LEGAL PRIVILEGE AND CLIENT’S INSTRUCTIONS
In the recent England and Wales Court of Appeal (Civil Division) decision of Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd & Anor [2020] EWCA Civ 11 (“Raiffeisen”), Males LJ (with whom Baker and Lewison LLJ agreed) held that documents pertaining to instructions which the respondent firm of solicitors received from its clients are privileged and do not have to be disclosed. This update summarises the key statements made by Males LJ in the Raiffeisen decision.
The facts. The key facts of Raiffeisen Bank are summarised at paragraphs 1 to 3 of the judgment, which are duplicated below for ease of reference:
“1. While acting for an Indonesian company which was to provide finance in connection with a share sale agreement, the respondent firm of solicitors ("Ashurst") provided a written confirmation to the appellant bank ("the Bank") that it had been put in funds in an amount not less than US $85 million and that it had received irrevocable instructions to transfer these funds into an escrow account or, in the event that the proposed escrow agreement was not signed within 30 days, to continue to hold the funds pending agreement between the parties on an alternative arrangement. The Bank says that, in reliance on that confirmation, it agreed to release its security to enable the transaction to proceed. It is now apparent, however, that although Ashurst did receive the US $85 million into its client account, within about 2 ½ months the money was no longer there and the balance of the client account had been reduced to zero.
2. In the event, although it obtained the shares, the buyer failed to pay the agreed price and the Bank has commenced this action, not only against the buyer but also against Ashurst, claiming that by issuing the confirmation, Ashurst undertook obligations of which it is in breach and made representations which were untrue.
3. This appeal arises as a result of requests by the Bank for disclosure of documents and Further Information relating to the instructions which Ashurst had received from its client. Moulder J ordered Ashurst to disclose the balances on its client account during the relevant period, but otherwise refused the Bank's applications, holding that the material sought was privileged. This is an appeal against that refusal.”
Instructions were not confidential? In Raiffeisen, it was submitted for the Bank that the instructions lacked confidentiality since (a) the client had authorised Ashurst to make “promises and representations” to the Bank as to the client’s instructions, (b) the client had impliedly authorised Ashurst to disclose the instructions, and (c) the instructions not the kind of communication which attracted legal advice privilege as they could have been easily done by a bank, and were akin to instructions to collect rent ([50] Raiffeisen).
The case of Conlon. In this regard, the key issue concerned what was decided in the case of Conlon v Conlons Ltd [1952] 2 All ER 462 (“Conlon”) ([54] Raiffeisen). This is because, as Males LJ stated at [57] Raiffeisen, the decision in Conlon as been described by textbook writers as “difficult”, “perhaps a decision at the margins”, “not convincing” and “not without problems.”
Mere communication by a solicitor to a third party as to the client’s instructions does not automatically give rise to a loss of confidentiality. After examining various authorities, Males LJ agreed with the Australian cases that the “… initial instructions given by the client [should be treated] as confidential and therefore covered by privilege, but … that privilege will be waived if the client puts in issue the content of those instructions”, and held that Conlon should be understood in this manner ([61] Raiffeisen).
As such, “… Conlon does not stand for the proposition that legal advice privilege does not extend to a communication containing information which the client instructs the solicitor to repeat… a statement by a solicitor to a third party as to the instructions he has from his client does not automatically and without more give rise to a loss of confidentiality in the documents which contain or evidence those instructions. …” ([63] Raiffeisen).
The relevant legal context. In addition, Males LJ did not accept the submission that Ashurst was “doing no more than a bank might have done in making a statement as to the basis on which it was holding money” ([73] Raiffeisen), and did not accept that the instructions were akin to “an instruction to a solicitor to collect rent on behalf of his client” ([74] – [75] Raiffeisen).
Males LJ held that the relevant legal context is directly related to the performance of Ashurst’s professional duties as a solicitor, as Ashurst’s role would no doubt have included “… negotiating and reviewing the terms of the documentation, including the Solicitor's Confirmation, and advising its client as to the meaning and effect of that Confirmation. Such advice is likely to have included advising as to the significance of the statement that the instructions which it had received were "irrevocable" and the circumstances, if any, in which the client would be entitled to the return of the money. It would to my mind be surprising if Ashurst had not given such advice.”
Significance. Raiffeisen is important as it pertains to a point of practical importance: when would a client’s instructions to his/her lawyers not be cloaked with legal advice privilege. As Males LJ observed at [63] Raiffeisen, it is not uncommon for a lawyer to make statements to a third party as to the instructions the lawyer received from his clients, and it “… would be surprising if, by their doing so, privilege in their underlying instructions was lost.”
Tags: Legal advice privilege; Client’s instructions; Third Party; Making statements as to client’s instructions to a third party
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