Property Alliance Group Ltd v The Royal Bank of Scotland Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 05 November 2015 |
| Neutral Citation | [2015] EWHC 3187 (Ch) |
| Docket Number | Case No: HC-2013-000459 |
| Court | Chancery Division |
| Date | 05 November 2015 |
[2015] EWHC 3187 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
7 Rolls Building, Fetter Lane
London EC4A 1NL
Mr Justice Snowden
Case No: HC-2013-000459
Tim Lord QC, Adam ClohertyandKyle Lawson (instructed by Cooke, Young & Keidan LLP) for the Claimant
David Railton QC and Adam Sher (instructed by Dentons UKMEA LLP) for the Defendant
Hearing date: 24 September 2015
Introduction
The issue that I have to decide is whether documents which have been referred to in earlier Judgments and Orders as "the ESG High Level Documents" are documents for which legal advice privilege has been properly claimed by the Defendant ("RBS"). The ESG High Level Documents were disclosed in Category 1 of Appendix B to a supplemental list of documents dated 20 February 2015.
By paragraphs 1–3 of an order made on 15 June 2015, following a judgment handed down on 8 June 2015 ( [2015] EWHC 1557 (Ch)), Birss J directed that the ESG High Level Documents be produced to the court for inspection pursuant to CPR 31.19(6); that they be inspected by another Judge of the Chancery Division; and that the inspecting Judge should determine (i) whether the claim for privilege is well-founded or not, and (ii) if parts of the documents are privileged, whether any suitably redacted copies should be provided for inspection (so as to withhold only the privileged parts).
The nature of the litigation and the background to the order for inspection were set out in paragraphs 1–40 of the judgment of Birss J to which I have referred. In brief, the Claimant ("PAG") alleges that RBS induced it to enter into four interest rate swap agreements between 2004 and 2008 that employed 3 month GBP LIBOR as a reference rate. PAG claims that by proposing such swaps, RBS implicitly misrepresented that it was not rigging the relevant LIBOR rate. As is well-known, following regulatory investigations in various jurisdictions, RBS has admitted that it was involved in rigging the Japanese Yen and Swiss Franc LIBOR rates and as a result has paid substantial fines of about £700 million. It has, however, denied misconduct in relation to the setting of any GBP LIBOR rates.
At an earlier stage in the litigation, Birss J ordered disclosure relating to all LIBOR currencies and tenors rather than just 3 month GBP LIBOR. The practical problem produced by that order was the sheer volume of documents that would need to be reviewed (about 25 million). It was thought that one way forward, in order to focus and limit the disclosure exercise, would be for RBS to disclose "high level" internal reports, reviews and summaries relating to the allegations of LIBOR misconduct. PAG suggested that there must be documents of this type in existence, not least because the RBS board or some sub-committee must have received such high level documents in order to perform its function, and that not all such documents could be privileged.
Attention was thus focussed on the Executive Steering Group ("ESG") of RBS. In paragraphs 27–40 of his judgment, Birss J described how the precise origins and role of that body had been the subject of a great deal of attention in evidence and submissions. Based on that material, and on the basis of his understanding as to the role of the ESG, Birss J was not satisfied that the claim to legal advice privilege had been correctly made out, and hence he made the order for inspection by the court.
I was subsequently appointed as the inspecting Judge and RBS duly produced 81 ESG High Level Documents for my inspection. Given the uncertainties as to the role of the ESG which had been highlighted by Birss J, I made an order that RBS should provide me with a witness statement setting out the background facts and exhibiting any documents that it contended were relevant to the claim to privilege, and that PAG should have the opportunity to respond to that evidence. In addition, and in marked distinction to the difficulties which confronted Birss J, I was also able to review the documents themselves before hearing argument on 24 September 2015 on the applicable legal principles that I should apply.
The ESG and the ESG High Level Documents
The ESG and its role were described in the witness statement of Mr. Paul de Gruchy dated 31 July 2015. Mr. de Gruchy is the Senior Legal Counsel in the Corporate and Institutional Banking division of RBS and was an attendee at meetings of the ESG.
Mr. de Gruchy's evidence explained that after the commencement of the many regulatory investigations in various jurisdictions including the United States, the United Kingdom, Canada and Japan in April 2010 (the "Regulatory Investigations"), RBS instructed a number of external legal advisers in different jurisdictions to advise the bank and to represent it before the numerous regulators. Principal among these law firms were Clifford Chance, which had primary responsibility for regulatory matters and defending litigation brought by customers and third parties, and SJ Berwin LLP which had responsibility for competition law issues.
Mr. de Gruchy's evidence continued,
"13. To oversee the Regulatory Investigations and related litigation, and liaise with the Bank's legal advisors and provide instructions accordingly, the Bank established an Executive Steering Group or ESG. The ESG was set up as a standalone committee rather than as a sub-committee of the Bank's Board of Directors….
14. The ESG was comprised of individuals from within relevant functions of the Bank – including from Legal … HR and Compliance as well as senior business representation. The ESG was formalised in July 2011….
15. To carry out its purpose in overseeing the conduct of the Bank's responses to the Regulatory Investigations…the ESG held conference calls with Clifford Chance, SJ Berwin and on occasions other of the Bank's external legal advisors on a regular basis from July 2011 onwards. These meeting provided a forum for the ESG to discuss with the Bank's external legal advisors the status of the Regulatory Investigations and communication with regulators around the world, with the Bank's legal advisors providing advice and analysis on issues and next steps, so the ESG could make decisions appropriately and provide further instructions as necessary…
16. Clifford Chance would take the lead for each of the ESG meetings (essentially thereby also acting as the secretariat for the meetings), setting — in conjunction with the Bank's internal legal advisors – the agenda and circulating advice on the Regulatory Investigations … Clifford Chance, SJ Berwin and on occasions other of the Bank's legal advisors would then attend the meetings (held by telephone conference) to discuss the Regulatory Investigations with the members of the ESG. The ESG would, for instance, ask to be advised and updated on the issues arising in the Regulatory Investigations, and what should be done next.…"
Mr. de Gruchy then classified the ESG High Level Documents into two types:
"20. The first type of ESG High Level Documents are confidential memoranda in the form of tables prepared by Clifford Chance, which advised and updated the ESG on the progress, status and issues arising in the Regulatory Investigations (falling within the set of documents described above as the "updates" prepared by Clifford Chance for the ESG). These memoranda formed the basis of discussions at the ESG meetings regarding the Bank's proposed strategy and Clifford Chance's advice in relation to the Regulatory Investigations. In effect, they formed part of the continuous exercise of advising and updating the ESG on the Bank's position in relation to the Regulatory Investigations, providing the ESG with the opportunity to give further instructions on behalf of the Bank to Clifford Chance (and/or other of the Bank's external legal advisors) or otherwise to seek further advice in relation to the Regulatory Investigations.
21. The second type of ESG High Level Documents are confidential notes/summaries drafted by Clifford Chance concerning the discussions between the ESG and its legal advisors at the ESG meetings. These notes, by their nature (given their authorship) reflect Clifford Chance's views on the Regulatory Investigations, as Clifford Chance determined the information to be included in the notes. Clifford Chance would circulate these notes after each ESG meeting, thereby in effect also constituting the summary "minutes" of the discussions between the ESG and its legal advisors at the ESG meetings."
Mr. de Gruchy's evidence emphasised that all of the ESG High Level Documents were produced by Clifford Chance for the ESG, that they were expressly marked "privileged and confidential", and they were all communicated by Clifford Chance to the ESG either before or following the ESG meetings.
Having reviewed the ESG High Level Documents for myself, I confirm that Mr. de Gruchy's description of the format of the documents in the first sentence of each of paragraphs 20 and 21 of his witness statement is accurate.
I would supplement Mr. de Gruchy's evidence by indicating, as I did to the parties at the hearing without opposition from Mr. Railton QC who appeared for RBS, that the table in the earlier documents in the first category contains four columns headed "Authority/Litigation", "Applicable Rates", "Comment" and "Status". In later documents the "Status" column is omitted and replaced by a "Next Steps" remark in each box in the "Comment" column.
I would also indicate (as I did at the hearing) that in general terms, a more appropriate description of the first type of document would be that the tables "informed and updated" the ESG on the progress status and issues in the regulatory investigations, rather than...
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