Privilege lost after cherry-picking: an undesired outcome of an employer's tactical decision to waive privilege

The UK Employment Appeal Tribunal (EAT) recently ordered an employer to disclose its external lawyer's comments in relation to the dismissal of an employee. The EAT held that the employer waived privilege in redacted parts of a draft dismissal letter setting out its lawyer’s comments, as a result of the employer’s decision to rely on other privileged material relating to the claimant’s dismissal: Kasongo v Humanscale UK Ltd [2019] UKEAT 0129_19_0909.

It is well established, both in the UK and in Hong Kong, that a party who chooses to waive legal professional privilege over selected documents may find that the waiver extends further than he intended. This is known as the principle of "collateral waiver" or, more colloquially, the cherry-picking rule. It is designed to prevent a party choosing to rely on favourable aspects of his privileged material while hiding behind legal professional privilege to avoid having to disclose less favourable aspects. Even with a break in time between communications, if the advice relates to the same matter or legal question, privilege cannot be selectively waived for some communications related to it, but not others.  In the present case, the EAT rejected the employer’s submission that the redacted comments represented a separate “transaction” from the legal advice given six days earlier and therefore were not caught by the cherry picking rule. It was held that they were all part of the same transaction, which was advising the employer on the claimant’s dismissal.

While the decision is not surprising on its facts, it acts as a reminder of the dangers of relying on privileged material (even where it appears on its face to be helpful to a party’s case) if there is related privileged material which is less helpful and may undermine the benefit obtained. The risk of waiving privilege over more than you wanted, and the difficulty of anticipating where the line will be drawn in a given case, gives reason to pause and think before deciding to disclose and rely on otherwise privileged material.

Background

The claimant was dismissed after 11 months’ service. She brought claims against her former employer for unfair dismissal and discrimination due to pregnancy, alleging that she informed her manager that she was, or might be, pregnant. The employer defended the claim on grounds that it was unaware of the pregnancy and that her dismissal was entirely due to performance issues.

Documents disclosed by the employer in the proceedings included the following, which appeared to corroborate its position that the claimant’s dismissal was already in hand before the date she says she told her manager she might be pregnant:

• a contemporaneous note of a telephone call between the employer’s senior HR manager and its external solicitor setting out advice about the possible termination of employment;
• an email sent by the HR manager to the employer’s in-house counsel later that day, explaining that the employer “would like to terminate an employee asap based on behaviour (issues with tardiness, attendance and quality of work)”, summarising the external legal advice received, and asking for views; and
• a draft dismissal letter which had been prepared by the employer’s lawyers and sent to the employer 6 days later, from which certain comments by its lawyers had been redacted.

The claimant somehow managed to read the redacted words and sought to rely on them at the employment tribunal hearing. The employer objected. Amongst other points, the employment tribunal held that the claimant could not rely on the redacted part of the letter as it was covered by legal professional privilege and it would have been obvious to the claimant that the employer had not intended to disclose it. The claimant appealed.

Decision

The EAT allowed the appeal and held that the claimant could rely on the redacted words in the draft dismissal letter.

The EAT firstly held that the note and email were both privileged, however the employer had waived privilege by choosing to disclose them to assist his case. In respect of the draft dismissal letter, the employer submitted that there was a clear distinction and difference between the legal advice given earlier and the advice on the wording of the draft dismissal letter which came six days later.   Although the employer conceded that the waiver led to a risk of a partial or misleading picture, it argued that the draft dismissal letter was not part of the same “transaction” as the note and email, and therefore the redactions were not caught by the cherry picking rule and unaffected by the waivers of privilege.

The EAT agreed with the claimant’s submission that this was a “wholly artificial distinction”. The documents were all part of the same transaction, ie the giving of legal advice about the claimant’s dismissal and the possible legal implications. That was not affected by the six-day gap between the documents.

The EAT, however, did not provide any guidance on how to assess whether documents were part of the same transaction, but even a gap of six days was not enough to create 'separate transactions'.

What does this mean for employers

This decision is interesting as it is not common for the EAT to deal with issues of privilege.  It provides a stark reminder to employers, not only in the UK but also in Hong Kong, that they ought to tread cautiously when deciding whether to waive privilege on communications made between an employer and its counsel or any evidence that is likely to support their claim.  Policies or strategies to use legal advice in a selective manner to obtain a forensic advantage will not be accepted by the courts.

While a pure reference to the existence of the privileged document may not constitute a waiver, a reference to and reliance upon the content of the document is more likely to result in a loss of privilege.  Where privilege is waived in relation to parts of a document, or in relation to one document amongst a number of documents relating to the same issue, this may result in the waiver of privilege in relation to the whole document and/or other related privileged documents as a result of collateral waiver.