Balabel v Air India

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE TAYLOR,LORD JUSTICE PARKER
Judgment Date16 Mar 1988
Judgment citation (vLex)[1988] EWCA Civ J0316-8
Docket Number88/0242

[1988] EWCA Civ J0316-8

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM AN ORDER OF HIS HONOUR JUDGE PAUL BAKER Q.C.,

SITTING AS A JUDGE OF THE HIGH COURT

Royal Courts of Justice

Before:

The Master of the Rolls

(Lord Donaldson)

Lord Justice Parker

Lord Justice Taylor

88/0242

Ahmed Kamal Balabel
Elsa Balabel
and
Air India

MR G.A. LIGHTMAN Q.C. and MISS BEVERLY ROGERS, instructed by Messrs Hobson Audley & Co., appeared for the Appellants (Defendants).

MR M.J. BURTON Q.C. and MR IAN McCULLOCH, instructed by Messrs Howard Kennedy, appeared for the Respondents (Plaintiffs).

THE MASTER OF THE ROLLS
1

I will ask Lord Justice Taylor to give the first judgment.

LORD JUSTICE TAYLOR
2

This case raises an important point concerning legal professional privilege. Boardly, the issue is whether such privilege extends only to communications seeking or conveying legal advice, or to all that passes between solicitor and client on matters within the ordinary business of a solicitor.

3

This appeal arises from an action for specific performance of an agreement for an under-lease, alleged to have been made in either May or November 1984. The respondent plaintiffs are husband and wife and are directors of Marchcoin Ltd. The appellant defendant, Air India, is an Indian corporation and is the lessee of premises in Clifford Street and New Bond Street in London. On 9th July 1982 an under-lease of these premises was assigned to Marchcoin Ltd. for a term expiring on 31st May 1984. Marchcoin fell into arrears with the rent. The appellant, Air India, forfeited the lease, obtaining possession by a judgment dated 11th October 1983. On 11th January 1984 Marchcoin was granted relief from the forfeiture on paying the arrears in full. Although their under-lease was due to expire on 31st May 1984, Marchcoin enjoyed the protection of Part II of the Landlord and Tenant Act 1954.

4

In January 1984 negotiations began for the grant to them of a new under-lease on the expiration of their existing under-lease. Slaughter and May were the solicitors acting for Marchcoin and the respondents. The appellants' solicitors were Bulcraig and Davis (later Bulcraigs), the partner in charge being Mr Anthony Wade.

5

On 3rd February 1984 Marchcoin served a notice requesting the grant of a new tenancy under section 26 of the 1954 Act. On 20th March the appellant served a counter-notice opposing such a grant. Negotiations continued. Eventually, on 15th July 1985, the respondents started proceedings claiming specific performance of an agreement for an under-lease as well as damages and an account. The agreement was pleaded in the alternative in paragraphs 4 to 7 of the amended statement of claim. Since the allegations made there are relevant to the issue on this appeal, I set out those paragraphs:

"4. By an agreement made between the first named Plaintiff orally on behalf of himself the second named Plaintiff and Marchcoin Limited and one da Gama the local Regional Director for the United Kingdom of the Defendant on its behalf at the offices of the Defendant 17–18 New Bond Street in the City of Westminster on 10th May 1984 it was orally agreed ( inter alia):—

"(a) That in consideration of Marchcoin Limited not relying on its rights under the said Act the Defendant would grant to the Plaintiffs an Under Lease of the said premises 11–13 Clifford Street and 17–18 New Bond Street for a term of 20 years from 1st June 1984 at a rent to be negotiated between advisors to be paid quarterly with a rent review every 5 years.

"(b) The covenants in the said Under Lease should be similar to those in the Under Lease under which Marchcoin Limited was holding over.

"(c) The said Under Lease should be prepared by Solicitors at the expense of the Plaintiffs.

"5. Pursuant to the said agreement and in part performance thereof the Plaintiffs:—

"(a) Procured Marchcoin Limited not to proceed with the said proceedings CH 1984 of No. 2525

"(b) Instructed their Solicitors Messrs Slaughter & May to proceed on their behalf to negotiate and approve the terms of the said Lease

"(c) Instructed their valuers to negotiate the said rent

"(d) Agreed the said rent prior to 6th November 1984 at a figure of £35,000 per annum for the first two years of the term of the Lease and £38,000 per annum for the next three years thereof

"(e) From the 25th May 1984 undertook to Marchchoin Limited to pay the rent of the premises required by the Defendant.

"6. Pursuant to the said agreement on 6th November 1984 the Solicitors to the Defendant sent under cover of their letter dated 6th November 1984 to the said Solicitors to the Plaintiffs an engrossed Counterpart of the Under Lease of the said premises to which the Plaintiffs will refer at trial for its full terms and is copied and annexed hereto marked 'A'.

"7. Further if contrary to the contention of the Plaintiffs hereinbefore set forth this Honourable Court should hold that the agreement set forth and the matters relied upon in paragraphs 4 and 5 hereof do not constitute an agreement whereof this Honourable Court can decree specific performance then the Plaintiffs aver and contend that an agreement as set forth in paragraph 4 hereof was concluded between the parties prior to 22nd November 1984.

6

PARTICULARS

7

The Plaintiffs will rely as the note and memorandum thereof on the engrossed counterpart of the said Under Lease and letter set forth in paragraph 6 and the Defendants' letter to the Plaintiffs dated 22nd November 1984."

8

In support of these allegations the respondents sought from the appellant discovery of documents under three heads.

  • (1) Communications between the appellant and its solicitors other than those seeking or giving legal advice.

  • (2) Drafts, working papers, attendance notes and memoranda of the appellant's solicitors relating to the proposed new under-lease.

  • (3) Internal communications of the appellant other than those seeking advice from their Indian legal advisers.

9

The appellant's solicitors declined to disclose the requested documents on grounds of legal professional privilege. The issue came before a Master Munrow on 14th October 1987. He upheld the appellant's claim of privilege, stating that a document passing during a transaction does not have to incorporate a specific piece of legal advice to obtain that privilege. The respondents appealed. They also issued a subpoena duces tecum against Mr Wade, Air India's solicitor, which he applied to have set aside. The case came before His Honour Judge Paul Baker Q.C., sitting as a deputy High Court judge. On 28th January 1988 he discharged the subpoena but allowed the appeal in respect of specified documents, taking a different view from the learned Master on the point of principle. From his decision the appellant now appeals to this court, having been granted leave by Lord Justice Nicholls on 4th February 1988.

10

In the course of his argument Judge Baker reviewed the authorities. He sought to distinguish those which supported a broad view of the scope of legal professional privilege. In the result he adopted the approach of Scott J. in the unreported case of Committee of Receivers of Galadari v. Zealcastle Ltd. He concluded as follows:

11

"The defendants in my judgment are entitled to withhold all communications which seek or convey advice, even though parts of them may contain narratives of facts or other statements which in themselves would not be protected. On the other hand, documents which simply record information or transactions, with or without instructions to carry them into execution, or which record meetings at which the plaintiffs were present, are not privileged."

12

The issue before this court is whether the learned judge's test was correct or whether privilege extends, as the appellant argued, to all communications between solicitor and client on matters within the ordinary business of the solicitor and which are referable to the relationship.

13

The importance of the point in this case is clear. There is an issue as to whether any agreement for a fresh under-lease was made. In so far as the respondents rely upon an oral agreement, they would require in order to enforce it a memorandum in writing pursuant to section 40 of the Law of Property Act 1925. They hope to find it in the appellant's documents.

14

If the appellant is right, there would be a blanket of privilege over all the documents in dispute since clearly all the steps whether advisory or executive taken by a Solicitor in the course of negotiations for a lease would be within the scope of his ordinary business. On the learned judge's ruling, a selective exercise was required to withhold only those documents seeking or giving advice and to disclose any which merely recorded information or events or gave instructions. He carried out that exercise and ruled that a number of documents specified in the schedule to his order should be disclosed.

15

It is common ground that the basic principle justifying legal professional privilege arises from the public interest requiring full and frank exchange of confidence between solicitor and client to enable the latter to receive necessary legal advice. Originally it related only to communications where legal proceedings were in being or in contemplation. This was the rationale which distinguished the solicitor and client relationship from that between any other professional man and his client. There is no doubt that legal professional privilege now extends beyond legal advice in regard to litigation. But how far?

16

Mr Lightman, counsel for the appellant, has referred to a long series of decisions from 1833 until today. He submits that with the exception of three cases, which he does not shrink from...

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