England and Wales High Court (Administrative Court) Decisions

1. LORD JUSTICE AULD: The 1st to the 83rd applicants, who are owned or controlled by Spanish interests, are claimants for damages against the Secretary of State for Transport in judicial review proceedings. They seek further discovery from him. They are owners or managers of fishing vessels who claim to have suffered damage from the exclusion of their vessels from the Register of British fishing vessels as a result of Section 14 of the Merchant Shipping Act 1988, which entered into force on 1st December 1988. The European Court of Justice, on 25th July 1991, ruled that that exclusion infringed European Community Law. The applicants' entitlement to damages will turn on whether they can prove, among other matters, that the United Kingdom's infringement was intentional or reckless. On that issue, the legal advice that the Government sought and received from time to time on the legality of the legislation as a matter of Community Law is likely to be important. In giving discovery the Secretary of State has waived legal professional privilege in respect of legal advice in connection with his "formulation of policy" before 29th October 1987, the date of the introduction to Parliament of the Merchant Shipping Bill.

2. The applicants maintain, by this application, that the Secretary of State, as a matter of fairness, should also waive such privilege thereafter until 25th July 1991, the date of the European Court's ruling that Section 14 infringed Community Law. The Secretary of State argues that fairness does not require him to extend the waiver because he will not suggest at trial that the legal advice he received before the introduction of the Bill to Parliament is representative of later advice or guided his approach thereafter to the enactment and implementation of Section 14.

3. The factual background to the applications in a little more detail is as follows.

4. Section 14 of the 1988 Act, which passed through Parliament substantially as first introduced, excluded from the British Register of Shipping fishing vessels owned or managed by non-nationals and by persons, whether nationals or not, who were not resident and/or domiciled in this country ("the nationality, residence and domicile conditions"). It was aimed at so-called "quota hoppers", in the main Spanish fishing interests who had purchased or who had become involved in the management of British vessels to obtain the benefit of this country's fishing entitlement under the Community's common fisheries policy. On 1st April 1989, on the expiry of the transitional period provided by the Merchant Shipping (Registration of Shipping Vessels) Regulations 1988, Section 14 took effect so as to exclude the applicants' vessels from the Register of British fishing vessels.

5. The applicants challenged the operation of the Act by these proceedings for judicial review, alleging that it infringed European Community Law. In the course of the proceedings the European Court of Justice, on references to it by the Divisional Court under Article 177 of the EEC Treaty, has given three rulings, described for convenience as Factortame 1 to III. In Factortame I (Case C-213/89; [1990] ECR I-2433), on 19th June 1990, the European Court caused the House of Lords to suspend the nationality, residence and domicile conditions. In Factortame II (Case C-221/89; [1991] ECR 1-3905), on 25th July 1991, the Court declared the conditions to infringe Community Law. And in Factortame III (Case C-48/93; [1996] ECR 1-1029), on 5th March 1996, the Court ruled on the conditions under which a Member State may incur liability for damage caused to individuals by its breaches of Community Law. It held (paras. 51 and 58) that breach of a rule of Community Law confers a right of reparation on an individual where the national court is of the view that it satisfies three conditions, namely where: it is intended to confer rights on individuals; the breach is "sufficiently serious; and the damage is directly caused by the breach.

6. The condition of sufficient seriousness is the relevant one for consideration here. The Court held (para. 55) that the decisive test is whether the Member State has "manifestly and gravely disregarded the limits on its discretion", taking into account the following (para. 56):

7. The Court went on to give some specific guidance to this Court on the question whether the introduction and maintenance in force of the 1988 Act constituted a sufficiently serious breach for the purpose. It held (para. 61) that the nationality condition constituted direct discrimination and was "manifestly contrary to Community Law" and (para. 62) that the residence and domicile conditions are "prima facie" incompatible with it. As to the latter, it held (para. 63) that this Court

8. There were also separate proceedings in the European Court of Justice brought by the European Commission against the United Kingdom which resulted in the Court, on 10th October 1989, suspending the nationality condition and, on 4th October 1991, ruling that it infringed Community Law. See Commission v. United Kingdom (Case C-246/89).

9. The applicants, in their Re-amended Statement of Claim, have set out the matters upon which they will rely in seeking to establish that the enactment and implementation of the Act constituted a "sufficiently serious" breach of Community Law. In paragraphs 34 and 35, there is a general and particularised allegation of intentional or reckless infringement of Community Law. The particulars, which were expressed to be the best the applicants could give pending discovery, include: the United Kingdom Government's drafting and introduction of the 1988 Act when it was on notice of its possible unlawfulness under Community Law and/or when it apprehended legal action by the applicants; a belief that the European Commission had so advised the United Kingdom Government; the drafting of the Act and the shortness of the transition period before it took effect, allegedly an attempt to frustrate legal challenge; and that whatever uncertainty the United Kingdom may have had about the illegality of the legislation it could have been left in little doubt about it after the European Court's rulings in Commission v. United Kingdom in 1989 and in Factortame I in 1990.

10. At a directions hearing on 10th September 1996 Collins J ordered that on the application, now fixed for 14th July 1997, the following two issues should be determined:

11. The issue on discovery arises in this way. At the hearing on 10th September 1996 Collins J also directed that the Secretary of State should make discovery of documents relevant to a number of allegations in the applicants' Re-Amended Statement of Claim, including those of intentional or reckless infringement in paragraphs 34 and 35. The Secretary of State, in making discovery, has made a general claim of legal professional privilege in respect of documents or part documents passing between Ministers or officials and Government lawyers, between Government lawyers, and instructions to and advice given by counsel, for the purpose of advising Ministers or officials. He has also claimed such privilege in respect of documents and part documents of Ministers, officials or government lawyers the dominant purpose of which was for existing or anticipated litigation. However, as I have said, the Secretary of State waived privilege in respect of documents relating to the provision of legal advice in connection with the formulation of policy up and until the Bill's introduction to Parliament on 29th October 1987.

12. The applicants challenge the entitlement of the Secretary of State to limit his waiver of legal professional privilege to the period before the introduction of the Bill to Parliament. They maintain that, having decided to make that waiver, he should also in fairness make it for the period of the Bill's passage through Parliament to its enactment on 1st December 1988, its taking effect on 1st April 1989 and up to the European Court's ruling in Factortame II on 25th July 1991 that it contravened Community Law.

13. Mr David Vaughan QC, on behalf of the applicants, took as his starting points fairness and common sense. They are neatly summarised in Phipson on Evidence, 14th ed., 1990, at 527, in the proposition that "a party is not entitled to show his hand in part". See also Style & Hollander's Documentary Evidence, 5th ed. 1994, at 216 and 224. He submitted that the legal advice received by the Secretary of State in the disclosed pre 29th October 1987 material goes to the Government's understanding of the lawfulness or otherwise of its proposed legislation and hence to the issue whether the United Kingdom's infringement of

14. Community Law was intentional or reckless. Mr Vaughan submitted that, for the Divisional Court to do what the European Court has directed, it must have access to the legal advice received by the Government, not just up to the introduction of the Bill to Parliament but throughout its passage to enactment and thereafter until 25th July 1991 when the European Court declared in Factortame II that it contravened Community Law.

15. Mr Vaughan suggested that the Secretary of State's disclosure of legal advice only for that early part of the period invites the question whether he received different advice during the remainder of it. He argued that that question is underlined by the lack of an explanation from the Secretary of State for his partial disclosure. He also expressed puzzlement as to the cut-off date chosen by the Secretary of State for disclosing legal advice "in connection with the formulation of policy", observing that securing enactment of the legislation and implementing it were equally matters of policy capable of amounting to intentional or reckless infringement of Community Law.

16. The applicants make an associated complaint about the editing or redacting by the Secretary of State of a number of disclosed documents, mostly dated after the cut-off date of 29th October 1987, either because of claimed irrelevance or of legal professional privilege. Mr Vaughan said that the applicants were sceptical about the editing insofar as the claimed justification was irrelevance and about its propriety insofar it depended on a claim of privilege. He asked for an order for disclosure of the edited documents to the applicants' lawyers for their inspection or to the Court for it to resolve the matter under RSC Order 24, rules 12 and 13.

17. Mr Nicholas Forwood, QC, on behalf of the 84th applicant, adopted Mr Vaughan's submissions, in particular as to the period covering its passage through Parliament and to its coming into effect in April 1989. He contended that they applied a fortiori to his lay client because, in the special circumstances of his case, the implementation of the 1988 Act constituted, in its nationality condition, a clear infringement of Community Law which the Commission made plain at an early stage in the parallel proceedings that it instituted against the United Kingdom in the European Court. He argued that if there is to be a proper assessment of the United Kingdom's responsibility in these proceedings it is necessary to consider not only its legal advice before introduction of the Bill but its response to such legal advice as it received during and after its passage through Parliament.

18. Mr Stephen Richards, on behalf of the Secretary of State,

19. Much will depend, of course, on the indication given by the party waiving privilege before trial whether he intends to rely upon the privileged material at trial and, if so, for what purpose. If he does intend to put it in evidence, there is an obvious advantage in both parties knowing where they stand before trial. It enables each of them to determine whether and how to proceed with the litigation and to avoid costly adjournments for further discovery and consequential work which otherwise would occur if the point had to be determined at trial. Where, however, there is uncertainty as to the use, if any, a party intends to make at trial of disclosed privileged material, the resolution of the opposing party's claim to further and associated discovery may have to await the trial, with all the tactical and costly disadvantage that that may be to the party concealing his hand.

20. On the substance of the matter Mr Richards took as his starting point the absolute nature of legal professional privilege unless waived, referring to the words of Lord Taylor in R v. Derby Magistrates' Court, ex p. B [1996] 1 AC 487, at 507D. He maintained that the long established entitlement of a party to waive privilege in respect of some material without affecting his privilege in respect of other material was subject only to one exception, that of fairness. However, he argued that that consideration only arose in the limited circumstance where the disclosed and undisclosed documents related to "a single transaction". He cited a number of examples of such cases, namely Nea Karteria Maritime Co. Ltd. v. Atlantic & Great Lakes Steamship Corporation (No 2) [1981] Comm. L.R. 138 - a note of an interview; General Accident - a single conversation; Derby & Co. Ltd. v. Weldon (No 10) [1991] 1 WLR 660 - two conversations; and Great Atlantic Insurance Co. v. Home Insurance Co. Trust Company [1981] 1 WLR 529, CA - a single, non-severable, document.

21. Turning to the circumstances of this case, Mr Richards made two main submissions.

22. First, he drew attention to the long period and different stages of the introduction and implementation of the offending legislation, contrasting it with the single transaction type of case which he maintained was the natural setting for fairness to require full disclosure of a partially disclosed material. See e.g. General Accident, per Hobhouse J at 114H-115A. He maintained that no unfairness would result from the Secretary of State's partial disclosure because its limitation was plain, disclosure only of legal advice in connection with the formulation of policy prior to the introduction of the Bill to Parliament. He said that neither the applicants nor the Court could be misled; there was and would be no suggestion by the Secretary of State that that disclosed material was representative of legal advice that it received after 29th October 1987 on the policy of continuing with and implementing the legislative proposal.

23. Second, Mr Richards submitted that the broad nature of the applicants' claim for disclosure, in any event, offends the protection from disclosure given to legal advice. That is because it encompasses not only material relating to legal advice on matters of policy over a period of several years, but also associated legal advice - given in connection with the present and other proceedings throughout much of that period. The latter material, Mr Richards maintained, was likely to overlap, often within the same documents, with advice on the Government's post 29th October 1987 policy with regard to the 1988 Act. There was also the difficulty, flowing from his first submission, that such material relates to separate "transactions" - separate pieces of litigation and, insofar as they touched on policy, separate from the pre - 29th October 1987 policy deliberations which produced the Bill.

24. Mr Richards summarised his submissions by saying that waiver of privilege in respect of advice given in connection with the formulation of policy before the introduction of the Bill cannot logically and should not legally require the Secretary of State to disclose privileged advice given thereafter in the context of litigation concerning the legality of the Act and its implementation.

25. The classic judicial statement of principle is that of Mustill J in NEA Karteria, at 139:

26. The most obvious application of that principle is in relation to a single document, where a party waives privilege as to part of it but seeks to withhold the rest of it - "cherry picking" as Style & Hollander have called it (op. cit, 216 and 224) See, for example, the Court of Appeal's decision in the Great Atlantic in which Templeman LJ, with whom Dunn LJ agreed, held that, unless a document is severable as to its subject matter, either the whole or none of it should be disclosed. It also extends to attempted partial waiver of privilege in respect of certain of a number of documents relevant to the same issue or transaction. Of course, the scope for unfairness depends on the breadth of the matter in issue or their severability if more than one, and on the exact relationship and/or relevance to such issue(s) of the documents respectively disclosed and sought to be withheld. It may or may not be that partial disclosure of documents going to a matter or matters in issue, say in an exchange of correspondence with legal advisers, would be unfair.

27. Much depends on whether the party making partial disclosure seeks to represent by so doing that the disclosed documents go to part or the whole of an "issue in question", the expression used by Mustill J in the passage from his judgment in Nea Karteria that I have cited. The issue may be confined to what was said or done in a single transaction or it may be more complex than that and extend over a series of connected events or transactions. In each case the question for the court is whether the matters in issue and the document or documents in respect of which partial disclosure has been made are respectively severable so that the partially disclosed material clearly does not bear on matters in issue in respect of which material is withheld. The more confined the issue, for example as to the content of a single document or conversation, the more difficult it is likely to be to withhold, by severance, part of the document or other documents relevant to the document or conversation.

28. As Mr Richards observed, all or most of the reported cases deal with narrow issues of that sort. See e.g. the Great Atlantic, per Lord Templeman at 536D-F; Konigsberg, per Peter Gibson J at 1265C-G; and Derby v. Weldon (No 10), per Vinelott J at 918a-b. In Konigsberg the matter in issue was a transfer of land and the question was whether it was a gift or a sale. Peter Gibson J held that the party asserting that it was a sale and who had waived privilege in respect of a letter from her solicitor apparently supporting her case, could not claim privilege in respect of an affidavit sworn by him doubting it. Where the issue is broad, or there are several of them, or where the history giving rise to the litigation is long and/or complicated, partial disclosure which is clearly confined in its impact to one aspect of the case may well not require the all or nothing approach. In such a case it is not, in my view, apt terminology to ask whether a series of connected events or matters is a single "transaction" or series of separate "transactions" for this purpose. Where a party's conduct over a period of time is in issue the effect of partial disclosure of documents must depend on the particular facts of the case, usually as seen before trial in the pleadings and in other interlocutory battle-lines drawn by the parties.

29. As I have said, on this application Mr Richards has stated that the Secretary of State will not suggest at the trial that his conduct after 29th October 1987 in relation to the enactment and implementation of the 1988 Act was governed by the disclosed legal advice that he received before that date. It is not a case of partial disclosure in relation to his conduct throughout the period in issue, but one of clear severability of two periods within it and of the disclosed and undisclosed documents relating respectively to each period. If the Secretary of State keeps to Mr Richards' word I can see no unfairness to the applicants. The applicants and the Court know his stance, that of a party prepared to reveal the legal advice that he received as to his conduct over one period but not over another, with all the suspicion and adverse inference that that may engender. If the Secretary of State does seek to take an unfair advantage of his partial discovery at the trial, whether as a matter of evidence or argument, the applicants would be entitled to invite the trial judge to re-open the matter and determine whether there should be further disclosure.

30. The same considerations apply to the applicants' complaints about the redacted documents. As to irrelevance, the basis for some of the redactions, if part of a document is irrelevant that part can be redacted. See G.E. Capital Corporate Finance Group Ltd. v. Bankers Trust Co. [1995] 1 WLR 172, CA. So also can it be redacted if part of it is properly the subject of a claim for privilege. The Secretary of State's stand is that he has redacted documents either on the grounds of irrelevance or, in the case of documents after 29th October 1987 on the grounds of irrelevance or privilege. The applicants are sceptical of those claims and seek disclosure to their legal representatives or the Court to check them. This is in truth an application for discovery to see if discovery has been properly given. That is not the function of discovery and it is impermissible. See Berkeley Administration Inc. & Ors v. McClelland & Ors [1990] Fl. St. R. 381, CA.

31. Accordingly, I would dismiss both applications.

32. LORD JUSTICE AULD: We have distributed in draft our reasons for the judgment given on 25th April of this year. I think on that occasion we dealt with the matter of costs. Is there any other matter that we need to deal with today?

33. MR LINDSAY: My Lord, there is only one very short matter that arises from the terms of the judgment and it is at page 4 where there is the reference to Factortame III. Your Lordships may have inserted it but if not it is [1996] ECR 1-1029.

34. LORD JUSTICE AULD: I am most grateful to you.

35. MR LINDSAY: That is the only matter.

36. MISS FRAZER: My Lords, I represent the 1st to 83rd Applicants and there are no matters arising.

37. LORD JUSTICE AULD: Thank you both for attending today.