Ford v Financial Services Authority & Anor

The court held that two documents were subject to joint-interest legal professional privilege but that the Financial Services Authority's limited reliance on that privileged material in the Warning Notice did not require quashing of the Warning Notice. The judge treated the use of the privileged material as inadmissible evidence rather than as an excess of power; he concluded that the privileged passages were peripheral and largely parasitic on non-privileged Grant Thornton material.

Rather than quashing the Warning Notice, the court ordered remedial steps: redaction of the privileged material from the Warning Notice and other deployable documents, an injunction restraining further use of the privileged material, and mandatory "best endeavours" searches and deletion/redaction of hard copy and electronic copies held by the FSA. The court refused the claimant's application to remove from the investigation all FSA staff and legal advisers who had seen the privileged material and refused wider disclosure of the post-judgment correspondence, but required the FSA to write to recipients requesting return or deletion of the material and to provide copies of those letters and responses to the claimant's solicitors. The protective warning notice application was refused as unnecessary. The court balanced the protection of legal privilege with proportionality and the public interest in the expeditious conduct of regulatory proceedings, and relied upon statutory confidentiality provisions in FSMA and related Regulations in framing remedies.

Background and parties:

• Nature of proceedings: remedies hearing connected to a prior judgment ([2011] EWHC 2583 (Admin)) in which the claimant, Mr Stewart Ford, had succeeded in part by establishing that two documents attracted joint-interest legal professional privilege (LPP). The remedies hearing addressed how the court should vindicate that privilege and what orders should follow.
• Parties: Claimant: Stewart Ford; Defendant: Financial Services Authority (FSA); Interested parties: Peter Johnson and Mark Owen.

Relief sought by the claimant:

• Quashing of the RDC Warning Notice dated 26 October 2010 (and those to interested parties);
• destruction and deletion of all copies of the two privileged documents held by the FSA; deletion or redaction of the SIR and Warning Notices to remove privileged passages;
• an injunction preventing further use of the LPP material and steps to prevent third parties retaining or using it, including disclosure of correspondence and recusal of RDC members; and
• quashing of protective warning notices and other consequential relief.

Issues framed by the court:

• Whether the Warning Notice should be quashed because it referred to and relied upon privileged material;
• what remedial orders should be made to vindicate LPP where privileged material had been disseminated to third parties;
• whether persons within the FSA who had seen the privileged material should be removed from the investigation;
• what disclosure, if any, should be ordered of letters and responses sent to third parties who had received the privileged material; and
• whether the protective warning notice required relief.

Court's reasoning and conclusions:

• The court analysed the extent to which the privileged material affected the Warning Notice and concluded it was peripheral and largely dependent on non-privileged Grant Thornton material; accordingly the Warning Notice, when redacted of the privileged passages, remained coherent and powerful.
• The judge applied a discretionary balancing exercise (considering authorities such as Berkeley and Edwards) and held that quashing the Warning Notice would be disproportionate and unnecessary; instead redaction and injunctive protection of the privileged material would vindicate the claimant's rights.
• On removal of staff, the court adopted the principles developed in private law authorities (including Ablitt, Stiedl and the Canadian Celanese decision) but emphasised public interest and proportionality in regulatory proceedings. It refused the claimant's broad request to exclude all FSA staff and in-house advisers who had seen the material, finding exclusion would be disproportionate and prejudicial to the regulatory process.
• On disclosure, the court applied the Tweed test and declined to order production of the covering letters or post-judgment responses as a matter of course, but required the FSA to write to recipients asking for return/deletion and to provide copies of those letters and any responses (or note of non-response) to the claimant's solicitors so the claimant could pursue enforcement against third parties if necessary.
• The court ordered specified "best endeavours" measures for retrieval, destruction, deletion or redaction of hard and electronic copies of the two privileged documents, the SIR and Warning Notices, subject to narrow exemptions to permit litigation and secure audit copies to be retained.
• The application relating to the protective warning notice was refused as redundant given the refusal to quash the original Warning Notice.

Subsidiary findings: the court accepted the FSA had taken legal advice and that its conduct was not arbitrary; it acknowledged practical limitations in locating every copy electronically but required reasonable searching and provided liberty to apply if serious practical difficulties arose.

The court declined to quash the RDC Warning Notice. It held that two documents attracted joint-interest legal professional privilege and that the FSA had relied on them improperly but only to a peripheral extent. The court therefore ordered redaction of privileged material from the Warning Notice and other deployable documents, injunctive protection against further use, and that the FSA use its best endeavours to retrieve and destroy or redact hard copy and electronic copies (subject to narrowly defined litigation and audit exceptions). The court refused the claimant's wider remedies including the removal of all FSA staff and legal advisers who had seen the privileged material, refused wider disclosure of the FSA's post-judgment correspondence, and refused the claim concerning the protective warning notice. The orders were shaped by considerations of proportionality and the public interest in concluding regulatory proceedings expeditiously.