Bsa International Sa V. Hugh Mcclelland Irvine+john Alastair Irvine+douglas Forbes Irvine
| Jurisdiction | Scotland |
| Judge | Lord Glennie |
| Neutral Citation | [2009] CSOH 77 |
| Date | 27 May 2009 |
| Docket Number | CA52/08 |
| Court | Court of Session |
| Published date | 01 June 2009 |
| OUTER HOUSE, COURT OF SESSION [2009] CSOH 77 | |
| CA52/08 | OPINION OF LORD GLENNIE in the cause B.S.A. INTERNATIONAL S.A. Pursuers; against (FIRST) HUGH McCLELLAND IRVINE; (SECOND) JOHN ALASTAIR IRVINE; and (THIRD) DOUGLAS FORBES IRVINE Defenders: ________________ |
Pursuers: Lake QC, Burness LLP
Defenders: Mure, MacRoberts
27 May 2009
[1] This action arises out of a Share Purchase Agreement ("the SPA") dated 29 September 2004, under which the defenders and other parties ("the vendors") sold to the pursuers their shareholdings in A McLelland & Son Ltd ("McClelland") for a consideration of just over £96 million. The purchase and sale completed on 29 September 2004.
[2] The pursuers claim damages for negligent misrepresentation and/or breach of warranty, in each case based upon warranties set out in Part 3 of the Schedule to the SPA. In clause 13 of that Part of the Schedule, the vendors warranted that
"No Group Company has received any process, notice or communication, formal or informal, by or on behalf of the Office of Fair Trading or the European Commission ... and so far as the Warrantors are aware, there are no subsistence circumstances that may give rise to any such process, notice or communication being received by any Group Company."
On 5 May 2005, McClelland were served with a notice by the Office of Fair Trading ("the OFT") under section 26 of the Competition Act 1998 requiring them to produce certain documents and information for the purposes of an investigation under the Act. On the 20 September 2007, the OFT served on McClelland a Statement of Objections ("SO"), which gave notice that the OFT proposed to make a decision that, in 2002 and 2003, McClelland and others had entered into a concerted practice and/or practices which had as its/their object the prevention, restriction or distortion of competition in respect of the retail price of certain products produced in the UK; and that they had done this by engaging in the repeated exchange and/or disclosure of commercially sensitive retail pricing intentions. In support of its proposed findings, the OFT relied upon McClelland's participation in meetings and correspondence during that period, of which details are given in Articles 6 and 7 of Condescendence.
[3] The pursuers, through their solicitors, gave notice to the solicitors for the defenders of possible claims under the warranty provisions, both in May 2005 and in September 2007. There is an issue between the parties as to the effect of these notices.
[4] In Article 10 of Condescendence, the pursuers make the following averment about the events from and after September 2007:
"Following service on them of the SO, McClelland ... took legal advice from solicitors and counsel as to how to respond. Investigations were undertaken into the facts and circumstances relied upon by the OFT. Staff members were interviewed."
In the following Articles of Condescendence, the pursuers describe the negotiations between McClelland and the OFT concerning the possibility of reaching an early resolution agreement, and the involvement of the defenders in these negotiations. At about the beginning of 2008, a stage was reached at which McClelland decided to enter into an agreement with the OFT. In Article 16 of Condescendence, the pursuers make this averment:
"McClelland took the advice of counsel as to the merits of admitting the breach and agreeing to cooperate with the OFT. The advice of counsel was that the advantages of early resolution of the proceedings outweighed the disadvantages. In reliance on this advice, McClelland entered into an agreement with the OFT in which, inter alia, they admitted involvement in breaches of the Act, undertook to cooperate with the OFT and the OFT agreed to adopt a decision which imposed a penalty ..."
A copy of counsel's advice, in the form of a written Opinion from Professor Philippa Watson, has been produced by the pursuers and lodged in process.
[5] The pursuers' claim is put on the basis of negligent misrepresentation and, separately, breach of warranty. The quantification of the claim under each head differs slightly, but in essence they claim the amount of the penalty imposed by the OFT together with their costs in dealing with and responding to the allegations made by the OFT, and in particular to the SO.
[6] The matter comes before the court on the defenders' motion for recovery of documents in terms of their Specification of the Documents (No.23 of Process). Some of the categories of documents sought in that Specification were the subject of agreement between the parties. Call 1 had already been dealt with sufficiently at an earlier stage. It was agreed that I should make an order in terms of Calls 4 and 5. And an undertaking was given in respect of Call 6. The remaining issues arise under calls 2, 3 and 7. These raise questions of confidentiality or legal professional privilege.
[7] It is convenient to take calls 2 and 7 together. Call 2 relates to the averment in Article 10 and seeks recovery of:
"All documents of whatever description and held in whatever form (including electronically) containing entries setting out or recording the terms of the legal advice referred to in Article 10 of Condescendence, in order that excerpts of such entries may be taken therefrom at the sight of the Commissioner."
Call 7 relates to the averment in Article 16 and seeks recovery of
"The instructions, and relative documents, provided to Professor Philippa Watson for the purpose of providing the Opinion dated 11 February 2008 ..."
This is the Opinion referred to by the pursuers in that Article and already lodged in process.
[8] Mr Mure, who appeared for the defenders, submitted that if the pursuers wished to found upon the legal advice which they took, which would otherwise be privileged, then fairness required that the court and the defenders should be in possession of all the legal advice on that point and not only a part of it. He referred to Wylie v Wylie 1967 SLT (Notes) 9 and to a number of English decisions to like effect, including Great Atlantic Insurance Co. v Home Insurance Co. [1981] 1 WLR 529, citing with approval the passage from the judgement of Mustill J in Nea Karteria Maritime Co. Ltd. v Atlantic and Great Lakes Steamship Corporation [1981] Com. L.R. 138, and Re Konigsberg (a Bankrupt) [1989] 1 WLR 1257. It was not necessary in Scottish procedure to wait until one party adduced the otherwise privileged material in evidence before raising the question of waiver of privilege: see Whitbread v Goldapple 2003 SLT 256, distinguishing on this point of practice the decision of Hobhouse J in General Accident Fire and Life Assurance Corporation Ltd. v Tanter [1984] 1 WLR 100. In Article 10, the pursuers were relying upon the legal advice sought and obtained in September 2007 and subsequently. The advice of Professor Watson was part of this. It was specifically relied upon by the pursuers in Article 16. The Opinion had been produced, but that Opinion itself referred back to earlier advice and to changes in circumstances which had caused Professor Watson to modify her earlier advice. It was necessary, in the interests of fairness, that the defenders should be able to see the whole of the advice, and the instructions and information on which it was based. Only in light of that could the Opinion be fully understood and its coherence assessed. It was essential to any effective cross-examination of the expert that counsel for the other party should have available to him the whole of the material upon which the expert had relied. There was a danger that what the defenders were being given was only a partial view selected by the pursuers.
[9] I did not understand Mr Lake QC to challenge this general approach. He accepted that there had been a waiver of privilege in respect of Professor Watson's Opinion. However, he submitted that that Opinion was self-contained. It set out the question which was asked and all the matters which Professor Watson considered relevant to her Opinion. Nothing further was needed. Further, it was important to identify the issue to which the Opinion related. There was no issue between the parties as to McClelland having been in breach of the prohibition in the Act. Nor was there any issue as to whether or not the pursuers should have entered into a compromise agreement with the OFT. Nothing, therefore, turned on Professor Watson's Opinion. There was no reason why the pursuers should not maintain privilege in respect of the whole of the legal advice obtained since September 2007, or at least to that part of it which had not already been produced.
[10] Mr Lake emphasised that the principle laid down in the cases to which I was referred was that, once part of the privileged material relating to a particular subject matter was put in play, whether by the release of part of a privileged document or by the release of one of a series of privilege communications, then the whole document or series of communications must be produced, unless that which had been released dealt with a separate subject matter from that which had not. The rationale was that any use of part of a document, or part of a series of documents, might be unfair or misleading, and that the party making the partial disclosure was not the person who could safely be left to judge whether or not there was such unfairness: see Great Atlantic at p.536. It was important to note the limit on the rule. A partial disclosure would usually waive privilege only in respect of the "transaction" or "issue" in respect of which there had been that partial disclosure: see General Accident at p.114-115, Great Atlantic at p.538-9. This approach was applied in Fulham Leisure Holdings Ltd. v Nicholson Graham & Jones [2006] PNLR 23 by Mann J, who emphasised that the underlying principle was one of fairness. That principle will usually only require a waiver of privilege to the extent of opening up the...
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