Privilege

In Al Sadeq v Dechert [2024] the Court of Appeal held that:

1) The merits threshold for the existence of an iniquity which prevented legal professional privilege arising, whether legal advice privilege or litigation privilege, was a balance of probabilities test.

2) Where iniquity had been shown to the relevant standard so as to engage the exception, there was no privilege in documents and communications brought into existence "as part of" or "in furtherance of" the iniquity. The principle in Three Rivers DC v Bank of England [2003] that not all communications with representatives of the client attracted legal advice privilege, (only those which took place with employees and representatives who were specifically authorised to seek and receive the advice), did not extend to litigation privilege.

Facts

The appellant (S) appealed against a decision on the scope and application of legal professional privilege, and the respondents cross-appealed.

Until 2012, S had been the deputy CEO of the Ras Al Khaimah Investment Authority (RAKIA), the sovereign wealth fund of the Emirate of Ras Al Khaimah (RAK). RAKIA alleged that its CEO (M), who left RAKIA in 2012, had perpetrated systematic and wide ranging frauds against RAKIA and associated entities; and that, together with a number of associates, he had been responsible for misappropriating funds and otherwise causing losses of hundreds of millions of dollars. S had been arrested in Dubai in 2014 and taken to RAK, where he had been tried, convicted of fraud, and sentenced to imprisonment by the RAK courts. He contended that he was innocent of any wrongdoing and that proceedings against him and M were politically motivated. The respondents were a UK law firm and three of its former partners. The firm had been engaged in 2013 to assist in the investigation of the frauds said to have been perpetrated by M, S and others. In 2014 the firm entered into a further letter of engagement with Ras Al Khaimah Development LLC (RAK Development) which had taken over responsibility from RAKIA for the allegedly misappropriated assets.

S brought proceedings against the respondents alleging that they had violated his rights, by using threats and/or mistreatment and/or other unlawful methods, to force him to give evidence, including false evidence, in an attempt to build a case against M and his alleged co-conspirators at the behest of the ruler of RAK. Following disclosure in those proceedings, S challenged the respondents' claims to legal professional privilege (LPP). S argued that the iniquity exception to LPP applied by reference to the iniquitous conduct comprising (i) his unlawful abduction from Dubai and unlawful detention in RAK; (ii) the unlawful prison conditions in which he was held in RAK; and (iii) the denial of access to legal representation in RAK. The respondents' evidence was that a careful review had been undertaken to consider whether documents fell within the iniquity exception and none had done so.

S also challenged claims to litigation privilege arguing that the litigation relied on had not been in contemplation and that the firm's clients were not parties to some of the litigation, but merely alleged victims; and contended that the principle in Three Rivers extended to litigation privilege. S further contended that communications created for the purpose of the respondents' investigatory work could not be withheld from inspection on the grounds of legal advice privilege. The respondents cross-appealed on the Three Rivers point in relation to legal advice privilege, recognising that the court was bound by the decision, but in order to preserve the position for an appeal to the Supreme Court.

Iniquity exception

The merits threshold for the existence of an iniquity which prevented LPP arising, whether legal advice privilege or litigation privilege, was a balance of probabilities test. On an assessment of the material available to the party or its legal adviser conducting disclosure, or the court, it had to appear more likely than not that such iniquity existed. In an interlocutory context there was no distinction to be drawn between cases in which the iniquity was one of the issues in the proceedings and those where it was not. There might be exceptional circumstances in a particular case which justified the court adopting a balance of harm analysis. The material before the court clearly established the three iniquities relied on by S. Where iniquity had been shown on the balance of probabilities which engaged the exception, there was no privilege in documents and communications brought into existence "as part of or in furtherance of" the iniquity. Those were two categories, either of which was sufficient. "Part of" would include documents which reported on or revealed the iniquitous conduct in question and documents brought into existence in preparation for the iniquity. But it did not extend to any document which would not exist but for the iniquity. The disclosure exercise would have to be re-undertaken to see if there were documents that fell within the iniquity exception properly applied.

Litigation privilege

The respondents' evidence was sufficient to establish that the relevant litigation was in contemplation on the dates identified. Provided that the communications had been made for the sole or dominant purpose of the litigation, litigation privilege could extend to proceedings to which the firm's clients were not a party. It was not necessary to decide whether there was an additional requirement for the person to have a sufficient interest in the contemplated proceedings, over and above satisfying the dominant purpose test; if that was a requirement, it was satisfied in relation to RAK Development. The Three Rivers principle did not apply to litigation privilege.

Legal advice privilege

The firm had been appointed for its legal expertise and that was brought to bear in the investigatory process. The respondents accepted that any document created as part of a purely investigative role, divorced from their role as lawyers, would not be privileged. However, there was nothing from which it could be inferred that legal advice privilege had been wrongly claimed in relation to communications involving the respondents' investigative activities. It was common ground that the court was bound by the Three Rivers principle in relation to legal advice privilege, and that the cross-appeal therefore had to be dismissed.

Practical Implications

This is an important case on the iniquity exception. It does, however, put the legal team for the party accused of wrongdoing in a near impossible position. They have to answer the question whether, on the balance of probabilities on the material then available, such iniquity existed (i.e. their own client had furthered a criminal or fraudulent purpose: 'fraud' in this context is to be interpreted in a relatively wide sense). If so, they are obliged to hand over the very material that may well establish the very wrongdoing their client is accused of. On the facts of the case the following wrongdoing was accepted as being within the fraud category:

(1)? Kidnapping and extraordinary rendition.

(2)? Unlawful detention.

(3)? Torture and inhumane treatment.

(4)? Denial of legal representation.

(5)? Threats to the Claimant and his family.

(6)? Extracting false confession statements.

(7)? Unlawful search of the Claimant's home and offices.

(8)? Attempts to hamper the preparation of certain proceedings.

I cannot see how the legal team will reconcile their duties to the Court and to their client and it seems very likely that independent counsel will have to be involved in making the assessment of whether the balance of probabilities test is met.