Jersey Unreported Judgments

Discovery

[2022]JRC122

Royal Court

(Samedi)

7 June 2022

Before     :

Advocate Matthew John Thompson, Master of the Royal Court.

 

Advocate R. S. Christie for the Plaintiff.

Advocate D. Evans for the First Defendant was excused from appearance.

Advocate S. C. Thomas for the Second and Third Defendants.

CONTENTS

		Paras
1.	Introduction	1-3
2.	Background	4-15
3.	The Café de Lecq waiver issue	16-37
4.	The Fox Williams waiver issue	38
5.	Submissions	39-48
6.	Decision	49-63

judgment

the MASTER:

Introduction

1.        This judgment contains my decision in relation to an application for specific discovery brought by the plaintiff.  For reasons set out later in this judgment in what are already complex proceedings, this application itself developed its own complexity.  This was because I found myself having to determine:-

(i)        whether a waiver of certain documents had already occurred by those documents being listed in the second defendant's list of documents and copies provided; and

(ii)       whether the plaintiff could rely on those documents for the purposes of arguing that a waiver of a report by Fox Williams LLP English Solicitors ("Fox Williams") and witness statements referred to in that report also required discovery of the instructions to and engagement of Fox Williams to conduct an investigation into the plaintiff's alleged misconduct and all correspondence to and from Fox Williams in relation to their engagement.

2.        The first aspect of the decision I have had to make about the listing of documents has been described in written submissions as the "Café de Lecq waiver issue" following on from the judgment of the Royal Court in Café de Lecq Limited v R.A. Rossborough (Insurance Brokers) Limited [2011] JLR 182.  The second issue is described in this judgment as the "Fox Williams waiver issue".

3.         I have concluded that I firstly should determine the Café de Lecq waiver issue before determining the Fox Williams waiver issue, notwithstanding that both my decisions are set out in this judgment.

Background

4.        The general background to this dispute has most recently been summarised by me in my judgment dated 11^th May 2022 (Pender v GGH (Jersey) Limited and Ors [2022] JRC 106) in respect of the second and third defendants' application for security for costs.  I refer to paragraphs 2 and 3 of that judgment which I adopt without reciting the same and which confirms the complexity of these proceedings.

5.        Although this judgment is limited to the two issues I have referred to in the introduction, these matters were only part of the matters that came before me for hearing on 16^th February 2022.  Firstly, I had to deal with the application for security for costs leading to the judgment referred to above.  Secondly, the plaintiff sought specific discovery of eight categories of documents including the Fox Williams' waiver application.  Thirdly, there was an application by the second defendant to amend its counterclaim albeit that application was largely resolved by agreement.  The specific discovery summons however was fully argued albeit matters ultimately reached a conclusion with a consent order being agreed and approved earlier this month.

6.        The application in respect of the Fox Williams waiver was supported by affidavits filed by Gavin Anderson an Irish Solicitor employed by Bedell Cristin which set out the procedural history of the dispute and an affidavit sworn by the plaintiff dated 9^th February 2022.  The following paragraphs of the plaintiff's affidavit which are pertinent and state as follows: -

"11. On 10 November 2017 there was a terse email whereby PSG had decided to instruct lawyers to terminate me [38]. There is no explanation of why this decision was suddenly taken, other than the background context, of which the paragraphs above give a flavour - I was the only person preventing PSG from making decisions at Company level in the interests of PSG rather than in the interests of the Company as they should have been. It is notable that this email was sent to PSG personnel including Maya Batheja, the PSG head of HR. I believe around this time PSG instructed Fox Williams to advise on removing me - I return to this below.

14. It is clear from a review of the evidence between around 13 November 2017 and 20 November 2017 that certain individuals, particularly at PSG and Craven Street Capital, set out to artificially manufacture a series of complaints against me. The way in which this was done was not sophisticated and the intention is transparent. An example is a memo of Charles Lens of Craven Street Capital dated 13 November 2017 but created 16 November 2017 [56-57]. When viewed alongside the remainder of the evidence, the document is markedly different in tone and presentation. It is clearly part of an artificial exercise designed to tar me and justify allegations of misconduct. By contrast, there is an email from Charles Lens to PSG sent on the evening in question [51-52]. It gives a completely different account, extremely positive about both the Shepherds Friendly deal and about myself ("To be fair - Dan has been on point tonight"). The following day, after an exchange with Mr Punter, Charles Lens sends a second email [50-51] painting a completely different picture, which then forms the basis of the later memo. The two emails are completely inconsistent, and there is no explanation in the documents as to why that is. There are other examples. It is clear from the documents that Mr Lens was specifically sent to the Shepherds Friendly meeting to gather evidence against me; I believe that this was all done on the advice of Fox Williams, who had been recently instructed (presumably by PSG).

17.      Jumping ahead for a moment to April 2018, there followed over the next four months an investigation into whether or not I had committed misconduct which I believe failed the most basic requirements of a fair process. Right at the outset, on 20 November 2017, Fox Williams, the lawyers who conducted the investigation, wrote to Mr Punter [63] asking of the termination meeting "How do you think everything went today?... We think that you and Angus should meet... to consider formally whether Daniel should be treated as a bad leaver by reason of his conduct... Once a meeting has taken place formal notice can be served... We think that rushing to serve the notice tomorrow might deprive you of the opportunity to have better grounds for treating him as a bad leaver... We are just thinking ahead and working out what can be done to fend off the possibility of a claim for the shares at a later date..." I should note that the firm producing this email was also the author of the report which PSG claims followed a fair process in order to conclude that I was guilty of misconduct. This is an important email, as I am seeking further disclosure of documents in relation to the instruction of Fox Williams. In particular, PSG have pleaded that the Company instructed Fox Williams to produce the reports, whereas it appears from this email and others that it was PSG who was instructing Fox Williams. I am asking the Court to order discovery of the instructions to Fox Williams to produce the reports."

7.        The plaintiff also filed a lengthy skeleton argument in support of his applications.  The section dealing with Fox Williams was in part 6 starting at paragraph 79 to 94.  The relevant paragraphs in relation to evidence filed and the Café De Lecq waiver issue are as follows: -

"(6) The instructions to and engagement letter from Fox Williams in relation to the reports into the Plaintiff's alleged misconduct, and all correspondence to and from Fox Williams in relation to the engagement.

79. These documents were first mentioned in the meeting of 9 December 2021 and formally requested in the letter of 14 January 2022 [G/3/G351-G352/GA-1/pages 212-213]. The comment of the Defendants so far [G/3/355/GA-1/page 216], is that the documents are privileged, the Plaintiff has not articulated the basis on which he is entitled to see them, and they are not relevant because the Plaintiff has the witness statements gathered by Fox Williams, and the two resulting reports.

80 The reports of Fox Williams are key, since it is these reports on the basis of which PSG purported to confiscate the Plaintiff's ordinary shares (gross misconduct was required on the Articles). The Plaintiff pleads that this had to be done by independent directors (in terms of the Articles), and that the non-independent directors who did it were acting in bad faith and not independently (in this context, independently of PSG) [G/6/G621 - G623/DP-2/paras 39-42]. Accordingly, the fairness of the Fox Williams process on which the decision was made, is of the highest relevance.

81. The Defendants plead that the Company engaged Fox Williams LLP to investigate the Plaintiff's past conduct and produce a report to assist the Company to reach a determination on gross misconduct [D/3/D38 para 42]; the directors did not act without good faith [D/3/D38/ para 44]; the ordinary directors could decide the point, and the Plaintiff is put to proof that they failed to exercise their judgment independently [D/3/039 para 47].

82. The background to this issue is set out in the Plaintiff's affidavit at paragraphs 11, 17 and 40 [G/4/G443/G445/G452]. On 10 November 2017 there was an email [G/5/G496/DP- 1/page 38] showing PSG had decided to terminate the Plaintiff and needed to instruct lawyers; this was sent to PSG personnel including Maya Batheja, the PSG head of HR. On 20 November 2017, the day the Plaintiff's CEO role was terminated in a meeting with Jonathan Punter, Mr Punter received an email from Fox Williams (who had clearly by this point been instructed, it appears by PSG) [G/S/G521/DP-1/page 63] asking of the termination meeting "How do you think everything went today? ... We think that you and Angus should meet ... to consider formally whether Daniel should be treated as a bad leaver by reason of his conduct ... Once a meeting has taken place formal notice can be served ... We think that rushing to serve the notice tomorrow might deprive you of the opportunity to have better grounds for treating him as a bad leaver ... We are just thinking ahead and working out what can be done to fend off the possibility of a claim for the shares at a later date ... " Fox Williams then later produced the reports in question.

83. The following points arise:

a. As stated above, the Defendants have pleaded that the Company engaged Fox Williams to investigate the Plaintiff's past conduct and produce a report to assist the Company to reach a determination on gross misconduct [D/3/D38/para 42]. On the face of it, it appears here that it was in fact PSG which engaged Fox Williams.

b. By pleading that it was the Company which engaged Fox Williams, the Defendants have put the instructing party in issue and have therefore waived any privilege over the instructions.

c. Further, the independence from PSG of the decision is one of the key issues. The question of whether it was, in fact, PSG who instructed Fox Williams to investigate and provide the report is therefore highly relevant. It is very obviously capable of helping or harming the Defendant's (pleaded) case, let alone leading upon a trail of enquiry which might do so.

94. I note that there are between 10 and 20 emails to and from Fox Williams in the disclosure, to which the Plaintiff was not a party; none of them shed light on whether it was the Company, or PSG, which instructed Fox Williams to produce the report; or on the production of the report."

8.        In the second defendant's skeleton argument at paragraph 42 the second defendant partially conceded that it had retained Fox Williams as follows: -

"... at the start of the relevant period, Fox Williams was engaged by PSG.  Fox Williams provided advice on a range of issues which are confidential to PSG but included issues around Mr Pender's conduct, and litigation risk".

9.        In relation to preparation of its report, on 2^nd March 2018 Fox Williams wrote to the plaintiff's Scottish Solicitors, Brodies LLP and stated: -

"...as stated in our letter of 31 January 2018, we are instructed by Punter Southall Group Limited, Gryphon Group Holdings Limited, GGH (Jersey) Limited and Craven Street Capital Limited (the "Companies") in respect of your client's data subject access request."

10.      Advocate Christie for the plaintiff argued, by reference to the documents that had been disclosed in the second defendant's list of documents, that Fox Williams had been instructed by the second defendant by 20^th November 2017.  His specific discovery application in respect of instructions given to Fox Williams therefore extended to instructions given by the second defendant.

11.      Advocate Thomas argued that the disclosure of the documents that Advocate Christie was relying upon was clearly an error by reference to Café de Lecq and the plaintiff and Advocate Christie were therefore not entitled to make use of the same.  This submission emerged after I had already received extensive submissions from both parties on the Fox Williams waiver issue.

12.      Given this objection I directed that both parties should file written submissions on the Café de Lecq waiver issue and whether Advocate Christie was entitled to rely on documents already listed and where he had been provided with copies.  I ordered a simultaneous exchange of written submissions given the importance of the Café de Lecq waiver issue argument, giving both parties permission to file supplemental submissions in response once they had seen the principal submissions filed by the other party.

13.      Having considered the submissions, I have resolved to determine the Café de Lecq waiver issue on the basis of the written submissions received without the need for any further oral hearing.  I further determined that once I had reached my view in respect of the Café de Lecq waiver issue I would then determine the Fox Williams waiver issue albeit the reasons for both decisions are set out in this judgment.

14.      In relation to the Café de Lecq waiver issue, I dealt with this issue as Advocate Christie had undertaken not to rely on any documents already disclosed if I ruled that he was not entitled to do so.  In light of this undertaking there was no need to refer the Café de Lecq waiver issue to the Royal Court as no injunction was required to restrain use of documents.  Secondly because I had heard detailed submissions both written and oral on the Fox Williams waiver issue it would have been an inefficient use of court time to refer the Café de Lecq waiver issue to the Royal Court, await the outcome of that issue, and then determine the Fox Williams waiver issue.

15.      I wish to make it clear at this stage that while I have referred to the Fox Williams waiver issue, this was for convenience only to distinguish the same from the Café De Lecq waiver issue and what further submissions I required.  The use of this epithet does not mean that I had reached any conclusion as to whether or not a waiver of any kind had occurred prior to receipt of written submissions on the Cafe de Lecq waiver issue and the usual judicial process of evaluating written and oral submissions in reaching a decision.  Rather the phrase used was simply a convenient way of describing concisely the plaintiff's application given the number of other issues I had to deal with.

The Café de Lecq waiver issue

16.      In relation to the applicable principles set out in the Café de Lecq judgment, these were summarised in the head note of the reported judgment at paragraph 4 as follows: -

"In general, once a document was included in the list for discovery and inspected by the other side, privilege was lost because parties were entitled to rely on the discovery process and to assume that any privilege that might otherwise have been claimed for a document had been waived. The court should, however, normally intervene by injunction requiring the return of a document and restraining its use if (a) inspection of the document were procured by fraud; or (b) the party or lawyer to whom discovery was made realized that the document had been disclosed as the result of an obvious mistake, or a reasonable lawyer would have so realized. The onus was on the party who had mistakenly disclosed the document to satisfy the court that a lawyer receiving it should have realized that a mistake had been made. If a lawyer who received documents gave detailed consideration to the question whether they had been made available for inspection by mistake and honestly concluded that they had not, that would be relevant, and in many cases important, but the decision whether an obvious mistake had been made was for the court."

17.      This summary was expanded upon at paragraphs 46 to 49 of Café de Lecq as follows: -

"46 The general rule is that once a document included in the list for discovery is inspected by the other side privilege is lost. A party is entitled to rely on the discovery process and is entitled therefore to assume that any privilege which might otherwise have been claimed for a document has been waived. The position was authoritively described by Slade, L.J. in Guinness Peat (7) ([1987] 1 W.L.R. at 1043-1044):

"Mr. Burnton, in the present case, did not seek to suggest that F.R.P. had waived or otherwise lost their privilege simply by including the McLeish letter in Part 1 of Schedule 1 to the first supplementary list of documents. He accepted that they would have been entitled to serve an amended list claiming privilege for it at any time before inspection took place. However, in his submission, privilege is essentially privilege from compulsory disclosure. By analogy with the Great Atlantic Insurance Co, case, he submitted, once a privileged document has not only been disclosed but also inspected in the course of discovery, it is too late to put the clock back; the privilege is lost. The essential distinction between the present case and the Goddard and Herbert Smith cases, Mr. Burnton contended, is that neither of those two cases dealt with a loss of privilege occurring as a result of a step taken in the litigation by the party entitled to the privilege. In all cases where inspection has been given in the course of discovery, he submitted, the court should follow the Briamore decision [1986] 1 W.L.R. 1429. This provides a simple practical rule. It places the onus on the party giving discovery, who should ensure that only documents in respect of which no claim of privilege is made should be disclosed. It avoids the practical problems involved in attempting to restore the previous status quo by prohibiting a party and his experts from using information obtained in the normal course of discovery.

With one important reservation, I would entirely accept the submissions summarised in the immediately preceding paragraph. Care must be taken by parties to litigation in the preparation of their lists of documents and no less great care must be taken in offering inspection of the documents disclosed. Ordinarily, in my judgment, a party to litigation who sees a particular document referred to in the other side's list, without privilege being claimed, and is subsequently permitted inspection of that document, is fully entitled to assume that any privilege which might otherwise have been claimed for it has been waived. Let there be no doubt about that."

47 The court went on in Guinness Peat (ibid ., at 1045) to describe the reservation referred to in the extract just quoted, namely that if the party to whom discovery has been made or a solicitor either (a) has procured inspection of the relevant document by fraud; or (b) on inspection, realizes that he has been permitted to see the document only by reason of an obvious mistake, the court should normally intervene by injunction ordering the return of the document and restraining its use.

48 The test established in Guinness Peat (7) was elaborated in Pizzey v. Ford Motor Co. Ltd. (10), where again a privileged document had been inadvertently disclosed as part of the discovery process. The Court of Appeal held that an injunction ordering its return should be granted not only where the receiving solicitor realized that an obvious mistake had been made but also where a reasonable solicitor would have realized that this was the case. The relevant passage from the judgment of Mann, L.J. reads as follows ([1994] PIQR at P21):

"Slade, L.J.'s use of the phrase 'obvious mistake' does not seem to me founded on any authority, but the use was repeated by Dillon, L.J. in Derby & Co. Ltd. in the passage which I have quoted. I respectfully agree with the usage. It is of the utmost importance in the context of litigation that a party should be able to rely on the discovery of his adversary. Exceptions to that ability must not extend beyond fraud and mistake. Cases of mistake are stringently confined to those which are obvious, that is to say those which are evident. This excites the question: Evident to whom? The answer must be to the recipient of the discovery. If the mistake was evident to that person, then the exception applies, but what of the case where it was not evident but would have been evident to a reasonable person with the qualities of the recipient? In this context the law ought not to give an advantage to obtusity, and if the recipient ought to have realised that a mistake was evident then the exception applies."

The Court of Appeal went on to say that the onus is on the party who has mistakenly disclosed the document to satisfy the court that a solicitor receiving the document ought to have realized that there had been a mistake.

49 The most recent summary of the applicable principles is to be found in the case of Al Fayed v. Metropolitan Police Commr. (1), which concerned an application in which counsel's opinion was inadvertently disclosed on discovery. The case postdated the introduction of the new Civil Procedure Rules but the court made clear that the principles remained those derived from the pre- Civil Procedure Rules case law. Clarke, L.J. summarized the relevant principles in his judgment as follows ([2002] EWCA Civ 780, at para. 16): "In our judgment the following principles can be derived from those cases:

(i)        A party giving inspection of documents must decide before doing so what privileged documents he wishes to allow the other party to see and what he does not.

(ii)      Although the privilege is that of the client and not the solicitor, a party clothes his solicitor with ostensible authority (if not implied or express authority) to waive privilege in respect of relevant documents.

(iii)     A solicitor considering documents made available by the other party to litigation owes no duty of care to that party and is in general entitled to assume that any privilege which might otherwise have been claimed for such documents has been waived.

(iv)     In these circumstances, where a party has given inspection of documents, including privileged documents which he has allowed the other party to inspect by mistake, it will in general be too late for him to claim privilege in order to attempt to correct the mistake by obtaining injunctive relief.

(v)       However, the court has jurisdiction to intervene to prevent the use of documents made available for inspection by mistake where justice requires, as for example in the case of inspection procured by fraud.

(vi)     In the absence of fraud, all will depend upon the circumstances, but the court may grant an injunction if the documents have been made available for inspection as a result of an obvious mistake.

(vii)    A mistake is likely to be held to be obvious and an injunction granted where the documents are received by a solicitor and:

(a)       the solicitor appreciates that a mistake has been made before making some use of the documents; or

(b)      it would be obvious to a reasonable solicitor in his position that a mistake has been made;

and, in either case, there are no circumstances which would make it unjust or inequitable to grant relief.

(viii)   Where a solicitor gives detailed consideration to the question whether the documents have been made available for inspection by mistake and honestly concludes that they have not, that fact will be a relevant (and in many cases an important) pointer to the conclusion that it would not be obvious to the reasonable solicitor that a mistake has been made, but is not conclusive; the decision remains a matter for the court.

(ix)     In both the cases identified in (vii) (a) and (b)           above there are many circumstances in which it may nevertheless be held to be inequitable or unjust to grant relief, but all will depend upon the particular circumstances.

(x)       Since the court is exercising an equitable jurisdiction, there are no rigid rules."

The Court of Appeal went on in that case to hold that, while the solicitor might have concluded that a mistake had been made, it was by no means obvious. In those circumstances, an injunction was refused.

18.      Although both parties referred to various English authorities, and responded to the other party's submissions on those authorities, I do not consider that these other authorities advance the position beyond Café de Lecq and the discretion that case vests in me.  The above principles are accordingly the ones I have applied.  I therefore consider I have to ask myself whether, on the balance of probabilities, Advocate Christie appreciated that a mistake had been made before making use of the email of 20^th November 2017.  If he did not l have to consider, again on the balance of probabilities, whether it would be obvious to a reasonable solicitor that a mistake had been made by the email 20^th November 2017 being listed and inspection permitted.  Whatever the conclusion to these two questions, I also have to be satisfied that there are no circumstances which make it unjust or equable to grant relief i.e. to prevent use of the document.

19.      In his written submissions Advocate Christie stated as follow at paragraphs 4.1 to 4.8: -

"4.1 Inevitably this submission involves, to an extent, stating a number of facts in submission. I have considered whether I should be stating what happened in an affidavit, but it did not appear at the hearing on 16 February 2021 that this was expected. Accordingly, I propose to state what happened in this format, mindful of my duty to the Court.

4.2 I do not recall precisely when I first saw the document, but I do not recall seeing it in the original discovery review (in late 2020 to early 2021) and have good reason to think I did not see it then. Inevitably in a review of over 20,000 documents targeted approaches have to be adopted.

4.3 I saw the document in the time leading up to the mediation - in September or possibly October 2021. First, by way of background, this was not an isolated document. I was aware of other similar documents in the discovery between PSG and Fox Williams. I would also note that it is clear from the discovery generally - in particular, the very high level of redaction of anything which makes reference to legal advice, often inappropriately - that the Defendants had gone to very great lengths to exclude privileged material.

4.4 Given the focus which has now been placed on this issue, it is right that the Court is aware of these other documents and can consider them in the round (and make appropriate orders if so, minded in relation to all of them). I understand from the Defendants' summons that they intend to do the same. These documents had not been precisely identified and grouped by the Plaintiff's legal team until after the hearings on 16 and 18 March 2022 when it was first alleged that the 20 November 2017 email was privileged and should not have been disclosed. From a brief review, it appears that the documents listed by the Defendants are largely the same documents, with the addition of a) duplicates and b) attachments (in passing, it is not clear why some of the attachments would themselves be privileged).

4.5 The documents are exhibited to the Second Affidavit of Gavin Anderson [G682-G684]. It is suggested that they be reviewed in full, but I have the following specific comments.

(a) An email at [G686] appears to show the genesis of the instruction on 11 November 2017, following on from [G496], which I have taken the Court to previously.

(b) At [G687] is the email concerning the counterclaim and the preference shares, which was discussed at length during the hearings on 16 February 2022 and 18 February 2022; this document was already at [J15]. It did not occur to me before or during the hearings, and did not appear to occur to anybody else, that the email to Jane Mann was to a Fox Williams lawyer. This was picked up by the Plaintiff's team when we searched the Defendants excel disclosure list for Fox Williams email addresses.

(c) The email at [G696] from Fox Williams to PSG personnel concerns the need to ratify the termination of the Plaintiff's employment.

(d) The email at [G697] from Fox Williams to PSG personnel attaches a draft script for that board meeting which is at [G698-G699], and also a draft script for a Without Prejudice meeting with the Plaintiff. That document is also one which the other side seek the return of in their summons. We have not included that second draft because it may itself be Without Prejudice (although we are unclear on that, since the meeting did not in fact take place).

(e) In relation to [G700-G701], this was an email dated 11 June 2018 from PSG to Fox Williams. Fox Williams had requested two emails between Simon Davis and Jonathan Punter in October 2017; this email supplied them. It may be significant that the second Fox Williams report was finalised on 21 June 2018, ten days later. The obvious inference is that Fox Williams were gathering documents for the purposes of their second report. It is notable that (although the Defendants say that by this time there was a second instruction, by the Company rather than by PSG) Fox Williams' point of contact for gathering documents was Karen Simmonds, who is the PA at PSG of Jonathan Punter, Angus Samuels and Kenneth McKelvey.

(f) Finally, at [G704-G709] are the board minutes of the Company at which the Company first considered the Plaintiff's response to the first Fox Williams report [G704], and then decided based on the two Fox Williams reports to find that the Plaintiff had committed gross misconduct and was a leaver for serious breach [G705-G709]. These are not Fox Williams documents of a kind comparable to the 20 November 2017 email; but on reflection they should have been before the Court on 16 February 2022 and are therefore included for completeness. I return to them very briefly below.

4.6 Accordingly, at the time I first saw the email of 20 November 2017, I was aware of the existence of these Fox Williams documents generally but did not have a clear idea of how many there were. I had looked at some of them but had not looked at all of them. In any event, the email of 20 November 2017 was not an anomaly.

4.7 At the time I actually took the view that it was possible the Fox Williams documents might not have ever been privileged at all, on the basis that they were a form of independent investigator appointed to produce a report which would be relied upon openly. On further reflection I think that is wrong, but at the time I thought it was a possibility. I would not propose to place much weight on that, except to demonstrate that while it is easy to place a spotlight on one document and put the decision-making of a lawyer under the microscope, it is worth remembering that there are over 20,000 documents in this matter, and in order to be efficient and cost effective decisions like this have to be made extremely quickly in relation to a very large number of documents.

4.8 The key point, however, was that I formed the firm view that if the Fox Williams documents had at one point been privileged, the Defendants had waived any privilege by disclosing and relying upon the Fox Williams report. Accordingly, my reaction to the 20 November 2017 email, and those other Fox Williams documents I looked at the time, was not that they had been disclosed in error; but rather that one way or another my client was entitled to see all of the Fox Williams documents, and that if the matter did not settle we would be making an application for specific discovery of the other documents, as it appeared that while a number of such documents had been disclosed, there must be a good deal more that had not been."

20.      In relation to his submissions, looking at the email of 20^th November 2017 in isolation, it is clearly privileged on its face because it is giving advice to the PSG Group about whether the plaintiff should be treated as "bad leaver" and the process that might be followed.

21.      However, it is necessary to put the email in context.  This involves looking at the second and third affidavit of discovery sworn on 21^st October 2020 by Advocate Sheedy on behalf of the plaintiff.  This affidavit runs to 105 pages and contains a detailed explanation of the discovery process.  His affidavit of discovery at paragraph 47 explained how documents held by the third parties had been searched for including those of Fox Williams.  At paragraph 52 the affidavit explained that all documents pertaining to Fox Williams' engagement were subject to human eye review rather than any technology assisted review.  Furthermore, in paragraph 66 in respect of the technology assisted review exercise Fox Williams' documents were used as one example of relevant and irrelevant evidence.

22.      At paragraph 89 the affidavit explained that as well as a search for review of privileged documents held on behalf of the second defendant, Baker & Partners had reviewed documents belonging to the first defendant.  The affidavit of discovery that Advocate Christie had received therefore made it clear that documents held by the second defendant including documents received from Fox Williams were expressly reviewed for privilege and this was done by a human eye review.  Paragraph 89e. of the affidavit of discovery also made it clear that a partial waiver of a document prepared by Fox Williams, namely the report, had occurred.

23.      In his eighth affidavit dated 11^th March 2022, sworn following my request for written submissions, Advocate Sheedy further expanded on the process of discovery.  The number of reviewers involved were set out at paragraph 8.  At paragraph 10 he deposed in relation to the way the 6,500 documents protected in whole or in part by legal professional privilege had been identified.

24.      Paragraph 14 of his affidavit states as follows: -

"14. In relation to privileged documents, the agreed protocol as part of the discovery review was that any documents identified as potentially privileged by any of the team working on discovery as part of the first-tier review (1LR) were supposed to be identified and flagged for second-tier review (2LR). The majority of the 1LR reviewers were provided by PSG's document service provider, LDM, and were, I was assured by LDM, trained in how to identify prima facie privileged material. 2LR would be conducted by qualified lawyers, which was not generally the case for 1LR (as is common in large discovery exercises)."

25.      The affidavit then continued at paragraph 16 as follows: -

"16. The Privileged Emails were disclosed by mistakenly being included in Schedule 1 of the Discovery Affidavit, rather than being withheld as privileged. They were accordingly provided to the Plaintiff when inspection was given on 27 November 2020. That disclosure and provision for inspection was inadvertent and no waiver of privilege was intended by the Second Defendant."

26.      Paragraph 17 then explains how the 15 emails which were privileged, with 9 attachments, were disclosed.  The reason for this was explained at paragraph 18 to 21 as follows : -

"18. Our investigations show that the majority of the majority of the Privileged Emails were not coded as privileged (or potentially privileged) at 1LR. This meant the documents were not identified and flagged for review as part of 2LR. This resulted in their inadvertent disclosure and production.

19. Of the five emails that did progress to 2LR and were not marked as privileged, two are near duplicates of one another. The decision taken on them is consistent. The feature of the emails that qualifies them for privilege is that a lawyer from Fox Williams is cc'd into the correspondence in the context of Fox Williams' engagement to advise on Daniel Pender's departure from GGHL although on their face neither email seeks or gives legal advice.

20. The two documents which I undertook a second-tier review of for privilege do not explicitly contain privileged material (they do not seek or provide legal advice) but are, when appreciated in their full and proper context, part of a continuum of correspondence that does attract privilege. I accept that had I considered the documents in their full context (rather than in isolation) they would have been obviously privileged to me. The final document is an attachment to an email which would not have appeared privileged on the face of it and so was missed at 2LR.

21. Owing to the scale of the discovery task it was not possible to have a single person review all the email traffic to and from Fox Williams across the entire 'document universe', and so attachments to emails were sometimes not reviewed in context."

27.      I have referred to these affidavits because they are supportive of Advocate Christie's position that the email of 20^th November 2017 was not the only email disclosed from Fox Williams and that a detailed discovery exercise had been carried out.  Most affidavits of discovery are much briefer than the affidavit provided in this case and do not contain anything like the detailed explanation that was set out.  The level of detail provided including the express reference to reviewing Fox Williams' documents including for privilege puts the disclosure of the email of 20^th November 2017 in a different context to looking at the document in isolation.  Coupled with the partial waiver of the Fox Williams' report this means that I accept that Advocate Christie's statements that he did not appreciate that a mistake had been made.  Rather his focus was that his client was entitled to more than had been produced, not that what had been disclosed was an error.

28.      The fact that the mistake was made by first level reviewers does not assist the second defendant as this mistake would not have been apparent to Advocate Christie when he was considering the email of 20th November 2017 as part of the inspection process.  He was not privy to the further detail contained in Advocate Sheedy's eighth affidavit.  He only had the benefit of the affidavit of discovery which he was entitled to rely on as I have found.

29.      However, that is not the end of the matter.  I also have to consider whether it would have been "obvious" to a reasonable solicitor in Advocate Christie's position that a mistake had been made.  It is not enough simply that a different solicitor (or Jersey Advocate) might have held a different view.  The onus is also on the second defendant to persuade that the mistake was obvious, again on the balance of probabilities.

30.      This part of the test also has to be applied at the time inspection of the document took place.  The context of the document being disclosed as set out above applies equally to what a reasonable solicitor would have concluded.  Again therefore the complexity of the discovery process as described in the discovery affidavit, that privilege appeared to have been reviewed carefully by an extensive team, that a number of Fox Williams' documents had been listed and that a partial waiver had taken place are all relevant to what a reasonable solicitor would have concluded.  In my judgment, while the matter is finely balanced, ultimately the second defendant has not persuaded me that it would have been "obvious" to a reasonable solicitor in Advocate Christie's position looking at the email of 20^th November 2017 in the context I have set out that a mistake had been made.  Obvious is a high threshold. In this case I consider that different lawyers would have reached different views.  Some would have adopted Advocate Christie's approach.  Others would have been more cautious.  Both approaches are justifiable and understandable which is why the threshold is not met.

31.      My conclusion in respect of both what Advocate Christie thought at the time of discovery and inspection and what a reasonable solicitor would have concluded can also be tested by the subsequent reaction of the defendants when Advocate Christie did make use of the email.  When the document was disclosed in the unsuccessful mediation, the defendants did not object to its use.  In the extract from the mediation statement provided by agreement to me, the email of 20^th November 2017 was relied upon in describing the production of a report from Fox Williams as an "extraordinary charade" and was said to have plainly failed the most basic requirements of a fair process.  This was quite clearly the plaintiff making use of the email of 20^th November 2017.  While this statement was for a mediation, in my judgment it should have been obvious, given how the email was used, that it would be relied upon in the court proceedings if a settlement was not achieved.  Yet there was no protest that the plaintiff was relying on the email.  This lack of any protest from the second defendant's extensive legal team is support for the view that it was not obvious that a waiver of privilege had occurred.

32.      Furthermore, when the plaintiff referred to the email of 20^th November 2017 in his affidavit as referred to above no objection was taken.  Nor was any objection taken when the plaintiff filed its skeleton argument again referring to the email.

33.      Advocate Sheedy in his eighth affidavit fairly accepted that his team should have realised the significance of the plaintiff's reliance on the email at mediation, a concession which he was right to make.  Likewise, he also fairly accepted on behalf of the second defendant's legal team that they should have appreciated that the reference to the email in the plaintiff's affidavit and skeleton argument was relying on a privileged document.  In relation to the reason offered that that the legal team did not do so due to the complexity of the matter, although I agree that the application before me was complex in that a number of different issues had been raised both in respect of specific discovery and security for costs, the defendant's submission is still difficult to accept.  As noted above, the email on its face gave legal advice and so prima facie is privileged.  The second and third defendants also have at their disposal an extensive, experienced and sophisticated legal team.  Yet there was no objection until substantive submissions on the Fox Williams waiver issue had been made by the plaintiff.

34.      The failure to raise the question of privilege until after submissions had been made during the hearing, following reliance on the email at the mediation and in the plaintiff's affidavit and skeleton argument filed for the present application, in my judgment therefore does not support the second defendant's position that it would have been obvious either to Advocate Christie or to a reasonable solicitor in the position of Advocate Christie that a mistake had been made.  Rather the failure confirms the conclusions reached above that it would not have been obvious either to Advocate Christie or to a reasonable solicitor in the position of Advocate Christie that a mistake had been made.

35.      If I am wrong on these conclusions and it was obvious to Advocate Christie or should have been obvious to a reasonable solicitor in the position of Advocate Christie that a mistake had been made, I still have to be satisfied that there are no circumstances which would make it unjust or inequitable to grant relief.  In my judgment, there are circumstances which would make it unjust and inequitable to grant relief.  What the court is being asked to consider in relation to the Fox Williams waiver issue is whether or not there has been 'cherry picking' and whether, to understand what has been disclosed, the plaintiff should receive more documentation about what Fox Williams were being told or were advising.  The ultimate context for this issue is whether or not the report Fox Williams ultimately produced where privilege has been waived was an independent report.

36.      In my judgment in this case it would be inequitable to approach this question on the basis that Fox Williams were only instructed by the first defendant in February 2018 when in fact they were advising the second defendant at the time of the plaintiff's dismissal from November 2017 on the same issue.  The concession at paragraph 42 of the second defendant's skeleton is also significant.  The second defendant concedes that "at the start of the relevant period" Fox Williams were engaged by PSG.  While that concession refers to Fox Williams providing advice on a range of issues, what the email of 20^th November 2017 reveals is that Fox Williams were advising the second defendant on whether to treat the plaintiff as a bad leaver when he was dismissed, which is at the heart of the present dispute, and not at some later date.  The email of 20^th November gives clarity to the second defendant's concession that Fox Williams were instructed from some earlier undefined period.  It would also be wrong for the court to be in a position, when having to consider whether the partial waiver of the Fox Williams' report requires any further waiver, to have to ignore when in fact Fox Williams were first instructed and by whom in particular when there were individuals  (including Mr Punter and Mr Samuels who were both directors of the first and second defendants) who appear to have been providing instructions to Fox Williams. The date of the latter's instruction by the second defendant was also known to me before any objection was taken to reliance on the email.  These matters are sufficient for me to conclude in this case as a matter of discretion that I should not prevent reliance on the email of 20^th November.

37.      I wish to make it clear that this conclusion does not mean that any further discovery should be ordered.  Such a question is part of the Fox Williams waiver issue not the Café de Lecq waiver issue.  My conclusion on the Café de Lecq waiver issue simply means that the Fox Williams waiver issue will be determined on the basis that Fox Williams were first retained to advise (by the second defendant) on whether the plaintiff should be treated as a good or bad leaver in November 2017. What the consequences of that might be is one of the questions for the Fox Williams waiver issue to which I now turn.

The Fox Williams waiver issue

38.      As summarised above the application by the plaintiff was for discovery of instructions to and the engagement of Fox Williams in relation to the plaintiff's alleged misconduct and all correspondence to and from Fox Williams in relation to their engagement.  This application was made because the plaintiff had disclosed a report from Fox Williams as to whether the plaintiff should be treated as a good or bad leaver which the board of the first defendant had then relied upon in deciding to determine that the plaintiff was a bad leaver.  The plaintiff had further disclosed witness statements obtained by Fox Williams which were referred to in the report.

Submissions

39.      The plaintiff's case was that any determination by the first defendant on whether or not the plaintiff was a bad leaver and therefore his ordinary shares should be confiscated had to be carried out by independent directors in accordance with the articles.  However, the determination was said to be made by directors who were acting in bad faith and who were not independent of the second defendant.  Accordingly, the fairness of the Fox Williams process, which was the basis of the decision made by the directors of the first defendant, was of the highest relevance.  As the second and third defendants' case was that the directors did not act without good faith, that the ordinary directors could decide the point and the plaintiff was put to proof that the ordinary directors of the first defendant failed to exercise their judgment independently, what had been discussed with Fox Williams was highly material.  This was why the plaintiff contended it was highly material that the second defendant had engaged Fox Williams in November 2017.

40.      The plaintiff also wished to challenge the assertion that it was the first defendant who had engaged Fox Williams.  As noted above in part it is now admitted that the second defendant had also instructed Fox Williams, but privilege was not waived in respect of those instructions.

41.      What instructions therefore had been given to Fox Williams was said to be one of the key issues and was capable of helping or harming the defendants' pleaded case.

42.      The plaintiff further argued that once the defendants had waived any privilege in the report and the witness statements, the relevant instructions also had to be disclosed because the plaintiff was entitled to look behind the veil and scrutinise the process by which it was concluded that the plaintiff was guilty of gross misconduct and a bad leaver.

43.      The plaintiff's concern was that there was 'cherry picking' (see Deripaska v Chernukhin & Anor [2021] JCA 206).

44.      Given that the defendants had decided to waive privilege in respect of the Fox Williams report, the question which then had to be decided was what issue the waiver was concerned with and what materials should be produced as a consequence.  The analysis of the transaction in issue was driven by the concept of fairness.

45.      The defendants' position was that any instructions were governed by legal professional privilege which had not been waived and no clear claim to establish a waiver had been made.

46.      The claim to privilege was asserted in the first and second defendants' affidavits of discovery as well as prior to discovery taking place.

47.       The defendants' position was that Fox Williams were retained by the first defendant in February 2018 and that the first defendant was entitled to protect that advice on the grounds of privilege and on conventional grounds.

48.      The defendants further argued that the limited waiver did not open the flood gates to a wholesale waiver of privilege and had no foundation in principle.

Decision

49.      In relation to the principles applicable on a waiver of privilege these were summarised by the Court of Appeal in Deripaska v Chernukhin at paragraphs 49 to 59 which state as follows: -

"49. As a matter of public policy, the preservation of legal professional privilege is an important principle. There is a public interest in ensuring that communications between legal advisors and their clients may be frank and free and not emerge into the public domain if litigation is subsequently pursued. This interest has been identified in many cases (notably in the decision of Elias J (as he then was) in the Employment Appeal Tribunal in the Brennan case cited above). Consequently, legal professional privilege is not to be taken as easily having been lost.

50. Nevertheless, there are circumstances in which privilege may be taken to have been waived; and if it is waived (in whole or in part) there is a public interest, which the Court will supervise, in ensuring that the extent of material disclosed presents a materially fair picture. Equality of arms - the essence of a fair trial - means that there must be no 'cherry-picking' of the material disclosed. Thus, circumstances frequently arise where a Court must determine whether (and how) there has been waiver of privilege and the extent of collateral disclosure obligations which may then arise to ensure that the evidential picture presented is not an unfairly partial one. As it is put in Matthews & Malek, "Disclosure" (5th ed, 2017) at paragraph 16.23 (recently cited in IMO Renewables Ltd y Reeves [2020] EWHC 789 (Ch), Judge Jarman QC, at 20): "Where a person is deploying in court material which would otherwise be privileged, the opposite party and the court must have the opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood."

51. However, what fairness requires depends upon the circumstances in which privilege is lost. It may, for example, be lost by mistaken disclosure of a particular document, or mistaken understanding of the extent of disclosure obligations; or it may be by deliberate reliance on the fact and content of legal advice taken.

52. In Serdar Mohammed v Ministry of Defence [2013] EWHC 4478 (QB) at [14], Leggatt J (as he then was) sets out at least five legally distinct ways in which a right to assert privilege may be lost:

"1) What might be called a 'true' waiver occurs if one party either expressly consents to the use of privileged material by another party or chooses to disclose the information to the other party in circumstances which imply consent to its use. Such a waiver may be either general or limited in scope.

ii) Where a party waives privilege in the above sense by deliberately deploying material in court proceedings, the party also loses the right to assert privilege in relation to other material relating to the same subject matter: see e.g. Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529. The underlying principle is one of fairness to prevent 'cherry-picking': see e.g. Brennan v Sunderland City Council [2009] ICR 479, 483-4 at [16].

iii) Similarly, a party who by suing its legal advisor puts their confidential relationship in issue cannot claim privilege in relation to information relevant to the determination of that issue. Again, the governing principle is one of fairness: see e.g. Paragon Finance v Freshfields [1999] 1 WLR 1183.

iv) Because privilege only protects information, which is confidential, if the information concerned ceases to be confidential, privilege cannot be claimed. Where a party does an act which has the effect of making information public, this has sometimes been described as a waiver of privilege (Goldstone y Williams (1899) 1 Ch 47), but it is more accurate to say that privilege cannot be claimed because confidentiality has been lost.

v) Where a party comes into possession of privileged material by any means, and even if without the knowledge or consent of the other party, the receiving party is free to use such material subject to the equitable jurisdiction of the court to restrain a breach of confidence."

53. Given that the touchstone principle is to ensure a fair trial, we consider the distinction drawn by Leggatt J in Serdar Mohammed between 'true waiver' and 'loss of confidentiality' to be an important one. If, during the course of litigation, a party has disclosed a document to the other side which it could have kept confidential (in circumstances where this is not an obvious mistake triggering obligations on the other side's professional advisors to return it) then, in practical terms, the confidentiality in the document has been lost. The other side cannot 'unknow' what they know, and it would be artificial to say that they cannot now rely upon the content of the document so disclosed for their own purposes.

54. But the position is different, and more complicated, in relation to 'true waiver', i.e. where one party has sought to deploy in Court material which they could have chosen to keep privileged.

55. In that context, the principles (as summarised by the English High Court in IMO Renewables at 21) are as follows: "i) A mere reference to a privileged document does not of itself amount to a waiver of privilege, even If the document referred to is being relied on for some purpose. ii) Reliance in itself is not the test but whether the contents of the document are being relied on, rather than its effect. iii) Where the maker of a statement does not quote the contents of a privileged document, or summarise them, but simply refers to the document's effect, there is no waiver of privilege. iv) If statement makers go too far, they can be put to their election as to whether to leave in the reference and produce the document or take it out and retain privilege. v) If the document is referred to in order to persuade the court at an interlocutory stage to take a particular view of the merits of the case (e.g. an application for a freezing order or for summary judgment), this operates as a collateral waiver. vi) If use of the document can be shown to be made for a limited purpose only at the interlocutory stage, there may be no waiver."

56. Where there has been such 'true waiver' the issue then arises as to what flows from that, in order to ensure equality of arms between the parties.

57. The disclosing party did not have to deploy the privileged material; but if it does so, it must do so in a fair - that is materially complete - way. In those circumstances, reliance upon one document or statement may trigger a duty to disclose such underlying documents as are required to ensure that the full picture has been put before the Court in relation to the issue in relation to which there has been partial disclosure, But where such partial waiver has occurred, but the material not yet actively 'deployed', the Court may decide that the party which intended to rely on privileged material can instead withdraw that reliance. In other words, it can be put to its election as to whether to withdraw its reliance on privileged material, or to disclose the whole of it.

58. As to the issue of election, the classic statement of the law is in the decision of a distinguished Court of Appeal (Denning MR, Donaldson & Brightman LJJ) in Buttes Gas. In that case, Brightman LJ observed at 268C-D that while reference to a privileged document in a pleading did not in itself waive any legal professional privilege attached to it, it was 'equally clear' that a party could not rely on a privileged document so pleaded without waiving privilege on the whole of it, and 'sooner or later' would have to either decide whether to forego privilege or abandon reliance on it.

59. In the recent English High Court decision of Waksman J in PCP Capital Partners LLP & Another v Barclays Bank Plc [2020] EWHC 1393 (Comm), it was noted at [47] that applications for documents based on waiver of privilege entailed (at least) two questions: whether there had been a waiver of privilege, and if so, whether it is appropriate to order production of privileged documents other than those to which reference had been made which was the foundation for the waiver. The learned judge also noted at [48] that in deciding whether there had been waiver, the reference to legal advice must be sufficient, 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". In that case, having concluded that there had in fact been a waiver of privilege by Barclays, the learned judge noted at [129] that it was accepted by PCP that if Barclays wished to avoid the consequences of the waiver, it could withdraw its reliance on the privileged material in question and in connection with it.""

50.      I have set out the extract at this length because what has occurred here is a true waiver in the sense of a deliberate decision by the first defendant to waive privilege in respect of the Fox Williams report and any witness statements obtained in relation to that report.  What that requires me to determine is whether it is appropriate to order production of what would otherwise be privileged documents namely communications between Fox Williams and the first or second defendants.  The touchstone for my determination is fairness.  As part of my decision I also have to determine whether what is being disclosed "represents the whole of the material relevant to the issue in question".

51.      As to what the issue in question is, the plaintiff's case is summarised at paragraphs 35 to 42 of the order of justice with the criticisms of the process pleaded at paragraphs 39 to 42 as follows: -

"39. It is apparent from the face of the report and would have been apparent to any member of the board of the Company, including Jonathan Punter, if they had been acting in good faith and with sufficient diligence, that the report was fundamentally flawed, that its conclusions criticising the Plaintiff could not properly be relied upon and that the allegations of gross misconduct remained (and remain) unproven.

39.1. The body of the report (excluding witness statements) is contained in a mere five-and-a-half pages, of which only three deal with the conclusions.

39.2. There is nothing to indicate that the authors of the report possessed, to any degree, the forensic ability, expertise or experience requisite for the preparation of the report.

39.3. Messrs Fox Williams LLP are not independent of the Company: they are the Company's solicitors.

39.4. It is clear from paragraph 3.2 of the report that the report itself purports to proceed upon an "investigation" which involved solicitors from Messrs Fox Williams interviewing eight witnesses. There is nothing to indicate that any of those solicitors possessed the forensic ability, expertise or experience necessary for the investigation. 

39.5. It is likewise clear from the report that the solicitors in question, in addition to relying upon interviews, relied upon unsworn witness statements.

39.6. There is nothing in the report to demonstrate how, if at all, the evidence taken from the witness was tested for reliability or credibility.

39.7. Crucially, the Plaintiff himself was neither interviewed nor invited to be interviewed. The preparation of the report thus failed to comply with the maxim audi alteram partem and in so failing it likewise failed to comply with the requirements of natural justice.

40. What is more, in setting out the conclusion contained in paragraph 6.5.6 of the report the authors have manifestly exceeded their own specific remit, as stated in paragraph 1.4 of the report.

41. The investigation was conducted retrospectively at the end of March 2018 and sent to the Plaintiff on 4 April (some four months after the Plaintiff's dismissal on 20 November 2018). Furthermore, it occurred after the Plaintiff's solicitors, Messrs. Carey Olsen, had written to the directors of the Company on 22 January 2018 pursuant to the pre-action protocol (PD RC17/01), immediately before the dilution of his Ordinary Shareholding and following his dismissal as CEO of GGHL. The letter raised the Plaintiff's concerns in relation to these matters, and also inter alia his concerns in relation to his exclusion from management of the Company and GGHL, and the then threatened expropriation of his Ordinary Shares under the "Bad Leaver" provisions in the Company's Articles of Association.

42. There is no evidence that the decision to treat the Plaintiff as a "Bad Leaver" was approved by any Independent Directors of the Company. Furthermore, in relying upon the report, each of the directors who did so (being Mr Punter, Mr Davis and Mr Samuels) failed in his duty to exercise independent judgment with respect to the complaints against the Plaintiff."

52.      The first defendant did not file any substantive answer to the plaintiff's claim and instead has taken a neutral approach.  The substantive response is therefore to be found in the answer and counterclaim of the second defendant.  The relevant part of the case in response commences at paragraph 42 where the second and third defendants plead that the first defendant "engaged the assistance of Fox Williams LLP, a London law firm, to investigate the plaintiff's past conduct and produce a report".  However, the same individuals who were directors of the first defendant and the second defendant had also instructed Fox Williams in November 2017 on the same issue namely the plaintiff's leaver status.

53.      The substantive answers to the plaintiff's criticisms of the production of the report and its reliance are pleaded at paragraphs 44 to 47 of the defendants' answer and counterclaim as follows: -

"44. As to paragraph 39, it is denied that any member of the board of the Company acted without good faith and/or without sufficient diligence in considering the Report. It is further denied that the Report could not reasonably be relied upon by the directors of the Company.

a. The length of the Report is not relevant to the conclusions reached therein. The Plaintiff is put to proof as to what length of report would, in his view, have been appropriate.

b. The Plaintiff is put to proof that the authors of the Report did not possess, to any degree, the forensic ability, expertise or experience requisite to interviewing witnesses and/or the preparation of such a report.

c. It is denied there was any requirement that the investigators behind the Report were required to be independent of the Company.

d. All of the witness statements appended to the Report were signed by the witnesses.

e. It is denied there was any requirement that the investigators behind such a report were required to test the reliability or credibility of witnesses. The Plaintiff is put to proof as to the steps taken by the investigators when interviewing witnesses.

 f. It is denied that there was any requirement on the Company to involve the Plaintiff in the investigation or the creation of the Report. In accordance with paragraph 2.2 of the Report, the Company provided a copy of the Report to the Plaintiff in order that he might provide his written comments, should he choose to do so. Those comments were received and considered by the Company.

45. As to paragraph 40 the Company was entitled to take into account the conclusion at paragraph 6.5.6 of the Report.

46. The timing of the report vis à vis other events as set out in paragraph 41 is admitted.

47. As to paragraph 42, there were not, and never had been, any Independent Directors of the Company. Given the composition of the board of the Company, the Plaintiff is put to proof as to which of the directors of the Company would have been Independent Directors within the meaning of the Articles of Association of the Company. Further, the Plaintiff was determined by the directors of the Company to be a Leaver for Serious Breach (within the meaning of the Articles of Association of the Company) for which no determination of the Independent Directors was required. The Plaintiff is put to proof on the averment that the directors of the Company failed to exercise an independent judgment in their consideration of the complaints made against the Plaintiff.

54.      In my judgment the pleadings give rise to the following issues: -

(i)        Who instructed Fox Williams;

(ii)       Were there any members of the board of the first defendant who acted without good faith;

(iii)      Whether the report could be reasonably relied upon by the directors of the first defendant;

(iv)      The process followed by Fox Williams;

(v)       Whether independent directors were required; and

(vi)       Whether the directors of the first defendant exercised an independent judgment.

55.      These issues are at the heart of the dispute between the plaintiff and the second and third defendants.

56.      In my judgment, the instruction of Fox Williams by the first defendant in February 2018 does not represent the full picture in relation to the Fox Williams report and fairness requires disclosure of more material.  This is for the following reasons.

57.      Firstly, when a report has been produced which has been relied upon by the first defendant to determine that the plaintiff should be treated as a bad leaver, fairness requires the instructions to prepare that report to be produced.  By instructions I do not simply mean the formal retention of Fox Williams but the full instructions that were given i.e. any information given to Fox Williams relevant to the plaintiff's leaver status.

58.      In this case the need for instructions given to Fox Williams is particularly significant.  This is firstly because the directors of the first defendant and the second defendant overlapped.  The plaintiff is therefore entitled to explore whether in giving instructions to prepare a report for the board of the first defendant to consider, were these individuals acting as directors of the first defendant or were they having regard to the interests of the second defendant where they were also directors.  In particular, the instructions given is relevant to the good faith issue raised on the pleadings.

59.      Secondly, Fox Williams were already advising in November 2017.  To draw a cut-off of February 2018 when the formal instruction was sent by the first defendant is an artificial exercise given the overlap in directorships referred to above and when the second defendant was already taking advice on whether or not the plaintiff could be treated as a bad leaver.

60.      What is significant about the email of 20^th November 2017 is that in effect Fox Williams advised caution, not to rush into serving the notice and instead to look for "better grounds" to treat the plaintiff as a bad leaver.  The rationale was to "fend off the possibility of a claim for the shares at a later date". This is now what has occurred and in reality is the same issue as the first defendant  retained Fox Williams to advise on in February 2018.

61.      What does this conclusion mean should be disclosed?  I pose this question because the defendants are entitled to take legal advice in respect of which privilege is not easily lost.  The loss of privilege should therefore only be in respect of the precise issue arising from waiver of the report namely whether or not to treat the plaintiff as a bad leaver as set out in paragraph 62 below.  Advice on the consequences of that decision such as advice on claims that might be brought, the litigation process to be followed in respect of such claims or the prospects of success in respect of such claims should not be lost simply because I have concluded that further disclosure is required so the court has the appropriate picture before it.

62.      What I therefore consider should be disclosed is the following: -

(i)        Any information given either by the first or second defendants or given on their behalf to Fox Williams relating to whether or not the plaintiff should be treated as a bad leaver, or a leaver for serious breach, or had committed gross misconduct, or should have his shares confiscated;

(ii)       Any instructions from the first or second defendants or given on their behalf between November 2017 and 21 June 2018 in relation to the investigation or production of the reports or any witness statements, or in relation to any legal advice identified below;

(iii)      Any information provided by the first and/or second defendants to Fox Williams in relation to the investigation or production of the reports or any witness statements, or in relation to any legal advice identified below;

(iv)      Any legal advice given by Fox Williams apart from the reports between November 2017 and 25 June 2018 as to whether or not the plaintiff was or might be treated as a bad leaver, or a leaver for serious breach, or had committed gross misconduct, or should have his shares confiscated, including in relation to the process to be followed to make such a determination.

63.      Whether or not any documents disclosed establish the case the plaintiff wishes to make is of course a matter for a trial, and for the Royal Court to decide.  What is important is that the plaintiff and the Royal Court are in the same position as the defendants to be able to evaluate the reliance by the defendants on the report to justify the first defendant's decision to treat the plaintiff as a bad leaver.

Authorities

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

Pender v GGH (Jersey) Limited and Ors [2022] JRC 106. 

Deripaska v Chernukhin & Anor [2021] JCA 206.