In the current case raised by means of the former owners of department store chain McEwens of Perth in opposition to The Royal Bank of Scotland %, the query arose as to whether there has been an implied waiver of legal recommendation privilege in terms of the advice given to a party granting a non-public guarantee.
McEwen Direct Limited (MDL) acquired the stocks in McEwens of Perth Limited (EPL) as a part of a control buyout (MBO) in 2008. As a part of the financing for the MBO, John Bullough and Georgina Bullough (spouses) (the Guarantors) granted a private guarantee for £750,000 (the Guarantee) which changed into supported via a preferred safety over their home in favor of The Royal Bank of Scotland % (the Bank).
MoPL went into administration in March 2016 having accumulated money owed totaling £four.27 million, together with Bank debt totaling £three.44 million. The Bank then moved to recover monies owed.
The Guarantors raised an action to lessen the Guarantee and to interdict (block) the Bank from enforcing the Guarantee or the usual security over their home assisting this Guarantee.
The Guarantors argued that the Guarantee and the supporting widespread safety must now not be relied upon for two motives:
first of all, the connection supervisor for the Bank misrepresented the position, in pointing out that the Bank could exhaust all rights towards MDL and MoPL before imposing the Guarantee, and that the Bank would by no means take the Guarantors’ home; and
secondly, in reliance on this misrepresentation, the Bank could be in breach of true faith in enforcing the Guarantee and preferred security.
In order to assess the records, the Bank sought to recover certain documents that the Guarantors have been depending upon for their case. The Guarantors produced the documents, however, argued that the contents were covered with the aid of legal recommendation privilege. In particular, one of the files that had been produced, an attendance observe, had been redacted. The Bank sought, amongst different matters, disclosure of an unredacted version of the attendance notice.
The attendance be aware
Whilst there are many relevant data, in this case, it’s miles worth looking on the contents of the attendance be aware. The attendance word changed into made through the solicitors acting for the Guarantors and recorded the events on the day completion of the MBO. The attendance note narrated, amongst different matters, that:
the Guarantee turned into tabled on the assembly;
the first Guarantor, John Bullough, waived his right to take criminal advice in appreciate of the Guarantee;
the connection manager for the Bank indicated that the Bank would generally exhaust all rights towards the corporations before enforcing a personal assure, however, that the Bank could now not be prepared to position this into writing (the attendance note is redacted at this factor (the First Redaction));
the second one Guarantor, Georgina Bullough, would require criminal recommendation (the details of which we expect were redacted from the attendance be aware as the word is redacted at this factor (the Second Redaction)); and
the Guarantors signed and introduced the Guarantee and the MBO finished.
The argument that felony advice privilege had been waived
The Bank argued that the second Guarantor, Georgina Bulloch, had obtained criminal advice when it comes to the Guarantee and that by using referring to the content of that felony recommendation within the courtroom court cases, this constituted an implied waiver of privilege in recognition of that recommendation. Accordingly, the Second Redaction should therefore now not observe.
In addition, the Bank argued that if the First Redaction related to felony advice to the Guarantors, then the First Redaction need to additionally no longer follow as the first Guarantor, John Bullough, had additionally impliedly waived privilege in relation to that recommendation. Furthermore, it would be unfair for the Guarantors to cherry pick what facts to reveal in the attendance observe.
The opinion of Lord Doherty
On the facts of the case presented to him, Lord Doherty refused the motion of the Bank to disclose the files that the Guarantors argued were included with the aid of legal advice privilege.
Lord Doherty provided the following summary of the regulation regarding legal expert privilege (which we’ve paraphrased), as mentioned in Scottish Lion Insurance Co Ltd v Goodrich Corporation and Others 2011 SC 534:
Legal professional privilege can be overridden via statue and can be waived by means of the man or woman entitled to it.
Legal expert privilege can be explicit or inferred from the records and situations of the case.
An implied waiver arises where the individual entitled to the advantage has given up that right to resist disclosure both commonly or in a selected context. Such occasions will exist wherein the character’s conduct is inconsistent with the retention of that right.
The waiver does not depend upon the subjective purpose of the individual entitled to it, but ought to be judged objectively at the behavior of the person asserting that privilege. Privilege can be waived for a constrained reason without being waived normally (in other words, a waiver of privilege may be with regards to a specific context).
Whether the behavior of someone entitled to privilege is inconsistent with the protection of confidentiality, either usually or for a constrained motive, is depending on the relevant occasions. Consideration of equity may endure on an evaluation of whether or not someone’s conduct when it comes to the lawsuits has been inconsistent with the maintenance of confidentiality, and whether privilege has been waived.
This case serves as a reminder of the troubles round prison recommendation privilege and how it can be waived.
Lord Doherty’s opinion within the count John Louis Bullough and Georgina Dorothea Mary Bullough v The Royal Bank of Scotland p.C  CSOH 24, posted on 12 March 2019, may be discovered right here (PDF).
Evidence before answer listening to is due to start on 11 June 2019.