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22 August 2017
In Atlantisrealm Ltd v Intelligent Land Investments (Renewable Energy) Ltd ( EWCA Civ 1029) the Court of Appeal allowed an appeal of a first-instance decision not to order the deletion of a privileged email disclosed by the appellant to the respondent. In arriving at its decision, the Court of Appeal extended the principles around inadvertent disclosure identified in Al-Fayed v The Commissioner of Police for the Metropolis ( EWCA Civ 780) to cover situations where an inspecting solicitor does not identify that a document has been mistakenly disclosed, but another solicitor acting for the same party subsequently does.
The general rule with regard to inadvertent disclosure is stated in Civil Procedure Rule (CPR) 31.20, which states that:
"Where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court."
The case of Al-Fayed considered the application of CPR 31.20 and identified a number of principles relevant to its operation. It was held that where inadvertent disclosure of privileged material occurred, the court could grant an injunction if the disclosure of the documents was an obvious mistake. A mistake would likely be held to be obvious in circumstances where the material was received by a solicitor who either appreciated or should reasonably have appreciated that a mistake had been made before making some use of the documents. Conversely, if a solicitor gave detailed consideration to the question of whether the material had been made available for inspection by mistake and honestly concluded that it had not, that fact would support the conclusion that the mistake was not obvious.
The appellant, Intelligent Land Investments (Renewable Energy) Limited (ILI), had sold the respondent, Atlantisrealm Limited, two of its subsidiary companies in 2014. The share purchase agreement for the sale contained various warranties, which Atlantisrealm claimed had been breached. Atlantisrealm brought proceedings for damages against ILI.
During Autumn 2016 the parties carried out disclosure exercises in compliance with the usual English civil procedure. On October 18 2017 ILI disclosed approximately 5,000 documents for inspection. Included in its disclosure was a privileged email between ILI and its solicitors from March 2014, which the court referred to as the 'March email'. The March email, while not being fatal to ILI's case, was unhelpful to one of its key arguments.
In January 2017 Mr Newton, a senior solicitor at the firm representing Atlantisrealm, wrote to ILI's solicitors forwarding a copy of the March email. ILI's solicitors responded immediately, requesting that the March email be deleted on the basis that it was privileged and had been disclosed inadvertently. Newton refused, stating that privilege had been waived. ILI then applied for an injunction to prevent use of the March email by Atlantisrealm.
According to ILI, its disclosure exercise involved a two-tier process whereby a junior lawyer or trainee would tag a document as either 'disclose', 'not relevant' or 'privileged' with an optional tag to escalate the documents for an additional review by a more senior lawyer if the reviewer was uncertain about the correct coding. The March email had been tagged 'disclose' and no escalation tag had been applied.
Atlantisrealm's evidence was that the first solicitor to have reviewed the March email had formed the view that ILI had waived privilege in relation to its communications with its former solicitors. That solicitor had drawn the email to the attention of the more senior Newton, who had also formed the view that the March email had not been disclosed by mistake.
The judge at first instance, in the absence of evidence from ILI's junior lawyer who had tagged the March email as 'disclose', thought it was legitimate to infer that the junior lawyer had made a conscious decision to disclose it. In other words, there had been no mistaken disclosure and thus the case did not fall within the remit of CPR 31.20. The judge also concluded that even if he was wrong and a mistake had been made, it was not an obvious one on the basis that Atlantisrealm's solicitor who had initially reviewed the documents (whose account of events the court accepted) had not identified it as such. Accordingly, the judge dismissed ILI's application. ILI then appealed to the Court of Appeal.
The Court of Appeal was unanimous in overturning the first-instance decision and finding in favour of ILI.
The first question that the court considered was whether the disclosure of the March email had been a mistake. Disagreeing with the first-instance decision, it concluded that it was perfectly clear that the disclosure of the document had been the mistake of a junior lawyer and neither the relevant partner nor the client had ever taken a considered decision to waive privilege. CPR 31.20 therefore applied.
The court then considered whether the mistake was obvious, concluding that it was. It did not consider that it could look behind the first-instance factual finding that Atlantisrealm's lawyer who had initially reviewed the March email had not appreciated that it had been disclosed by mistake. However, no factual finding had been made in relation to the account of Newton that he too had not appreciated it. The court did not accept that Newton had not appreciated that the March email had been disclosed by mistake, stating that it was clear from Newton's email forwarding the document to ILI's solicitors that he had appreciated it.
In the absence of authority as to how the Al-Fayed principles would apply in a "two solicitors" situation, the court considered it necessary to add a "modest gloss" to those principles. It held that in circumstances where the inspecting solicitor does not spot that a document has been mistakenly disclosed, but refers the relevant document to a more percipient colleague who does spot it before making use of it, then this would be a case of obvious mistake and accordingly it was open to the court to grant relief. The court thought it appropriate to do so in this case, noting that it was clear that if the first-instance court felt it could have done so, then it would have.
Finally, the court also made several concluding observations that are worth repeating:
"i) In the electronic age, even with the help of sophisticated software, disclosure of documents can be a massive and expensive operation. Mistakes will occur from time to time.
ii) When privileged documents are inadvertently disclosed… if the mistake is obvious, the lawyers on both sides should co-operate to put matters right as soon as possible.
iii) The disclosure… procedure… depends upon the parties and their lawyers acting honestly, even when that is against a party's interest."
The Court of Appeal's application of a "modest gloss" to the principles in Al-Fayed clarifying how the principle is to be applied in a "two solicitors" situation is helpful. Many, if not most, disclosure exercises will involve a team of people of differing seniority and familiarity with the case, so it is pragmatic and sensible that the view of the first solicitor to review a particular document (who may be quite junior) is not the only relevant view to be considered when determining whether CPR 31.20 relief should be granted.
The decision will no doubt be a relief both to ILI and its solicitors (not least the junior lawyer who mistakenly marked the document for disclosure). However, while accepting the court's concluding observations that mistakes inevitably happen, the case is a useful example of an issue that might have been avoided by additional quality checks on the proposed disclosure. According to the judgment, approximately 150 emails involving ILI's former solicitors were disclosed, even though a large number of documents had been withheld for privilege (presumably involving the same solicitors). In these circumstances, a check by a more experienced lawyer of the 150 emails which had not been escalated might have identified the issue before disclosure took place.
The judgment also makes the case for agreeing a document exchange protocol before disclosure. Such protocols often contain express wording dealing with inadvertent disclosure and add an additional layer of protection should such mistakes occur (which may, as the court indicated, be inevitable given the volume of documents now routinely reviewed in the course of disclosure).
Although solicitors may breathe a sigh of relief at the decision in this case, they should also treat it as a cautionary tale and consider carefully what quality checks can be carried out at proportionate cost in disclosure exercises and, where possible, agree a specific protocol regarding inadvertent disclosure with opposing solicitors.
For further information on this topic please contact Davina Given or Chris Whitehouse at RPC by telephone (+44 20 3060 6000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
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