The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice McCombe,Sir Brian Leveson,Sir Geoffrey Vos
Judgment Date05 Sep 2018
Neutral Citation[2018] EWCA Civ 2006
Docket NumberCase No: A2/2017/1514

[2018] EWCA Civ 2006

IN THE COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

THE HONOURABLE MRS JUSTICE ANDREWS DBE

Rolls Building

7 Rolls Buildings

Fetter Lane

London, EC4A 1NL

Before:

Sir Brian Leveson, PRESIDENT OF THE QUEEN'S BENCH DIVISION

Sir Geoffrey Vos, CHANCELLOR OF THE HIGH COURT

and

Lord Justice McCombe

Case No: A2/2017/1514

Between:
The Director of the Serious Fraud Office
Claimant / Respondent
and
Eurasian Natural Resources Corporation Limited
Defendant / Appellant

and

The Law Society
Intervener

Mr Bankim Thanki QC, Ms Tamara Oppenheimer and Ms Rebecca Loveridge (instructed by Hogan Lovells International LLP) appeared for the Appellant

Mr Jonathan Fisher QC, Mr James Segan and Mr Eesvan Krishnan (instructed by Eversheds Sutherland LLP) appeared for the Respondent

Ms Dinah Rose QC and Mr David Pievsky (instructed by Reed Smith LLP) appeared for the Interveners

Hearing dates: 3 rd, 4 th and 5 th July 2018

Judgment Approved

Lord Justice McCombe

Sir Brian Leveson, President of the Queen's Bench Division, Sir Geoffrey Vos, Chancellor of the High Court, and

Introduction

1

This appeal raises important issues as to the proper scope of legal professional privilege. The defendant, Eurasian Natural Resources Corporation Limited (“ENRC”), had asserted that certain documents generated during investigations into its activities by its solicitors and forensic accountants (the “Documents”) were the subject of legal advice privilege and/or litigation privilege. The Documents related to fraudulent practices allegedly committed in Kazakhstan and Africa, which had been notified to ENRC by a whistle-blower, and included notes made by ENRC's outside solicitors of some 184 interviews (including with its current and former employees). The Director (the “Director”) of the Serious Fraud Office (the “SFO”) claimed declarations that the Documents were not the subject of legal professional privilege. Mrs Justice Andrews essentially granted the declarations sought.

2

ENRC submitted that Andrews J was wrong because she misinterpreted the Court of Appeal's decision in Three Rivers District Council and Others v. Governor and Company of the Bank of England (No. 5) [2003] QB 1556 (“ Three Rivers (No. 5)”) as to the kind of documents that could be the subject of legal advice privilege. She ought not to have held that communications with a client for these purposes were only those with an employee who was specifically tasked to seek and obtain legal advice. Instead, the judge ought to have held that, to attract legal advice privilege, all that was necessary was that the employee in question was authorised by the client to provide the information to the company's lawyer. The ratio decidendi of Three Rivers (No. 5) was that only communications between client and lawyer were privileged. It was not necessary for the Court of Appeal there to decide which representatives of the client could claim privilege, because the client was the Bingham Inquiry Unit, not the Bank of England itself. The dicta concerning employees in Three Rivers (No. 5) were, therefore, obiter. In any event, ENRC submitted that the judge ought to have regarded certain of the Documents as privileged as lawyers' working papers. The SFO submitted in response that, even if Three Rivers (No. 5) were to be interpreted as ENRC claimed, it was now well-established that legal advice privilege could only be established where the dominant purpose of the communication was to obtain legal advice, which was not the case here, since the solicitors' primary engagement was to undertake an investigation into the facts.

3

In relation to litigation privilege, ENRC argued that the judge wrongly held that (i) no criminal prosecution was reasonably in contemplation 1 and (ii) none of the Documents was created with the sole or dominant purpose of defending anticipated criminal proceedings. On the facts, the judge was also wrong to hold that the Documents had been created on the understanding that they would be provided to the SFO. The SFO, on the other hand, contended that the judge's conclusions were amply justified on the facts.

4

We will return to these arguments below. It is first necessary to set out some of the factual background, which is important because ENRC ultimately contests the judge's approach to the evidence and contemporaneous documents.

Factual background

5

ENRC is a company incorporated under the laws of England and Wales. It is part of a multinational group of companies operating in the mining and natural resources sector. It was a public limited company until 14 th January 2014, and a FTSE-100 listed company between 2007 and 2013. Until 2009/2010, its principal operations were carried out through a wholly-owned subsidiary, Sokolov-Sarbai Mining Production Association (“SSGPO”), in Kazakhstan. At the same time, it was diversifying its operations through acquisitions of companies operating in various parts of Africa. It is undoubted that ENRC and its subsidiaries operated in countries perceived as being high risk in terms of public sector bribery and corruption (see Gross LJ at paragraphs 4–5 in R (Soma Oil and Gas Ltd) v. Director of the Serious Fraud Office [2016] EWHC 2471 (Admin)).

6

The SFO was constituted under section 1(1) of the Criminal Justice Act 1987 (“ CJA 1987”). Its functions include the investigation and prosecution of crimes involving serious or complex fraud, domestic and overseas bribery and corruption. Section 1(3) of the CJA 1987 allows the SFO to investigate any suspected offence which appears to the Director on reasonable grounds to involve serious or complex fraud. Section 2(4) allows the Director to require production of any specified documents which appear to him to relate to an investigation he is undertaking, and section 2(9) allows the person under investigation to refuse to disclose documents on the grounds of legal professional privilege.

7

In 2009/2010, ENRC became aware of allegations of criminality on the part of certain African companies that it was seeking to acquire. In particular, its mid-2010 acquisition of a company called Camrose Resources Limited (“Camrose”) gave rise to litigation (which has since settled) with a Canadian company, First Quantum Minerals (“FQM”). FQM alleged that a copper mine had been unlawfully appropriated by the government of the African country in question and sold to a company allegedly linked to a friend of that country's President. The buyer had then procured the sale of that company to ENRC as part of the Camrose deal. It was ENRC's recorded view in August 2010 that those allegations were “in large part unsubstantiated, but bearing in mind the low threshold for suspicion it is not possible to discount them completely”.

8

On 20 th December 2010, ENRC received an email from an apparent whistle-blower alleging corruption and financial wrongdoing within SSGPO (the “whistle-blower email”). Having brought the whistle-blower email to the attention of ENRC's board of directors, ENRC's audit committee engaged DLA Piper UK LLP (“DLA Piper”) to investigate the allegations it contained. The investigation was headed by Mr Neil Gerrard (“Mr Gerrard”), who was at the time DLA Piper's head of litigation.

9

On 15 th March 2011, ENRC's then general counsel Mr Randal Barker (“Mr Barker”) emailed one of the company's non-executive directors, saying:-

“I think you and the other members of the Audit Committee need to be careful not to be too bullish about regulatory risk, especially … given where we are reputationally post-Camrose (I can sense from GC 100 [an association of 100 large companies' general counsel] meetings with the MoJ and the SFO that we are firmly on the radar and I expect an investigation in due course, which is why I have upgraded our dawn raid procedures recently).”

10

On 8 th April 2011, there were media reports that Mr Eric Joyce MP had written to the SFO, asking it to investigate ENRC and whether it had adequate procedures to prevent bribery in connection with its acquisition of Camrose. His essential complaint was that ENRC should have asked more questions about the Camrose deal.

11

On 17 th April 2011, ENRC's head of compliance Mr Cary Depel (“Mr Depel”) wrote an internal email to colleagues, in which he said “I predict a sh!tstorm and a [SFO] dawn raid … before summer's over … the company's ‘books and records’ will be a [first] port of call”. That email was forwarded to ENRC's chief executive officer, and also to Mr Barker, who commented that Mr Depel was “fundamentally correct – we need to be prepared”.

12

Around the same time, ENRC instructed Forensic Risk Alliance (“FRA”), a firm of forensic accountants, to undertake a books and records review. The review, which was led by FRA's co-founder Mr Toby Duthie (“Mr Duthie”), began on 12 th May 2011. According to the witness statements of Mr Duthie and ENRC's solicitor Mr Daniel James Spendlove (“Mr Spendlove”), its main purpose was to identify and address issues within ENRC's accounting records that might have exposed the company to liability under bribery and corruption legislation or the Companies Act 2006, and its secondary purpose was compliance-related, namely to assist Jones Day with the legal advice that it was providing to ENRC on its compliance programme. It will be seen that the judge did not accept this evidence, and considered that the review was commissioned primarily for compliance purposes.

13

On 21 st April 2011, Mr Gerrard wrote a letter to Mr Barker, in response to a request to provide a written advice “in order to ensure that all possible practical steps are taken to maintain legal professional privilege over documents and communications created in relation to this investigation”. That letter, in so far as is relevant and not covered by legal advice privilege, said:-

“The internal investigation at...

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