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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
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Lord Johnston
Lord Reed
Lord Abernethy
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[2008] CSIH 14
P961/03
OPINION OF THE COURT
delivered by LORD JOHNSTON
in
RECLAIMING MOTION
on
PETITION and ANSWERS
in the cause
NARDEN SERVICES LIMITED
Petitioners and
Respondents;
against
INVERNESS RETAIL and BUSINESS PARK
LIMITED and OTHERS
Respondents and Reclaimers:
for
an Order for Rectification
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Parties participating at this hearing:
First, Second & Fifth Respondents & Reclaimers: Dewar, Q.C., MacColl; Russel & Aitken
Third & Fourth Respondents:
Scott, Q.C., Robertson; Brodies
Non-participating Party: Petitioners: Dundas & Wilson
12 February 2008
[1] This
reclaiming motion relates to an interlocutory opinion by a temporary judge in
this petition for rectification. As will
become clear the petitioners did not feature before us and the issues were
canvassed as between the first, second and fifth respondents (the appellants)
and the third and fourth respondents (the respondents) relating to how the
court should deal with issues of confidentiality in relation to certain bundles
of recovered documents. Initially the
reclaiming motion was initiated by the respondents and the current appellants
entered a cross reclaiming motion. The
former was abandoned and the only issue before us related to the latter.
[2] There were
two separate bundles of documents emanating, firstly, from accountants Ernst
& Young (EY documents) and,
separately, from Paull & Williamson, Solicitors (PW documents).
[3] As will
become clear again the bundles required to be dealt with in a separate way in
as much that those emanating from EY are still in two sealed envelopes which
have not been opened and are not, so far as we could discover, subject yet to
any inventory identifying what they are.
On the other hand the PW documents were sent directly from the haver to
the respondents without the knowledge of the appellants and, accordingly, the
respondents have seen them. This
situation raises a separate issue to be addressed in due course from that
relating to EY.
[4] Against that
background the relevant part of the Lord Ordinary's Opinion is as follows:
"[18] The
position so far as these documents are concerned is that there is before the
court a motion to open the confidential envelopes Nos [26 and 27] of
process. Although that motion was not
intimated to the first, second and fifth respondents because they have not
entered the process, they have now entered opposition to the motion. They are entitled to do this by virtue of
rule of court 35.8(4). I cannot see
any valid reason for an alternative procedure being followed, such as having
submissions on confidentiality before the commissioner. I shall therefore continue the motion on
behalf of the third and fourth respondents to open up the confidential
envelopes Nos 26 and 27 of process lodged by Ernst & Young to a date
to be afterwards fixed for submissions on the merits of the claim of
confidentiality being made by the first, second and fifth respondents.
[19] It
is in relation to the documents from Paull & Williamsons that the problem
arises. The interlocutor of 13
April 2004
allowed the confidential envelopes Nos 23 and 24 of process to be opened up and
the third and fourth respondents now seek to lodge as late productions No
7/9-35 of process, which consists of part of the documents from Nos 23 and 24
of process. Put shortly, the position
adopted by Mr Scott on behalf of the third and fourth respondents was that they
had followed the procedure in the rules of court and it was now too late for
the court to entertain a claim of confidentiality in relation to these
documents on behalf of the first, second and fifth respondents. I have reached the view that, in light of
certain provisions of the Human Rights Act 1998, that submission cannot be
sustained. The claim which the first,
second and fifth respondents seek to make in relation to these documents is one
of confidentiality based on legal professional privilege, an absolute legal
privilege and a fundamental human right which has been held to be part of the
right of privacy guaranteed by article 8 of the Convention, and they assert
that the disclosure of these documents would amount to a breach of their
article 8 rights. It is unlawful for the
court to act in a way which is incompatible with a Convention right: section 6(1) and (3)(a) of the 1998 Act. In relation to any act or proposed act of a
public authority which the court finds is or would be unlawful, it may grant
such relief or remedy, or make such order, within its powers as it considers
just and appropriate: section 8(1) of
the 1998 Act. It therefore seems to me
that, notwithstanding that the claim of confidentiality in relation to these
documents by the first, second and fifth respondents is being made later in the
day, and the third and fourth respondents have followed the rules of court so
far as their recovery is concerned, the court, faced as it now is with a claim
of confidentiality by the first, second and fifth respondents, must take steps
to ensure that their article 8 rights are protected. It further seems to me that, if I were to
accept the submission by Mr Scott, it is at the very least possible that the
court would be acting in a away which was incompatible with a Convention right
and therefore acting unlawfully. In my
opinion the procedure which should now be adopted to deal with the claim of
confidentiality on behalf of the first, second and fifth respondents is that I
should continue their motion of 26 April 2004 and the motion by the third and
fourth respondents for the late lodging of No 7/9-35 of process for submissions
on the issue of confidentiality in relation to Nos 23 and 24 of process."
[5] It can be
seen at once that the decision of the Lord Ordinary amounted to no more than a
continuation of the motions for a further hearing in respect of both bundles of
documents and he declined, in either respect, to appoint a Commissioner to deal
with the matter.
[6] The issue
before us developed in a somewhat unusual way and therefore enables us to deal
with it again in a somewhat unorthodox manner.
[7] The primary
contention on behalf of the appellants was that the open-ended interlocutor,
merely continuing the motions, issued by the Lord Ordinary did not adequately
safeguard the rights of the appellants in respect of legal professional
privilege (LPP) which undoubtedly accrued to them in principle and, according
to them, applied specifically in this case to both sets of documents. They therefore proposed means of safeguarding
their interests in one of two ways.
Their primary contention was that this court should order that the issues
of confidentiality and privilege should be dealt with ex parte by a Commissioner to whom the matter should be remitted by
the Lord Ordinary for that purpose and, in particular, a ruling on the question
in relation to each and all of the documents.
It was contended that the respondents should not be represented at such
a hearing either in respect of the EY documents or in respect of the PW
documents notwithstanding that they had in fact seen the latter documents. If the court in relation to EY was not
inclined to allow an ex parte hearing
it was submitted that the matter should still be remitted to a Commissioner by
the Lord Ordinary, but in addition a special advocate should be appointed to
represent the interests of the respondents.
The special advocate could take instructions from the respondents in
respect of the general approach that should be taken, but should not disclose
either the content of the documents if such arose or, more specifically, the
reasons being asserted by the appellants for not disclosing the documents on
grounds of LPP, it being alleged that explanations going beyond the actual
terms of the documents, but again confidential to the appellants' position,
might have to be revealed. For such
information beyond the contents of the documents to be disclosed to the
respondents might, it was submitted, prejudice the position of the appellants
overall in this action, but more importantly in other actions, of which there
are a number, relating to the complicated dispute. The notion of a special advocate is to be
found focussed in R. v H. [2004] 2 AC 134.
[8] The response
by the respondents to this approach, focussing on the contention that it had
not been demonstrated that the Lord Ordinary had made any error of law or
misdirected himself in the course he adopted, was that to have an ex parte hearing, or even the
alternative suggested by the appellants, was contrary to their right in terms
of an adversarial process to be represented at any hearing involving their
interests and, indeed, was contrary to natural justice. The Lord Ordinary's interlocutor therefore
should be allowed to stand and matters proceed to the further hearing.
[9] It has thus
to be observed that the issues before us are purely matters of procedure. In particular, it was expressly accepted by
the respondents that their clients had no right to see the EY documents until
the issue of confidentiality had been resolved.
[10] We were
referred to a number of cases ranging over various aspects of LPP, but since it
was not disputed that such is the right of every individual within the legal
system, we need no more than focus on general issues which were not in dispute
before looking at the particular question here.
[11] They can be
summarised as follows:
1. The notion of
LPP as we have indicated is enshrined in the common law of
Scotland.
There is (in broad terms) a right of absolute privilege in respect of
communications emanating between a solicitor and a client relating to advice
and also in respect of any documents, including those coming from accountants,
which were prepared in the contemplation of litigation. It was not disputed at the Bar that that
absolute right could not be abrogated, but it was also accepted that it had to
be established.
2. The
principles of natural justice, and in particular the right to be heard, are
equally firmly established: see for example the case of Barrs v British Wool Marketing Board 1957 SC 72.
3. Scots law has
exhibited many examples of a judge either personally or
through a Commissioner, or both,
determining issues of LPP in relation to documents without reference to third
parties, or to the parties themselves, until the matter was resolved. (See particularly McCowan v Wright (1852) 15D
229 and Santa Fe International
Corporation v Napier Shipping SA
1985 SLT 485).
4. Issues were
canvassed before us as to the inter-reaction between Article 6 and
Article 8 of the European Convention
on Human Rights, and particularly as to the questions which Article should
defer to the other in the event of a conflict between them. We are however satisfied that Scots law
affords sufficient protection to legal professional privilege to meet the
requirements of Article 8, and that the relevant procedure under Scots law is
equally compliant with Article 6. In
such a situation, we respectfully agree with the observations of Lord Cooke of
Thorndon in R (Daly) v Secretary of State for the Home Department
[2001] 2 AC 532 at para 30:
"while this case has arisen in a
jurisdiction where the European Convention for the Protection of Human Rights
and Fundamental Freedoms applies, and while the case is one in which the
Convention and the common law produce the same result, it is of great
importance, in my opinion, that the common law by itself is being recognised as
a sufficient source of the fundamental right to confidential communication with
a legal adviser for the purpose of obtaining legal advice ... The truth is, I
think, that some rights are inherent and fundamental to democratic civilised
society. Conventions, constitutions,
bills or rights and the like respond by recognising rather than creating them."
Accordingly, although we were
referred to a number of cases in the European jurisprudence we do not consider
it necessary to discuss them further.
5. Our attention
was drawn to the current position in England, and to the
relevant procedural provisions in the
Civil Procedure Rules. While it is
interesting to note what happens in England we are again firmly of the view
that this matter can be determined by us in accordance with decisions within
the Scottish legal system and we do not therefore propose to consider the
English position any further.
[12] In seeking to
determine this matter at this stage we recognise that the Lord Ordinary did not
discuss how, in the context of the inter
parte hearing, adequate protection should be offered to the undoubted
rights in principle accruing to the appellants in respect of LPP. On the other hand we are equally firmly of
the view that to hold a hearing ex parte
in the course of an adversarial legal action involving the rights of a party
who is not allowed to be present, would contravene the principles of natural
justice. It would in addition be
unsatisfactory, as well as unfair, for the court to attempt to resolve
potentially disputed questions of confidentiality in the absence of a
contradiction. We are therefore not prepared
to entertain, as a solution to the problem of resolving the questions of
confidentiality, either of the options put forward by the appellants. The former contradicts the right of the
respondents to be present at such a hearing.
The latter, although less restrictive, does not, to our minds,
sufficiently respect the right of the respondents to be represented at any
hearing concerned with their applications for the recovery of documents and for
leave to lodge documents as productions.
The reclaiming motion must therefore be refused. However, the matter does not end there in our
view. It is appropriate in the
circumstances to indicate how this court considers the matter should be approached
in respect of both bundles of documents.
[13] In this
respect we consider that the procedures followed in McCowan and Santa Fe enable
a solution to be found in relation to the EY documents, involving the judge (and,
if necessary, a Commissioner, but with a final determination of the issue by
the judge), without allowing the party contesting confidentiality to see the
documents in advance of a decision.
[14] We would
accordingly recommend against the background of adhering to the Lord Ordinary's
interlocutor as follows:
1. EY
documents
Since they are still in a sealed
envelope the matter should be brought before the court in the context of the
motion to open up the envelope and a hearing take place between both parties as
to the principles to be applied in that respect (including the question whether
non-privileged material in a document which also contains privileged material
can be excerpted, or whether, in such circumstances, privilege attaches to the
document as a whole).
Thereafter consideration is to be
given as to how an inventory of the documents in the sealed envelope should be prepared. That should not be done by the respondents or
anyone on their behalf. It is a matter
for the judge to determine how that should best be done.
The question of confidentiality
should be argued against the contents of the inventory. If it becomes or appears to become impossible
for any decision to be made having regard only to the terms of the inventory and
the submissions, we would consider it appropriate that the judge should himself
examine the documents against the background of the principles discussed and
determine the issue of confidentiality and LPP in respect of each of them.
It follows that these documents
should only be released to the respondents if the judge has ruled that LPP does
not apply to all or some of them.
2. PW
documents
Here a hearing should take place to
address the separate issue, the documents having been seen and examined, as to
what extent the respondents may make use of them. The judge is not a jury and is therefore able
to examine the documents, if it becomes necessary so to do. If, at the end of the day, he is to be
regarded as compromised because of material that has been put before him, he
may simply determine the issue and thereafter recuse himself from any further
part in the litigations.
[15] Against that
background and in these circumstances this reclaiming motion is refused but
will be continued to determine the question of expenses.
