Many business people do not understand the concept of “privilege” as it applies to documents which may need to be disclosed in litigation or tribunal proceedings. The recent judgement of the Supreme Court in the case of R (on the application of Prudential plc and another) -v- Special Commissioner of Income Tax and another (“the Prudential case”) is a recent reminder that the issue as to whether a document is privileged or not can have important consequences.
Background
In most contentious proceedings there is a duty to disclose (i.e. a duty to state whether the document exists or has existed) any documents which may have a bearing on the outcome of the litigation. Under the Civil Procedure Rules “standard” disclosure requires a party to disclose:
the documents on which he relies; and
the documents which:
adversely affect his own case;
adversely affect another party’s case; or
support another party’s case...
However, although the existence of such documents must be disclosed, a party is entitled to refuse to provide copies of those documents if they are, by their very nature, “privileged”.
The problem
The average businessman will usually confuse the concept of “privilege” in this context with “confidential” and this is where the problem arises. The right to withhold copies of documents can only be exercised in limited circumstances where these documents are privileged and, as the Prudential Case has now illustrated, the concept of privilege has a strict legal definition.
There are two main types of situation in which a document might come into existence in which it might also be regarded as privileged:
- “Legal Advice Privilege” – letters and other communications that pass between a party and his solicitors are privileged from production provided that they are confidential and they are written to or by the solicitor in their professional capacity for the purpose of obtaining or giving legal advice or assistance for the client;
- “Litigation Privilege” – letters and other communications that pass between a solicitor and a non-professional agent or third party, whether directly or through an agent, which have come into existence after litigation has been contemplated or commenced and which have been made with a view to such litigation..
The Prudential Case concerned documents which related to transactions made under a Pricewaterhouse Coopers (PWC”) marketed tax avoidance scheme. Prudential sought to withhold some of these documents as they argued that the documents attracted Legal Advice Privilege by virtue of them comprising legal advice on the tax scheme from PWC to Prudential. The Supreme Court held that Legal Advice Privilege did NOT attach to the documents because PWC were not qualified lawyers – they restated the current legal position which is that Legal Advice Privilege only applies to advice given by members of the legal profession.
Summary
In any circumstances in which it is possible that a dispute might arise, businesses should be cautious of creating documents which might later need to be disclosed. Documents which many individuals might regard as being confidential may still need to be disclosed subsequently if litigation arises, even if the documents adversely affect that party’s case.
Typical examples of such documents which some might regard as “confidential” include internal reports or investigations, minutes of internal meetings including meetings of the Board of Directors and internal emails etc. Although confidential, such documents will not be regarded as “privileged” because they do not fall within the categories of documents that a party is entitled to withhold. Should subsequent litigation arise, relevant copies would therefore need to be supplied to the court and other parties.