EMW Law LLP v Halborg

Disclosure is determined by reference to the pleaded issues. Documents may remain relevant even where the alleged breach is linked to an earlier settlement, particularly where the existence, terms or consequences of that settlement are disputed.

The without prejudice rule does not prevent disclosure where a legitimate third party with a financial interest needs the material to litigate a claim concerning negotiations or their outcome. The concluded-agreement exception may apply even though the party asserting the agreement was not a participant in the negotiations. Common interest privilege does not give a party a right to demand otherwise privileged documents. Delegating legal work to an agent does not, without more, waive the client’s legal professional privilege.

EMW Law LLP engaged Mr Halborg, a solicitor, to assist with litigation brought by Mr Halborg’s parents and their family company. EMW’s remuneration depended on recovery of costs from the opposing parties. After the underlying claim settled, EMW alleged that Mr Halborg had failed to recover or account for its fees.

EMW brought a contractual claim and sought disclosure of correspondence concerning negotiations with the opposing solicitors, payments received, work carried out by EMW, and communications with a costs draftsman. Master Clark ordered disclosure of four classes of documents. Mr Halborg appealed, relying principally on the without prejudice rule and legal professional privilege. The central issues were the relevance of the documents and whether those protections justified withholding them.

1. Relevance. The Class A documents, comprising correspondence with the opposing solicitors about the underlying costs, were relevant. The pleaded breaches were not confined to conduct occurring before the alleged November 2011 settlement. They included failures to negotiate, pursue recovery, allocate a global settlement fairly, keep EMW informed and disclose relevant documents. The existence of any settlement was itself an issue.
2. The Class B documents, concerning payments on account or partial settlements, were relevant because payments could support or undermine the parties’ cases on breach and loss.
3. The Class C documents, concerning work done by EMW, were relevant because the defence made no admission as to the extent of that work and denied that it had been carried out in accordance with Mr Halborg’s instructions.
4. The Class D documents, consisting of communications with the costs draftsman, were not relevant. The draftsman’s views could not determine the pleaded issues.
5. Without prejudice rule. The rule generally protects genuine settlement negotiations from use in evidence or disclosure. It is a joint privilege and cannot ordinarily be waived unilaterally. The analogy with common interest privilege did not assist EMW: that doctrine protects privilege when documents are voluntarily shared, but does not give the recipient a right to compel disclosure.
6. The concluded-agreement exception applied because the pleadings raised an issue as to whether a settlement had been reached, and the correspondence was necessary to determine that issue. The exception could be relied on by EMW, which had a legitimate interest in the outcome despite not being a party to the negotiations. Further, an exception comparable to that recognised in Muller v Linsley & Mortimer applied because disclosure was necessary to make EMW’s claim justiciable. Appropriate restrictions on use or public access could protect the underlying parties.
7. Legal professional privilege. The fact that the clients knew of or agreed to EMW carrying out work did not waive privilege. Mr Halborg could show privileged material to EMW with the clients’ consent, but EMW could not insist on documents that it had not previously seen and that the clients did not wish to disclose.
8. The appeal was dismissed as to the Class A and Class B documents and allowed as to the Class C and Class D documents.

High Court (Chancery Division): On appeal from Master Clark’s disclosure order dated 28 October 2016. The appeal was dismissed as to Classes A and B and allowed as to Classes C and D.