Inferring Advice: A helpful clarification on the extent of privilege

27 November 2017

The recent case of Edwardian Group Ltd v Singh [2017] EWHC 2805 (Ch)(“Edwardian Group”) has clarified the extent to which privilege can be claimed over documents in which legal advice is not explicitly stated but can be inferred. At a time when a string of recent authorities have appeared to limit the scope of privilege (Director of the SFO v ENRC [2017] EWHC 1017 and RBS Rights Issue in particular), it is reassuring to see a decision which reinforces the fundamental protection provided by privilege and offers assistance to a party wishing to assert a claim.

In Edwardian Group, a dispute arose in relation to the disclosure of litigation funding documents, some of which were withheld and some of which were redacted by the Petitioner on the basis that the content of the legal advice could be “inferred” from the communications.  The First Respondent relied on the case of Financial Services Compensation Scheme v Abbey National Treasury Services plc [2007] EWC 2868 (Ch) (“Abbey National”) to argue for disclosure of the litigation funding documents in full. The judge in Abbey National stated that, in relation to documents from which advice could be inferred, “unless perhaps the inference is obvious and inevitable in which case the document is in substance a statement of the advice or communication, privilege does not attach to such documents.”

The Petitioners submitted, however, that the decision in Abbey National was inconsistent with a number of other binding decisions, particularly Lyell v Kennedy (No 3) (1884) 27 Ch D 1 (“Lyell”), in which the judge refused to order disclosure of documents which would give the other party “a clue” as to the advice given by the solicitor.

Mr Justice Morgan reviewed the relevant authorities and noted that although the judge in Abbey National did not appear to have been referred to the case of Lyell, Lyell had been applied in recent cases concerning issues of privilege such as RBS Rights Issue Litigation [2017] 1 WLR 1999 and Imerman v Tchenguiz [2010] Lloyd’s PN 221 . On that basis he considered that the Lyell test was the appropriate test to apply in the present case and accordingly refused to make an order for the disclosure of the litigation funding documents. The judge did, however, add an important caveat by drawing a distinction between documents in which there is a definite and reasonable foundation for an inference as to the substance of legal advice, and documents in which there is merely something which would allow one to speculate whether legal advice had been obtained and its substance (adopted from the Australian case AWB v Terence Cole [2006] F.C.A. 571). A claim to privilege could not extend to this latter group of documents.

The issue of whether references in documents which allow the substance of legal advice to be inferred are protected by privilege is a frequently encountered problem and this decision is of great assistance in clarifying what was previously an ambiguous area of the law with conflicting authorities.  Although such references do not directly evidence advice received and are not strictly privileged communications themselves, it is only right that the protection afforded by privilege should extend to such material. Mr Justice Morgan should be commended for his common sense approach to this particular issue.

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