Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Robin Knowles CBE |
| Judgment Date | 13 May 2022 |
| Neutral Citation | [2022] EWHC 1136 (Comm) |
| Docket Number | Case No: FL-2018-000019 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1136 (Comm)
THE HON Mr Justice Robin Knowles CBE
Case No: FL-2018-000019
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
COMMERCIAL COURT (QBD)
FINANCIAL LIST
Royal Courts of Justice
Strand, London, WC2A 2LL
Tamara Oppenheimer QC, Adam Sher and Marcus Field (instructed by Cahill Gordon & Reindel (UK) LLP) for the Defendants
Tim Lord QC and Fred Hobson (instructed by Reynolds Porter Chamberlain LLP) for the Claimants
Hearing dates: 24 November 2021
Approved Judgment
I direct that pursuant to CPR PD39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
Introduction
The Defendants (“Credit Suisse”) challenge claims by the Claimant (“Loreley”) to legal professional privilege. For Loreley, Mr Tim Lord QC formulates the “central question” arising in these terms: “Is the identity of the persons who are authorised to give instructions to solicitors on behalf of a corporate client in ongoing litigation a matter which is covered by litigation privilege?”.
Loreley's counsel and solicitors state that although previous authorities address matters which “bear at least some resemblance to the question in hand”, they are aware of no authority or commentary which addresses this specific question, and that none is referred to by Credit Suisse. They describe Credit Suisse's position as “in effect, inviting the Court to create an exception to the application of [litigation privilege], such that it would cover all aspects of a party's preparation for litigation except the identity of the persons authorised to give instructions”.
The litigation
The litigation concerns Loreley's purchase of notes (“the Notes”) from the Third Defendant in 2007 for US$100 million. The Notes formed part of a CDO (collateralised debt obligation) transaction. They were linked to the credit of residential mortgage-backed securities (RMBS). Credit Suisse had been involved in the securitisation of a number of the RMBS.
Loreley alleges fraud in relation to the securitisation by Credit Suisse of the RMBS and in representations made to Loreley in the sale of the Notes. The causes of action advanced include fraudulent misrepresentation and unlawful means conspiracy. There are limitation issues, including what facts and matters relevant to its claim Loreley knew or could with reasonable diligence have discovered before November 2012 or 2015.
Loreley's knowledge: IKB and KfW
Although a company, Loreley is a special purpose vehicle. It has no employees. Its directors are “supplied” by a professional services company.
IKB Deutsche Industriebank AG (“IKB”) was the sole “Liquidity Facility Provider” to Loreley, and Credit Suisse contends that Loreley is reliant on IKB for its record keeping. A subsidiary of IKB, IKB Credit Asset Management acted as Loreley's investment adviser in connection with the purchase of the Notes.
Another German bank, Kreditanstalt fur Wiederaufbau or KfW Bankengruppe (“KfW”) rescued IKB in 2007 in the global financial crisis. Credit Suisse says that KfW took over as the “Liquidity Facility Provider” to Loreley. KfW became a creditor of Loreley with security over Loreley's assets which include this claim or its proceeds.
On Credit Suisse's case, on the question of knowledge, “the knowledge of IKB and KfW is … relevant, not least given that, in reality, all decisions by [Loreley] were made by IKB (albeit then formally approved by the professional directors)”. In its Defence, Credit Suisse alleges that “KfW initiated and/or was otherwise involved in the decision to launch the present litigation and (it appears) may be providing instructions to RPC [Reynolds Porter Chamberlain LLP, Loreley's solicitors] on behalf of [Loreley]”.
The parties are agreed that the question whether knowledge is capable of being attributed to Loreley in the context and for the purpose of this case is an issue to be resolved at trial and is not for determination now. The parties are aware that there are decisions in other cases that may or may not bear on that question in this case.
Through Mr Lord QC, Loreley queries whether the information sought by Credit Suisse is of any probative value in relation to the limitation issue. Nevertheless, Loreley accepts that the question who gives instructions on behalf of Loreley to RPC is “relevant as a building block (albeit a small one) for Credit Suisse's contention that the claims against it are time barred”. Loreley recognises that if KfW/IKB provide instructions to RPC, Credit Suisse will seek to rely on this “as a badge of ‘control’ so as to argue that the knowledge of KfW/IKB is attributable to [Loreley].”
The information sought
A CPR Part 18 Request from Credit Suisse asked Loreley to confirm whether IKB decided to pursue this litigation and whether individuals at KfW were providing instructions to RPC in relation to this litigation.
Loreley's position in response is that the information sought is irrelevant and “by its nature, subject to legal professional privilege”. Later exchanges, including by direction of the Court, did not resolve the matter but made clear that litigation privilege rather than legal advice privilege was the form of legal professional privilege on which Loreley placed primary reliance.
On this application, Credit Suisse seek Orders that “the names of the individuals who are, or have been, authorised to give instructions to RPC in relation to the litigation are not subject to [legal professional privilege]”, that Loreley provide a full response to the relevant CPR Part 18 Request, and that certain documents provided by Loreley with redactions be provided without those redactions.
On 30 June 2021 following certain directions given by Picken J, Loreley gave early disclosure of documents described as follows by Loreley: (i) minutes of a Loreley board meeting on 7 November 2018 to consider the issuance of the claim (ii) board approval instructing RPC to issue proceedings (iii) RPC's engagement letter with Loreley dated 12 November 2018 and (iv) minutes of a Loreley board meeting on 13 February 2020 to consider the filing/service of the present proceedings.
The disclosure was subject to redactions, including one made to the engagement letter on the basis that litigation privilege applied to text in that letter that referred to the identity of individuals who are entitled to provide instructions to RPC in relation to the litigation.
Legal professional privilege
Legal professional privilege “is a single integral privilege, whose sub-heads are legal advice privilege and litigation privilege” ( Three Rivers DC (No. 6) v Bank of England [2004] UKHL 48; [2005] 1 AC 610 per Lord Carswell at paragraph [105]). The two sub-heads “have different characteristics” ( SFO v Eurasian Natural Resources Corp Ltd [2018] EWCA Civ 2006; [2019] 1 WLR 791 per Sir Brian Leveson PQBD, Sir Geoffrey Vos CHC and McCombe LJ at [64]–[66]).
The requirements for litigation privilege may be taken to be as follows ( Three Rivers DC (No. 6) (above) at [102] per Lord Carswell; see SFO v ENRC (above) at [64]–[66]):
“… communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied:
(a) litigation must be in progress or in contemplation;
(b) the communications must have been made for the sole or dominant purpose of conducting that litigation;
(c) the litigation must be adversarial, not investigative or inquisitorial.”
The elements of legal advice privilege may be taken to be as follows ( Three Rivers DC (No. 6) (above) at [102] per Lord Carswell; see SFO v ENRC (above) at [64]–[66]):
“… After examining the authorities in detail, Taylor LJ said, at p 330 [in Balabel v Air India [1988] Ch 317 (“ Balabel”)]:
“Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client … Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as ‘please advise me what I should do’. But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and...
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