Court of Appeal on limited waiver of privilege

The Court of Appeal has held that a claimant was entitled to assert privilege in a draft witness statement relating to separate litigation, despite having previously copied the draft to the defendant in the current proceedings: Berezovsky v Hine [2011] EWCA Civ 1089.

The decision is a reminder that, in some circumstances, it is possible to disclose privileged documents to a third party for a limited purpose while retaining the ability to assert privilege even against that party should a dispute arise in future.

Background

The issue arose in litigation brought in the Chancery Division by Russian oligarch Boris Berezovsky against the beneficiaries of the estate of a former business associate, Mr Patarkatsishvili, who died in February 2008 (the "Family Defendants"). Mr Berezovsky is also the claimant in a separate long-running and high-profile Commercial Court action against Roman Abramovich. The actions raise a number of overlapping issues, which were ordered to be tried as preliminary issues in the Chancery action at the same time as the trial of the Abramovich action which started at the beginning of October in the Commercial Court.

Before Mr Patarkatsishvili's death, his solicitors received from Mr Berezovsky's solicitors copies of draft witness statements prepared for Mr Berezovsky and Mr Patarkatsishvili in the Abramovich action. The question arose whether the Family Defendants could rely on the draft statements in the trial of the overlap issues.

First instance decision

At first instance, the judge (Mann J) held that the Family Defendants should not be restrained from using the documents. It was clear the draft statements were initially privileged, and that privilege belonged to Mr Berezovsky alone. However, the circumstances in which they were sent to Mr Patarksishvili's solicitors did not preserve Mr Berezovsky's privilege to the extent of enabling him to prevent Mr Patarksishvili (or his successors in title, the Family Defendants) from deploying the documents in defence of claims brought by Mr Berezovsky.

Court of Appeal decision

The Court of Appeal reached the opposite conclusion. The court agreed with Mann J that the draft statements had been sent to Mr Patarkatsishvili's solicitors for the purposes of (i) assisting Mr Patarkatsishvili with the preparation of his evidence in his asylum claim, and (ii) ensuring that there was no conflict between that evidence and the evidence of both Mr Berezovsky and Mr Patarkatsishvili in the Abramovich action.

Unlike the judge, however, the court held that the draft statements were sent on the basis that their use for any other purpose was prohibited, unless it was a purpose to which Mr Berezovsky assented or, arguably (and it was unnecessary to decide), a purpose which could not damage Mr Berezovsky despite his objection to it, or a purpose which could damage him but would not involve the statement being revealed to any third party.

This decision was based on a number of factors, including that the sensitivity of the draft statements must have been obvious to both parties and that Mr Berezovsky would have expected Mr Patarkatsishvili to be sympathetic to the need to protect confidentiality given that they were allies at the time, and therefore "the absence of any spelling out of the limited extent of any waiver is not an indication that Mr Berezovsky was at all relaxed about the subsequent use of the draft statements, or that Mr Patarkatsishvili would have expected him to be relaxed". It was particularly clear that the parties would not have envisaged the draft statements being deployed by Mr Patarkatsishvili in the Abramovich action, for which the privilege was particularly important to Mr Berezovsky. On the facts, the court was satisfied that Mr Berezovsky would have intended a very limited waiver of privilege and that Mr Patarkatsishvili would have appreciated that.

The court left open the question of whether the Family Defendants would be able to use the draft statements in the trial of the claim by Mr Berezovsky apart from the overlap issues, i.e. where deployment would not necessarily involve their disclosure to Mr Abramovich.

Implications

This case does not establish new law, but it is a useful reminder of principles that can often be overlooked: in particular, that it is possible not only to disclose privileged documents to a third party (X) on confidential terms without losing privilege against the rest of the world, but that in some circumstances privileged documents can be disclosed to X without losing privilege even against X.

It seems this principle will apply if the court is satisfied that the disclosure to X was restricted to a particular purpose and X is now trying to use the documents for some other purpose without the privilege holder's consent, or possibly (given the issues left open by the court) where such use will damage the privilege holder, or where it will involve the documents being disclosed to a third party.

It is also interesting that, in this case, the disclosure of the privileged material was not accompanied by any express restriction as to the purpose for which it could be used. The Court of Appeal was prepared to proceed on what it said must have been the obvious intentions of the parties. In such circumstances, however, a party would be well advised to ensure that the disclosure is accompanied by a statement (and ideally an agreement from the third party) not only that the disclosure is on confidential terms and there is no intention to waive privilege, but also setting out the specific purpose for which disclosure is made and providing that the use of the material for any other purpose is prohibited.