Litigation privilege: Loreley v Credit Suisse

Practical takeaways

• Generally, the identity of the person giving instructions on behalf of a corporate entity will not be privileged. If a party considers that it should be privileged (i.e. it might reveal something about the content of the communication or the litigation strategy being discussed), they will need to explain why, but will need to do so in general terms so as not to disclose the privileged information.
• Even if the information is not privileged, the party seeking disclosure will still need to persuade the court that it either falls within a duty of disclosure, or (as here) that the request for the information under Part 18 of the CPR is reasonable and proportionate. 

Background

The claimant ("Loreley") alleges fraudulent misrepresentation and unlawful means conspiracy in relation to its purchase of US$100m of notes from the defendant ("Credit Suisse") as part of a collateralised debt obligation transaction.

Credit Suisse's defence alleges that Loreley's claims are time barred, which would be a complete defence to the claim. It alleges that Loreley knew, or could with reasonable diligence have known, of certain relevant facts necessary to plead the claim, at an early enough point that the claim was now time-barred. In particular, Credit Suisse relied on the fact that Loreley was an SPV with no employees, and directors provided by a professional services company, and argues that the knowledge of either of two German banks: IKB, on whom Loreley relied for its book-keeping; or KfW, a creditor of Loreley with security over its assets, including the claim against Credit Suisse, should be attributed to Loreley.

In a Part 18 Request for further information of Loreley's pleaded case, Credit Suisse asked whether individuals at KfW were providing instructions to Loreley's solicitors in relation to the litigation. Loreley refused to answer, claiming that this information was subject to litigation privilege.

First instance decision

At first instance, the High Court held that the identities of the individuals authorised to give instructions on Loreley's behalf to its solicitors were not subject to legal professional privilege and ordered Loreley to disclose their identities. Mr Justice Robin Knowles determined that the identity of the person communicating with a lawyer on behalf of a corporate client would only be privileged if: (1) the communication is privileged; and (2) privilege would be undermined by disclosure of the identity. 

Mr Justice Robin Knowles also made a declaration: "In the present case, the identities of the individuals who are, or have been, authorised to give instructions to Reynolds Porter Chamberlain LLP ('RPC') on behalf of the Claimant in relation to these proceedings are not subject to legal professional privilege."

For further details, please see our article covering the first instance decision.

Appeal

Privilege

Loreley appealed, arguing that the identities of the individuals authorised to give instructions to solicitors on behalf of a corporate client in the course of ongoing litigation are necessarily covered by litigation privilege and it does not depend on whether privilege would be undermined by disclosure of their identity. Loreley also submitted that: (i) the purpose of litigation privilege is to establish a "zone of privacy" around a party's preparation for litigation (a concept drawn from the Canadian case of Blank v. Canada (Minister of Justice) [2006] SCC 39); and (ii) the identities of the individuals authorised to give instructions are "paradigmatically" within the scope of litigation privilege because its disclosure might provide an advantage to the opponent.

There was no prior authority addressing the issue here. The Court of Appeal therefore considered it as a matter of principle. Lord Justice Males gave the leading judgment, with which Lady Justice Nicola Davies and Sir Geoffrey Vos agreed. 

Lord Justice Males referred to Lord Carswell's statement in Three Rivers District Council v Governor & Company of the Bank of England (No. 6) [2004] UKHL 48, [2005] 1 AC 610 setting out the requirements for litigation privilege: "communications between the parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the sole or dominant purpose of conducting that litigation; (c) the litigation must be adversarial, not investigative or inquisitorial" and the purpose of litigation privilege (as set out in Three Rivers (No. 6): see R v Derby Magistrates Court, ex parte B [1996] AC 487, amongst other cases): a client must be certain that whatever she says to her lawyer in confidence will not be disclosed without her consent.

Lord Justice Males concluded that, if disclosing the identity of a person communicating with their lawyer regarding litigation would "inhibit candid discussion" between them, the person's identity should be privileged. Otherwise, it is unnecessary and may in fact deprive the court of relevant evidence.

Lord Justice Males considered that, in general, there would be no such inhibition: disclosing the person's identity would not reveal anything about the contents of the communications. Indeed, there was no evidence that it would do so here. Lord Justice Males acknowledged, however, the possibility in "an unusual case" that identifying the person giving instructions might reveal something about the content of the communication or the litigation strategy being discussed, but that would need to be explained as the basis of a claim for privilege¹ (albeit in general terms not to disclose the privileged information).

Lord Justice Males agreed with Credit Suisse that there was no support in English authorities or in the principles underpinning litigation privilege for the concept of a "zone of privacy". The examples put forward by Loreley did not support its existence.

Request for further information

Whilst the identities of those giving instructions to Loreley's solicitors are not privileged, and so would not be a ground to refuse disclosure or inspection, in the circumstances Lord Justice Males did not agree that such disclosure should be ordered through CPR Part 18. A request under CPR Part 18 "should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or to understand the case he has to meet."

Lord Justice Males held the information request to be unnecessary and disproportionate. It was only of peripheral relevance and did not cause any difficulty for Credit Suisse's preparations for trial. Lord Justice Males warned that he would not encourage such requests.

Declaration

The Court of Appeal also set aside the declaration made by Mr Justice Robin Knowles at first instance that the identities of the individuals who are, or have been, authorised to give instructions on Loreley's behalf in relation to the proceedings are not subject to legal professional privilege. That was because: (i) a declaration in such general terms serves little or no purpose; and (ii) the question of privilege ought to be tested by reference to particular communications rather than in the abstract.

¹ As was the case in JSC BTA Bank v Ablyazov [2012] EWHC 1252 (Comm).