Great Atlantic Insurance Company v Home Insurance Company
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE TEMPLEMAN,LORD JUSTICE DUNN |
| Judgment Date | 28 January 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0128-3 |
| Docket Number | 81/0044 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 January 1981 |
[1981] EWCA Civ J0128-3
Lord Justice Templeman
and
Lord Justice Dunn
81/0044
1980 G. No. 2072
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(MR. JUSTICE LLOYD)
Royal Courts of Justice.
MR. PATRICK PHILLIPS, Q.C. and MR. P. WALKER (instructed by Messrs. McKenna & Co.) appeared on behalf of the Plaintiffs (Appellants).
MR. JOHN GREENBOURNE (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the First and Second Defendants.
MR. J.V.Z. STEYN, Q.C. and MR. J.N. GRUDER (instructed by Messrs. Ince & Co.) appeared on behalf of the Third Defendants (Respondents).
This is an appeal from an order made by Mr. Justice Lloyd on the fourteenth day of a trial which is still progressing whereby he ordered the plaintiffs to give discovery of parts of a memorandum for which the plaintiffs claim privilege. In granting leave to appeal the learned judge made observations deprecating any appeal in the course of a trial but he considered that he was constrained in the exceptional circumstances to grant leave. I agree wholeheartedly that appeals in the course of a trial should be firmly prevented or discouraged save in the most exceptional circumstances. Such appeals cause difficulties for the litigants, for the trial judge and for this court. In the present case, for example, this court has been inevitably hampered, notwithstanding the assistance of experienced counsel by a necessarily brief and incomplete recital of the facts, some of which remain in dispute, and by the necessity for a speedy resolution of this appeal. I intend no criticism. Indeed it is a credit to all concerned that the plaintiffs' cause of action in a matter of great complexity with large sums of money at stake only arose on the 11th June, 1980 and trial of the action began before Mr. Justice Lloyd on the 24th November, 1980.
By an underwriting agency agreement dated the 2nd June, 1977 the second defendants Afia authorised the third defendants C.E. Heath & Go. (International) Ltd. to enter into re-insurance agreements as agents for and on behalf of the first defendants Home Insurance Company. In November 1977, inexercise or in purported exercise of their authority, Heath entered into an agreement with the plaintiffs Great Atlantic Insurance Co., which are insurers, and the fourth to eighth defendants, which are companies carrying on marine insurance broking business under the inspiration of Mr. Elger. The agreement of 1977 was replaced by a quota share marine and aviation re-insurance agreement dated the 9th January, 1978 whereby marine insurance sought by clients of and negotiated by Mr. Elger and his companies would be accepted by the plaintiffs while Home would re-insure to the extent of 90 per cent of the risk. On the 29th March, 1978 Heath confirmed to the plaintiffs that the reinsurance agreement made on the 9th January, 1978 was effective and was binding on Home by reason of the authority vested in Heath by the underwriting agency agreement dated the 2nd June, 1977.
In 1980 the plaintiffs became worried about the result's of insurance business negotiated by Elger, accepted by the plaintiffs and re-insured by Home. The plaintiffs sent out an insurance expert, a Mr. Alexander, to investigate Elger's business and he made a written report commenting very adversely on the conduct and results of Elger's business. This report is not a document for which privilege against disclosure in legal proceedings can be claimed by the plaintiffs or has been claimed by the plaintiffs.
About the same time as he made his report, Mr. Alexander orally reported the results of his investigation and discussed the results of his visit to Elger's offices with a representative of the firm of American attorneys who were acting for the plaintiffs as their lawyers. No privilege can be claimed for what Mr. Alexander said to the American representative because litigation was not at the time in prospect in the present proceedings. See Wheeler v. Le Marchant (1881) 17 Chancery Division 675. Heath could for example subpoena Mr. Alexander and the American representative to give evidence of what was said between them.
By a memorandum dated the 2nd May, 1980 the American attorneys wrote to the plaintiffs setting out in the first two paragraphs of that memorandum an account of the discussions between Mr. Alexander and the representative of the American attorneys. The memorandum then continued with additional matter which, according to the sworn affidavit of a partner in the plaintiffs' English firm of solicitors, dealt with "questions of strategy affecting both the Elger and Marlow matters". For present purposes the "Marlow matters" need no explanation; they are connected with the difficulties which had arisen over the Elger matters.
In this appeal the plaintiffs argue that the first two paragraphs of the memorandum are not privileged because they are merely an account of a discussion which was itself not privileged. They argue that the additional matter was privileged. Heath claim that the whole of the memorandum was privileged and that the privilege has been waived in the circumstances which I shall shortly narrate and that Heath are entitled to see the whole of the memorandum including the additional matter for which privilege is asserted. The learned judge agreed with Heath.
In June 1980 Home and Afia repudiated the 1977 re-insurance agreement and also the substituted re-insurance agreement dated the 9th January, 1978. Home and Afia denied that Heath had authority to bind either Home or Afia to the 1978 agreement. The plaintiffs in the present proceedings are seeking a declaration that both Home and Afia are bound by the 1977 and 1978 agreements. If the plaintiffs fail in any respect because Heath did not possess the necessary authority to bind Home and Afia, then in the same action the plaintiffs seek damages from Heath for breach of warranty of authority.
It is part of Heath's reamended defence that the plaintiffs connived with Home and Afia in connection with the repudiation by Home and Afia of the 1977 and 1978 re-insurance agreements. The report by Mr. Alexander and the memorandum from the plaintiffs' American attorneys dated the 2nd May, 1980 are said to be relevant to this defence in that they support the plaintiffs' case as to the reason for a meeting held in London in June 1980 between representatives of the plaintiffs and Afia at which it is said by Heath that the connivance between the plaintiffs and Home and Afia took place.
The plaintiffs' English solicitors intended to give discovery of the first two paragraphs of the memorandum dated the 2nd May, 1980 and intended to claim privilege for the additional matter contained in that memorandum. The plaintiffs' solicitors did not intend and the plaintiffs did not intend to waive any privilege in respect of any document. By mishap, no doubt due to the speed with which this litigation has been conducted, the plaintiffs' solicitors failed to claim privilege or to make clear that they were claiming privilege in respect of the additional matter contained in the memorandum. The plaintiffs' solicitors, however, only provided to the defendants and for use in the trial copies of the memorandum limited to the first two paragraphs and excluded the additional matter for which privilege was intended to be claimed and is now claimed. In the result none of the defendants is aware of the contents and terms of the additional matter.
In the course of his opening speech in the first days of the trial which began on the 24th November, 1980 the plaintiffs' counsel read to the learned judge in open court the first two paragraphs of the memorandum dated the 2nd May, 1980 which formed part of a bundle of agreed documents. At that stage the plaintiffs' counsel was not aware that the two paragraphs only represented part of the contents of the memorandum and he had no knowledge of the additional matter and he had no intention of waiving privilege in respect of the whole or part of the memorandum or any other privileged document.
A few days later the plaintiffs' counsel and Heath's counsel discovered that the memorandum as read to the judge was incomplete and did not include the additional matter which the plaintiffs' solicitors believed to be privileged and for which they intended to claim privilege. Heath's counsel on behalf of Heath asked for disclosure of the additional matter on the grounds that part of a document having been put before the court by the plaintiffs, Heath were entitled to see the whole of the document whether or not that document had originally be privileged. The plaintiffs declined to disclose the additional matter in the memorandum on the grounds that the first two paragraphs were not privileged and had been disclosed for that reason, but that the additional matter was privileged and that privilege had not been waived. Mr. Justice Lloyd decided in favour of Heath, and ordered disclosure of the whole of the memorandum. With leave of the judge, the plaintiffs appeal to this court.
The first question is whether the whole of the memorandum dated the 2nd May, 1980 was privileged or, as the plaintiffs' English solicitors thought, the first two paragraphs were not privileged and therefore were bound to be disclosed. In my judgment, the whole of the memorandum...
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