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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Narden Services Ltd v Inverness Retail & Business Park Ltd & Ors [2008] ScotCS CSIH_14 (12 February 2008)
URL: http://www.bailii.org/scot/cases/ScotCS/2008/CSIH_14.html
Cite as: [2008] CSIH 14, [2008] ScotCS CSIH_14

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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

 

Lord Johnston

Lord Reed

Lord Abernethy

 

 

 

 

 

 

[2008] CSIH 14

P961/03

 

OPINION OF THE COURT

 

delivered by LORD JOHNSTON

 

in

 

RECLAIMING MOTION

 

on

 

PETITION and ANSWERS

 

in the cause

 

NARDEN SERVICES LIMITED

Petitioners and Respondents;

 

against

 

INVERNESS RETAIL and BUSINESS PARK LIMITED and OTHERS

Respondents and Reclaimers:

 

for

 

an Order for Rectification

_______

 

 

Parties participating at this hearing:

First, Second & Fifth Respondents & Reclaimers: Dewar, Q.C., MacColl; Russel & Aitken

Third & Fourth Respondents: Scott, Q.C., Robertson; Brodies

Non-participating Party: Petitioners: Dundas & Wilson

 

12 February 2008

 

[1] This reclaiming motion relates to an interlocutory opinion by a temporary judge in this petition for rectification. As will become clear the petitioners did not feature before us and the issues were canvassed as between the first, second and fifth respondents (the appellants) and the third and fourth respondents (the respondents) relating to how the court should deal with issues of confidentiality in relation to certain bundles of recovered documents. Initially the reclaiming motion was initiated by the respondents and the current appellants entered a cross reclaiming motion. The former was abandoned and the only issue before us related to the latter.

[2] There were two separate bundles of documents emanating, firstly, from accountants Ernst & Young (EY documents) and, separately, from Paull & Williamson, Solicitors (PW documents).

[3] As will become clear again the bundles required to be dealt with in a separate way in as much that those emanating from EY are still in two sealed envelopes which have not been opened and are not, so far as we could discover, subject yet to any inventory identifying what they are. On the other hand the PW documents were sent directly from the haver to the respondents without the knowledge of the appellants and, accordingly, the respondents have seen them. This situation raises a separate issue to be addressed in due course from that relating to EY.

[4] Against that background the relevant part of the Lord Ordinary's Opinion is as follows:

"[18] The position so far as these documents are concerned is that there is before the court a motion to open the confidential envelopes Nos [26 and 27] of process. Although that motion was not intimated to the first, second and fifth respondents because they have not entered the process, they have now entered opposition to the motion. They are entitled to do this by virtue of rule of court 35.8(4). I cannot see any valid reason for an alternative procedure being followed, such as having submissions on confidentiality before the commissioner. I shall therefore continue the motion on behalf of the third and fourth respondents to open up the confidential envelopes Nos 26 and 27 of process lodged by Ernst & Young to a date to be afterwards fixed for submissions on the merits of the claim of confidentiality being made by the first, second and fifth respondents.

[19] It is in relation to the documents from Paull & Williamsons that the problem arises. The interlocutor of 13 April 2004 allowed the confidential envelopes Nos 23 and 24 of process to be opened up and the third and fourth respondents now seek to lodge as late productions No 7/9-35 of process, which consists of part of the documents from Nos 23 and 24 of process. Put shortly, the position adopted by Mr Scott on behalf of the third and fourth respondents was that they had followed the procedure in the rules of court and it was now too late for the court to entertain a claim of confidentiality in relation to these documents on behalf of the first, second and fifth respondents. I have reached the view that, in light of certain provisions of the Human Rights Act 1998, that submission cannot be sustained. The claim which the first, second and fifth respondents seek to make in relation to these documents is one of confidentiality based on legal professional privilege, an absolute legal privilege and a fundamental human right which has been held to be part of the right of privacy guaranteed by article 8 of the Convention, and they assert that the disclosure of these documents would amount to a breach of their article 8 rights. It is unlawful for the court to act in a way which is incompatible with a Convention right: section 6(1) and (3)(a) of the 1998 Act. In relation to any act or proposed act of a public authority which the court finds is or would be unlawful, it may grant such relief or remedy, or make such order, within its powers as it considers just and appropriate: section 8(1) of the 1998 Act. It therefore seems to me that, notwithstanding that the claim of confidentiality in relation to these documents by the first, second and fifth respondents is being made later in the day, and the third and fourth respondents have followed the rules of court so far as their recovery is concerned, the court, faced as it now is with a claim of confidentiality by the first, second and fifth respondents, must take steps to ensure that their article 8 rights are protected. It further seems to me that, if I were to accept the submission by Mr Scott, it is at the very least possible that the court would be acting in a away which was incompatible with a Convention right and therefore acting unlawfully. In my opinion the procedure which should now be adopted to deal with the claim of confidentiality on behalf of the first, second and fifth respondents is that I should continue their motion of 26 April 2004 and the motion by the third and fourth respondents for the late lodging of No 7/9-35 of process for submissions on the issue of confidentiality in relation to Nos 23 and 24 of process."

[5] It can be seen at once that the decision of the Lord Ordinary amounted to no more than a continuation of the motions for a further hearing in respect of both bundles of documents and he declined, in either respect, to appoint a Commissioner to deal with the matter.

[6] The issue before us developed in a somewhat unusual way and therefore enables us to deal with it again in a somewhat unorthodox manner.

[7] The primary contention on behalf of the appellants was that the open-ended interlocutor, merely continuing the motions, issued by the Lord Ordinary did not adequately safeguard the rights of the appellants in respect of legal professional privilege (LPP) which undoubtedly accrued to them in principle and, according to them, applied specifically in this case to both sets of documents. They therefore proposed means of safeguarding their interests in one of two ways. Their primary contention was that this court should order that the issues of confidentiality and privilege should be dealt with ex parte by a Commissioner to whom the matter should be remitted by the Lord Ordinary for that purpose and, in particular, a ruling on the question in relation to each and all of the documents. It was contended that the respondents should not be represented at such a hearing either in respect of the EY documents or in respect of the PW documents notwithstanding that they had in fact seen the latter documents. If the court in relation to EY was not inclined to allow an ex parte hearing it was submitted that the matter should still be remitted to a Commissioner by the Lord Ordinary, but in addition a special advocate should be appointed to represent the interests of the respondents. The special advocate could take instructions from the respondents in respect of the general approach that should be taken, but should not disclose either the content of the documents if such arose or, more specifically, the reasons being asserted by the appellants for not disclosing the documents on grounds of LPP, it being alleged that explanations going beyond the actual terms of the documents, but again confidential to the appellants' position, might have to be revealed. For such information beyond the contents of the documents to be disclosed to the respondents might, it was submitted, prejudice the position of the appellants overall in this action, but more importantly in other actions, of which there are a number, relating to the complicated dispute. The notion of a special advocate is to be found focussed in R. v H. [2004] 2 AC 134.

[8] The response by the respondents to this approach, focussing on the contention that it had not been demonstrated that the Lord Ordinary had made any error of law or misdirected himself in the course he adopted, was that to have an ex parte hearing, or even the alternative suggested by the appellants, was contrary to their right in terms of an adversarial process to be represented at any hearing involving their interests and, indeed, was contrary to natural justice. The Lord Ordinary's interlocutor therefore should be allowed to stand and matters proceed to the further hearing.

[9] It has thus to be observed that the issues before us are purely matters of procedure. In particular, it was expressly accepted by the respondents that their clients had no right to see the EY documents until the issue of confidentiality had been resolved.

[10] We were referred to a number of cases ranging over various aspects of LPP, but since it was not disputed that such is the right of every individual within the legal system, we need no more than focus on general issues which were not in dispute before looking at the particular question here.

[11] They can be summarised as follows:

1. The notion of LPP as we have indicated is enshrined in the common law of

Scotland. There is (in broad terms) a right of absolute privilege in respect of communications emanating between a solicitor and a client relating to advice and also in respect of any documents, including those coming from accountants, which were prepared in the contemplation of litigation. It was not disputed at the Bar that that absolute right could not be abrogated, but it was also accepted that it had to be established.

2. The principles of natural justice, and in particular the right to be heard, are

equally firmly established: see for example the case of Barrs v British Wool Marketing Board 1957 SC 72.

3. Scots law has exhibited many examples of a judge either personally or

through a Commissioner, or both, determining issues of LPP in relation to documents without reference to third parties, or to the parties themselves, until the matter was resolved. (See particularly McCowan v Wright (1852) 15D 229 and Santa Fe International Corporation v Napier Shipping SA 1985 SLT 485).

4. Issues were canvassed before us as to the inter-reaction between Article 6 and

Article 8 of the European Convention on Human Rights, and particularly as to the questions which Article should defer to the other in the event of a conflict between them. We are however satisfied that Scots law affords sufficient protection to legal professional privilege to meet the requirements of Article 8, and that the relevant procedure under Scots law is equally compliant with Article 6. In such a situation, we respectfully agree with the observations of Lord Cooke of Thorndon in R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 at para 30:

"while this case has arisen in a jurisdiction where the European Convention for the Protection of Human Rights and Fundamental Freedoms applies, and while the case is one in which the Convention and the common law produce the same result, it is of great importance, in my opinion, that the common law by itself is being recognised as a sufficient source of the fundamental right to confidential communication with a legal adviser for the purpose of obtaining legal advice ... The truth is, I think, that some rights are inherent and fundamental to democratic civilised society. Conventions, constitutions, bills or rights and the like respond by recognising rather than creating them."

Accordingly, although we were referred to a number of cases in the European jurisprudence we do not consider it necessary to discuss them further.

5. Our attention was drawn to the current position in England, and to the

relevant procedural provisions in the Civil Procedure Rules. While it is interesting to note what happens in England we are again firmly of the view that this matter can be determined by us in accordance with decisions within the Scottish legal system and we do not therefore propose to consider the English position any further.

[12] In seeking to determine this matter at this stage we recognise that the Lord Ordinary did not discuss how, in the context of the inter parte hearing, adequate protection should be offered to the undoubted rights in principle accruing to the appellants in respect of LPP. On the other hand we are equally firmly of the view that to hold a hearing ex parte in the course of an adversarial legal action involving the rights of a party who is not allowed to be present, would contravene the principles of natural justice. It would in addition be unsatisfactory, as well as unfair, for the court to attempt to resolve potentially disputed questions of confidentiality in the absence of a contradiction. We are therefore not prepared to entertain, as a solution to the problem of resolving the questions of confidentiality, either of the options put forward by the appellants. The former contradicts the right of the respondents to be present at such a hearing. The latter, although less restrictive, does not, to our minds, sufficiently respect the right of the respondents to be represented at any hearing concerned with their applications for the recovery of documents and for leave to lodge documents as productions. The reclaiming motion must therefore be refused. However, the matter does not end there in our view. It is appropriate in the circumstances to indicate how this court considers the matter should be approached in respect of both bundles of documents.

[13] In this respect we consider that the procedures followed in McCowan and Santa Fe enable a solution to be found in relation to the EY documents, involving the judge (and, if necessary, a Commissioner, but with a final determination of the issue by the judge), without allowing the party contesting confidentiality to see the documents in advance of a decision.

[14] We would accordingly recommend against the background of adhering to the Lord Ordinary's interlocutor as follows:

1. EY documents

Since they are still in a sealed envelope the matter should be brought before the court in the context of the motion to open up the envelope and a hearing take place between both parties as to the principles to be applied in that respect (including the question whether non-privileged material in a document which also contains privileged material can be excerpted, or whether, in such circumstances, privilege attaches to the document as a whole).

Thereafter consideration is to be given as to how an inventory of the documents in the sealed envelope should be prepared. That should not be done by the respondents or anyone on their behalf. It is a matter for the judge to determine how that should best be done.

The question of confidentiality should be argued against the contents of the inventory. If it becomes or appears to become impossible for any decision to be made having regard only to the terms of the inventory and the submissions, we would consider it appropriate that the judge should himself examine the documents against the background of the principles discussed and determine the issue of confidentiality and LPP in respect of each of them.

It follows that these documents should only be released to the respondents if the judge has ruled that LPP does not apply to all or some of them.

2. PW documents

Here a hearing should take place to address the separate issue, the documents having been seen and examined, as to what extent the respondents may make use of them. The judge is not a jury and is therefore able to examine the documents, if it becomes necessary so to do. If, at the end of the day, he is to be regarded as compromised because of material that has been put before him, he may simply determine the issue and thereafter recuse himself from any further part in the litigations.

[15] Against that background and in these circumstances this reclaiming motion is refused but will be continued to determine the question of expenses.

 

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