In the course of investigating the actions of Grant Thornton, as auditors for Sports Direct International (SDI), the Financial Reporting Council (FRC) is seeking disclosure of various documents in SDI’s possession. SDI refused to disclose 40 documents on the grounds that they were protected from disclosure by legal advice privilege.
Mr Justice Arnold had to decide on three issues regarding legal advice privilege:
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Were the documents privileged solely by virtue of the fact that they were attached to lawyer-client communications?
Mr Justice Arnold found this suggestion by SDI “startling”. Case-law clearly confirms that privilege cannot attach to pre-existing documents solely because they are sent to lawyers for the purpose of obtaining advice.
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Did SDI’s waiver of privilege in sending the documents to Grant Thornton mean that the privilege was automatically waived for disclosure to the FRC, as Grant Thornton’s regulator?
Mr Justice Arnold dismissed the suggestion that the waiver extended to disclosure to Grant Thornton’s regulator. The purpose was entirely separate to that which was intended when sending the documents to Grant Thornton.
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Would disclosure of the documents infringe the rights of SDI?
The protection that privilege affords is recognised as a fundamental human right but it can be overridden by legislation. Pre-existing case law, whilst unpopular, had determined that production of documents to regulators would not infringe privilege.
It was the application of this principle that resulted in Mr Justice Arnold ordering SDI produce documents to the FRC. It is this issue upon which SDI were granted permission to appeal and it remains to be seen whether the Supreme Court eventually overturns the current case law to restore the fundamental right of privilege.
How Can Nelsons Help?
Cathryn Selby
is a Partner in our Dispute Resolution team specialising in complex litigation, including civil fraud actions within which disclosure of documents and the privilege attaching to them can often prove to be a key battle ground.
Please call Cathryn or another member of the team on 0800 024 1976 or contact us via our online form.