Property Alliance Group Ltd v The Royal Bank of Scotland Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Birss |
| Judgment Date | 20 November 2015 |
| Neutral Citation | [2015] EWHC 3341 (Ch) |
| Docket Number | Case No: HC 2013 000459 |
| Court | Chancery Division |
| Date | 20 November 2015 |
[2015] EWHC 3341 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Birss
Case No: HC 2013 000459
Tim Lord QC and Kyle Lawson (instructed by Cooke Young & Keidan) for the Claimant
David Railton QC and Adam Sher (instructed by Dentons) for the Defendant
Hearing dates: 5th and 6th November 2015
This is the second judgment dealing with issues arising at the hearing on 5 th-6 th November 2015 in these proceedings. This judgment deals with privilege. The earlier one ( [2015] EWHC 3272 (Ch)) dealt with PAG's amendments to the Particulars of Claim to plead fraudulent misrepresentation and with disclosure.
The earlier judgment summarises the nature of the proceedings (see the judgment as a whole and paragraphs 1 to 18 in particular). In brief PAG contends that RBS mis-sold swap contracts to PAG in the period 2004–2008. The allegations include misrepresentations relating to LIBOR. PAG also contends that in breach of contract RBS transferred PAG into RBS's turnaround division (called the Global Restructuring Group ("GRG")). Certain misconduct relating to manipulation of LIBOR has been admitted by RBS but otherwise PAG's claim is denied. PAG terminated the swaps in 2011 by paying £8 million to RBS. The claim form was issued on 17 th September 2013.
The issues addressed in this judgment derive from RBS's application of 22nd October 2015, seeking:
(i) inspection pursuant to CPR r31.19(5) of certain audio recordings and transcripts of those recordings over which PAG has asserted privilege;
(ii) an order under CPR r31.20 granting permission for use by RBS of a document (the "Kilty/Rubens email") over which PAG claims privilege but which was inadvertently disclosed by PAG to RBS;
(iii) an order that PAG should re-review each claim to privilege made in its disclosed list of documents and produce a new list providing further particularity.
There was also an application for specific disclosure under CPR r31.12 of further audio recordings and transcripts but that was disposed of in evidence during the hearing. The evidence from PAG is that there are no further recordings and transcripts in the class sought and so there is no need to make an order.
I can deal with point (iii) at the outset. I agree with RBS that it is right and proportionate to require PAG to re-review each claim to privilege made in its list of documents. RBS made a number of criticisms of PAG's approach to privilege in the original list, many of which have been accepted expressly or implicitly by PAG. It is unnecessary to consider those criticisms in any detail. I will mention only the following points. First, the background to this matter is that in these proceedings PAG has already subjected RBS's claims to privilege to detailed scrutiny, leading as it did to inspection of certain privileged RBS documents by the court (see my judgment at [2015] EWHC 1557 (Ch) and the consequent judgment of Snowden J at [2015] EWHC 3187 (Ch)). RBS submitted that it is only fair that the other side should be held to the same high standard. I agree. Second, there have been real difficulties with each of the four categories of privilege claimed by PAG. Most stark was the claim to common interest privilege in certain documents when that claim was demonstrably misconceived, but there have been problems across the board. Third is PAG's disclosure report and EDQ, which do not mention the existence of audio files, even compendiously as the subject of a privilege claim (see below). Given that the claimant must have been well aware of their existence (see below), this is surprising. I will require PAG to re-review its privilege claim.
Issue (i) – the recordings and transcripts
The audio recordings and transcripts which RBS seeks to be allowed to inspect are recordings of meetings which took place between Mr David Russell, the founder and managing director of PAG and two individuals, Mr Matthew Jones and Mr Anthony Goldrick. Both were employed by RBS at the time that PAG entered into the swap contracts. At the time each met with Mr Russell they were no longer RBS employees.
Mr Russell made the audio recordings surreptitiously without telling Mr Jones or Mr Goldrick. His reason for doing this was to gather evidence for this claim. PAG asserts litigation privilege over these materials. RBS contends they are not privileged.
The facts
Mr Jones had been employed by RBS from 1988 until October 2009. From 1992 to 2003, he worked in a group called Specialised Lending Services. This group later became the GRG. In 2003, Mr Jones moved to RBS's Corporate Real Estate Finance team, where he acted as relationship manager for a number of borrowers, including PAG.
Mr Jones left RBS's employment in October 2009 and took up a position at Barclays in January 2010. While at Barclays, he intended to target PAG as a potential client and was therefore actively in contact with Mr Russell. The two met several times during this period. Mr Jones left Barclays in January 2013 to take up a similar role at Santander in April 2013.
Shortly after Mr Jones had begun working for Santander he was contacted by Mr Russell, who asked if he would be available for a quick "catch up". This was on 25th June 2013. They met at an office owned by PAG at 39 Princess Street in Manchester, which was called Frank Rostron's, a shirt shop. Mr Russell arranged for the meeting to be recorded, unbeknownst to Mr Jones.
At the meeting, Mr Russell and Mr Jones discussed whether there might be opportunities for PAG and Santander to do more work together in the future. Mr Russell made it clear that he would prefer to work with Mr Jones if the relationship between PAG and Santander was to develop. Mr Jones subsequently spoke with his senior director about the meeting with Mr Russell. Mr Jones has stated in his witness statement that he did not consider that the content of the conversation was confidential.
Mr Russell arranged for a subsequent meeting under similar circumstances, which took place on 21st November 2013. This meeting was also recorded, without Mr Jones's prior knowledge or consent. During this second meeting, Mr Russell began discussing the hedging that PAG had entered into with RBS and asked Mr Jones if he would act as a witness for PAG in a claim against RBS. Mr Jones declined and sought to withdraw from the conversation.
The facts are similar with Mr Goldrick. Mr Goldrick worked in a variety of roles at RBS between 1982 and 2012 and set up a dedicated property lending team outside of London in 1999. In 2003 he was promoted as a regional Senior Director for Property Finance, which involved managing RBS's Corporate Real Estate business across the north of England. During this time, he was introduced to PAG and a number of other clients with whom he maintained a "high-level" relationship. Mr Goldrick became the Head of Real Estate Finance Portfolio Management for the north of England from January 2009 until he left RBS in September 2012 to set up his own consultancy business.
Between May 2012 and June 2013, Mr Goldrick communicated extensively with Mr Russell about acting as a consultant to PAG. Mr Goldrick met Mr Russell on 4 April 2013, where they discussed a potential role for Mr Goldrick as a consultant to PAG. Mr Russell subsequently asked Mr Goldrick to attend a meeting at Frank Rostron's on 25th June 2013. Mr Russell arranged for this meeting to be recorded but he did not reveal this to Mr Goldrick. At this meeting, Mr Goldrick recalls that hedging was discussed, especially in the context of the restructuring/refinancing discussions that PAG was having with GRG around this time. Following the meeting, Mr Goldrick sent Mr Russell a draft consultancy agreement. It is clear that he believed that the only intent and purpose behind the meetings with Mr Russell was to discuss the potential provision of his services to PAG as a consultant.
Mr Russell arranged for the recording of a further meeting, which took place on 21st November 2013. Again, Mr Goldrick did not know that he was being recorded. One of the things that Mr Russell told Mr Goldrick during this meeting was that PAG had instructed Cooke, Young and Keidan LLP in relation to a claim about the swaps. At a subsequent meeting on 19th November 2014 Mr Russell asked Mr Goldrick to assist PAG with its claim against RBS. Mr Goldrick declined. That meeting was not recorded.
It is clear that Mr Russell's true motive throughout was to seek information and evidence which might assist him in the claim which his company was going to bring against RBS. To further that end, Mr Russell deliberately deceived Mr Jones and Mr Goldrick about his motives. Mr Russell did not think either individual would meet him if he told them why he wanted to meet them and he was right about that. Mr Russell did not tell either of them that the meetings were being recorded because he thought Mr Jones and Mr Goldrick would be more likely to speak openly about RBS if they believed that they were speaking "off the record". He was obviously right about that too.
Mr Jones and Mr Goldrick both confirmed in their evidence that they believed the meetings were to discuss the furthering of their respective business relationships with PAG and both were disappointed when they discovered Mr Russell's deception.
The law
The essential requirements for establishing the existence of litigation privilege were summarised by Lord Carswell in Three Rivers District Council v the Bank of England (No.6) [2005] 1 A.C. 610 at paragraph 102, where he said that:
"communications between parties or their solicitors and third parties for...
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