Waiver of Privilege in PCP Capital Partners LLP v Barclays Bank

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In PCP v Barclays [2020] EWHC 1393 (Comm), Waksman J shone light on the principles applicable to waiver of privilege when a litigant refers to his interactions with lawyers in his written evidence.

The Claimants alleged that certain agreements that Barclays had entered into with a third party were shams. In defending this allegation, Barclays' witnesses made references to:

  • The "close involvement" of their lawyers in drafting the (allegedly sham) documents.
  • The fact that their lawyers were "comfortable" with the documents.
  • The fact that they had "the benefit of legal advice".
  • The fact that two specific lawyers, in whom a Barclays executive had "great confidence", "were closely involved in the detailed negotiations".

Waksman J, in a characteristically clear and confident judgment, explained the legal principles in play in this sort of waiver argument, and held that Barclays were relying on the above statements to imply that their lawyers had advised that the allegedly sham agreements were proper and lawful.

1. The Relevant Principles

Waksman J addresses the key principles at [47] to [60].

Basic principles

Waksman started by noting a series of basic, and uncontroversial, principles of the law of privilege at [47]:

(1)  Legal professional privilege is regarded as a fundamental right of the client whose privilege it is. The loss of that right through waiver is therefore to be carefully controlled;

(2)  Generally, privileged documents cannot be ordered to be provided in litigation by the party whose privilege it is unless this is as a result of a waiver;

(3)  Absent waiver, the fact that such documents might be highly relevant does not entail their production;

(4)  Applications for documents based on a waiver of privilege entail at least the two following fundamental questions:

(a)  Has there been a waiver of privilege?

(b)  If so, is it appropriate to order production of privileged documents other than those to which reference has been made which was the foundation for the waiver?

(5)  The concept of fairness underpins the rationale for having a concept of waiver which can then entail the production of further privileged documents. This is because if the party waiving is, by the waiver thereby creating a partial picture only of the relevant legal advice, it is unfair to the other party to allow him to "cherry pick" in this way.

(6)  That said, it is also clear that the question of whether or not there has been a waiver is not to be decided simply by an appeal to broad considerations of fairness.


Next, Waksman J observed at [48] that it was difficult to find an authoritative statement of when a waiver arises. For him, it requires two facts:

  • A sufficient reference to legal advice; and
  • Reliance on that legal advice in some way to support a claim or defence.

Thus, Waksman J observed at [49, it was clear that in two contexts there would clearly be no waiver:

First, where there is a purely narrative reference to the giving of legal advice. This is because there is no reliance on the advice for the purposes of supporting a party's case.

Secondly, "nor does a mere reference to the fact of legal advice along these lines, 'My solicitor gave me detailed advice. The following day, I entered into the contract'. That is not waiver, however tempting it may be to say that what is really being said is 'I entered into the contract as a result of that legal advice'. The corresponding point is that, if that latter expression is used, then there will be waiver."

The content/effect distinction

This takes us on to the key aspect of Waksman J's judgment: the "vexed issue which still confounds the law of privilege, namely the idea that, quite aside from reliance, waiver cannot arise if the reference is to the 'effect' of the legal advice as opposed to its 'contents'".

This distinction, which gained particular traction in the Court of Appeal's decision in Marubeni v Alafouzos [1986] WL 408062, was deprecated by Waksman J. For instance, he observed at [55], after citing from the judgments in Marubeni, as follows:

"It is not completely clear to me what meaning was ascribed to the word 'effect' in [Marubeni] but I proceed on the basis that it meant the conclusion or outcome of the advice .... But it is then very difficult to understand how that distinction works if applied mechanistically and without any reference to context or purpose."

Waksman J explained at [56]-[59] that, in his view, Marubeni is best explained as being a case to do with reliance. He then explained the correct approach at [60], as follows:

"... in my judgment the correct approach to applying the content/effect distinction is this: the application of the content/effect distinction, as a means of determining whether there has been a waiver or not, cannot be applied mechanistically. Its application has to be viewed and made through the prism of (a) whether there is any reliance on the privileged material adverted to; (b) what the purpose of that reliance is; and (c) the particular context of the case in question. This is an acutely fact-sensitive exercise. To be clear, this means that in a particular case, the fact that only the conclusion of the legal advice referred to is stated as opposed to the detail of the contents may not prevent there being a waiver."

Finally, Waksman cited a number of first instance decisions where Elias, Morgan and Males JJ (as they then were) adopted a nuanced approach close to that which he thought appropriate.

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2. The result

As noted above, Waksman J concluded that there was a waiver. His key reasoning is found at [88]-[91], as follows:

"88.  The starting point in my judgment is paragraph 19 of [a Barclays' executive's witness statement]. In my judgment, the sentence "I took comfort from …" amounts to a general statement that what he did in connection with the [allegedly sham agreements] was to follow the lawyers' advice or, to put it more directly, the lawyers approved of it or, to put it in yet another way, the lawyers advised that it was lawful.

89.  On any sensible and realistic view, [the Barclays witness] was doing more than simply referring to the fact of advice. In one sense, the scope of the reference is only to the effect of the advice, if by "effect" one does indeed mean conclusion. None of its contents are quoted as such and all he relies upon is the conclusion: it is lawful. But that, depending upon context, can still be sufficient for waiver for the reasons which I have given above ....

90.  One therefore turns to reliance. Is [the Barclays executive] relying on the advice to that effect? Plainly he is because he is saying that he followed it in connection with the ASAs alleged to be shams.

91.  One then asks what the purpose of that reliance is. Again the answer is obvious. It is to say that this following of advice goes to the state of mind of [the Barclays executive] and the proper characterisation of these agreements. If the lawyers advised they were lawful, it is less likely that they were or should be regarded as shams."

This analysis is simple, common-sensical and (as a result) compelling. Barclays were trying to rely on their legal advice by the back door, seeking to avoid waiving privilege and therefore prevent PCP from scrutinising their case in this regard. That was clearly unfair.

In the result, and as PCP had accepted should be the case, Barclays was given an opportunity to decide whether to continue to rely on the paragraphs of its witness statements which gave rise to the waiver: see [129]. To the extent that it did, it needed to disclose privileged documents relating to the 'transaction' alluded to in those paragraphs.

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