High Court: insufficient to withhold documents by describing them as 'by their nature privileged'

Ruling on a preliminary matter ahead of a hearing to take place next year, Chief Master Marsh said that the practice had "no place in modern litigation, let alone litigation of very real complexity".

"It is clearly unhelpful, without describing the documents said to be privileged, to say that 'their nature' explains why they are privileged because the recipient of the list of documents has no way of knowing which documents, or classes of documents, are being referred to," he said.

He ordered the company to provide a full list of the documents it was claiming privilege in relation to, along with the date when each document was created, the nature of the privilege claimed and further evidence about how the claim to litigation privilege arose, in the form of a witness statement made by a "proper officer" of the company rather than its lawyers.

"In the unlikely event that the description of a document or its date is said to reveal privileged information, in the first instance such a document may be described in general terms or included within a class of documents," he said.

Litigation expert Michael Fletcher of Pinsent Masons, the law firm behind Out-Law.com, said that the form of wording used by the company had become "commonplace" in disclosure statements in recent years. However, the judge in this case was clearly of the view that "litigators need to do better, so that the basis for claiming privilege may be properly understood by the other party and the court".

"It may not be necessary to list every document in respect of which privilege is claimed, but parties should now consider setting out in their disclosure statement the specific categories of documents in respect of which privilege is claimed, and why," he said.

"This is a welcome development. Privilege should be considered carefully by a party before it is claimed, and it is reasonable to expect a disclosure statement to provide sufficient transparency on this. Setting out a clear basis for a privilege claim may also reduce the number of occasions where inter-solicitor correspondence is sent exploring the basis upon which privilege claims have been made," he said.

The civil procedure rules (CPRs), which govern legal proceedings in the civil courts, give parties the right to withhold documents from disclosure in certain circumstances, including where those documents carry litigation or legal advice privilege. However, the party who wishes to claim that right must state so in writing, and the grounds on which it claims the right. The High Court is able to compel that party to provide further evidence of that right, but in practice will only do so in exceptional circumstances.

The underlying dispute arose out of a collaboration agreement between two pharmaceutical companies, to do with joint research on drugs for the treatment of Alzheimer's disease. No candidate drugs had been nominated by the end of the collaboration term. One of the companies continued with the work after the agreement ended, providing the other with regular updates. The dispute was whether two drugs that emerged from this later work were within the scope of the collaboration agreement.

Along with the dispute over whether the evidence provided about the documents was sufficient to justify the privilege claim, there was also a disagreement over whether the documents were being withheld on the grounds of litigation privilege, or on legal advice privilege. The company "appeared to conflate legal advice privilege with litigation privilege", and had attempted to claim privilege over certain "attendance notes" covering conversations or meetings with its current and former employees. The judge found that the company was not entitled to do so.

"The essence of legal advice privilege is the protection of confidential communications between lawyers and their clients for the purpose of giving and obtaining legal advice," he said.

"In my judgment, none of these attendance notes can be the subject of legal advice privilege. They do not fall within the generally understood confines of legal advice privilege ... because it is not apt to cover an information gathering exercise of the type which will normally be conducted in relation to litigation but undertaken before a dispute is in reasonable contemplation," he said.

An alternative claim for litigation privilege also failed because there was no evidence that the documents had been created for the "dominant purpose" of obtaining legal advice, evidence or information in preparation for actual legal proceedings, or where legal proceedings were reasonably anticipated.

Michael Fletcher said that companies and in-house lawyers should "take heed" of the judge's findings on this point.

"The attendance notes were taken before litigation was in reasonable contemplation; they were part of a fact-finding exercise in respect of a contract that had been entered between the parties," he said. "Litigation privilege did not therefore apply. Chief Master Marsh also found that legal advice privilege did not apply, even in respect of attendance notes recording conversations between employees and lawyers; those employees were not part of the 'client' and so legal advice privilege could not apply."

"This is a salutary reminder of the need for caution in any 'fact finding' exercise that is conducted before a dispute is in contemplation. It will often be necessary to conduct such investigations, but documents and notes created in such exercises may not be privileged - even if lawyers are involved - unless they record communications or conversations between the lawyers and the specific 'client' individuals for the purpose of allowing the lawyers to give those clients legal advice. Such exercises need careful advance planning to minimise the risk of such documents being created," he said.