BBGP Managing General Partner Ltd & Ors v Babcock & Brown Global Partners

A solicitor retained by a managing partner may have the partnership and its partners as the client, even though the managing partner contracts with the solicitor as the partnership’s authorised agent. Under a joint retainer, one client cannot assert privilege against another concerning communications made during the retainer.

Privilege and confidentiality remain enforceable against outsiders, and access does not permit unrestricted dissemination or use. A direct shareholder may have limited common-interest access, but that exception does not extend up a holding chain or to advice concerning claims against the shareholder. The iniquity exception requires a strong prima facie case and should ordinarily be determined from open material.

The claimants sought declarations concerning their entitlement to inspect legal advice from Slaughter and May held in digital form on the Babcock & Brown Group database. The advice had been obtained during disputes concerning the management and removal of the managing general partner of Babcock & Brown Global Partners, an English limited partnership.

The court considered who was the client, whether the advice was jointly privileged, the rights of partners and a direct shareholder, and whether alleged breaches of fiduciary duty engaged the iniquity exception. It also considered whether the court should inspect closed material when deciding whether that exception was established.

Result. The court granted declarations governing inspection, confidentiality and privilege, subject to material limitations. The issues concerned access to documents already in the claimants’ possession and control, rather than compulsory disclosure under the Civil Procedure Rules 1998.

1. Client identity. Slaughter and May had been retained by Global acting through General. General had authority to enter the retainer, but it did so as Global’s agent and not solely for its own sectional interests. The approach in Three Rivers DC v Bank of England (No.5) [2003] QB 1556 did not alter that factual conclusion.
2. Joint retainer. Advice obtained for Global was prima facie confidential and privileged. During the joint retainer, ending on 5 October 2009 for the purposes of the ruling, no partner could assert privilege against another partner. The principle applied both to communications made during the retainer and to documents concerning partnership affairs.
3. Continuing restrictions. Access did not permit unrestricted dissemination or use against Global. The privilege was joint, and no partner could waive it unilaterally. General could disclose material to its direct shareholder on a common-interest basis, but that exception did not extend up the holding chain or to advice concerning actual or contemplated claims against the shareholder.
4. Iniquity. The iniquity principle applied where advice was sought or given to facilitate sufficiently serious sharp or underhand conduct. Personal advantage was not an essential element. The principle could also apply where a third party used an innocent client as a tool. The conduct alleged against Mr Hanson and the fund management team established a strong prima facie case of iniquity in relation to the Internal Claims.
5. Closed material. The court should not ordinarily inspect privileged material when deciding whether the iniquity threshold is met. Inspection required an exceptional factor of real weight. The mere failure of the open material to establish the case was insufficient. The court therefore relied on the open material and held that privilege did not apply to material concerning the Internal Claims up to 5 October 2009. Privilege remained for material relating solely to the External Claims. Costs were reserved, and a separate private judgment concerning the closed material was to be delivered.