RBS loses privilege argument as court defines who is a ‘client’ narrowly

RBS: interview notes not protected by working papers privilege

RBS: interview notes not protected by working papers privilege

The High Court has applied a narrow interpretation of who is a client in denying RBS legal advice privilege in relation to interviews its solicitors carried out with staff – but said it was an issue the Supreme Court needed to look it.

Mr Justice Hildyard ruled that, for these purposes, the client “consists only of those employees authorised to seek and receive legal advice from the lawyer”.

Further, legal advice privilege does not extend to information provided by employees and ex-employees to or for the purpose of being placed before a lawyer, he decided.

In The RBS Rights Issue Litigation [2016] EWHC 3161 (Ch), an interlocutory hearing as part of the group litigation over the bank’s 2008 rights issue, the judge was asked to decide on RBS’s claim to privilege in relation to transcripts, notes and other records of interviews conducted with employees and ex-employees.

Hildyard J said he was bound by the Court of Appeal’s ruling in Three Rivers District Council and others v Governor and Company of the Bank of England (No 5) [2003] QB 1556, a decision that has been the subject of much criticism since for not clarifying who is a lawyer’s ‘client’ for the purposes of legal advice privilege.

Quoting a critique by the Singapore Court of Appeal, Hildyard J said: “There is, to my mind, force in these criticisms and attempts to confine the application of the decision in Three Rivers (No 5).

“It may be that in a suitable case the Supreme Court will have to revisit the decision, and perhaps the fundamental question as to whether and to what extent the distinction between legal advice and litigation privilege on which Three Rivers (No 5) ultimately rests is really justified and appropriate…

“But… there can be no real doubt as to the present state of the law in this context in England: Three Rivers (No 5) confines legal advice privilege to communications between lawyer and client, and the fact that an employee may be authorised to communicate with the corporation’s lawyer does not constitute that employee the client or a recognised emanation of the client…

“The individuals interviewed were providers of information as employees and not clients: and the interview notes were not communications between client and legal adviser.”

In the alternative, RBS argued that the lawyers’ notes of the interviews were privileged as part of their working papers.

It was common ground that such papers are generally covered by legal professional privilege, but Hildyard J said RBS had to prove that the notes in question had “some attribute or addition such as to betray or at least give a clue as to the trend of advice being given to the client by its lawyer”. This meant a pure transcript was not privileged.

He said RBS’s argument was that the interview notes carried “the annotation as to ‘mental impressions’” because they revealed the lawyers’ “train of inquiry” and by being a note, not a transcript, they reflected “some greater or lesser degree of selection”.

The judge ruled: “This, in my judgment, is not sufficient: the evidence is not such as to substantiate the claim to privilege on the basis of ‘lawyers’ working papers’. My conclusion is reinforced by the consideration that there is a real difference between reflecting ‘a train of inquiry’ and reflecting or giving a clue as to the trend of legal advice.”

RBS has indicated that it will seek permission to appeal.

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