No Collateral Waiver Where Party Relied On The Effect Of Legal Advice Rather Than Its Content

Author:Herbert Smith Freehills
Profession:Herbert Smith Freehills
 
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The High Court has held that a claimant did not waive privilege where, in evidence filed in response to an application to strike out its claims under Dutch law, it stated that it had received Dutch law advice and had formulated its claims on the basis of that advice: KMG International NV v Chen [2019] EWHC 3634.

Where a party relies on privileged material to support its claim, whether on an interim application or at trial, the principle of collateral waiver or the “cherry picking rule” may come into play to require the disclosure of other privileged material relating to the same issue or transaction. This principle is based on fairness, so as to avoid a party being able to put forward only part of the picture.

The present case is a reminder that the court will distinguish between reliance on the content of a privileged document and reliance on its existence or effect. Only the former rather than the latter will give rise to a collateral waiver. As the judge recognised in this case, however, the dividing line between reliance on the contents of a document and reliance on its effect is by no means clear cut. In practice, therefore, parties to litigation should be very cautious in referring to privileged materials in any evidence submitted.

Background

The defendants applied for strike-out on the basis that the Dutch law claim advanced by the claimant was not properly particularised and was not supported by evidence of Dutch law.

The claimant served evidence in response to the strike-out application and in support of its intended application for permission to re-amend its particulars of claim. That evidence stated that the claimant had obtained Dutch law advice from De Brauw which had formed the basis of its formulation of the Dutch law claim, though the advice had not been made available to the defendants because it was privileged.

The claimant also introduced an expert report of Professor Veder in support of the proposed amendments. In response to the defendants' request for the instructions or materials provided to Professor Veder in order to prepare his report, the claimant produced a redacted version of a note from De Brauw (the “Note”).

The defendants applied for an unredacted copy of the Note under CPR 35.10(4). This rule provides, in summary, that the material instructions on which an expert report is based are not privileged against disclosure, but the court will not order disclosure unless satisfied that there are reasonable grounds...

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