Farm Assist Ltd v Secretary of State for the Environment Food & Rural Affairs

JurisdictionEngland & Wales
Judgment Date12 December 2008
Neutral Citation[2008] EWHC 3079 (TCC)
CourtQueen's Bench Division (Technology and Construction Court)
Date12 December 2008
Docket NumberCase No: HT-07–119

[2008] EWHC 3079 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand. London, WC2A 2LL

Before:

The Hon. Mr. Justice Ramsey

Case No: HT-07–119

Between:
Farm Assist Limited (In Liquidation)
Claimant
and
Secretary of State For Environment Food & Rural Affairs
Defendant

Hearing date: 20th November 2008

The Hon Mr Justice Ramsey :

Introduction

1

In these proceedings FAL contends that an agreement entered into as a result of a settlement brought about by mediation should be set aside for economic duress. It was evident in the course of interlocutory and case management hearings that there were a number of issues relating to privilege which should be dealt with at this stage so that the effect of those issues on disclosure and on documentary and witness evidence could be resolved now.

2

Directions were given for a procedure to identify such issues followed by written submissions in which the parties could set out their contentions on those issues, in advance of oral submissions at the hearing.

3

Before and during the course of the hearing, the parties were able to agree the appropriate order for disclosure in relation to a number of categories of documents which had previously been in issue.

4

In particular, the parties have agreed that there should be standard disclosure of documents relating to quantity surveying and accountancy documentation to include, on the part of FAL, insolvency documentation, as follows:

(1) the quantity surveying and accountancy documentation and advice over which privilege is expressly claimed in the Amended Defence and Counterclaim upon which DEFRA aver the offer of £575,000 and the deductions in Appendix 1 were based;

(2) the quantity surveying and accountancy documentation and advice from 2001–2003 over which privilege now appears to be claimed by DEFRA in correspondence;

(3) the quantity surveying, accountancy and insolvency documentation prepared for and the advice provided to FAL, its officers and/or Mr Hepworth, who was the Managing Director of FAL, from 2001–2003;

(4) the quantity surveying, accountancy and insolvency documentation prepared for and the advice provided to FAL, its officers and/or Mr Hepworth immediately before and during the mediation;

(5) the quantity surveying, insolvency and accountancy documentation prepared for and the advice provided to FAL, its officers and/or Mr Hepworth from 25 June 2003 until 25 February 2005; save for those documents for which legal advice privilege could be claimed.

Disclosure of legal advice privilege

5

In this judgment I deal with the major remaining issue between the parties which concerns DEFRA's contention that FAL should give disclosure of the following documents referred to in paragraphs 13(4) and 13(5) of DEFRA's submissions:

(1) The legal advice given to FAL, its officers and/or Mr Hepworth on the interpretation of the contract dated 13 March 2001, the merits of the claims for money, the offers to be made to DEFRA, the response to be made to DEFRA's offers and the options available to FAL from 2001 until 25 June 2003;

(2) The legal and/or insolvency advice provided to FAL its officers and/or Mr Hepworth from 26 June 2003 until 29 March 2007.

6

These paragraphs raise the issue of whether FAL was obliged to disclose documentation which would otherwise be covered by legal advice privilege both before and after 25 June 2003, the date of the mediation.

7

DEFRA submits that FAL's claim to set aside the mediation settlement because of economic duress, leads to an implied waiver of any legal advice privilege because the state of mind of Mr Hepworth, acting on behalf of FAL, is put in issue. FAL submits that there is nothing in the claim for duress which gives rise to an implied waiver and that it can maintain its claim to legal advice privilege.

The ingredients of economic duress

8

The ingredients of actionable duress were summarised by Dyson J in DSND Subsea v. Petroleum Geo-Services [2000] BLR 530 at 544, para 131 as follows:

1

”…there must be pressure, (a) whose practical effect is that there is compulsion on, or lack of practical choice for, the victim; (b) which is illegitimate; and (c) which is a significant cause inducing the claimant to enter into the contract: seeUniversal Tankships Inc of Monrovia v. International Transport Workers' Federation [1983] 1 AC 366 at 400B-E and Dimskal Shipping Co SA v. International Transport Workers' Federation [1992] 2 AC 152at 165 G. In determining whether there has been illegitimate pressure, the Court takes into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure has acted in good or bad faith; whether the victim had any realistic practical alternative but to submit to the pressure; whether the victim protested at the time; and whether he affirmed and sought to rely on the contract. These are all relevant factors. Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining.”

9

DEFRA relied on two aspects of those ingredients which, it submitted, required the Court to consider the state of mind of Mr Hepworth. First, DEFRA stated that there must be pressure which has the effect of compulsion on or lack of practical choice for Mr Hepworth. Secondly, DEFRA referred to the issue of whether Mr Hepworth affirmed and sought to rely on the Contract.

10

DEFRA says that it is apparent that FAL instructed solicitors from about 2001 and that they received legal advice at and before the mediation all of which contributed to Mr Hepworth's state of mind. Equally DEFRA says that the reason for the delay between 24 June 2003 and 29 March 2007 must be explained and is relevant to the issue of whether FAL affirmed and sought to rely on the contract.

Implied waiver in English law

11

The possible circumstances in which there may be an implied waiver of legal privilege in proceedings can be divided into two categories. First there are cases where the nature of the proceedings themselves amount to an implied waiver. Secondly there are cases where the implied waiver derives from a particular allegation raised in the proceedings.

12

In this case, it is necessary to review the law concerning implied waiver both in relation to proceedings for economic duress and in relation to the particular allegations raised in this case.

Lillicrap v Nalder

13

The question of implied waiver of privilege arose in the case of Lillicrap v. Nalder [1993] 1 WLR 94 in which a property developer sued a solicitor for negligent advice on the purchase of a property. The solicitor wished to rely on previous retainers, in which the developer had ignored advice, so as to challenge the developer's assertions that, with proper advice, the developer would not have purchased the property.

14

Dillon LJ, adopted the formulation of the scope of waiver set out by May J at first instance, as follows at 99:

“A client who sues his solicitor invites the court to adjudicate the dispute and thereby, in my judgment, waives privilege and confidence to the extent that is necessary to enable the court to do so fully and fairly in accordance with the law including the law of evidence. I suspect that at the fringes each case will depend on its own facts. Normally the waiver will extend to facts and documents material to the cause of action upon which the plaintiff sues and the defendant's proper defence to that cause of action. The bringing of a claim for negligence in relation to a particular retainer will normally be a waiver of privilege and confidence for facts and documents relating to that retainer, but not without more for those relating to other discrete retainers”

15

Dillon LJ then added at 99:

“The waiver can only extend to matters which are relevant to an issue in the proceedings and, privilege apart, admissible in evidence. There is no waiver for a roving search into anything else in which the Solicitor or any other solicitor may have happened to have acted for the clients. But the waiver must go far enough, not merely to entitle the plaintiff to establish his cause of action, but to enable the defendant to establish a defence to the cause of action if he has one. Thus, it would extend to matters under earlier retainers, as in the hypothetical example I have given, which established that the experience of the client, was, to the knowledge of the solicitor, such that the solicitor was not in breach of duty as alleged.”

16

Russell LJ expressed the test in this way at 101:

”…by bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done. This is another way of expressing the view that May J expressed in his judgment in the passage to which Dillon LJ has referred.''''

17

Farquharson LJ said this at 102 to 103:

“For my part, I would have difficulty in holding that the defendants should, as a matter of principle, be prevented from adducing evidence which is relevant to that issue. A proper interpretation of the waiver in this case is, in my judgment, one that embraces not only the documents and advice arising from the Heligan Manor transaction, but also documents or information otherwise subject to privilege which are relevant to the issues between the parties and it would be unfair to exclude.”

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