Privilege not lost despite opponent having wholesale access to email accounts containing the privileged material

The High Court has held that the seller of certain companies could assert privilege against the buyer in respect of emails and documents in employees' email accounts, despite the buyer having received wholesale access to those accounts as a result of the underlying transaction: ConocoPhillips Co v Chrysaor E&P Ltd [2021] 3 WLUK 524.

The decision illustrates that, in some circumstances, privilege may not be lost against an opponent in litigation despite that opponent having access to the privileged material. In particular, the court may determine that access was given only for a limited purpose, and so confidentiality - and therefore privilege - has not been lost more generally.

The court in this case referred to Berezovsky v Hine [2011] EWCA Civ 1089 (considered here) in which the Court of Appeal held that a party was entitled to assert privilege in a draft witness statement relating to separate litigation, despite having previously copied the draft to its opponent in subsequent proceedings. The court was satisfied that the draft had been disclosed for a limited purpose, and its use for any other purpose was prohibited - despite there having been no express agreement to that effect.

While these decisions show that a party may be able to provide a third party with access to privileged material for a limited purpose, without losing the right to assert privilege even against that third party if a dispute later arises, each case will turn on its facts and this is obviously an area where it pays to be cautious. A party in this situation should consider whether it is really necessary to provide a third party with access to a database containing privileged documents, or whether the privileged documents can be carved out from the material provided. If access is given, it is best to ensure that this is accompanied by a statement (and ideally an express agreement) not only that the material is provided on confidential terms and there is no intention to waive privilege, but also restricting the use of the material for any purpose other than the specific purpose stated.

Background

The underlying dispute involved a claim for rectification of a contract concerning the sale of certain companies engaged in the North Sea oil industry.

The defendant buyer challenged the claimant seller's claims to privilege in respect of email messages and documents within email accounts to which access had been given to the buyer following the sale of the companies, and which had later been copied across wholesale to the buyer's systems.

The relevant email accounts belonged to employees of the seller's subsidiaries who had become employees of the buyer's subsidiaries following the sale. The reason for giving access and copying the accounts to the buyer was for the practical and efficient conduct of the underlying business transacted through the companies that had been sold.

The buyer argued that the seller could no longer assert privilege in the relevant emails and documents because they were no longer confidential as against the buyer. In light of the seller's claim to privilege, however, the buyer had not looked at the material for the purpose of the litigation to date.

Decision

In a short ex tempore judgment, the High Court (Knowles J) held that the seller's privilege had not been lost.

The judge noted that, because the buyer had been given access to the entire email accounts containing the privileged material, it was fair to say there was a high risk that confidentiality could be lost. As he put it:

"There are more careful ways of allowing access but the question is in this case and in like situations: has the confidentiality been lost?"

It was common ground between the parties that confidentiality can be preserved impliedly, as well as expressly. The question of whether or not confidentiality has been preserved must be examined in the particular context of each case.

The judge noted that the seller's counsel had referred the court to the way in which the matter of privilege and confidentiality was analysed by Lord Neuberger MR in the Beresovksy litigation. While the context, facts, and circumstances of that case were very different to the present case, it was nonetheless valuable as an illustration of the need to look at the question in the context of the particular case.

In the present case, the access occurred because of provisions of the contract between the parties. The judge stated: "The arrangements were broad but not, in my judgment, so broad as to allow access for any purpose or for the purpose of use in this type of litigation between a buyer and a seller. The access was wholesale but the purpose was not."

As a result, the judge was not persuaded that confidentiality was lost so as to allow the buyer to succeed in its challenge. The seller remained entitled to assert privilege in the relevant emails and documents.

(This judgment was given on 30 March 2021, but the transcript has only recently been made available on Westlaw.)