In Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd, Mr Justice Robin Knowles QC provides a helpful two-part test to clarify whether the identity of those providing instructions to solicitors can be covered by litigation privilege.
The claimant (“Loreley”) is a special purpose vehicle with no employees and directors “supplied” by a professional services company. Loreley’s “Liquidity Facility Provider” was IKB Deutsche Industriebank AG (“IKB”) and, in 2007, IKB was rescued by KfW Bankengruppe (“KfW”).
The defendants (collectively, “Credit Suisse”), provided USD100 million of loan notes to Loreley through the third Defendant, Credit Suisse Securities (USA) LLC.
In 2007, Loreley purchased the loan notes, which formed part of a collateralised debt obligation transaction and was linked to residential mortgage-backed securities (“RMBS”). Loreley alleges fraud in relation to the securitisation by Credit Suisse of the RMBS and in the representations it made to Loreley in the course of the sale of the notes.
Credit Suisse issued an application which sought several orders, including that “the names of individuals who are, or have been, authorised to given instructions to their solicitors, RPC, in relation to the litigation are not subject to [legal professional privilege], that Loreley provide a full response to [its] relevant CPR Part 18 Request, and that certain documents provided by Loreley with redactions can be provided without those redactions” (paragraph 13, judgment).
Loreley had already provided early disclosure in the claim following directions given by Picken J. However, the documentation provided by Loreley, including an engagement letter, had been redacted. Loreley’s solicitors, RPC, claimed litigation privilege applied to the documents as they referred to the identity of individuals who were providing instructions in the litigation.
Credit Suisse brought their application on the basis that litigation privilege and legal advice privilege could not coincide together as they were mutually exclusive classes of privilege. It also contended that Loreley’s claim was not one where the identity of a client formed an integral part of its confidential communications. It was Credit Suisse’s position that the identity of the individuals giving instructions to Loreley’s solicitors was important as it supported their defence that Loreley’s claims were in fact already time barred. This was because it alleged that KfW took over as the “Liquidity Facility Provider” to Loreley from IKB and that KfW became a creditor of Loreley with security over Loreley’s assets, which included Loreley’s claim against Credit Suisse or its proceeds.
Loreley accepted that the question of who gives instructions to RPC on its behalf was “relevant as a building block (albeit a small one) for Credit Suisse’s contention that the claims against it are time barred” (paragraph 10, judgment).
In order to decide whether litigation privilege applied to Loreley’s redactions, the judge considered various well-known precedents. Loreley argued that these did not apply to litigation privilege, only legal advice privilege. It also asserted that both litigation privilege and legal advice privilege could apply to communications between a legal team and its client. This was vehemently opposed by Credit Suisse.
The judge concluded that whether or not the identity of a person communicating with a lawyer is privileged depends on whether:
Whilst this two-part test should be used when deciding whether privilege applies to a person’s identity, the judge ultimately concluded that there was ‘no one size fits all’ approach and that each case would therefore require a decision on its facts. The judge added that litigation privilege would not apply to the identity of those giving instructions in every case (paragraph 42, judgment).
The judge concluded that Loreley had not shown any evidence to suggest that revealing the identity of those providing instructions to RPC would lead to any clues regarding the contents of those instructions.
The judge held that, whilst the distinction between legal advice privilege and litigation privilege remains, with legal advice privilege only applying to communications between a lawyer and client and litigation privilege applying to both communications between a client or the client’s legal team and a third party, the two principles should not be deemed to be mutually exclusive. As such, both litigation privilege and legal advice privilege can apply to the same communication. That said, as there is a ‘no one size fits all’ approach, legal teams should carefully consider this on a case-by-case basis.
In order to determine whether litigation privilege, legal advice privilege or, in some cases, both apply, practitioners should consider the following two stages before making any redactions:
This article first appeared on the Practical Law Dispute Resolution Blog on 13 July 2022 here.