Imputed waiver of privilege upon clients suing former lawyers: Lillicrap v Nalder & Son

Back from Vanuatu, a pleasant place, I am slaving away at a 10,000 word paper on the application of the Evidence Act, 2008 to civil cases involving lawyers.  In due course, no doubt, I will subject you to a serialised version of it.  One of the things I am considering is that species of implied waiver of legal professional privilege which is an incident of suing your lawyer, so expect more case notes on that topic than you could reasonably want to read.  First up: Lillicrap v Nalder & Son [1993] 1 WLR 94, which seems to be the English decision most often cited for the proposition that upon a client suing their lawyer, the client’s client legal privilege over the solicitor’s file, and over communications between them more generally, is waived to the extent necessary to allow the lawyer to respond to the suit.  It was recently affirmed in Esso Australia Resources Pty Ltd v BHP Billiton Petroleum (Bass Strait) Pty Ltd [2007] VSCA 224, a decision of Acting Chief Justice Maxwell and Justice of Appeal Chernov.  And in Mann v Carnell (1999) 201 CLR 1, the majority said:

‘It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege[20]. Examples include disclosure by a client of the client’s version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication[21], or the institution of proceedings for professional negligence against a lawyer, in which the lawyer’s evidence as to advice given to the client will be received[22].

[20] Cross on Evidence, 5th Aust ed (1996), par 25005; Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 497-498.

[21] Benecke v National Australia Bank (1993) 35 NSWLR 110.

[22] Lillicrap v Nalder & Son (a firm) [1993] 1 WLR 94; [1993] 1 All ER 724.’

The facts in Lilicrap were that two property developers, the Lilicraps, wanted to buy land and a building and convert it into four residences.  They retained the defendant solicitors to act for them in and advise them on the transaction, and later complained that issues in relation to rights of way over, and absent from the property were not brought to their attention.  The solicitors sought to amend their defence so as to admit negligence, but deny causation.  They said had the right of way issues been brought to their attention, the clients would still have gone ahead contrary to their pleaded claim that they would not have done so.  They proposed to give as particulars 6 instances in which advice by them in relation to the risks of purchasing property were disregarded by the clients.  In response, the clients sought delivery up of the files other than the principally relevant one, a course described at 97 as in keeping with ‘the general practice in cases where privileged documents are in the hands of persons not entitled to hold them’.  The English Court of Appeal decided that when the clients sued their solicitors, they waived privilege not only over the file relating to the matter sued on, but also those relating to the matters which the solicitors said established a pattern of not following advice.

Lord Justice Dillon said, at 98-99:

‘But it is accepted that the waiver may be implied, and that there is an implied waiver where the client brings proceedings for professional negligence against the solicitor.  [The clients’ counsel] suggests that the waiver is only in respect of documents and information concerned with that particular retainer.  That may in general, prima facie, be so but it is not difficult to envisage scenarios where it is apparent that the waiver must have a wider scope.  [A hypothetical example then follows.]

….

The waiver can only extend to matters which are relevant to an issue in the proceedings and, privilege apart, admissible in evidence.  There is no waiver for a roving search into anything else in which the solicitor or any other solicitor may have happened to acted for the clients.  But the waiver must go far enough, not merely to entitle the plaintiff to establish his cause of action, but to enable the defendant to establish a defence to the cause of action if he has one.  Thus, it would extend to matters under earlier retainers, as in the hypothetical example I have given, which established that the experience of the client was, to the knowledge of the solicitor, such that the solicitor was not in breach of duty as alleged.’

They hypothetical example was of a claim for negligence in failing to warn of the need when purchasing property to check the contract plan against the reality on the ground by measuring and checking that fences are where they should be.  Both parties agreed that if previous transactions in which the solicitor had acted could be used to demonstrate that such advice had been given several times previously and acted upon and understood by the clients (and so demonstrate an absence of the kind of ignorance in relation to the need to do so which would give rise to a duty of care to warn about it) then the waiver imputed upon the commencement of professional negligence proceedings would extend to allow the solicitors to do so.

Russell LJ said, at 101:

‘The parameters of the retainer, to my mind, erect an artificial barrier.  In my judgment, by bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done.’

Farquhuarson LJ said, at 102:

‘The defendants seek to show in the particulars of the six other transaction that, even if proper advice had been tendered, the plaintiffs would have ignored it as they had done in the past; in other words, the issue is one of causation.  For my part, I would have difficulty in holding that the defendants should, as a matter of principle, be prevented from adducing evidence which is relevant to that issue.  A proper interpretation of the waiver in this case is, in my judgment, one that embraces not only the documents and advice arising from the Heligan Manor transaction, but also documents or information otherwise subject to privilege which are relevant to the issues between the parties and which it would be unfair to exclude.’

The alternative citation for the decision is [1993] 1 All ER 724.

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