Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Lady Justice Nicola Davies,Sir Geoffrey Vos |
| Judgment Date | 10 November 2022 |
| Neutral Citation | [2022] EWCA Civ 1484 |
| Docket Number | Case No: CA-2022-001108 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 1484
Sir Geoffrey Vos, MASTER OF THE ROLLS
Lady Justice Nicola Davies
and
Lord Justice Males
Case No: CA-2022-001108
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
COMMERCIAL COURT (QBD)
FINANCIAL LIST
Mr Justice Robin Knowles CBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Tim Lord KC & Fred Hobson (instructed by Reynolds Porter Chamberlain LLP) for the Appellant
Tamara Oppenheimer KC & Adam Sher (instructed by Cahill Gordon & Reindel (UK) LLP) for the Respondents
Hearing date: 12 October 2022
Approved Judgment
This judgment was handed down remotely at 10.30am on Thursday 10 November 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This appeal is concerned with the scope of litigation privilege. The respondent defendants (“the Bank” — there is no need to distinguish between them) wish to know which individuals are authorised to give instructions in relation to these proceedings on behalf of the appellant claimant (“Loreley”), a special purpose vehicle with no employees whose directors are supplied by a professional services company. Loreley responds that this information is privileged. But another question also arises, whether (regardless of privilege) this is the kind of information which Loreley should be ordered to provide under CPR 18 as a matter of good case management when it is unrelated to the content of any disclosable document.
Mr Justice Robin Knowles made a declaration that:
“In the present case, the identities of the individuals who are, or have been, authorised to give instructions to Reynolds Porter Chamberlain LLP (‘RPC’) on behalf of the Claimant in relation to these proceedings are not subject to legal professional privilege.”
He ordered Loreley to disclose this information in response to a Part 18 Request dated 16 th October 2020.
In addition, he ordered Loreley to disclose an unredacted copy of the engagement letter from RPC to Loreley dated 12 th November 2018, which had previously been disclosed in redacted form so as to conceal (among other things, with which we are not now concerned) the identity of those with whom RPC would communicate (“Redaction 6”).
In the case of other documents which had been disclosed in redacted form, the judge required Loreley to reconsider the question of privilege for the redactions in the light of the principles set out in his judgment.
Loreley now appeals.
Background
Loreley's claim in this action concerns the purchase of notes from the Bank in 2007 (“the Notes”) for US $100 million. The Notes formed part of a collateralised debt obligation (“CDO”) transaction and were linked to the credit of residential mortgage-backed securities (“RMBSs”). The Bank had been involved in the securitisation of a number of these RMBSs.
Loreley alleges fraud in relation to the securitisation by the Bank of the RMBSs and in representations made to it in the sale of the Notes. The causes of action advanced include fraudulent misrepresentation and unlawful means conspiracy.
The Bank contends, among other defences, that the claims are barred by limitation. As the proceedings were not issued until 15 th November 2018, the claims are prima facie time barred, but Loreley seeks to rely on section 32 of the Limitation Act 1980, alleging that time only began to run when it discovered the alleged dishonest misconduct or could with reasonable diligence have discovered it. It says that this did not occur until January 2017.
Accordingly there is an issue whether Loreley did discover or could with reasonable diligence have discovered the alleged misconduct before 15 th November 2012, six years before the issue of proceedings. Because Loreley is a special purpose vehicle with no employees whose directors are supplied by a professional services company, there are issues as to whose knowledge is to be attributed to Loreley for this purpose. The Bank's case is that matters which were known to, or could with reasonable diligence have been discovered by, two German banks, referred to as IKB and KfW, should count as matters known to or discoverable by Loreley for the purpose of section 32. Loreley disputes this.
IKB Deutsche Industriebank AG (“IKB”) was the sole “Liquidity Facility Provider” to Loreley in connection with the purchase of the Notes. A subsidiary of IKB, IKB Credit Asset Management, acted as Loreley's investment adviser. The Bank's case is that Loreley is reliant on IKB for its record keeping.
Another German bank, Kreditanstalt für Wiederaufbau or KfW Bankengruppe (“KfW”), rescued IKB in 2007 in the global financial crisis. KfW took over as the “Liquidity Facility Provider” to Loreley and became a creditor of Loreley with security over its assets, including the claim in this action or its proceeds. It is now common ground that any sums recovered in this action will ultimately benefit KfW as Loreley's main creditor.
The Bank's case is that “in reality, all decisions by [Loreley] were made by IKB (albeit then formally approved by the professional directors)”. In its Defence, the Bank 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 on behalf of [Loreley]”. This is the context in which it wishes to find out the identity of the individuals giving instructions to RPC. The Bank will contend that if such instructions are given by IKB/KfW, that is relevant evidence that IKB/KfW exercised control over Loreley six years earlier, in the period before 15 th November 2012, supporting its argument that the knowledge of IKB/KfW during that period is to be attributed to Loreley. The significance of this is, or at least appears to include, that in 2011 IKB commenced proceedings against the Bank in New York, making very similar allegations to those made by Loreley in the present action.
The judge did not decide, and was not asked to decide, whether the knowledge of IKB and/or KfW should count as Loreley's knowledge for the purpose of section 32 of the Limitation Act. It was and is common ground that this will be an issue for trial. Loreley has questioned whether the information sought by the Bank will be of any probative value in relation to the limitation issue, but has so far accepted that the question who gives instructions on its behalf 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”.
Procedural history
On 16 th October 2020, after exchanges of pleadings which already ran to hundreds of pages, the Bank served an extensive Request for Further Information pursuant to CPR 18. Request 17 was as follows:
“Paragraph 104(3)(b) of the Defence inter alia alleges that KfW may be providing instructions to RPC on behalf of Loreley 30.
Please therefore confirm whether or not individuals at KfW provide instructions in relation to this litigation on behalf of Loreley 30.
(For the avoidance of doubt, this request does not seek disclosure of the content of any communications which are subject to legal professional privilege, seeking (at most) to identify the individuals who engaged in such communications, which fact is not itself a communication or subject to legal professional privilege).”
The response, dated 7 th December 2020, consisted of a denial that the knowledge of KfW was to be attributed to Loreley, together with a claim to privilege:
“In any event, the request seeks information as to the circumstances in which the decision was made to pursue the present claim and/or the provision of instructions in relation to the conduct of the claim. That information is, by its nature, subject to legal professional privilege.”
On 14 th May 2021 a case management conference, in fact the second such conference in the action, was held before Mr Justice Picken. There were numerous items on the agenda, one of which (in fact the last) was that the Bank sought an order requiring Loreley to provide this information, and to produce for inspection RPC's letter of engagement. Loreley did not resist production of the engagement letter, provided that this did not pre-judge whether all or any parts of it were covered by privilege. It did resist answering the Request for Further Information, contending in its skeleton argument that, in view of what was already common ground (see [12] above), the information was not reasonably necessary to enable the Bank to prepare its case; and that it was covered by litigation privilege. In oral argument, the principal focus of Loreley's resistance was concerned with privilege. Under some pressure of time, Mr Justice Picken did not give a formal judgment, but commented that the real issue was whether the information was privileged and that he would take what he described as the same “pragmatic and sensible approach” as in relation to the letter of engagement by ordering the information to be provided, subject to any claim for privilege.
The result was an order dated 14 th May 2021 which ordered Loreley to produce (among other things):
“All engagement letters between RPC and [Loreley] and/or [IKB] or relevant subsidiary (together ‘IKB’), and/or KfW Group or relevant subsidiary (together ‘KfW’) concerning the present litigation.”
The order went on to say that if Loreley sought to claim privilege, including by making redactions, full particulars of the matters relied on for the basis of the claim to...
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