Dechert LLP v Eurasian Natural Resources Corporation Ltd

Starting a detailed assessment of a solicitor’s bills does not produce a general waiver of legal professional privilege. Any implied waiver is confined to material and use necessary to enable the solicitor to defend the assessment; it does not expose the former client’s confidential dealings to the world.

Open justice remains the general rule, but the Civil Procedure Rules 1998, rule 39.2(3), permits a private hearing where publicity would damage confidentiality or privacy is necessary in the interests of justice. An ongoing criminal investigation and real risk of prejudice justified a private hearing. A public judgment could still be published.

ENRC instructed Dechert to investigate suspected fraud in its overseas operations. Following contact with the Serious Fraud Office, the investigation expanded substantially. ENRC later terminated the retainer and commenced a detailed assessment of Dechert’s bills under section 70 of the Solicitors Act 1974. Dechert’s evidence in response relied on confidential material obtained during the retainer.

ENRC applied under rule 39.2(3) of the Civil Procedure Rules 1998 for the assessment to be heard in private. Master Haworth dismissed the application, but Roth J allowed ENRC’s appeal and ordered a private hearing. Dechert appealed. The central questions were the extent of any implied waiver of legal professional privilege and whether that waiver required the assessment to be heard in public.

1. Appeal dismissed. The Court of Appeal unanimously upheld the order that the section 70 costs application and any subsequent assessment should be heard in private.
2. Open justice is the general rule, but it is subject to exceptions requiring a principled assessment of necessity. Rule 39.2(3) of the Civil Procedure Rules 1998 permits a private hearing where publicity would damage confidentiality or where privacy is necessary in the interests of justice. The court must assess the facts, the purpose of open justice and the risk of harm. The principles stated in A v BBC [2015] AC 588 and reflected in X v Dartford and Gravesham NHS Trust [2015] EWCA Civ 96 were applied.
3. Legal professional privilege is fundamental to the administration of justice. The authorities, including R v Derby Magistrates’ Court ex parte B [1996] AC 487, R (Morgan Grenfell & Co Ltd) v Special Commissioners [2003] 1 AC 563 and Three Rivers DC v Bank of England (No. 6) [2005] 1 AC 610, supported that approach.
4. In detailed assessment proceedings, any implied waiver arising from the client’s challenge to the solicitor’s charges is limited to the purpose for which disclosure is necessary. The principle applies equally to solicitor-and-own-client assessments and inter partes assessments. The fact that the solicitor previously possessed the documents does not justify disclosure for all purposes. B v Auckland District Law Society [2003] 2 AC 736, Bourns Inc v Raychen Corp [1999] 3 All ER 154, Goldman v Hesper [1988] 1 WLR 1238 and Hollins v Russell [2003] 1 WLR 2487 supported the limited-waiver principle.
5. Paragon Finance plc v Freshfields [1999] 1 WLR 1183 did not establish that fee or negligence proceedings must be heard publicly or that implied waiver is absolute. Its formulation confined waiver to what was necessary for the just determination of the claim. The court retained its discretion under rule 39.2(3).
6. On the facts, public deployment of the material could prejudice ENRC in the ongoing SFO investigation. Dechert had no substantial legitimate interest in a public hearing capable of outweighing ENRC’s protection. A private hearing did not preclude publication of a judgment. The court did not decide the broader alternative based solely on confidentiality or fair-trial rights, because that issue had not been argued; David Richards LJ expressed no view on it.

• Court of Appeal (Civil Division): By [2016] EWCA Civ 375, the appeal was dismissed and the order for a private hearing was upheld.
• High Court, Chancery Division: Roth J allowed ENRC’s appeal from the costs judge and held that the assessment should be heard in private.
• Costs judge: Master Haworth dismissed ENRC’s application for a private hearing but granted permission to appeal.