advanced in this case.
66. For these reasons, I express no view on any alternative basis on which the application for the hearing to be in private might have been made or on the discussion in paragraphs 41-44 of the judgment of Gloster LJ.