janvier 14 2020

"Every little (disclosure) helps": High Court considers whether privilege can be asserted over a document previously referred to in open court

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The High Court has handed down its latest judgment in the ongoing Tesco group action litigation.

By way of background, the group action has been commenced by Tesco shareholders against Tesco for issuing misleading information about its financial performance in 2014, whereby it allegedly overstated its profits by approximately £250 million.

The latest judgment of Mr Justice Hildyard concerns matters which were in dispute at the fourth case management conference ("CMC4"), heard in early November 2019.  Trial of the substantive dispute is due to take place in June 2020 and is currently listed for 44 days.

Asserting privilege over a document which has already been referred to in open court
Although a multitude of procedural issues were addressed by Hildyard J. at CMC4, in this latest judgment, one of the more interesting points which arose concerned whether or not a document (which was otherwise privileged) remained privileged, in circumstances where that document had been referred to in open court in related criminal proceedings.

The document (referred to as the "Majid Note") was a "first account" given to Freshfields (acting on behalf of Tesco), setting out what Ms Majid (a senior lawyer at Tesco) knew of the commercial income overstatements prior to 19 September 2014.  The Claimants sought disclosure of this note on the basis that it supported their underlying claim against Tesco and evidenced the fact that senior individuals within Tesco were aware of certain internal practices which ultimately resulted in the alleged income overstatement.

The Claimants did not dispute (for the purposes of this hearing) that the Majid Note was privileged.  However, the Claimants asserted that:

  • confidentiality in the document had been lost as result of its use in open court in the criminal proceedings; and/or
  • confidentiality may be lost because references made in public which do not themselves destroy confidentiality, engage the principle of open justice which gives a right of access to the evidence placed before the court and referred to during the hearing so that the way and basis on which the matter has been decided can be properly understood.

On the basis that one or both of the above was correct, the Claimants asserted that as the Majid Note was no longer confidential, privilege could no longer be maintained and, therefore, it was disclosable.

Tesco, however, drew a distinction between information contained in a document and the document itself.  In other words, public reference to certain information might cause the loss of confidentiality in the information, but not always in the document in which it was contained.

Tesco also noted that CPR r.31.22 does not apply to criminal proceedings and drew the judge's attention to the Criminal Procedure Rules and the Criminal Practice Direction (being the applicable rules in this context), which provide that "open justice requires only access to the part of the document that has been read aloud".

In the present circumstances, the judge gave consideration to the following points in relation to how the Majid Note was used and referred to in the criminal proceedings against Tesco:

  • the Majid Note had been provided initially by Tesco to the SFO pursuant to a limited waiver of privilege;
  • in the course of the criminal proceedings, the presiding judge (Sir John Royce) was referred to the Majid Note by counsel for the SFO. Paragraph 1 of the Majid Note was quoted and Sir John was invited to read the first three pages of the document itself (which he did);
  • counsel for the SFO then described or summarised (but did not quote from) the Majid Note, in particular the first three pages, and referred to paragraph 20 without indicating its content;
  • counsel for Tesco also referred to the Majid Note and read small extracts from the first three pages of it which described Ms Majid's first reactions to the revelation by the whistle-blower of the wrongful practices Tesco was engaged in.

Decision
Hildyard J. ultimately held that the Majid Note was not a disclosable document and remained privileged. Based on how it had been deployed in the related criminal proceedings, confidentiality had not been lost.

In the reaching that finding, he held that:

  • there was a distinction between the information in the document and the document itself;
  • the way in which a document (and the information contained within it) are used will determine whether confidentiality is lost or not – it is a matter of degrees;
  • in this case, the references to the Majid Note did not, either in terms of their detail or their extent, amount to a loss of confidentiality;
  • it was not likely that an application under the Criminal Rules would have led to disclosure of the Majid Note "as being necessary in order to understand what was going on";
  • the references to the Majid Note and Sir John's reading of it did not require its disclosure to enable the public to understand the approach of the court to the procedural decision before it.

Hildyard J. also noted that the "notion of unqualified right of access to a document which has been referred to [in open court]…is misplaced".

Comment
Hildyard J's decision highlights the extent to which the courts will uphold a party's right to assert privilege, if it can properly be argued that irrespective of how the document has been used, the substance of it remains confidential.  Furthermore, the judgment provides a useful reminder that it is not always the case that a document referred to in open court cannot be privileged because it is no longer confidential.

This decision may give particular comfort to parties who face document production requests for privileged documents from regulators – amid concerns relating to how those privileged documents will be used in any future investigations and/or criminal proceedings, and the implications in a civil context.  However, parties who are subject to such document production requests should still exercise caution before handing over privileged material.

To the extent it may be potentially advantageous to hand over a privileged document to a regulator (for example, in order to demonstrate cooperation), parties can take steps to protect the document's confidentiality, in order to preserve privilege.  Such steps may include:

  • expressly stating that the document being provided to the third party is subject to a limited waiver of privilege; or 
  • redacting the privileged document in order to maintain confidentiality in the substance of the document as a whole; or 
  • agreeing in advance how the document will and will not be used (including in any court proceedings).  

Although this will not guarantee that confidentiality (and therefore privilege) will be maintained, it is important to give due consideration to the steps one can take in order to balance the desire to maintain confidentiality and privilege in a document and, where necessary, demonstrate cooperation with the relevant regulator or other third party.

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