'Waiving' goodbye to privilege? Not so fast, says the high court

Barclays gave disclosure on 30 July 2021, stating in its disclosure certificate that certain communications had been withheld on grounds of legal privilege.

However, a subsequent witness statement made on behalf of the Bank referred to the role of Eversheds (Barclays' legal advisers) in responding to the Claimant's allegations of dishonest assistance. The witness made the following references (author's emphasis added): 

• Paragraph 119:
  "I took advice from Eversheds in the period between being notified of the change in structure and my response to Gerard Barnes [the Third Defendant]. I understand that advice is subject to privilege, although it is wrong for the Claimant to assert that the advice referred to the balance sheets that I had been sent."

• Paragraph 127:
  "I looked at this as a straightforward facility and corporate restructure. I saw the transfer of the Hospital at market value and I believed that this was being done by a professional and honest management team supported by a [sic] professional accountants and professional lawyers. The Relationship Director was very supportive of the customer. There was no immediate risk to the Bank and there was nothing to put me on alert or which meant that I suspected anything underhand. I would have been looking at the information I had at the time and whether that structure and business plan made sense to me, which they did. Because of the cash flow and profitability, there was nothing to make me suspect that this business would fail in the short term, and in fact it was successful. There was no discussion about the Company ceasing to trade. I would remember that."

• Paragraph 141:
  "Here, there was nothing to put me on alert. I looked at the business at a high level. The business was generating cash, it was keeping up its loan repayments. The Group had Clement Keys as its accountants and The Wilkes Partnership [the Sixth Defendant] advising them, and the Bank had Eversheds. I was dealing with professional advisers, both on my side and the Company's side, and I thought that I was dealing with a competent and experienced management team."

(the Eversheds' Statements)

The Claimant argued that:

• When considered as a whole and "holistically", the Eversheds' Statements constituted a waiver of legal privilege because the witness had referred to, and relied upon, the content of legal advice received (per the PCP Test): 
  • Paragraph 119 expressly referred to the content of the advice (which Barclays accepted) to deny that the E-mail "referred to" the balance sheets. The reference was more than "narrative".
  • In setting out his views on the restructure at paragraphs 127 and 141, the witness referred to professionals who were involved in the transaction and concluded that there was nothing to put him "on alert".  Although no specific piece of legal advice was referred to, the reference to lawyers and Eversheds was deployed to support his claim that there was nothing suspicious about the transaction i.e., he had acted honestly.

• The position could be likened to that in PCP, where one of the Bank's witnesses stated in evidence: "I am certain that if anything had been proposed at the meeting which created a problem from a legal perspective, [the lawyers] would have said so." 

• A key issue for trial was the witness's knowledge (or targeted suspicion) of the restructure at the time. Accordingly, the claim could not be determined fairly without the disclosure of the legal advice received.

Barclays resisted the application, asserting there had been no waiver by the Eversheds' Statements. In summary, the Bank stated:

• The witness was entitled to deny the various allegations of dishonesty pleaded against him and to say, without waiving privilege, that he had received legal advice.
• The statement at paragraph 119 only arose because the witness was responding to the Claimant's allegation that the E-mail "referred to" the balance sheets.
• Neither paragraph 127 nor 141 made any reference to legal advice and/or any suggestion that privilege was waived. All the witness was doing was commenting that there were professionals involved in the transaction, and it was not a "back-street" deal.  
• By contrast, in PCP, clear statements were made by the Bank's witnesses that they had received legal advice and these statements were relied upon in support of their position that their actions were lawful.

The Court dismissed the application for disclosure of privileged material.

The Judge agreed with Barclays, holding that, when considered fairly, objectively, and in proper context, the Eversheds' Statements did not amount to a waiver of legal privilege. 

In addition to points summarised above, the Court made the following findings:

• Preliminary points:
  • The witness did refer to part of the content of Eversheds' legal advice at paragraph 119 of his evidence, and whilst the advice was expressed in negative terms, privilege was still capable of being waived.
  • The distinction between "content" and "effect" is not conclusive and the matter of waiver will always be context dependent and fact sensitive.

• Specifics:

  • Paragraph 119: The reference in the first sentence to the fact that the witness took legal advice was not objectionable. The second statement was made in response to the Claimant's allegation and said no more than what is contained in Barclays' Defence. Moreover, it was the Claimant (not Barclays) who sought to rely on the content of the advice. Thus, the Tatneft Gateway applied, and privilege was not waived. 

  • Paragraph 127: Whilst it may be true that Eversheds' legal advice formed part of the information that the witness received at the time, there was no reference in paragraph 127 to that advice nor anything to suggest that the witness's reliance on the same resulted in the state of mind he described. The paragraph could not be read as referring to the limited (negative) reference in paragraph 119.

  • Paragraph 141: Although the witness did refer to Barclays receiving legal advice, no specifics were given. Not only was there no (or no sufficient) reference to legal advice, but there was no reliance on the contents of that advice by the witness. The witness said little more than with the "panoply of executives and professionals (including Eversheds) involved, things appeared to be 'above board'."

  • The facts came "nowhere close" to PCP.