Rawlinson And Hunter Trustees S.A. & Ors v Director of the Serious Fraud Office [2014] EWCA Civ 1129

[2014] EWCA Civ 1129Case No A3/2014/1352
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2014] EWHC 1102 (Comm)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION (COMMERCIAL COURT)
Mr. Justice Eder
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Thursday 31 st July 2014
Before
LORD JUSTICE LONGMORELORD JUSTICE MOORE-BICKLADY JUSTICE GLOSTER
Between
(1) RAWLINSON and HUNTER TRUSTEES S.A. (a company incorporated in Switzerland, in its capacity as trustee of the Tchenguiz Family Trust)Claimants/Appellants(2) VINCENT TCHENGUIZAppellantand othersAppellantDIRECTOR of the SERIOUS FRAUD OFFICEDefendant/Respondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr. Charles Hollander Q.C., Miss Rosalind Phelps and Mr. James Duffy (instructed by Stephenson Harwood LLP) for appellantsMr. Pushpinder Saini Q.C. and Mr. James Segan (instructed by Slaughter and May) for respondentHearing Hearing date : 14 th July 2014
JudgmentLord Justice Moore-Bick :
[1]This is an appeal by Vincent Tchenguiz and others (“the VT parties”) against the decision of Eder J. on an application under CPR 31.20 for permission to make use of certain documents said to have been disclosed by the respondent in error in litigation currently before the Commercial Court. Parallel proceedings have been brought against the same defendant by Robert Tchenguiz and others (“the RT parties”) in which similar issues arise in relation to disclosure and in those circumstances they have sensibly agreed to be bound by the outcome of this appeal. For convenience I shall refer to the parties to this appeal as “the VT parties” and “the SFO” respectively.[2]The proceedings in the Commercial Court have their origin in the collapse of the Icelandic bank Kaupthing Bank hf. As a result of its investigations into the circumstances in which that occurred the SFO obtained warrants for the arrest of Robert and Vincent Tchenguiz and to search both their residences and certain premises of the various companies and trusts through which they pursue their business interests. Some of the warrants were eventually quashed following successful proceedings for judicial review, but the VT parties and the RT parties both say that the execution of those warrants, together with the attendant publicity, caused significant financial loss and reputational damage. The claims for damages which formed part of the claims for judicial review were transferred to the Commercial Court. The trial is due to start early in October 2014.[3]Disclosure has been a very onerous exercise, in particular because of the number and nature of the documents held by the SFO which have to be reviewed for relevance, public interest immunity (“PII”), statutory prohibitions on disclosure, legal professional privilege and the rights of third parties. At its peak the team of reviewers employed by the SFO numbered well over one hundred and included junior barristers, trainee solicitors, contract lawyers and paralegals assigned to different aspects of the work. In March 2013 Slaughter and May wrote to the appellants’ solicitors on behalf of the SFO describing in broad terms how they intended to approach the task. In a letter dated 14th March 2013 they explained that the documents in the SFO’s possession fell into two categories: those relating to the investigation and those relating to the judicial review proceedings. The letter continued:
“The Judicial Review Work sat within the broader Investigation Work, in the sense that the judicial review proceedings were started at a point in time when the SFO’s investigation into Kaupthing had already started and in circumstances where the SFO’s investigation continued, albeit in a much reduced way, alongside the proceedings. A number of SFO employees found themselves engaged in both the Investigation Work and the Judicial Review Work. The SFO is entitled to, and does, assert privilege claims in respect of both limbs of LPP, namely legal advice privilege and litigation privilege. However, in order to avoid debate as to the true scope of the privilege in the relevant context, and to avoid the burdensome task of identifying any documents, or parts of documents, which may fall within that privilege, the SFO does not, and will not, generally assert litigation privilege over internal communications within the SFO as regards its Investigation Work, save to the extent that such communications may also fall within the scope of legal advice privilege. For the avoidance of doubt, our client does intend to assert its right to claim LPP over: (a) communications with external legal counsel, and communications with internal SFO lawyers, in respect of issues where those lawyers were providing discrete legal advice to the investigation team in relation to the Investigation Work; and (b) both the legal advice limb and the litigation privilege limb of LPP as regards the Judicial Review Work.”
[4]Similar explanations were expressed in letters written on 21st May 2013 and in witness statements made in the proceedings by Mr. Cotton, a partner in Slaughter and May.[5]Documents were disclosed in the form of electronic copies together with covering lists also in electronic form, so that disclosure and production for inspection occurred simultaneously. When I use the word “disclosure” (or some cognate expression), therefore, it should be understood with that in mind. During December 2013 and January 2014 a large number of documents were disclosed to the VT parties by the SFO, including the following documents that are the subject of the present appeal:(i) Document SFO-042290, a briefing note for the Intelligence Unit written by Katie Badger (“the Katie Badger document”);(ii) Document SFO-038047, a statement made by a former employee of the SFO, Wayil Eisa (“the Wayil Eisa statement”);(iii) Documents SFO-019016 and SFO-032717, comprising a short string of emails passing between the Treasury Solicitor and the SFO relating to a draft order that was to be placed before the court; and(iv) Document SFO-016237, a PowerPoint presentation in respect of which PII was claimed.[6]Following correspondence between Slaughter and May and the appellants’ solicitors, Stephenson Harwood, in which it was asserted that the documents had been disclosed inadvertently, the VT parties made an application to the court under CPR 31.20 for permission to make use of the documents in the proceedings. The application was resisted by the SFO on the grounds that the first three documents were subject to LPP and that disclosing them had been an obvious mistake. Eder J. held that each of those documents was indeed privileged and the fact that it had been disclosed by mistake obvious. Accordingly, he declined to give permission for their use.[7]In the case of the document in respect of which PII was claimed the SFO relied on a certificate issued by the Director (after disclosure had taken place) that the public interest in the administration of justice which would be served by disclosing it was outweighed by the public interest in withholding it from production. That certificate was not challenged and the judge exercised his discretion against allowing use to be made of the document.[8]Since different considerations apply to each of the documents, or group of documents, that are the subject of the appeal, it is convenient to deal with them separately. Before I do so, however, it is necessary to refer briefly to some of the authorities.[9]CPR 31.20 provides as follows:
“Where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court.”
[10]It is trite law that a party who is entitled to claim legal professional privilege in respect of a document is not bound to do so. He can, if he so chooses, waive privilege and allow the other party to the litigation to inspect it. It follows that it cannot be assumed that the production for inspection of a document to which privilege attaches must have inevitably have been inadvertent. Before the introduction of the CPR a party who inadvertently produced a privileged document for inspection could apply for an injunction to restrain its use. Although the jurisdiction to grant relief was discretionary, it was the established practice of the court to grant an injunction only in cases where it was satisfied that production had been obtained by fraud or where it was obvious that the document had been disclosed by mistake. (No question of fraud arises in this case and there is no need to refer to it again.) The starting point in such cases has always been that a party who is allowed to inspect documents is entitled to assume that they were produced for that purpose voluntarily. In Pizzey v Ford Motor Co. Ltd [1994] P.I.Q.R. 15 Mann L.J., (with whom the other members of the court agreed) having referred to a number of earlier authorities, including Goddard v Nationwide Building Society [1987] Q.B. 670, Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 W.L.R. 1027 and Derby & Co. Ltd v Weldon (No. 8) [1991] 1 W.L.R. 73 said at page 21:
“Slade L.J.’s use of the phrase “obvious mistake” does not seem to me founded on any authority, but the use was repeated by Dillon L.J. in Derby & Co. Ltd in the passage which I have quoted. I respectfully agree with the usage. It is of the utmost importance in the context of litigation that a party should be able to rely on the discovery of his adversary. Exceptions to that ability must not extend beyond fraud and mistake. Cases of mistake are stringently confined to those which are obvious, that is to say those which are evident. This excites the question: Evident to whom? The answer must be to the recipient of the discovery. If the mistake was evident to that person then the exception applies, but what of the case where it was not evident but would have been evident to a reasonable person with the qualities of the recipient? In this context the law ought not to give an advantage to obtusity, and if the recipient ought to have realised that a mistake was evident then the exception applies. My opinion accords with that expressed by the learned editors of Phipson on Evidence (14th edition, 1990) page 525.”
[11]Those principles were indorsed and applied by this court in Breeze v John Stacey & Sons Ltd (unreported, 21st June 1999). CPR 31.20 does not itself provide guidance in relation to the principles on which the court’s jurisdiction is to be exercised, but it has been accepted that they remain substantially the same as those on which the court formerly exercised its discretion to grant relief by way of injunction. The most convenient summary of the present law is to be found in the decision of this court in Al-Fayed v Commissioner of Police for the Metropolis [2002] EWCA Civ 780 (unreported, 29th May 2002), a case in which two opinions of counsel had been disclosed unintentionally. The Commissioner argued that the opinions were the subject of both LPP and class PII. The judgment of the court was delivered by Clarke L.J. Although there is a dispute relating to the court’s formulation of the principles which apply where PII is involved, it was common ground that what was said in that case correctly states the position in relation to LPP. In paragraphs 16-18 Clarke L.J. set out the following principles which were derived from the authorities to which I have referred and which in paragraph 18 the court expressly confirmed applied in the exercise of the court’s jurisdiction under CPR 31.20:(i) A party giving inspection of documents must decide before doing so what privileged documents he wishes to allow the other party to see and what he does not.(ii) Although the privilege is that of the client and not the solicitor, a party clothes his solicitor with ostensible authority (if not implied or express authority) to waive privilege in respect of relevant documents.(iii) A solicitor considering documents made available by the other party to litigation owes no duty of care to that party and is in general entitled to assume that any privilege which might otherwise have been claimed for such documents has been waived.(iv) In these circumstances, where a party has given inspection of documents, including privileged documents which he has allowed the other party to inspect by mistake, it will in general be too late for him to claim privilege in order to attempt to correct the mistake by obtaining injunctive relief.(v) However, the court has jurisdiction to intervene to prevent the use of documents made available for inspection by mistake where justice requires, as for example in the case of inspection procured by fraud.(vi) In the absence of fraud, all will depend upon the circumstances, but the court may grant an injunction if the documents have been made available for inspection as a result of an obvious mistake.(vii) A mistake is likely to be held to be obvious and an injunction granted where the documents are received by a solicitor and: (a) the solicitor appreciates that a mistake has been made before making some use of the documents; or (b) it would be obvious to a reasonable solicitor in his position that a mistake has been made; and, in either case, there are no other circumstances which would make it unjust or inequitable to grant relief.(viii) Where a solicitor gives detailed consideration to the question whether the documents have been made available for inspection by mistake and honestly concludes that they have not, that fact will be a relevant (and in many cases an important) pointer to the conclusion that it would not be obvious to the reasonable solicitor that a mistake had been made, but is not conclusive; the decision remains a matter for the court.(ix) In both the cases identified in (vii) (a) and (b) above there are many circumstances in which it may nevertheless be held to be inequitable or unjust to grant relief, but all will depend upon the particular circumstances.(x) Since the court is exercising an equitable jurisdiction, there are no rigid rules.[12]In the present case it was common ground that each of the documents in respect of which the SFO sought to rely on LPP had been read by lawyers employed by the VT parties for the purposes of inspecting documents produced on disclosure and that in each case the lawyer concerned believed that the document had been disclosed intentionally. Document SFO-042290 (The Katie Badger report)[13]The Katie Badger report was disclosed on 16th January 2014, together with about 1,500 other documents, under cover of a letter of that date which contained the following statement:
“By providing this disclosure in accordance with the CPR the SFO does not intend that there should be any waiver of the SFO’s rights to withold from disclosure and/or inspection documents or information, including third party information, which may have been inadvertently disclosed in these Proceedings.”
It was described as an “Intelligence Unit Briefing Note”. In the opening paragraph Ms Badger recorded that she had been asked to provide the Intelligence Unit with a briefing note on potential offences and any jurisdictional issues that might arise in taking on the investigation of the activities of Kaupthing Bank and certain of its clients in the UK that ultimately led to the bank’s collapse. The VT parties accepted that the document was privileged, but contended that it was by no means obvious that it had been disclosed by mistake. It contained nothing to indicate that Ms Badger herself was a lawyer; indeed, at a number of places she suggested that a lawyer should be consulted. The information the document contained was not of a sensitive nature. Moreover, parts had been redacted for relevance, suggesting that those acting for the SFO had considered it and were content to reveal the remaining contents. There was nothing in the manner of disclosure to suggest that a mistake might have been made.[14]The dispute in relation to this document turned entirely on the question whether it would have been obvious to a reasonable solicitor, standing in the shoes of the lawyer who read the document, that it had been disclosed by mistake. The judge held that it would. In his view the very size and complexity of the disclosure exercise meant that mistakes were likely to be made and that the correspondence to which I have referred made it clear that the SFO did not intend to waive its rights in documents which might be inadvertently disclosed. He also found that there were specific matters in the body of this particular document which indicated there had been an obvious mistake in disclosure, although he did not identify them and Mr. Saini Q.C. did not draw our attention to anything that the judge may have had in mind.[15]In my view the finding of an obvious mistake cannot be sustained on the basis of the material before the court. Not all those who were employed by the VT parties to inspect the documents were solicitors or barristers, and most if not all of them were quite junior. Nonetheless, once it is accepted that the person who inspected a document did not realise that it had been disclosed by mistake, despite being a qualified lawyer, it is a strong thing for the judge to hold that the mistake was obvious. Those reviewing the documents were engaged on an enormous task, in the course of which they had been required to consider many thousands of documents, some of which were, or at any rate may arguably have been, privileged. The judge laid some emphasis on the letters to which I have referred, but the essence of his thinking seems to have been that it was obvious that the document had been disclosed by mistake because it was obvious that it was privileged. That seems to me to confuse two things: whether the document was privileged and whether, even if privileged, it had obviously been disclosed by mistake. It is only if the court is satisfied of the latter that it will consider whether to prevent the use of the document in the litigation. No doubt in some cases the sensitive nature of the document will be enough to make it obvious that it has been disclosed by mistake, but often that will not be the case. Given the scale of the disclosure and the range of documents involved, I do not think that general assertions in correspondence that the SFO did not intend to waive privilege are sufficient to make it obvious that any document arguably privileged must have been disclosed by mistake. I would allow the appeal in relation to this document. Document SFO-038047 (The Wayil Eisa statement)[16]In March 2012 a former employee of the SFO, Wayil Eisa, was asked to provide an account of his involvement in the SFO’s investigation into the collapse of Kaupthing Bank. As a result he produced a chronological account of his participation in the investigation, which, shortly before he completed it, he expanded in order to provide information that might be useful in connection with the production of an affidavit for use in the judicial review proceedings. The document, which ran to a total of nearly 16 pages, described many aspects of the investigation, such as the way in which the investigation team worked, the resources available to it and the extent to which those who carried it out were also engaged on other investigations. Some of the material contained in the report was no doubt used by the SFO in mounting its defence to the judicial review proceedings, but other parts are the kind of material that management might well use in order to review the quality and effectiveness of the wider investigation.[17]This document was disclosed together with about 500 other documents on 23rd December 2013 under cover of a letter of that date in which it was said:
“By providing this disclosure in accordance with the CPR the SFO does not intend that there should be any waiver of the SFO’s rights to withold from disclosure and/or inspection documents or information, including third party information, which may have been inadvertently disclosed in these Proceedings.”
[18]The main dispute in relation to this document was whether it was subject to LPP at all. The SFO claimed that it was subject to litigation privilege because it had been created in contemplation of the judicial review proceedings which had already been commenced. The VT parties submitted that the evidence did not adequately support the conclusion that the report had been produced for the dominant purpose of the litigation as opposed to a review of the effectiveness of the operations, and that it was therefore not privileged. They relied on what was said by this court in Rawlinson v Hunter Trustees S.A. v Akers [2014] EWCA Civ 136 (an appeal against an earlier decision also dealing with disclosure) that in order to establish litigation privilege it is necessary to place before the court evidence from which it can be seen that the document in question was created in contemplation of litigation. Quite apart from that, however, the VT parties submitted that it was not obvious that the Wayil Eisa report had been disclosed by mistake. Even if it had been prepared for the dominant purpose of the judicial review proceedings, that was not obvious.[19]The evidence relating to the creation of the Wayil Eisa statement was contained in Mr. Cotton’s eleventh witness statement. In it he says that the statement was prepared by Mr. Eisa to explain his role and involvement in the investigation “in the context of” the judicial review proceedings, but he does not go so far as to assert that it was prepared for the dominant purpose of those proceedings. More importantly, he does not give an account of the circumstances in which it was created of a kind that would enable the court to satisfy itself that the claim to privilege was well founded. As has been said on many occasions, if a document has been created for more than one purpose, it is necessary to establish which of two, or perhaps more than two, purposes was dominant if a claim to privilege is to be made out.[20]The judge held that the report had been prepared for the dominant purpose of litigation. He accepted that Mr. Cotton had not said that in terms, but he considered that that was the necessary effect of his evidence and was apparent from the nature of its contents. He held that it would have been obvious to a reasonable solicitor that it had been disclosed by mistake. With all due respect to the judge, I am unable to agree. In my view the nature and contents of the document tend to suggest that it was created both for the purposes of reviewing the effectiveness of the investigation procedure and (but to a lesser extent) to provide information for use in connection with the litigation. In those circumstances if a claim for LPP is to be made out it is essential not merely to assert that it was created for the dominant purpose of litigation, but that there be material before the court from which it can see that that claim is well founded. In the present case evidence of that kind is lacking and for the reasons I have given I am unable to accept that the contents of the document are capable of making up for its absence. For those reasons I think the judge was wrong to hold that the document was privileged. However, if I am wrong about that, I would hold that any mistake in disclosing it was not obvious. For these reasons I would allow the appeal in relation to this document also. Documents SFO-019016 and SFO-032717 (The emails)[21]Document SFO-019016 was disclosed on 16th December 2013 under cover of a letter of that date which contained the following passage:
“Please also note that, due to time constraints it has not been possible for the SFO to undertake the level of quality control in relation to this tranche of disclosure as was undertaken for earlier tranches. By providing this disclosure in accordance with the CPR the SFO does not intend that there should be any waiver of the SFO’s rights to withold from disclosure and/or inspection documents or information, including third party information, which may have been inadvertently disclosed in the Proceedings.”
[22]Document SFO-032717 was disclosed on 19th December 2013 together with over 16,000 other documents under cover of a letter of that date written in similar terms.[23]These emails, sent in early June 2012, formed part of a single string relating to an application by parties associated with Robert Tchenguiz for permission to make use in proceedings in Guernsey of a statement made by Mr. Paul Brinkworth on behalf of the SFO in connection with the claim for judicial review. In them the Treasury Solicitor sought instructions in connection with the filing of a consent order in the Administrative Court, in particular whether the court should be made aware that parts of Mr. Brinkworth’s statement and the exhibits to which it referred had been provided to Grant Thornton some weeks earlier. Although on the face of them the emails were subject to LPP, Mr. Hollander submitted that the context in which they had been disclosed pointed to a deliberate decision not to claim privilege in respect of them. Mr. Saini relied on the fact that on their face the emails had been sent by solicitors to their clients seeking instructions in relation to an aspect of pending litigation and were thus privileged. He submitted that their content was of a kind that made it clear that they were not documents which the SFO had intended to disclose.[24]Towards the end of 2013 the VT parties had asked the SFO on more than one occasion to tell them whether Grant Thornton had been in any way involved in the drafting of Mr. Brinkworth’s statement. One response received from Slaughter and May was that the most efficient way in which to provide answers to their questions was to allow them to complete disclosure. As a result the VT parties decided to wait and see what that produced. In the event, the SFO disclosed several documents relating to the drafting of Mr. Brinkworth’s statement and the involvement of Grant Thornton. The documents included a number of contemporaneous emails passing between the solicitors acting for Grant Thornton and the Treasury Solicitor, including one marked “without prejudice and legally privileged”. Solicitors within Stephenson Harwood who read the group of documents assumed that they had been disclosed deliberately as a way of answering the questions that had been put earlier or that, despite their marking, it was accepted that they were not privileged. Some had been redacted for privilege, which served to confirm the assumption that the rest of the contents had been disclosed intentionally. They did not think that they had obviously been disclosed by mistake. It is unclear whether Documents SFO-019016 and SFO-032717 themselves were read by Stephenson Harwood, but they were read by lawyers employed by the VT parties, who did not think they had been disclosed by mistake because of their similarity to other documents disclosed in relation to the same subject matter.[25]In the light of the fact that they were on their face concerned with obtaining instructions, the judge thought that it would have been obvious to a reasonable solicitor that these emails had been disclosed by mistake, but he did not make any reference to the circumstances in which they had been disclosed, which in my view makes all the difference. Slaughter and May had led the VT parties to think that the questions they had asked about Grant Thornton’s involvement in the drafting of Mr. Brinkworth's statement would be answered by documents produced on disclosure. Here were documents which touched directly on that question and which were similar to other documents which had been partially redacted, suggesting that these had been reviewed and approved for disclosure. In the particular circumstances of this case I do not think it was obvious that these emails had been disclosed by mistake. I would therefore allow the appeal in relation to them. Document SFO-016237[26]This document was disclosed with over 10,000 other documents on 16th December 2013 under cover of a letter of that date. It is common ground that when this document was received and reviewed by the lawyers dealing with disclosure on behalf of the VT parties they were unaware that it was or might be subject to PII or that it had been disclosed by mistake. However, on 4th March 2014 the Director issued a PII certificate in respect of it. In that certificate he stated that he had considered the principles to be derived from R v Chief Constable of West Midlands Police ex parte Wiley [1995] 1 A.C. 274, on the basis of which he considered that the public interest in the prevention and detection of crime, which would be served by maintaining the confidentiality of the document, outweighed the public interest in the administration of justice, which would be served by its disclosure. When the application for permission to use the document in the proceedings came before the judge the certificate was before him. It was not challenged.[27]In paragraph 17 of its judgment in Al-Fayed the court said in relation to documents subject to PII:
“Those principles [sc. the principles set out in paragraph 16] seem to us also to apply to cases where the documents were not initially the subject of LPP privilege but in respect of which the disclosing party was entitled to claim PII. Once it is accepted that the party concerned is not bound to refuse to permit inspection of a relevant document we can see no reason why (in the absence of particular circumstances in a particular case) different principles should apply to the two situations.”
[28]Relying on what had been said in paragraphs 16 and 17, the VT parties submitted that permission should be given to make use of the document, since its disclosure was not an obvious mistake. The SFO submitted, however, that the judge had a broad discretion to refuse to allow the document to be used, which he should exercise in favour of rejecting the application, but, if that was wrong, he was not bound by what this court had said in paragraph 17 of Al-Fayed because the court had proceeded on the basis of an assumption and without the benefit of argument. The SFO also reserved the right to argue on any appeal that the observations had been made per incuriam. The judge found it unnecessary to decide whether an obvious mistake had been made (although he was prepared to assume that it had not) or whether he was bound by paragraph 17 of Al-Fayed (although he was prepared to assume that he was). He noted that in paragraph 16(x) of the judgment in Al-Fayed the court had said that there were no rigid rules and held that it was open to him to make whatever order he considered would best serve the interests of justice. The existence of an unchallenged PII certificate was, in his view, “a very potent and relevant matter to consider” and one to which he should give effect in this case. He therefore refused permission to make use of the document in the proceedings.[29]Before us Mr. Hollander Q.C. submitted that the judge had misunderstood what the court had meant in paragraph 16(x). Paragraph 16 as a whole was intended to encapsulate the principles to be derived from the previous authorities, which were concerned with the exercise of the discretion to restrain the use of a document by injunction. Inevitably, therefore, the court will have regard to what is just and convenient (as recognised in sub-paragraphs (v), (vi) and (ix)), but sub-paragraph (x) was not intended to recognise the existence of an unfettered discretion; it was intended simply to reflect the fact that there must be an element of flexibility. The judge should not, therefore, have treated it as allowing him to dispense with the need for an obvious mistake and should have granted the application in relation to this document. Mr. Hollander also submitted that what the court had said in paragraph 17 of Al-Fayed formed part of the ratio of its decision and was therefore binding on us, unless decided per incuriam, a conclusion which the court should be very slow to reach in relation to a court composed of Lord Phillips M.R., Robert Walker and Clarke L.JJ., all of whom were well aware of the principles relating to PII. Mr Saini Q.C. submitted that the judge had rightly understood that the principle in paragraph 16(x) of Al-Fayed entitled him to exercise a general discretion, notwithstanding the absence of an obvious mistake. If that were wrong, however, he submitted that paragraph 17 of the judgment was not part of the ratio of the decision, or, if it was, had been decided without the benefit of argument and per incuriam.[30]In my view Mr. Hollander was right in submitting that in paragraph 16(x) the court was not intending to give judges carte blanche to make whatever orders they think fit. The discretion under CPR 31.20 must be exercised judicially and in accordance with the principles derived from the earlier authorities, including, most importantly, Al-Fayed. However, I am persuaded that PII raises questions different from those that arise in connection with LPP. Ex parte Wiley makes it clear that, although it is ultimately for the court to decide the question of production for inspection and subsequent use in the proceedings, the person in possession of a document subject to PII is not entitled to disclose it at will but has a duty to protect the public interest, if necessary by an application to the court. The critical question, therefore, is whether we are free to depart from what was said in paragraph 17 of Al-Fayed because the court in that case proceeded on the basis of an assumption and did not hear argument on the relevant principles, including those to be derived from ex parte Wiley, to which its attention does not appear to have been drawn.[31]I confess to having some difficulty in understanding paragraph 17 of Al-Fayed. It was accepted by both parties before us that the principles underlying LPP and PII are fundamentally different. LPP is a private right, enjoyed by parties to litigation, to withhold from production confidential documents brought into being in contemplation of litigation or for the purposes of obtaining legal advice. Since the right is private in nature it can be waived by the person who is entitled to rely on it. It follows that a litigant may, if he so chooses, produce for inspection documents which he would otherwise be entitled to withhold. These principles underpin the decision in Pizzey v Ford Motor Co. Ltd and the authorities to which it refers, as well as the principles set out in paragraph 16 of Al-Fayed.[32]PII, on the other hand, is not a private right. It is concerned with maintaining the confidentiality of documents which would harm the public interest if they were allowed to enter the public domain. The House of Lords expounded the modern law relating to PII in R v Chief Constable of West Midlands Police ex parte Wiley. Lord Woolf, with whom the other members of the House agreed, referred to a passage in the judgment of Bingham L.J. in Makanjuola v Commissioner of Police for the Metropolis [1992] 3 All E.R. 617 at 623 to which he gave cautious approval. Bingham L.J. in that case had said:
“Where a litigant asserts that documents are immune from production or disclosure on public interest grounds he is not (if the claim is well founded) claiming a right but observing a duty. Public interest immunity is not a trump card vouchsafed to certain privileged players to play when and as they wish. It is an exclusionary rule, imposed on parties in certain circumstances, even where it is to their disadvantage in the litigation. This does not mean that in any case where a party holds a document in a class prima facie immune he is bound to persist in an assertion of immunity even where it is held that, on any weighing of the public interest, in withholding the document against the public interest in disclosure for the purpose of furthering the administration of justice, there is a clear balance in favour of the latter. But it does, I think, mean: (1) that public interest immunity cannot in any ordinary sense be waived, since, although one can waive rights, one cannot waive duties; (2) that, where a litigantholds documents in a class prima facie immune, he should (save perhaps in a very exceptional case) assert that the documents are immune and decline to disclose them, since the ultimate judge of where the balance of public interest lies is not him but the court; and (3) that, where a document is, or is held to be, in an immune class, it may not be used for any purpose whatever in the proceedings to which the immunity applies, and certainly cannot (for instance) be used for the purposes of cross-examination.”
[33]Lord Woolf said that he would unhesitatingly endorse most of what Bingham L.J. had said, but he qualified his approval, saying at page 296E-H:
“If a Secretary of State on behalf of his department as opposed to any ordinary litigant concludes that any public interest in documents being withheld from production is outweighed by the public interest in the documents being available for purposes of litigation, it is difficult to conceive that unless the documents do not relate to an area for which the Secretary of State was responsible, the court would feel it appropriate to come to any different conclusion from that of the Secretary of State. The position would be the same if the Attorney-General was of the opinion that the documents should be disclosed. It should be remembered that the principle which was established in Conway v Rimmer [1968] A.C. 910 is that it is the courts which should have the final responsibility for deciding when both a contents and a class claim to immunity should be upheld. The principle was not that it was for the courts to impose immunity where, after due consideration, no immunity was claimed by the appropriate authority. What was inherent in the reasoning of the House in that case was that because of the conflict which could exist between the two aspects of the public interest involved, the courts, which have final responsibility for upholding the rule of law, must equally have final responsibility for deciding what evidence should be available to the courts of law in order to enable them to do justice.”
[34]Later, after referring to an observation of Lord Simon in R v Lewes Justices ex parte Secretary of State for the Home Department [1973] 388, 407 that once the public interest in withholding a document outweighs the public interest in the administration of justice the evidence cannot be admitted and that the privilege cannot be waived by the Crown or anyone else, Lord Woolf said at page 298D-E:
“ . . . when Lord Simon said that the privilege was one which could not be waived, he was referring to the situation after it had been determined that the public interest against disclosure outweighed that of disclosure in the interests of the administration of justice. When that is the determination which has been made, it is inevitable that the preservation of the document should follow so as to protect what has been held to be the dominant public interest. It is, however, unhelpful to talk of "waiver" in the different situations where the balancing of the conflicting public interests has not yet been carried out or where it has been carried out and the result requires disclosure. Although it is the practice to talk of conflicting public interests this can be misleading. The conflict is more accurately described as being between two different aspects of the public interest. If it is decided that the aspect of the public interest which reflects the requirements of the administration of justice outweighs the aspect of the interest which is against disclosure, then it is the public interest which requires disclosure.”
[35]It is clear from these and other passages in Lord Woolf’s speech that PII differs fundamentally from LPP. Once the question has been raised whether it is in the public interest that production of a document, otherwise disclosable, should be withheld, it becomes necessary to balance the public interest in maintaining confidentiality against the public interest in the due administration of justice. If the need for confidentiality outweighs the need to promote the administration of justice, the document must not be disclosed. It would seem to follow that, if a document to which PII properly attaches is disclosed by mistake and an objection is raised to its use in the proceedings, it remains necessary for the court to decide in accordance with established principles whether its use should be allowed, regardless of whether the mistake was, or should reasonably have been, obvious to the recipient.[36]It is for this reason that I find it difficult to understand why in Al-Fayed the court appears to have considered that the holder of a document to which PII attaches is not bound to refuse inspection of it and why the same principles apply in such a case as those which apply to a document in respect of which LPP may be claimed. The explanation may, perhaps, lie in the recognition by Lord Woolf in ex parte Wiley that the court is unlikely to review a decision by a responsible official that the document may safely be produced. However, that is to say little more than that the document was in truth not subject to PII. Another explanation may, however, lie in the way in which the case was argued, both below and in this court. In Al-Fayed copies of two opinions written by Treasury counsel for the Crown Prosecution Service (“CPS”) and the Metropolitan Police solicitor (“MPS”) were inadvertently sent to the solicitors acting for claimant. A third opinion dealing with the propriety of arresting Mr. Al-Fayed and others had been intentionally disclosed. The CPS and MPS claimed that the opinions were the subject of LPP and also fell within a class of documents that was not disclosable by reason of PII. They therefore sought an order for the delivery up of the two documents and the claimants made a cross-application for permission to make use of them in the litigation. Before the judge it had been agreed that the principles to be applied were those to be found in Breeze v John Stacey & Sons Ltd, to which I have already referred (see the judgment below at [2002] EWHC 562 (QB), paragraph 25), but that may in fact have been limited to the argument based on LPP, because later, in paragraph 29, the judge summarised the submissions of Mr. Freeland for the third defendant (one of four members of the Organised Crime Group who had been made parties to the action) which included the submission that the opinions fell into a class of documents protected by PII.[37]The judge in that case was satisfied that on reviewing the documents the hypothetical reasonable solicitor would have realised that they were subject to LPP and to class PII and would have realised that an obvious mistake had occurred leading to inadvertent disclosure (paragraph 35). The judge gave no further consideration to the principles governing PII, perhaps because he thought that his finding that there had been an obvious mistake made it unnecessary to do so. Thus, although the defendants had argued that the documents were subject to PII, the case seems to have proceeded on the assumption that the principles to be applied to determine whether the claimants should be allowed to make use of documents subject to PII were the same as those which applied where LPP was concerned.[38]The argument that the opinions were subject to class PII was clearly pursued on appeal: see paragraph 8 of the judgment. Again, it appears that the legal principles were not in dispute, at least so far as LPP was concerned: see paragraph 10. In paragraph 11 Clarke L.J. summarised the position in relation to inspection as follows:
“By rule 31.3 a party to whom a document has been disclosed has a right to inspect the document except in certain circumstances, which by rule 31.3(1)(b) include the case where the party disclosing the document has a right or duty to withhold inspection of it. Such a right may exist on a number of grounds including LPP and PII. However, in both those cases a party may choose not to rely upon LPP or claim PII.” and in paragraph 13 he identified the question before the court as being “ . . . in what circumstances a party who has inspected copy documents which were subject to LPP or PII, but which have been voluntarily, but mistakenly, sent to him for inspection must return them or may be restrained from using them in the litigation in which they were disclosed.”
[39]In paragraph 15 Clarke L.J. referred to the leading cases on inadvertent disclosure, including those to which I have referred, culminating in Breeze v John Stacey. He then summarised in paragraph 16 the principles to be derived from those authorities and in paragraph 17 said that they applied also to documents in respect of which the disclosing party was entitled to claim PII. The court then proceeded to consider whether the documents had been disclosed as the result of an obvious mistake and in the course of doing so drew no distinction between LPP and PII: see paragraphs 64 and 68. In the end the court held that the mistake was not obvious, that the injunction restraining the claimants’ use of the documents should be discharged and that an order should be made permitting the appellants to make use of them in the litigation “on the basis that they are no longer the subject of LPP or PII, as between the parties to this action.”[40]I think it is clear, both from the way in which the court expressed its reasoning and from the decision itself, that for the purposes of the principles relating to inadvertent disclosure, the court considered that no distinction was to be drawn between PII and LPP, even to the point of assuming that a person holding a document that is subject to PII may choose to disclose it and thereby allow it to enter the public domain. In my respectful opinion that cannot be reconciled with the line of authority culminating in ex parte Wiley and is all the more difficult to accept in relation to what in Al-Fayed was a claim for class immunity. If the two opinions were subject to PII on that ground, they ought not to have been disclosed, whatever their contents, unless the public interest in the administration of justice overrode the public interest in maintaining the confidentiality of the class as a whole. The right to make use of them in the proceedings would not then have depended on the absence of an obvious mistake in disclosure, but on where the balance of public interest lay.[41]Since the court found that the documents in question had not been disclosed as the result of an obvious mistake, it was necessary for it to consider whether their use should nonetheless be restrained on the grounds of PII. That being so, I think Mr. Hollander was right in saying that what was said in paragraph 17 was essential to the court’s decision and therefore forms part of the ratio. Mr. Saini submitted, however, that the point had been decided on the basis of an assumption in which both parties had tacitly invited the court to acquiesce, and that the decision is therefore not binding on us.[42]The tacit assumption on which it is said the court proceeded was that a litigant in possession of a document to which PII attaches, or may attach, is entitled not to claim the immunity and produce it for inspection if he so wishes. Although at first instance both parties accepted that the principles relating to the inadvertent production of documents covered by LPP applied whichever way the defendants put their case, there is no express recognition in the judgment of this court that it was invited to, or did, proceed on the basis of that assumption. However, in the absence of any reference to the authorities relating to PII and in the light of the way in which the court expressed itself, I am persuaded that that was indeed the case. Paragraph 17 proceeds on the assumption that a party in possession of a relevant document is not bound to withhold it from inspection, even if he would be entitled to assert LPP or claim PII. The question which arises in this case following the issue of the PII certificate did not arise for consideration and the court did not address it. Al-Fayed was touched on in the case of R v G [2004] EWCA Crim 1368, [2004] 1 W.L.R. 2932, but the question for the court in that case was whether in criminal proceedings the court could restrain the use and dissemination of a document subject to PII which had been disclosed by mistake. The question we have to decide was not the subject of argument.[43]In R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] Q.B. 955 this court considered the circumstances in which an assumption which forms part of the ratio decidendi will not be binding because it does not reflect a considered part of the court’s decision. The judgment of the court (Schiemann and Buxton L.JJ. and Jacob J.) was delivered by Buxton L.J., who in paragraphs 20 to 37 gave a comprehensive analysis of the principle that a ratio, or part of a ratio, is not binding if it was assumed to be correct without the benefit of argument to that effect. The case before that court presented particular difficulty because, as Buxton L.J. observed in paragraph 25, the disputed proposition had been specifically identified as part of the earlier court’s reasoning on the issue that was being decided. However, having considered the relevant line of authority, the court held in paragraph 33 that a subsequent court is not bound by a proposition of law assumed by an earlier court that was not the subject of argument before, or consideration by, that court. However, it also sounded the following note of caution:
“38. Like all exceptions to, and modifications of, the strict rule of precedent, this rule must only be applied in the most obvious of cases, and limited with great care. The basis of it is that the proposition in question must have been assumed, and not have been the subject of decision. That condition will almost always only be fulfilled when the point has not been expressly raised before the court and there has been no argument upon it: as Russell L.J. went to some lengths in National Enterprises Ltd v Racal Communications Ltd to demonstrate had occurred in the previous case of Davies, Middleton & Davies Ltd v Cardiff Corpn 62 LGR 134. And there may of course be cases, perhaps many cases, where a point has not been the subject of argument, but scrutiny of the judgment indicates that the court’s acceptance of the point went beyond mere assumption. Very little is likely to be required to draw that latter conclusion: because a later court will start from the position, encouraged by judicial comity, that its predecessor did indeed address all the matters essential for its decision.”
[44]In the light of the decision in Kadhim I am satisfied that we are not bound by the decision in Al-Fayed that a person in possession of a document in respect of which PII may be claimed is entitled to produce it for inspection, since that question was not the subject of argument or decision. Moreover, since that proposition lies at the root of the court’s decision that the principles governing the exercise of the court’s discretion under CPR 31.20 apply to the inadvertent production of documents subject to PII in the same way as they apply to documents covered by LPP, I do not think we are bound by that part of the decision. In my view, if a document in respect of which a claim for PII can properly be made is inadvertently produced for inspection the court hearing an application for permission to use it in the proceedings should consider in accordance with established principles whether the public interest would be better served by restraining the use of the document or by allowing it to be used in the proceedings. In my view it is not necessary for the applicant to satisfy the court that disclosure was the result of an obvious mistake.[45]The judge, in seeking to determine the application within the confines of the principles set out in paragraph 16 of Al-Fayed, was right to recognise that a great deal of weight was to be attached to an unchallenged certificate issued by a senior official to the effect that the public interest would be better served by not allowing the document to be used in the proceedings. He was right (although not for the reasons he gave) to conclude that it was unnecessary in those circumstances for the SFO to show that disclosure had been the result of an obvious mistake and to refuse the VT parties permission to make use of the document. Indeed, for the reasons I have given I do not think that any other course was open to him. I would therefore dismiss the appeal in relation to this document. Disposal[46]For these reasons I would allow the appeal in relation to documents SFO-042290, SFO-038047, SFO-019016 and SFO-032717, but would dismiss the appeal in relation to document SFO-016237.

Lady Justice Gloster :

[47]I agree.

Lord Justice Longmore :

[48]I agree with Moore-Bick LJ on the issue of Public Interest Immunity. It does not appear that arguments of the kind accepted by the judge in this case and addressed to us can have been ventilated in Al-Fayed; otherwise the court would have had to pronounce upon them. In these circumstances we are not bound by that case to follow paragraph 17 of the judgment of Clarke LJ and must make up our own minds on the issue.[49]I also agree with Moore-Bick LJ that the mistake in disclosing the legally privileged documents cannot be said to have been an obvious mistake in the sense of being obvious to a reasonable solicitor in the position of Stephenson Harwood in the present case. In those circumstances, we are bound by Al-Fayed to allow the appeal in relation to those documents.[50]For my part I am sorry we are so bound. In his welcome and highly useful book Legal Professional Privilege for Corporations (Oxford 2014) Mr Andrew Higgins refers (paras 7.157-160) to the recent judgment of the High Court of Australia in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46 in which the High Court declined to follow the English authorities requiring the mistake to be obvious to a reasonable solicitor. The court remarked that much had changed in both Australia and England in the nature of litigation and the complexity of discovery since 1987 when Guinness Peat was decided. They instanced in particular the Woolf reforms and the resulting Civil Procedure Rules of 1998 in which it is stated that the overriding objective is that “of enabling the court to deal with cases justly and at proportionate cost.” They observed that Part 6 of the Civil Procedure Act (NSW) gave duties and powers of case management to courts in New South Wales in a similar way to that in which judicial case management has been encouraged (and even mandated) by our own CPR and they relied on section 56(1) of the New South Wales statute as conferring the Part 6 powers to ensure “the just, quick and cheap resolution of the real issues in the dispute or proceedings.” They deprecated heavy satellite litigation of the present kind and said (para 45):- “Although discovery is an inherently intrusive process, it is not intended that it be allowed to affect a person’s entitlement to maintain the confidentiality of documents where the law allows. It follows that where a privileged document is inadvertently disclosed, the court should ordinarily permit the correction of that mistake and then order the return of the document, if the party receiving the document refuses to do so.”[51]The High Court acknowledged that there was now a specific rule in England saying that where a party inadvertently allows a privileged document to be inspected, the inspecting party can only use it or its contents with the permission of the Court; they also observed that, although the court’s other management powers were mentioned in Al-Fayed, the Court of Appeal did not draw upon them.[52]If the Supreme Court were ever to be presented with a case of the inadvertent disclosure of privileged documents, it is not impossible that the simpler Australian approach would commend itself. That is not, however, an option open to us and I agree that in relation to the privileged documents, the appeal should be allowed.

Cited in 13 later judgments

and 4 more of the most senior