Jersey Unreported Judgments

Companies.

[2021]JRC039

Royal Court

(Samedi)

11 February 2021

Ref: 2019/173

Ref: 2020/004

Before     :

R. J. MacRae, Esq., Deputy Bailiff, sitting alone.

 

 

Advocate N. M. C. Santos-Costa for the Representors.

Advocate D. M. Cadin for the First Respondent.

judgment

the deputy bailiff:

1.        The Court sat on 8^th and 9^th October 2020 for the purpose of a pre-trial review and to consider three summonses, two issued by the First Respondent on 12^th August 2020 and 18th August 2020 respectively and one issued by the Representors on 30^th September 2020.  As there is an overlap between the 18^th August 2020 summons and the second prayer for relief in the 30^th September 2020 summons, I shall deal with those at the end of this judgment, having dealt first with the 12^th August 2020 summons and secondly with the Request for Further Information which is the third prayer for relief under the 30^th September 2020 summons.      

2.        The background to this case is set out at paragraphs 6 to 40 of the judgment of the Court dated 24^th June 2020, reported at Chernukhin and Anor v Deripaska and Anor [2020] JRC 121. 

The summons dated 12^th August 2020 ("the First Summons")

3.        Pursuant to the First Summons, the First Respondent seeks leave to amend the Particulars of Claim dated 17^th December 2019.  The trial of this case is shortly to be listed with a time estimate of one week. 

4.        Witness statements have been exchanged.  Accordingly, although this is not an early amendment to a pleading it is not a late application to amend either. 

5.        Since the First Summons was issued, most of the amendments have been agreed between the parties.  Three remain in dispute. 

6.        I start by reminding myself of the relevant principles.  Pursuant to Rule 6/12 of the Royal Court Rules: 

 "(1) The Court may at any stage of the proceedings allow a plaintiff to amend his or her claim, or any party to amend his or her pleading, on such terms as to costs or otherwise as may be just.

(2) Any party may at any stage of the proceedings amend his or her pleadings with the consent of the other parties."

7.        In Cunningham -v- Cunningham [2009] JLR 227 Birt, Deputy Bailiff summarised the relevant principles at paragraphs 17 to 19 as follows:

 "17. Although this application was made some four months before trial, it is nevertheless made comparatively late and the parties were agreed that allowing the amendment would almost certainly lead to the vacating of the trial date in August and its substitution by a date later in the year.  In the context of late applications to amend, the Court of Appeal said the following in Brown v Barclays Bank Plc 2001/241 - a case where the application was made as late as the morning of the trial:-

"18. The view in the earlier part of the twentieth century in England and Wales was that, in general, pleading amendments should be allowed, however late, provided that (1) allowing the amendment would not cause undue prejudice to the other party, and (2) such prejudice as would be caused could reasonably be remedied by payment of the other party's costs and by appropriate adjournment.

19. This approach had begun to disappear in the latter part of the twentieth century (see eg Ketterman v Hansel Properties [1987] AC 189 per Lord Griffiths at p.220), and was largely changed in the reforms to English civil procedure embodied in the new Civil Procedure Rules (CPR).  Today in England and Wales the Courts will take account of the following (amongst other) factors - the strains which litigation imposes on personal litigants, and on particular individuals in litigating companies and other bodies; the expectation that all the issues have already been fully defined; the efficient disposal of the particular case in ways proportionate to the sums involved, its importance, its complexity, and the parties' respective financial positions; the effects on the efficient disposal of other cases; the use of an appropriate share of the Court's resources; and similar matters covered by Part 1 of the CPR, in which an "overriding objective" is encapsulated.

20.  Jersey civil procedure has not been taken down the same route as the CPR.  But the statement of principle in Esteem Settlement quoted in paragraph 4 above and the other observations in that and subsequent Jersey cases show that by judicial decisions rather than wholesale rewriting of rules, Jersey civil procedure is moving in a similar direction, though with material differences.  For example, in a smaller jurisdiction such as Jersey with a relatively small number of fought civil actions, and a reasonable number of permanent Judges and part-time Commissioners, it is less likely that any impact on the progress of other actions will prove to be strongly relevant in a case such as the present.

21.  Where there is a late application for an amendment to the Order of Justice (or to the answer or reply) the Jersey courts have to strike a balance which is primarily between the parties to the instant case.  The burden on the applicant is a heavy one to show, for example, (1) why the matters now sought to be pleaded were not pleaded before, (2) why is the strength of the new case, (3) why an adjournment should be granted, if one is necessary, (4) how any adverse effects on the other party including the effects of any adjournment, any additional discovery, witness statements or experts reports, or other preparation for trial can be remedied, and (5) why the balance of justice should come down in favour of the party seeking to change its case at a late stage of the proceedings."

18. Another convenient summary of the relevant considerations can be found in Charlesworth v Relay Roads Limited (in liquidation) [1999] 4 All ER 397 at 401 where Neuberger J said this:-

"As is so often the case where a party applies to amend a pleading or to call evidence for which permission is needed, the justice of the case can be said to involve two competing factors.  The first factor is that it is desirable that every point which a party reasonably wants to put forward in the proceedings is aired; a party prevented from advancing evidence and/or argument on a point (other than a hopeless one) will understandably feel that an injustice has been perpetrated on him, at least if he loses and has reason to believe that he may have won if he had been allowed to plead, call evidence on, and/or argue the point.  Particularly where the other party can be compensated in costs for any damage suffered as a result of a late application being granted, there is obviously a powerful case to be made out that justice indicates that the amendment should be permitted.........

On the other hand, even where, in purely financial terms, the other party can be said to be compensated for a late amendment or late evidence by an appropriate award of costs, it can often be unfair in terms of the strain of litigation, legitimate expectation, the efficient conduct of the case in question, and the interest of other litigants whose cases are waiting to be heard, if such an application succeeds."

The application in that case was made after the hearing and after judgment had been handed down although before the order had been drawn up.

19. It is furthermore well established that the Court will not permit amendments which infringe the rules of pleading or which introduce a claim which is so hopeless that it would be liable to be struck out under RCR 6/13." (My emphasis)

8.        Most recently in Financial Technology Ventures II -v- ETFS Capital Limited [2020] JRC 152 Commissioner Clyde-Smith held on 3^rd August 2020:

 "11. The law as regards amendment to pleadings is also not in dispute.  The decision of Sir Michael Birt, then Deputy Bailiff, in Cunningham v Cunningham, Sovereign Trust International Ltd and C.I. Law Trustees Ltd [2009] JLR 227 at paragraphs 17-19 can be summarised as follows:

(i) The general position is that all matters in dispute between parties should be resolved so far as possible before the Court at trial.  Leave to amend should, therefore, be given if there is no prejudice to the other side which cannot be compensated for by costs (at paragraph 15).

(ii) Amendments will not be permitted which infringe the rules of pleading or introduce a claim which is so hopeless that it would be liable to be struck out (at paragraph 19).

(iii) More stringent considerations apply where an application to amend is late (at paragraph 17) and if (and only if) the Court considers that an amendment is 'late' it may then consider (at paragraph 21):

(a) why the amendment material could not have been pleaded earlier;

 (b) the strength of the new case;

 (c) whether and why an adjournment ought to be granted;

(d) how to remedy any adverse effects attendant upon the amendment being granted; and

(e) why the balance of justice favours the party seeking to amend at a late stage.

12. In terms of strike out, the applicable legal principles were considered in the decision of the Court of Appeal in Home Farm Developments and Others v Le Sueur and Others [2015] JCA 242 at paragraphs 23-29, where reference was made to the judgment of Beloff JA in Trant and Others v AG and Others [2007] JLR 231, in which he said at paragraph 22:

           "22     The test on an application to strike out is well established.  It is only where it is plain and obvious that the claim cannot succeed that recourse should be had to the court's summary jurisdiction to strike out.  Particular caution is required in a developing field of law.  Provided that a pleading discloses some cause of action or raises some question fit to be decided by a judge, jurats or jury, the mere fact that a case is weak is not a ground for striking it out.  These propositions are vouched for by a wealth of Jersey authority embracing principles deployed by the courts of the United Kingdom, see e.g. In re Esteem Settlement ... (2000 JLR at 127) (we note en passant that a new regime, arguably more favourable to an application to strike out, has been introduced in England and Wales by the Civil Procedure Rules).""

9.        The Representors invited me to follow the current provisions and commentary in the Civil Procedure Rules which govern proceedings in England and Wales, particularly Rule 17.3.6.  The test in England and Wales is slightly different.  The note to Rule 17.3.6 says "The question is whether the proposed new claim has a real prospect of success."  This would appear to be a stricter test than that contended for by the First Respondent and borne out by the Jersey authorities.  I do not propose to adopt the English test.  As Birt, Deputy Bailiff observed in Cunningham -v- Cunningham at paragraph 20:

 "Jersey civil procedure has not been taken down the same route as the CPR.  ... by judicial decisions rather than wholesale rewriting of rules, Jersey civil procedure is moving in a similar direction, though with material differences."    

10.      Accordingly, where there is clear Jersey authority, whether in our rules of court or in case law, it is not necessary to have regard to English procedural rules, still less follow them. 

11.      The first application to amend paragraphs 6 and 22.4 of the draft amended Particulars of Claim raises this point.  In summary, the current pleading claims that when the Representors applied, in effect ex parte, for interlocutory injunctions against the First Respondent, the Representors owed a duty to the Court to provide an undertaking in damages and ought to have explained to the Court why such an undertaking was inappropriate.    

12.      The draft amended pleading goes further and says that this duty was not merely owed by the Representors to the Court but was also owed to the First Respondent and that the Representors' advocates and/or the Representors' English lawyers owed a duty to the First Respondent to provide an undertaking in damages and/or explain why such an undertaking was inappropriate.  It is said that such a duty arose in the light of: 

(i)        the nature of the relief sought;

(ii)       the heightened duties of full and frank disclosure owed arising from the purported (but unjustified) urgency of the application;

(iii)      the failure to include an undertaking as to damages in the order placed before the Court; and

(iv)      the failure to draw such omission to the Court's attention as pleaded above.

13.      These matters were amplified by counsel for the First Respondent in submission who argued that the Representors' failure to mention the undertaking in damages could only lead to the First Respondent suffering loss.  Much stress was made on the fact that this was an ex parte application and it was argued that special obligations may arise from such a hearing.  The failure to provide an undertaking in damages, it was said, could not be corrected later.  The person in the position of a defendant (in this case the First Respondent) was a "neighbour" and it was "reasonably foreseeable" that the defendant would suffer harm in these circumstances.  It was submitted that it was "not outrageous" to suggest that an advocate owes a duty to the opposing party directly in these circumstances.  Furthermore, it was now clear from the disclosed evidence that Advocate Hurry had instructions from his clients, the Representors, to give an undertaking in damages, an undertaking that could only benefit the First Respondent.  The undertaking was not given, nor was the fact that it ought to be raised before the Court.  It was said in circumstances where Advocate Hurry had authority from his clients to give an undertaking which he knew could only protect a particular identified third party then he arguably owed a duty of care to the third party, the First Respondent, who was in his direct contemplation as the beneficiary of such an undertaking.  It was not suggested that at any stage did the Representors' advocates, Advocate Hurry in particular, "step out of [their] role" as lawyers to their clients (a relevant factor on some of the authorities) but it was argued that when making such an ex parte application the lawyer may owe a duty of care to the other party as it is only that party which is likely to suffer loss.    

14.      Reliance was placed on the case of Al-Kandari -v- Brown [1988] 1 QB 665, which was a case on very different facts, where a solicitor for one party voluntarily agreed to hold a passport to the order of the court which they failed to do, resulting in the other party recovering the passport, leading to the plaintiff being kidnapped and her children abducted.  A duty of care to the plaintiff was held to exist which was breached by the defendant solicitors. 

15.      Lord Donaldson of Lymington MR, giving the leading judgment of the Court of Appeal said:

 "The judge asked himself four questions:

(i)        Did the defendant solicitors owe the plaintiff a duty of care in contract or in tort?

He replied No to the contract and Yes to tort. Basing himself on Ross v Caunters (a firm) [1979] 3 All ER 580, [1980] Ch 297, a case in which a solicitor was held liable in tort to the intended beneficiary of a will for failing to advise his client, the testator, sufficiently on the formalities necessary to execute an effective testamentary disposition, he held ([1987] 2 All ER 302 at 308, [1987] QB 514 at 523):

 "A solicitor who has authority from his client to give an undertaking, one of whose objects is to protect an identified third party, owes a duty of care towards that third party, in that the third party is a person within his direct contemplation ...." 

(2)       Were the defendants in breach of that duty? He replied that they were-

'in that they failed to foresee or to guard against the obvious possibility that the Kuwaiti Embassy might retain the passport, failed to ensure that the embassy was supplied with a copy of the court order, and failed to inform the plaintiff's solicitors that the embassy had indeed retained the passport or that arrangements had been made for Al-Kandari to attend the embassy on the Friday in the absence of any representative from the defendants or their London agents.'  

(3)       Was the damage in fact suffered by the plaintiff a natural and probable consequence of this breach of duty?

He replied that, whilst the damage suffered by the plaintiff was indeed the natural and probable consequence of her husband obtaining his passport with the names of the children included, it was not foreseeable that the Kuwaiti Embassy would allow him to obtain possession of it. Accordingly the damage did not flow from the breach.                        

(4)       What would be the appropriate award of damages if liability could be established?  

He replied £20,000 general damages and agreed special damages of £7,668·14. 

           I ask myself the same questions."

16.      On the question of duty, Lord Donaldson said (at page 672E): 

 "For my part I regard the plaintiff as falling squarely (if she will forgive the term) within Lord Atkin's concept of the defendant solicitors' 'neighbours' (see Donoghue v Stevenson [1932] AC 562 at 580, [1932] All ER Rep 1 at 11), and accordingly, in the absence of contra-indications, of which there are none, the law required the solicitors to take reasonable care to avoid acts or omissions which they could reasonably foresee would be likely to injure the plaintiff. Thus I am in complete agreement with the judge that the defendants owed the plaintiff a duty in tort. Quite what was the relevant scope of that duty is, I think, more conveniently considered under the head of breach."  

17.      He went on to find the solicitors liable, thus allowing the appeal. 

18.      A similar question arose for consideration in Gran Gelato Limited -v- Richcliff (Group) Limited [1992] Ch 560 where Sir Donald Nicholls V-C said at page 569B:

 "Gran Gelato's claim against Gershon Young depends upon the solicitors themselves owing directly to Gran Gelato a duty to take reasonable care when answering the preliminary inquiries on behalf of their client Richcliff. That Richcliff itself owed such a duty of care is common ground. Indeed, in the light of authorities such as Esso Petroleum Co Ltd v Mardon [1976] 2 All ER 5, [1976] QB 801 the contrary could not be seriously argued. I was told that the existence of a claim directly against the solicitors may have practical importance in this case because it is questionable whether Richcliff is in a position to satisfy any substantial judgment debt.         

The approach now to be adopted by the court when considering issues relating to the existence of a duty of care in the context of negligent misrepresentation is set out in the decision of the House of Lords in Caparo Industries plc v Dickman [1990] 1 All ER 568, [1990] 2 AC 605. For there to be a duty of care there must be a foreseeability of damage and a close and direct relationship which has come to bear the label of 'proximity'. In addition, to adopt the phraseology of Lord Bridge of Harwich, the situation must be one in which the court considers it 'fair, just and reasonable' that the law should impose a duty of a given scope upon the one party for the benefit of the other." 

19.      The case concerned damages claimed by the plaintiff against the defendant and the defendant's solicitor arising from pre-contractual replies given in a conveyancing transaction.  It was held that in normal conveyancing transactions a solicitor acting as agent of the vendor did not owe a separate duty of care to the purchaser and accordingly the plaintiff's claim against the defendant's solicitor failed.  In concluding that no duty existed, the Vice Chancellor said at page 571E and F:

"But, in general, in a case where the principal himself owes a duty of care to the third party, the existence of a further duty of care, owed by the agent to the third party, is not necessary for the reasonable protection of the latter. Good reason, therefore, should exist before the law imposes a duty when the agent already owes to his principal a duty which covers the same ground and the principal is responsible to the third party for his agent's shortcomings. I do not think there is good reason for such a duty in normal conveyancing transactions.

I add this.  I appreciate that one consequence of this conclusion is that the buyer may be left without an effective remedy if the seller becomes insolvent.  I do not think that is sufficient reason for adding on to the solicitor-client relationship a duty owed directly by the solicitor to the non-client in normal conveyancing transactions.  That those with whom one deals may become insolvent is an ordinary risk of everyday life."

20.      He went on to add caveats as follows: 

 "Caveats

I must emphasise two points.  First, there will be special cases where the general rule does not apply and a duty of care will be owed by solicitors to a buyer.  A good illustration is the New Zealand decision of Allied Finance and Investments Ltd. -v- Haddow & Co. [1983] NZLR 22.  There solicitors acting for a borrower certified to an intending mortgagee that specified documents had been duly executed and were fully binding on their client and that there were no other charges on the boat which was the intended security.  The solicitors were held to owe a duty of care to the lender in connection with the giving of that certificate.  On any reasonable appraisal of that arrangement, the solicitors must be taken to have assumed personal responsibility to the mortgagee for the accuracy of their certificate.  That is a case in which, to adapt the language used by Lord Donaldson MR in Al-Kandari -v- J.R. Brown & Co. [1988] QB 665, 672, in the context of a solicitor acting in adversarial litigation, the solicitors had stepped outside their role as solicitors for their client and had accepted a direct responsibility to the lender.

Secondly, I must emphasise that nothing I have said detracts in any way from the duties owed by a solicitor to his own client when answering inquiries before contract. Nor does it relieve him from full financial responsibility for any carelessness on his part. If by his carelessness he exposes his principal to a claim by a buyer for negligent misrepresentation, he will be liable to indemnify his client on well-established principles."

21.      It was argued on behalf of the First Respondent this was indeed a "special case". 

22.      The Representors emphasised that Advocate Hurry did not stray from his role as a solicitor.  This is accepted but would not, on the authorities, necessarily prevent a duty of care arising.  Both parties drew the Court's attention to the decision of the Supreme Court in Steel -v- NRAM Limited [2018] 1 WLR 1190 in which Lord Wilson gave the judgment of the Court. This was a case where a solicitor did not, on the facts, assume a duty of care to a third party plaintiff lender (the solicitor was acting for the borrower).  The Supreme Court held that a representor would not be held to have assumed a duty towards the representee unless:

(i)        It was reasonable for the representee to have relied on what the representor said; and

(ii)       The representor should reasonably have foreseen that he would do so.  

At page 1198E, Lord Wilson said: 

 "24. ... Lord Steyn remarked at p 837 that there was no better rationalisation for liability in tort for negligent misrepresentation than the concept of an assumption of responsibility. It has therefore become clear that, although it may require cautious incremental development in order to fit cases to which it does not readily apply, this concept remains the foundation of the liability.

25. The legal consequences of Ms Steel's careless misrepresentation are clearly governed by whether, in making it, she assumed responsibility for it towards Northern Rock. The concept fits the present case perfectly and there is no need to consider whether there should be any incremental development of it. Nevertheless the case has an unusual dimension: for the claim is brought by one party to an arm's length transaction against the solicitor who was acting for the other party. A solicitor owes a duty of care to the party for whom he is acting but generally owes no duty to the opposite party: Ross v Caunters [1980] Ch 297, 322. The absence of that duty runs parallel with the absence of any general duty of care on the part of one litigant towards his opponent: Jain v Trent Strategic Health Authority [2009] UKHL 4, [2009] AC 853. Six authorities, briefly noticed in chronological order in what follows, may illumine inquiry into the existence of an assumption of responsibility by a solicitor towards the opposite party.

26. First, the decision of the Court of Appeal of New Zealand in Allied Finance and Investments Ltd v Haddow and Co [1983] NZLR 22. The claimant had agreed to make a loan to X and to take security for it on a yacht. The defendants, who were X's solicitors, certified to the claimant that the instrument of security executed by X in relation to the yacht was binding on him. In fact, as the defendants knew, it was not binding on him because he was not, and was not intended to become, the owner of the yacht. The court held that the defendants had owed, and breached, a duty of care to the claimant. Richardson J said at p 30, in terms which the other members of the court echoed:

 "This is not the ordinary case of two solicitors simply acting for different parties in a commercial transaction. The special feature attracting the prima facie duty of care is the giving of a certificate in circumstances where the [defendants] must have known it was likely to be relied on by the [claimant]."

27. Second, the decision of the Lord Ordinary, Lord Jauncey, in the Outer House in Midland Bank Plc v Cameron, Thom, Peterkin and Duncans 1988 SLT 611. The pursuer had made a loan to X in assumed reliance on a statement by the defenders, who were X's solicitors, about the extent of his assets. The statement was materially inaccurate. But the pursuer's claim against the defenders failed. Having referred to the Hedley Byrne case as the proper starting point and to the Allied Finance case, the Lord Ordinary observed as follows at p 616:

 "In my opinion four factors are relevant to a determination of the question whether in a particular case a solicitor, while acting for a client, also owes a duty of care to a third party: (1) the solicitor must assume responsibility for the advice or information furnished to the third party; (2) the solicitor must let it be known to the third party expressly or impliedly that he claims, by reason of his calling, to have the requisite skill or knowledge to give the advice or furnish the information; (3) the third party must have relied upon that advice or information as matter for which the solicitor has assumed personal responsibility; and (4) the solicitor must have been aware that the third party was likely so to rely."

The Lord Ordinary concluded that the pursuer was able to establish none of the first three of the four factors.

28. Third, the decision of the Court of Appeal in Al-Kandari v J R Brown and Co [1988] QB 665. The claimant, a mother of two children, feared that the father would abduct them to Kuwait. The court had made an order which, with their consent, obliged the defendants, who were the father's solicitors, to retain possession of his passport on which the children were registered. With the mother's consent, the solicitors allowed their agents to take the passport to the Kuwaiti embassy for alteration on condition that it would never be out of their sight. In fact the embassy insisted on retaining it overnight. The solicitors did not inform the mother that the embassy had retained the passport nor that (as they knew) the father was due to attend there on the following day. The embassy released the passport to the father, who abducted the children to Kuwait. The court held that, in failing so to inform the mother, the solicitors had breached a duty of care to her. Both Lord Donaldson of Lymington MR at p 672 and Bingham LJ at p 675 explained that, in agreeing to become obliged to retain possession of the father's passport, the solicitors had stepped outside their role as his solicitors and assumed responsibility towards the mother.

29. Fourth, the decision of Sir Donald Nicholls V-C in the High Court in Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560. The claimant wished to purchase an underlease from the first defendant. The claimant's solicitors inquired of the second defendants, a firm of solicitors acting for the first defendant, whether any provisions in the headlease might affect the length of the underlease. The negative answer of the second defendants was a misrepresentation, which, following its purchase of the underlease, caused loss to the claimant. The Vice-Chancellor held that it had a valid claim against the first defendant but that the second defendants had themselves owed no duty of care to it. He observed at pp 571-572 that only in special cases, such as the Allied Finance case, would a solicitor owe a duty of care to the opposite party and that there was nothing special about the case before him.

30. Fifth, the decision of the Court of Appeal of New Zealand in Connell v Odlum [1993] 2 NZLR 257. Prior to his marriage to W, the claimant wished to enter with her into an agreement of which the statutory effect would be to contract them out of the law's general provisions for the making of financial adjustments between them in the event of separation. Pursuant to one of the statutory requirements, the defendant, who was W's solicitor, certified that, prior to her signing the agreement, he had explained its effect to her. Following separation a judge found that he had not explained its effect to her and held that the agreement was void. The Court of Appeal held that it was highly arguable that, in giving the certificate, the defendant owed a duty of care to the claimant and that the claim should not be struck out. Thomas J explained at p 269 that the claimant had relied, and had been expected by the defendant to rely, on the certificate as a feature of the validity of the agreement and that there had been the necessary assumption of responsibility towards him on the part of the defendant.

31. And sixth, the decision of the Court of Appeal in Dean v Allin and Watts [2001] EWCA Civ 758, [2001] 2 Lloyd's Rep 249. The claimant proposed to lend money to W and X on the security of property owned by Y and Z. W and X instructed the defendants, their solicitors, to effect the security in favour of the claimant, with which Y and Z were willing to co-operate. The loan was made on the footing that the security was in place. But the defendants had carelessly misunderstood what was legally required in order to effect the security. In due course Y and Z established that the purported charge on their property was ineffective. The court held that the defendants had owed, and breached, a duty of care to the claimant. Robert Walker LJ explained in summary, at para 69, that the provision of effective security was of fundamental importance to the claimant and that, as the defendants knew or should have known, he was relying on them in that regard.

32. Perhaps it helps only slightly for us to have been reminded in the authorities cited above that Ms Steel and the firm are liable to Northern Rock only if it was a special case. Probably of greater assistance is the analysis in the Al-Kandari case that the solicitors owed a duty of care to the opposite party because they had stepped outside their normal role. But the six authorities cited above demonstrate in particular that the solicitor will not assume responsibility towards the opposite party unless it was reasonable for the latter to have relied on what the solicitor said and unless the solicitor should reasonably have foreseen that he would do so."

23.      Counsel for the Representors said that it was right and proper that the Jersey advocates owed duties to the Court because they were officers of the Court.  But the mere circumstance of an application being made ex parte should not give rise to a duty owing to the other side.  Such duty only arises when a solicitor does something to give rise to such a duty.  A lawyer must actively create a situation where a duty arises. 

24.      In my view, the authorities establish that although it is not necessary for a lawyer to step outside his role as a lawyer for a duty to arise to the opposing party, they must carry out some positive act which gives rise to the assumption of responsibility to the third party, the third party must rely upon that advice or information as a matter for which the lawyer had assumed personal responsibility towards him and the lawyer must have been aware that the third party was likely so to rely. 

25.      On any view these requirements were not satisfied in this case and accordingly the proposed amendment is hopeless and I disallow it.   

26.      The second disputed amendment related to paragraphs 5, 6 and 22.2 of the draft amended Particulars of Claim.  The current pleading claims that, in relation to the application for the ex parte interlocutory injunction, the Representors and/or the Representors' advocates owed duties to the Court.  The proposed amendment goes further and alleges that the Representors' English lawyers owed duties to the Court, including a duty to make full and frank disclosure of material facts.  It is not suggested that the Representors' English lawyers owed a duty to the First Respondent and in view of my observations above, such amendment would not be allowed. 

27.      The First Respondent focuses on the position of Ms Berard who swore the principal affidavit in support of the ex parte application on 28^th June 2019.  Reference is made to the decision in Ras Al Khaimah Investment Authority -v- Azima [2020] EWHC 1686 (Ch), where Andrew Lenon QC sitting as Deputy High Court Judge held at paragraph 19:

 "A solicitor in giving evidence to the Court is under a duty to be not only completely honest but also scrupulously accurate; see generally Wingate v Solicitors Regulation Authority [2018] EWCA Civ 366 at [97] to [101] and Brett v Solicitors Regulation Authority [2014] EWHC 2974 at [111] to [113]. Otherwise there is a particular risk of the Court being misled because of the trust which the Court places in solicitors as officers of the court to give their evidence reliably. I note that misleading the court, even inadvertently, is potentially a breach of paragraph 1.4 of the Solicitors Code of Conduct (2019) quoted at paragraph 10.9 above."

28.      Ms Berard is the focus of substantial complaint on the part of the First Respondent, including in sections of the amended Particulars of Claim which have been amended by consent, for example paragraph 3.3.4.8, because it is said that Ms Berard's evidence has been rejected by the English Court by Mr Justice Andrew Baker in a decision handed down on 17^th July 2020.  It is said that Ms Berard also misled this Court in the affidavit that she swore for the hearing in June 2019.  I say no more about this as it may be a feature of argument when this matter comes to trial.   

29.      It was said that Ms Berard was not merely the only real source of evidence before the Royal Court when it sat to consider granting the injunction but that she was also the partner with the London law firm that approved the skeleton argument filed on behalf of the Representors.  It was said that she in effect "controlled" the proceedings.  It was conceded by counsel for the First Respondent that there was no authority that he could point to relevant to this amendment.    

30.      The Representors argued that Jersey lawyers owed a duty to the Court because they were officers of the Court.  The Court should not confuse a specific duty to the Court with an obligation to tell the truth, which is common to every deponent.  It was said the responsibility for the case always rests with the Jersey advocate in accordance with his or her duty to the Court.  It is for the advocate to satisfy themselves that what they are putting forward is factually correct.  The Court observed that this might be difficult in cases which were urgent, which were being managed from another jurisdiction and from which all the evidence in support of the application was emanating.  It was conceded that experts also owed duties to the Court, but it was argued that this only arose because they were officers of the Court, were giving independent opinion evidence and they had voluntarily accepted that they owed duties to the Court.  It was argued that absent accepting that they owed such duties experts would not owe them, and it was said that witnesses who swear affidavits do not declare that they owe a duty to the Court. 

31.      Though I can see the attraction of the arguments on behalf of the Representors, I am unable to find that the proposed pleading is unarguable and/or hopeless.  It seems to me that it is arguable that those who swear affidavits to the Court in support of ex parte applications owe duties to make full and frank disclosure of material facts.  This is not a consequence of, in this case, the deponent in question being an English solicitor.  The profession of the deponent may make no difference to the existence of the duty.  The duty arises, if it arises, because they are giving evidence on oath on an ex parte application.  Accordingly, this application to amend is allowed. 

32.      The third proposed amendment is an amendment seeking a wasted costs order from the Representors' advocates and/or English lawyers.  The Representors oppose this application on three bases.  They argue that:

(i)        An application for a wasted costs order should be made by way of a separate application by summons and not as a part of a substantive claim;

(ii)       None of the persons against whom wasted costs orders are sought have been joined to the proceedings; and

(iii)      Any consideration of wasted costs should be deferred until after conclusion of the trial and then only considered if the First Respondent is successful on the merits.

33.      As to the first objection, there is no suggestion in the relevant Jersey authorities that were cited to me that it is essential to make a separate application for a wasted costs order and not to plead a claim for such an order.  As the First Respondent pointed out, the Representors themselves in their prayer for relief in their Answer dated 13^th February 2020 seek the following relief: 

 "(i) That the First Respondent's claims be struck out and/or dismissed. 

 (ii) That the First Respondent or alternatively his advocates, Messrs Bedell Cristin, pay the Respondent's costs on such basis as the Court sees fit." 

34.      Accordingly in their own Answer the Representors have sought a wasted costs order against Bedell Cristin which appears to cut the ground from under them in relation to their first and also second objection, i.e. that persons against whom wasted costs orders are sought ought to be joined to the proceedings.  In any event there is no requirement in law for such joinder.    

35.      The third objection, namely that any consideration of wasted costs should be deferred until after the conclusion of the trial is a sound point and in most cases this occurs, but it is not relevant on this application to amend.  It is likely that there will need to be a separate hearing in relation to any wasted costs application which, so far as any claim by the First Respondent for wasted costs is concerned, will only arise if the First Respondent is successful at trial and such a costs hearing would need to take place, without fettering the Court's discretion, on a date to be fixed at which both the Representors' advocates and his English solicitors would have the opportunity to be heard.  I note the relevant Civil Procedure Rule which provides that, on an application for a wasted costs order "the Court will give the legal representative a reasonable opportunity to make written submissions or, if the legal representative prefers, to attend a hearing before it makes such an order." 

36.      I have not heard any argument in relation to the format of a wasted costs hearing in this case, if it were to arise, but the need to give the relevant legal representative an opportunity to be heard is obvious. 

37.      Accordingly, I allow this application to amend. 

Paragraph 3 of the Representors' summons dated 30^th September 2020 ("the Third Summons")  

38.      Paragraph 3 of this summons requires the First Respondent to respond and comply with a Request for Further Information.  There are two requests for information as follows: 

 "Of Paragraph 5.2 of the Reply

 "the failure to identify to the Court the possible effect on the Viscount personally, the members of the Court and any other individuals, of transferring the shares in EN+ to the Viscount; an effect which is vividly illustrated by the fact that the return of the shares (said by the Representors to be a lesser issue than the original transfer in OFAC terms) proved so problematic for the Court and for the Viscount that the Representors' Advocates suggested that an express application to OFAC might be required to establish that "there would be no secondary sanctions risk associated with the transfer of the Russian Shares by the Viscount" (email from Advocate Williams dated 4 November 2019 at 21:03);"

Of Paragraph 5.3 of the Reply

 "the failure to identify that the transfer of the shares was potentially an irrevocable step by reason of the US Sanctions rather than a preservative one;" 

Of Paragraph 14 of the Reply, first sentence

 "It is denied that Mr Deripaska has not suffered any loss by the imposition of the Order dated 28 June 2019 and/or that he has no cause of action." 

1.   Please confirm whether the Viscount of Jersey was ever registered as a shareholder of EN+ in the Russian Federation. 

a.  If so, please provide full particulars of when the registration was done and how and when the fact of registration was confirmed.  Please also provide all supporting documentation. 

b.  If not, please provide full particulars of the enquiries made to seek to confirm the Viscount's status or not as a shareholder and of all explanations given as to why no registration was completed.   

2.        Please confirm whether B-Finance Limited, Mr Deripaska and/or any nominee or entity under Mr Deripaska's direct or indirect ownership or control is presently registered as the owner of all or a portion of the 45.5million shares in EN+ that were the subject of the Royal Court's Acts dated 28 June and 12 July 2019.  If so, please state when B-Finance, Mr Deripaska and/or any nominee or entity under Mr Deripaska's direct or indirect ownership or control was entered in the Russian registry of EN+ Group IPJSC as an owner of all or a portion of those shares and provide all supporting documentation."   

39.      It is first necessary to consider the principles upon which requests for further information are considered as no authority was cited to me in argument as to the approach the Court should take to these requests.  Royal Court Rules 6/15, under the title "Obtaining further information", provides that the Court may: 

"At any time of its own motion or on application order a party to

 (i) Clarify any matter which is in dispute in the proceedings; or

 (ii) Give additional information in relation to any such matter,

whether or not the matter is contained or referred to in a pleading."

40.      So, the request must relate to a relevant matter which is in dispute in the proceedings, whether or not it is contained or referred to in a pleading.  Accordingly, at the outset I reject the second request as the current ownership or control of shares in EN+ is not relevant to any matter in dispute in the proceedings.  That leaves the first request.  I note the practice direction in relation to Requests for Information dated 1^st June 2017 which provides, inter alia:

 "4. Before making an application to the Court for an order under Rule 6/15 a written request for the information sought, ("the Request") should be served on the other party stating a date by which the response to the Request should be provided.  The Request must allow the other party a reasonable time to respond.

5. The Request should be concise and should only relate to matters that are reasonably necessary and proportionate for a requesting party to prepare its own case, or to understand the case it has to meet."

41.      A submission made on behalf of the First Respondent was that the Representors have not in terms set out their first request in writing in previous correspondence.  However, it was reasonably clear from the submissions made that any such request by the Representors to the First Respondent would probably be met with a response which would not amount to a substantive response to the request.  Accordingly, in exercising my discretion in relation to this request, I have not held against the Representors the fact that they have not made a prior request in the terms of the first request that they now make.   

42.      I now turn to consider the terms of the first request. 

43.      Though it is perhaps unnecessary for it to do so, the request purports to be seeking further information in relation to specific paragraphs of the First Respondent's Reply.  The request does not in fact directly relate to or arise from the second or third cited passages of the Reply.  However, in relation to the first cited paragraph of the Reply (paragraph 5.2), the First Respondent's pleading in this paragraph is predicated on the footing that the shares in EN+ were indeed transferred to the Viscount.  There is an implied assertion to that effect by the First Respondent in paragraph 5.2 of his Reply.  It is said by the First Respondent that determination of this matter is irrelevant to the key issue, namely whether or not the Royal Court was misled on 28^th June 2019 and why.  It is also said that both sides knew that there were difficulties making contact with the Russian registrar of companies.  Reference was made to the affidavit of Mr McGregor, sworn on 21^st January 2020, which exhibited correspondence between the parties on this issue.  It was also said that whether or not the shares were in fact transferred to the Viscount or not was no longer relevant in view of the payment of the sum due pursuant to the arbitration proceedings in October 2019.    

44.      However on balance, having regard to the way in which the First Respondent has pleaded its case I do regard this matter as a relevant one to which a response must be provided.  Accordingly I allow the first request and order the First Respondent to reply within 28 days.    

The summons dated 18^th August 2020 ("the Second Summons") and paragraph 2 of the Third Summons

45.      I finally turn to the Second Summons and the connected first part of the Third Summons.  They are connected as they deal with the First Respondent's assertion that the Representors have waived privilege in relation to certain documents and certain categories of documents and the Representors' response, which in part seeks the Court's leave to amend various affidavits so as to delete reference to privileged documents and communications. 

46.      It is helpful first to set out the passages within certain of the affidavits which, it is said, give rise to a waiver of privilege.  I will not set out all the passages, particularly as some are duplicative of each other.  I will then set out the principles as contended for by each party and as found by the Court, and thereafter apply them to the relevant parts of the affidavits.    

47.      Thereafter I will deal with the Representors' argument that it is nonetheless possible, if and to the extent that there has been a waiver of privilege, for the clock to be turned back by the party which has waived privilege by declaring that it no longer wishes to rely on such material.  Whether it is necessary or possible to do so depends in part on the stage of the proceedings at which the waiver takes place. 

48.      First, the affidavit evidence.  On 24^th June 2020 the Court ordered, inter alia, that "signed dated and sworn witness statements of fact standing as evidence in chief should be simultaneously exchanged by close of business 35 days after the date of the judgment, witnesses to attend to be cross-examined, subject to the order of the Court at the pre-trial review." 

49.      That order, subject to agreed extensions which were made the subject of subsequent Court orders, was complied with and the evidence was served on 7^th August 2020.  The affidavit evidence served by the Representors included an affidavit of Advocate Hurry, an affidavit of Advocate Williams and an affidavit of Mr Chernukhin.  All were sworn on 7^th August 2020 and the evidence was filed with the Court.   

50.      11 days later, on 18^th August 2020, the advocates for the First Respondent, having considered the evidence disclosed by the Representors, issued their summons in which they sought orders that, inter alia, the Representors had waived privilege in relation to certain matters relating to the obtaining of the interlocutory orders in June 2019 by filing the three affidavits referred to and that accordingly the Representors should give discovery of all documents within their possession or control relating to or otherwise in connection with (a) the advice sought by the Representors and/or given by Clifford Chance in relation to the fact and consequences of the proposal to re-domicile EN+ Group Plc from Jersey to Russia within the date range 16^th August 2018 to 28^th June 2019 inclusive and (b) the issues of (i) the instructions given by the Respondents and/or Clifford Chance to Collas Crill prior to the hearing on 28^th June 2019, (ii) the procedural and substantive form the proceedings should take, and (iii) whether or not a cross-undertaking in damages should be offered, within the date range 18^th June 2019 to 20^th November 2019. 

51.      Prior to the First Respondent issuing his summons, the Representors filed their skeleton argument for the hearing on 18^th August 2020.  The skeleton argument was dated 14^th August 2020, and referred to the evidence of the three witnesses. 

52.      Accordingly, the First Respondent argues that this is evidence that was filed as evidence in chief pursuant to a Court order, relied on in correspondence (as it was) and referred to in a skeleton argument filed with the Court.  It is easiest to identify the relevant parts of the affidavits to the extent that they may amount to a waiver of privileges and the nature of the amendments now sought by the Representors to those affidavits by referring to them in a form in which they have now been filed for the purpose of the application to amend them.      

The affidavit of Advocate Williams

53.      Paragraph 15 of the affidavit of Advocate Williams (this is not a passage which involves any waiver of privilege but is relevant in context) reveals for the first time, and this was not a matter that was volunteered to the Court on 28^th June 2019 or revealed prior to this affidavit being sworn, that when the Bailiff saw the draft representation he, through his Judicial Secretary, gave "feedback" and "the comments specifically included a recommendation that the matter be brought by way of Order of Justice suing the arbitral defendants for registration of the arbitral awards coupled with interim injunctions restraining a transfer of the shares, and that a cross-undertaking in damages should be provided".  Paragraph 15 is followed by, now deleted in red: 

 "Nonetheless, I recall that Advocate Hurry sought instructions as to whether a cross-undertaking in damages and indemnities in favour of parties cited could be given if required.  That instruction was given shortly before the hearing." 

The affidavit of Advocate Hurry

54.      Advocate Hurry's affidavit contains the following passages.  At paragraph 20 he says: 

 "It is accepted that the decision to not offer a cross-undertaking was intentional."

55.      Paragraph 22 showing the original waiver and the proposed amendment are as follows: 

"21 Without waiver of privilege, w When drafting the Representation and the Representors' Skeleton Argument (in utmost haste) regard was had to the approach taken in Tepe v Botas where proceedings were commenced ex parte via representation and included an arrêt entre mains over shares of a Jersey company. No cross-undertaking was provided in that case. However, should the Court have required a cross undertaking in this case (depending upon how the hearing unfolded), I ensured that I was in a position to give one. However, and again without waiver of privilege, should the Court have required a cross-undertaking, instructions had been received to give one."

The affidavit of Mr Chernukhin

56.      Mr Chernukhin's affidavit contains the following passages, again with the proposed amendments shown: 

"5. 4 My lawyers have explained to me the allegations made I understand that an issue has been raised in these proceedings around as to the timing of the relief sought by me in late June 2019 and in particular the issue of alleged delay. In response,. In that regard, I wish to make the following points clear.

                 6. 5 In May 2018, I instructed my English legal team (Clifford Chance LLP and a team of barristers) to apply applied for a world-wide freezing order (the "WFO") against Oleg Deripaska. This was in circumstances where I was concerned that in light of his recent designation as a sanctioned individual by the US authorities, Mr Deripaska would take steps to dissipate his assets and/or move them to the Russian Federation, thereby undermining any future attempts to enforce LCIA arbitration awards (the "Arbitral Awards") that Navigator and I had won against Mr Deripaska and his company Filatona Trading Limited ("Filatona"). I had serious concerns about the ability to enforce the Arbitral Awards or any related English court orders in the Russian Federation. Even more so, given Mr Deripaska's political connections and status in that country. It was therefore important to me that collateral be available for enforcement purposes outside of the Russian Federation.

...

                 8. 7 Mr Deripaska sought a discharge of the WFO by offering that undertakings be given in relation to a number of shares in the Jersey-registered company EN+ Group Plc ("EN+ Jersey"). The collateral offered was not shares listed on the LSE or another public exchange, but rather a private block of shares in a listed company. I was initially reluctant to accept the proposed undertakings, because I would have preferred that Mr Deripaska put up security for the amounts due under the Arbitral Awards. In addition, I was concerned that Mr Deripaska's status as a sanctioned individual and also EN+'s status as a sanctioned entity would negatively impact on the value of the shares in EN+ Jersey. However, I understand that during the course of a hearing in the English High Court held on 19 June 2018 (which I did not attend), Mr Justice Knowles strongly encouraged the parties to seek to come to an agreement on the terms of the suggested undertakings. I also understand that Mr Deripaska's Lead Counsel (Justin Fenwick QC) gave assurances that the undertakings were a "real form of security". [VC1/37] Without waiving any privilege over the advice given, I received a call from Clifford Chance and the barrister team during the hearing, at the end of which I instructed them to try to come to an agreement with Mr Deripaska's lawyers about the proposed undertakings.

           ...

                 11. 10 On 16 August 2018, I saw the Reuters article "EN+ considers move to Russia's new offshore zone" [VC1/102-103], which I sent to Clifford Chance to get their views. Around that time, Clifford Chance brought to my attention a similar article was published by Bloomberg [VC1/104-105]. Without waiving any privilege as to the specific advice given, I understood from their advice that there was no immediate concerns about the Redomiciliation or the impact that it might have on the value of the underlying collateral, i.e. of the company EN+. There was certainly no appreciation on my part, or that of my lawyers of It was not clear from these articles what implications the Redomiciliation might have for the Undertakings.

                 12. 11 On 30 November 2018, during the trial in the High Court proceedings, a time when I (and my legal team) was very busy with the trial, I saw and emailed to my legal team another article in Vedomosti about the potential Redomiciliation to be decided in Paris in the end of December [VC1/106-112]. As before, I asked for feedback from my legal team. Without waiving any privilege as to the specific advice given, I understood from their advice my understanding was that there was no immediate concerns about the Redomiciliation or the impact that it might have on the value of the underlying collateral. Not being a lawyer myself, I relied on the advice of my legal team and followed that advice at all times.

                 ...

                 16. 15 In the event, in light of RPC's 29 May 2019 letter and its letter of 26 June 2019, and following further legal advice taken after receipt of the letters (over which no privilege is waived), I instructed Clifford Chance and, through them, Jersey lawyers, Collas Crill, to do everything they could to try I sought to ensure that the collateral was preserved and did not end up in the Russian Federation. The further steps taken in the course of these proceedings were pursuant to that objective.

                 ...

                 18. 17 I also deny the allegation that I went to court in Jersey without myself being willing to give a cross-undertaking in damages. Had an undertaking been required, I confirm that one would have been given, and that my legal team was in a position to do so at the hearing held on 28 June 2019. The need or not to give such an undertaking was a legal nuance beyond my understanding and I could only be advised on it by my legal team when they considered it appropriate. Without waiving privilege, directly before the hearing held on 28 June 2019, I was told by my legal team that a cross-undertaking may become necessary and I confirmed to them my willingness to provide one if required. I understand that in the event neither the Court nor Mr Deripaska's lawyers demanded a cross-undertaking in damages at either of the hearings held in Jersey on 28 June and 12 July 2019, and that no such cross-undertaking was therefore given."

Has there been a waiver of privilege? 

57.      This is an area of Jersey law where it is appropriate to consider English authority (Café de Lecq -v- R A Rossborough (Insurance) Brokers Limited [2011] JLR 182.  In summary, the Representors say that there is insufficient reference to legal advice for there to have been a waiver of privilege in this case and to the extent that there was a reference to the advice, it was to the effect of the advice and not to the contents of the same and that there was no reliance placed on the substance of the advice to the extent that it was disclosed.  Applying the principle set out in the authorities which I refer to below, it is argued that in those circumstances there has been no waiver of privilege.   

58.      The First Respondent contests this - Mr Chernukhin and his advocates, it is argued, have relied on the contents of privileged legal advice and, in the circumstances cannot in fairness be entitled to simultaneously refuse to disclose to the First Respondent or the Court that advice and related advice over which privilege has now been waived.  Absent disclosure, the Court will have an incomplete picture of events.   

59.      It is appropriate to consider the relevant authorities before returning to the extracts from the affidavits referred to above.   

60.      I was referred to a number of helpful authorities during the course of argument.  First the case Brennan and Others -v- Sunderland City Council [2009] ICR 479, a decision of the Employment Appeal Tribunal.  The facts of Brennan are of no assistance in this case but the principles are.  The EAT held at paragraph 16 that:

 "As a matter of public policy, all communications between a legal adviser and/or his or her client are privileged from date of production so long as they are confidential, written by or to the legal adviser in his or her professional capacity, and for the purpose of giving or getting legal advice."

61.      The EAT went on to say that a party may however waive that privilege "Classically, and uncontroversially, this would be so in instances where the party refers in detail to, and seeks to rely upon, part of a document setting out legal advice, but resists the other party's efforts to obtain disclosure of the whole of that advice."  At page 483F the Tribunal said: 

 "Whether or not privilege has been waived is determined by the application of the principle of fairness. In Burnell v British Transport Commission [1956] 1 QB 187, 190 for example, Denning LJ stated:

 "It would be most unfair that cross-examining counsel should use part of the document which was to his advantage and not allow anyone, not even the judge or the opposing counsel, a sight of the rest of the document, much of which might have been against him.""

62.      The Tribunal observed at page 484 that:

 "The fact that waiver is accidental makes no difference; once waived, the whole document must be produced (or at least all parts of the document relating to that subject matter)."

63.      In the Tribunal's conclusions at paragraph 62 to 70, it considered the principles in respect of waiver of privilege.  The following extract is particularly helpful: 

 "63. In our view the fundamental question is whether, in the light of what has been disclosed and the context in which disclosure has occurred, it would be unfair to allow the party making disclosure not to reveal the whole of the relevant information because it would risk the court and the other party only having a partial and potentially misleading understanding of the material. The court must not allow cherry picking, but the question is: when has a cherry been relevantly placed before the court?

64. Typically, as we have seen, the cases attempt to determine the question whether waiver has occurred by focusing on two related matters. The first is the nature of what has been revealed; is it the substance, the gist, content or merely the effect of the advice? The second is the circumstances in which it is revealed; has it been simply been referred to, used, deployed or relied upon in order to advance the party's case? As Waller LJ observed in Dunlop Slazenger [2003] EWCA Civ 901, the principles are not altogether easy to discern, partly perhaps because of the vagueness of the language adopted - for example, sometimes reliance and deployment are used as separate terms and sometimes they appear to mean much the same thing - and partly because the cases are necessarily fact sensitive.

65. In our judgment, it is an error to treat the earlier authorities as if the words falling from judicial lips had the sanctity of statute. We would not, therefore, adopt in quite such stark terms the contents/effects distinction which Mr White submits represents the law. Plainly the fuller the information provided about the legal advice, the greater the risk that waiver will have occurred. But we do not think that the application of the waiver principle can be made to depend on a labelling exercise, particularly where the categories are so imprecise. The concepts shade into each other, and do not have the precision required to justify their employment as rigid tests for defining the scope of waiver.

66. Having said that, we do accept that the authorities hold fast to the principle that legal advice privilege is an extremely important protection and that waiver is not easily established. In that context something more than the effect of the advice must be disclosed before any question of waiver can arise.

67. However, in our view, the answer to the question whether waiver has occurred or not depends upon considering together both what has been disclosed, and the circumstances in which disclosure has occurred. As to the latter, the authorities in England strongly support the view that a degree of reliance is required before waiver arises, but there may be issues as to the extent of the reliance. Ultimately, there is the single composite question of whether, having regard to these considerations, fairness requires that the full advice be made available. A court might, for example, find it difficult to say what side of the contents/effect line a particular disclosure falls, but the answer to whether there has been waiver may be easier to discern if the focus is on the question whether fairness requires full disclosure.

...

69. In our view the authorities demonstrate that reliance is necessary and there is currently no indication that the Council has any intention of relying on the advice. The disputed material was put before the court as an exhibit to a lengthy witness statement. The legal advice has not been specifically referred to in the pleadings nor in the witness statements themselves and in our view the mere reference to the advice - even to the content of it - was not in the circumstances sufficient to constitute a waiver of privilege. The council is not seeking to rely upon the advice to justify the reason why it decided to implement pay protection for a period of four years."

64.      Accordingly, on the authority of Brennan, it is important to have regard to whether or not the content as opposed to merely the effect of the advice has been disclosed and then to consider if the advice has been relied upon and ultimately whether fairness requires full disclosure. 

65.      Brennan was cited by approval by the Chancery Division of the High Court in Digicel Limited -v- Cable & Wireless Plc [2009] EWHC 1437 when Morgan J was required to consider whether there had been a waiver of privilege by reference to certain passages in witness statements where witnesses referred to legal advice which they had been given.  As to the appropriate approach to the material in front of him, the judge made the following observations at paragraphs 18 to 22 of the judgment:

 "18. Mr Rubin invited me to apply the approach encapsulated in those passages from Brennan.

19. Mr Patton, on behalf of the defendants, does not I think fundamentally disagree with this approach.  He does not in terms quarrel with the way in which the matter is discussed in Brennan.  To assist analysis of the problems which arise, he identified three questions which he submitted should be asked in turn. His questions are as follows:

(1)       Is there a reference to the legal advice? He submits if there is not, there is no waiver of any such privilege.

(2)       If there is a reference to the legal advice, is there reliance on that legal advice? He submits if there is not, there is no waiver of privilege.

(3)       If there is reliance on the legal advice, is the reliance on the contents of the advice or only on the effect of the advice? He submits that if the reliance is only on the effect of the advice, there is no waiver of privilege.

20. I do not think that at the end of the day there is any substantial difference between the parties as to Mr Patton's questions, save that Mr Rubin submits that the Brennan case has put its own gloss on the distinction between the contents of and the effect of a document.

21. I am happy to say that it is not necessary for the purposes of this judgment to attempt a definition of the line which divides the contents of legal advice from the effect of legal advice. Indeed, in view of the remarks in Brennan, it may be altogether unhelpful in this area to attempt too rigid a definition of that kind.

22. In addition to the above submissions as to the relevant law, I record the fact that the parties agreed that a statement which merely records the fact that legal advice has been given will not amount to a waiver of privilege in that advice."  

66.      In PCP Capital Partners LLP and PCP International Finance Limited -v- Barclays Bank Plc [2020] EWHC 1393 the Commercial Court considered an application for disclosure of privileged material made by the claimants, Waksman J at paragraph 47 onwards gave a useful exposition of the law which I found of assistance.  He said: 

 "47. I begin with a number of overarching points. 

 (1) Legal professional privilege is regarded as a fundamental right of the client whose privilege it is.  The loss of that right through waiver is therefore to be carefully controlled;

(2) Generally, privileged documents cannot be ordered to be provided in litigation by the party whose privilege it is unless this is as a result of a waiver;

(3) Absent waiver, the fact that such documents might be highly relevant does not entail their production;

(4) Applications for documents based on a waiver of privilege entail at least the two following fundamental questions:

                       (a) Has there been a waiver of privilege?

(b) If so, is it appropriate to order production of privileged documents other than those to which reference has been made which was the foundation for the waiver?

(5) The concept of fairness underpins the rationale for having a concept of waiver which can then entail the production of further privileged documents. This is because if the party waiving is, by the waiver thereby creating a partial picture only of the relevant legal advice, it is unfair to the other party to allow him to "cherry pick" in this way.

(6) That said, it is also clear that the question of whether or not there has been a waiver is not to be decided simply by an appeal to broad considerations of fairness.

48. As to the question of waiver itself, it is not easy to find a succinct and clear definition of when it arises, going beyond general statements to the effect, for example, that the party alleged to have waived them has deployed them in some way as part of its case.  But on any view in my judgment, first, the reference to the legal advice must be sufficient (a point I return to below) and second, the party waiving must be relying on that reference in some way to support or advance his case on an issue that the court has to decide.

49. I give two examples of what is clearly not waiver.  First, a purely narrative reference to the giving of legal advice does not constitute waiver.  This is because, on any view, there is no reliance upon it in relation to an issue in the case.  Nor does a mere reference to the fact of legal advice along these lines, "My solicitor gave me detailed advice.  The following day I entered into the contract".  That is not waiver, however tempting it may be to say that what is really being said is "I entered into the contract as a result of that legal advice".  The corresponding point is that if that latter expression is used, then there will be waiver.

50. I next turn to the vexed question which still confounds the law of privilege, namely the idea that, quite apart from reliance, waiver cannot arise if the reference is to the "effect" of the legal advice as opposed to its "contents".  The judicial disquiet to which this distinction has given rise is well- summarised in Passmore on Privilege 4th Edition, at paragraphs 7-224 to 7-242.

...

55. It is not completely clear to me what meaning was ascribed to the word "effect" in that case [Marubeni -v- Alafouzos] but I proceed on the basis that it meant the conclusion or outcome of the advice because, given the brevity of the reference to it, it is hard to see what else it could be.  But it is then very difficult to understand how that distinction works if applied mechanistically and without any reference to context and purpose.

56. Mr Lissack QC (correctly and inevitably, in my view) recognised the force of this in the course of argument because he accepted that if the reference was, "My solicitor told me that what I was about to do was lawful", that would be a matter of substance, not of effect, ie there would have been a waiver. Put another way, he said that the statement "I went and discussed it with my solicitor and he told me that it would be okay to go and do this transaction as a matter of law on Tuesday. On Tuesday I went and did it." would be effect and substance. And finally "I went to speak to the lawyer about whether I could sell somebody else's car and he said it would be lawful" would probably be substance. See in general pages 90 to 94 of the transcript. But on a strict application of the content/effect distinction, those examples could not constitute a waiver because only the conclusion is stated and not the contents of what might have been a lengthy written opinion. Such a mechanistic application of the distinction therefore has no logic nor any underlying principle and in this exchange at least, Mr Lissack QC did not advocate such a mechanistic test although he still relied upon the distinction on the points in issue when we turned to them.

57. I think it is possible to discern why the distinction might have been thought to have some superficial attractiveness and it is this.  If one refers to large sections of a legal advice, it is difficult to see why that should be done unless the advice is being relied upon in some way.  Otherwise, it is mere verbiage.  On the other hand a reference simply to the effect, for example concentrating on the outcome of the advice, may, and I stress may, indicate something different.

58. This is what happened in Marubeni.  The solicitor had to depose to the advice received because it was a procedural requirement under the rules for service out, but once deposed to, the fact that the lawyers had advised there was no defence in Japanese law was irrelevant to the issue of service out after it had been dealt with initially.  If the parties served out sought to set aside service on the basis, for example, that there was an extremely strong defence in Japanese law, then the court might have to decide that question.  But if it did, what the applicant's solicitors originally advised is neither here nor there. A claim before the court is not a good claim because the claimant's solicitors have said so.  It is a good claim if the court thinks so.  In other words, there is no reliance by the claimant on the solicitor's advice once the affidavit has been lodged.

59. Exactly the same point arises in applications for summary judgment.  To depose, for example, that "I have been advised by my solicitor and believe that there is no defence to this claim" is required by the rules.  Such requirements are there to avoid bad faith applications for summary judgment where the applicant knows it is hopeless and that there is a defence.  But, again, once the application for summary judgment has been made and is being decided by the court, what the applicant's solicitor thought about the defence is irrelevant.

60. Once the distinction is viewed in that context, one can see that the result in Marubeni was plainly correct.  The judgments in that case were somewhat compressed in their reasoning but I am quite sure that they were in effect applying the kind of analysis that I have just set out.  I will refer to some other cases below, but at this point, and to deal with matters of principle, in my judgment the correct approach to applying the content/effect distinction is this: the application of the content/effect distinction, as a means of determining whether there has been a waiver or not, cannot be applied mechanistically. Its application has to be viewed and made through the prism of (a) whether there is any reliance on the privileged material adverted to; (b) what the purpose of that reliance is; and (c) the particular context of the case in question. This is an acutely fact-sensitive exercise.  To be clear, this means that in a particular case, the fact that only the conclusion of the legal advice referred to is stated as opposed to the detail of the contents may not prevent there being a waiver."

67.      The judge then went on to consider the decision in Brennan and the decision in Digicel.  Waksman J continued: 

 "79. Finally, I rely upon a decision of Mr Justice Males as he then was in the case of Mid-East Sales v United Engineering [2014] EWHC 892. I start at paragraph 15 of the judgment.  He refers to waiver and Hollander on Documentary Evidence, where the authors noted a distinction between a reference to the fact of legal advice and reliance on the content of that advice. Males J went on to say:

 "That distinction reflects a policy not to hold that there has been a waiver without good reason and to confine cases of waiver to cases where the party said to have waived is relying on the content of the legal advice for some purpose.  Sometimes the distinction is drawn between reference to legal advice and deployment of it.  The overriding principle is one of fairness, that if the content of legal advice is deployed or relied upon in order to advance a party's case, then fairness may require that disclosure of that advice be made available so that the court can properly assess that assertion."

80. And then:

"16. In the present case the legal advice which is said to have been given has been referred to in the context of the question of delay by the second defendant in responding to the service of the claim form.  It appears to be relevant to the question as to whether...the court should exercise its discretion to set aside the default judgment....Mr Zahid Mumtaz...says at para. 29:

"Acting on the advice of IA Solicitors, the claim form and enclosures were returned to the British High Commission ... on the basis of Article 13 of the Hague Convention."

He then sets out the letter pursuant to which that was done

17. In his second witness statement..He says at para. 7:

"the thrust of Dudley 8 is that the second defendants' conduct was premised on incorrect legal advice from IA Solicitors.  Again I will address this point and demonstrate that it was as a result of IA Solicitors' advice that the second defendant took the steps it did in responding to the claim form.""

81. Then the judge concludes:

 "18.     It seems to me these two statements, taken together, do cross the line from reference to deployment.  They make a case that the second defendant was acting on legal advice in responding to the claim form in the way that it did.  That can only be relevant because the second defendant seeks to rely on that as a factor going to the exercise of the court's discretion.  I can see no other reason why the reference to acting on legal advice should have been included ...  Now that the second defendant has invited the court to exercise its discretion on the basis that it was acting on legal advice, it may be highly relevant to know what that advice was."

82. He concludes by saying there had been a waiver. 

83. I take two important things from this decision.  First, it clearly does not proceed on the basis of any mechanistic application of the contents/effect distinction or indeed even on the contents/fact distinction.  Secondly, the question of reliance and purpose is central to the determination of waiver.  All of that is consistent with and indeed supports my approach here.

84. Therefore there is nothing in any of those three cases which is contrary to the approach that I have outlined and indeed there is much there to support it.

85. If waiver is established, then, and only then, the question of whether further privileged documents should be provided arises.  Here the position was much less controversial between the parties as to the law.  In essence, the court has to decide the issue or "transaction" which the waiver was concerned with.  Once that has been identified, then all the privileged materials falling within that issue or transaction must be produced.  There may be no more if on a proper analysis the transaction itself was limited to the privileged material already referred to.  The identification of the transaction should be approached realistically so as to avoid either artificially narrow or wide outcomes.

86. The transaction analysis itself is driven by the concept of fairness.  It is why one has to ascertain the transaction, because then that establishes the playing field, as it were.  If the playing field is in truth wider than the documents which have been referred to so far, then it is not level as far as the non-waiving party is concerned because disclosure has in truth been only partial."

68.      It is worthy of note that having found that there had been a waiver of privilege, in his conclusions the judge said this: 

 "129. I make one further point here. It is accepted by PCP that if Barclays wishes to avoid the consequences of the waiver which I have now found and spelled out, it could withdraw its reliance (in the way I have also spelled out) on the privileged material in question and in connection with the issues surrounding the lawfulness of the ASAs.  There may still be a need to refer to lawyers being involved for the purpose of establishing a coherent narrative, but that is quite different and would not itself be objectionable."

69.      I also note that at paragraph 92 of the judgment the judge noted in that case that he was dealing with "very substantial civil litigation" and that "references to legal advice are not made casually or by accident here.  They can only be designed to improve Barclays' case on the issues surrounding the ASAs". 

70.      I was also referred to passages from Documentary Evidence by Charles Hollander (June 2018) and Thanki, the Law of Privilege (3^rd Edition - 2018). 

71.      Having referred to the principles it is now necessary to return to the affidavits.  It is necessary to bear in mind that the First Respondent's claims as set out in the Particulars of Claim focus principally on the alleged failure on the part of the Representors to provide an undertaking in damages.  The three affidavits refer expressly to advice received on this central issue.  The reference (at paragraph 15 of Advocate Williams' affidavit, paragraph 22 of Advocate Hurry's affidavit and various paragraphs of Mr Chernukhin's affidavit) is to the contents and not merely the effect of advice that was being given and received.  Mr Chernukhin in particular provides evidence as to the detail of the legal advice he was given at paragraphs 11 and 18 of his affidavit.   These were not references to legal advice that were given casually or accidentally.  They were deliberately included in the affidavits, in my view, in order to fortify Mr Chernukhin's case in respect of these issues.  Further, there can be no doubt that, in my view, this evidence was deployed and/or relied upon.  These are statements prepared and disclosed for the purpose of trial.  The fact that the witnesses have not yet given evidence does not, in my judgment, affect the fact that they have been relied upon in these proceedings.   

72.      Accordingly, there has been a waiver of privilege and, prima facie, all collateral material relevant to the matters referred to.  This would, on the face of it, extend to much if not all of the material sought by the First Respondent in his summons.  I may have reached a different conclusion on waiver had only the affidavits of Advocate Williams and Advocate Hurry been before me.  

Can the clock be turned back? Can the Representors declare that they no longer rely upon the privileged material? 

73.      The Representors' application to amend the affidavits by striking out the reference to the passages in which, I have found, they have waived privilege is founded on the submission that if the Representors are no longer relying on the material then no question of unfairness to the First Respondent can arise.  If the Representors are no longer relying on the privileged material, it is argued that they are no longer deploying it in any fashion.  The Representors argue that we are not at trial, it is not too late to withdraw the offending parts of the affidavits and what can be undone should, if no unfairness arises, be undone.    

74.      In reply, the First Respondent argues that as soon as the material was served it was deployed.    The cat is out of the bag and the application to amend the affidavits is misconceived.  This material now stands as evidence in chief and it will be quite wrong for it to be amended, let alone in the way proposed.    

75.      Furthermore, reliance was placed upon the decision in Café de Lecq -v- R A Rossborough (Insurance Brokers) Limited [2011] JLR 182 which makes clear, the First Respondent says, that in the context of production of privileged documents on discovery no question of turning the clock back can arise.   

76.      Finally, the First Respondent contends that there can be no objection to the Representors being cross-examined on what they have said in their affidavits - the First Respondent cannot unknow what he now knows about the privileged material.    

77.      With these competing arguments in mind I refer to the principles. 

78.      Hollander refers to the decision of General Accident Fire and Life Assurance Corp Ltd -v- Tanter [1984] 1 WR 100 and at paragraph 23-16 states: 

 "In General Accident Fire and Life Corp -v- Tanter Hobbhouse J held that an application based on collateral waiver was premature unless it took place after the evidence had been "deployed in court" in the strict sense, namely after the material was relied on in the evidence.  The significance of "deploying in court" is that once the material has been used in court in support of an application or at trial, it will be difficult to turn the clock back and thus retrieve the position.  If the document has been read out in opening, or relied on in the course of evidence, and thus deployed in court, it will be too late to turn the clock back.  If, however, the document, affidavit or witness statement has been disclosed to the other side but not yet deployed in court, it is not too late to retrieve the situation.  Thus if a party, having appreciated the consequences, is concerned not to disclose further documents, so long as it is possible without prejudice to the other party to retrieve the privileged material and for him not to rely on it, he should be entitled so to do.  Whether a party who has waived privilege in certain material before the trial should be required to produce the associated documents at that stage depends on the circumstances."     

79.      I note that the decision in General Accident preceded the more recent authorities that I have referred to and it is clear, having regard to those authorities, that there has been a waiver of privilege in this case.  However, the observations of Hollander in respect of the circumstances in which the clock might be turned back are of assistance. 

80.      On the same issue, Thanki says at paragraph 5.47:

 "Ultimately, the key issue is whether the clock can be turned back.  Once the document has been relied on in opening, deployed in evidence, or (in most cases) relied on at an interlocutory hearing, it will be too late to resist the effects of collateral waiver.  From a practical point of view there is much to be said for the parties knowing in advance of trial whether privileged documents will be relied upon so that any contentious issues of waiver of privilege can be resolved."  

81.      It is also worth noting, as I have above, the contents of paragraph 129 (my paragraph 68) of the decision of the trial judge in PCP.  The judge was proceeding on the footing that notwithstanding his findings in respect of waiver it was open to Barclays in that case to withdraw its reliance on the privileged material in question. 

82.      The First Respondent also relied upon the decision of the Royal Court in Café de Lecq in which Birt, Bailiff presiding considered an application by the defendant for an injunction requiring the return of a document which it said was privileged and disclosed by mistake during the discovery process. 

83.      At paragraph 49 of the judgment, the court summarised the applicable principles in the circumstances where privileged material is disclosed in error on discovery, drawing from the English decision of Guinness Peat Properties Ltd -v- Fitzroy Robinson Partnership [1987] 1 WLR 1027 and the later decision in Al-Fayed -v- Metropolitan Police Commissioner [2002] EWCA Civ 780. 

84.      Having set out an extract from the judgment of Clark LJ in Al-Fayed, Birt B held at paragraph 50:

 "The principles to be derived from the above three cases are equally applicable in Jersey.  Thus, in the context of a privileged document which is inadvertently disclosed as part of the discovery process, the Court may intervene by injunction to prevent the use of such a document where inspection has been procured by fraud or where the document has been made available for inspection as a result of an obvious mistake." 

85.      On the facts the Court concluded that there had not been an obvious mistake and accordingly it was not appropriate to grant an injunction. 

86.      The First Respondent argues that as there was no mention of "turning the clock back" in Café de Lecq, then it would be inappropriate to permit the Representors to do so in this case. 

87.      Thanki considers the English authorities referred to in Café de Lecq dealing with privileged documents disclosed and inspected on discovery.  The following comment is made at paragraph 5.143:

 "The rationale for the harsher treatment meted out to the applicant who has caused inspection of the documents as a step in the litigation (as opposed to one whose documents have fallen into the other side's hands by some other means) is justified on the basis that it places the onus on the party seeking discovery to get his house in order prior to inspection."

88.      Accordingly, there is no inconsistency between the Court's power to permit a party to turn the clock back in certain circumstances and the approach to be taken to privileged documents disclosed on discovery. 

89.      Having regard to the fact that this material in this case has not been relied upon at trial, whether in a skeleton argument prepared for trial or in an opening speech or in evidence at trial, I have, on balance, decided that it is fair for the Representors to be permitted to amend their affidavits so that they stand as amended as evidence in chief in this case.  This material has not yet been referred to in open court or in a written opening speech, nor a skeleton argument prepared for the purposes of trial.  In my view it is not too late for the clock to be turned back and accordingly notwithstanding my findings in relation to waiver and the collateral effect of such waiver, I do permit the Representors to amend their affidavits in the terms proposed.

90.      As to the consequences, I agree with the decision of Master Thompson in Crociani -v- Crociani [2015] JRC 145, although the decision was on different facts and with a different outcome as the affidavit in that case had not in the Master's opinion been deployed but had been filed with the Court and served on the other parties.  In those circumstances the Master observed at paragraph 50: 

 "Although the affidavit had not been deployed, it had been filed with the court and served on the other parties.  It was part of the Court record.  The plaintiffs, as they had done in making the present application, were entitled to refer to the third affidavit and to rely on any parts of it in any subsequent court application, whether interlocutory or at trial."

91.      By the same token, the First Respondent is quite entitled to cross-examine the witnesses for the Representors on what they have said in their affidavits as originally sworn if it is to his advantage to do so.  It would be wholly artificial to expect the First Respondent to put from his mind what he has learnt about advice given and received as disclosed by the affidavits filed by the Representors by the three deponents in question on 7^th August 2020.  Accordingly, the First Respondent is entitled to make such use of the affidavits originally filed by the Representors as he thinks fit at trial.  However, the Representors will no longer be relying, or "cherry picking" as the First Respondent would have it, on all or any of the legal advice which they have received and thus no question of waiver of privilege would arise. 

Other matters

92.      I also made directions for the purpose of bringing the Amended Particulars of Claim on for trial in the near future.  Those are encapsulated in the Act of Court.     

Authorities

Chernukhin and Anor v Deripaska and Anor [2020] JRC 121. 

Royal Court Rules. 

Cunningham -v- Cunningham [2009] JLR 227. 

Financial Technology Ventures II -v- ETFS Capital Limited [2020] JRC 152. 

Civil Procedure Rules. 

Al-Kandari -v- Brown [1988] 1 QB 665. 

Gran Gelato Limited -v- Richcliff (Group) Limited [1992] Ch 560. 

Steel -v- NRAM Limited [2018] 1 WLR 1190.

Ras Al Khaimah Investment Authority -v- Azima [2020] EWHC 1686 (Ch).

Café de Lecq -v- R A Rossborough (Insurance) Brokers Limited [2011] JLR 182.

Brennan and Others -v- Sunderland City Council [2009] ICR 479.

Digicel Limited -v- Cable & Wireless Plc [2009] EWHC 1437. 

Guinness Peat Properties Ltd -v- Fitzroy Robinson Partnership [1987] 1 WLR 1027

Al-Fayed -v- Metropolitan Police Commissioner [2002] EWCA Civ

PCP Capital Partners LLP and PCP International Finance Limited -v- Barclays Bank Plc [2020] EWHC 1393. 

Documentary Evidence by Charles Hollander (June 2018)

Thanki, the Law of Privilege (3^rd Edition - 2018)

Café de Lecq -v- R A Rossborough (Insurance Brokers) Limited [2011] JLR 182. 

General Accident Fire and Life Assurance Corp Ltd -v- Tanter [1984] 1 WR 100.

Crociani -v- Crociani [2015] JRC 145.