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Is there any confidence in privilege post Panama papers?

Posted: 09/08/2016

We are all familiar with the concept of privilege, which has been woven into our legal fabric for centuries. But the Mossack Fonseca leak has put privilege and confidentiality firmly in the spotlight, for all the wrong reasons. Can privilege really withstand the modern threats of computer hacking and widespread, near instantaneous leaking of confidential information?

Recent case law suggests that judges across the world are re-examining the principles of confidentiality and privilege and exercising their discretion to ensure that justice is done and wrongdoers do not profit from sharp practice.

In Lachaux v Independent Print Limited [2015], the dispute involved the claimant’s privileged communications with his French lawyer, which had (somehow) been obtained by his ex-wife. The ex-wife admitted passing the communications to a large number of public organisations to help her regain contact with their child, and threatened to make further disclosure. She also provided them to the defendant publications, whom the claimant was suing for libel. 

Slightly surprisingly, perhaps, Tugendhat J granted the claimant an injunction. He held that the evidence of widespread disclosure fell short of demonstrating that confidentiality had been lost: despite the fact that the leaked documents were easily located by a straightforward search of social media and the internet; and despite the ex-wife’s threat to disclose them further. 

This is not an isolated example of a Lord Denning-esque leap to ensure justice is done. In the Singaporean case HT SRL v Wee Shou Woon [2016] the claimant’s computer system was hacked, with privileged and confidential communications stolen and uploaded onto WikiLeaks. The defendant was not involved with the hack but adduced evidence referring to the leaked emails in ongoing litigation, contending that they were now in the public domain and could no longer be considered confidential.

Hoo Sheau Peng JC recognised the court’s equitable jurisdiction to protect confidential documents. The correct approach was to consider whether the documents had entered evidence. He distinguished the Spycatcher case (Attorney General v Guardian Newspapers Ltd [1988]): the relevant question was whether there was any value to the party claiming confidentiality, and that was essentially a question of fact. As the claimant had made its application before the privileged documents had been formally admitted into evidence, Peng JC ordered the pleadings and evidence to be expunged of references to the privileged documents. 

These cases show the courts adopting a somewhat artificial but common-sense approach in favour of maintaining privilege. This approach recognises that victims of cybercrime or intentional disclosure are placed at a significant disadvantage through no fault of their own. It also serves as a reminder not to underestimate judicial invention; their lordships will develop the doctrine of privilege to reflect modern realities. 

Legal practitioners should remember that:

  • Prevention is better than cure. In April 2016, the New York security firm Flashpoint issued a warning that cyber-criminals had targeted 48 law firms, looking to gain access to the treasure-trove of confidential and sensitive information stored on their servers. Professional services firms and their clients need robust security systems (both physical and electronic) to minimise the risk of hacking.
  • Swift intervention can save the day. While judges may have a remarkable aptitude for “ignoring” confidential and privileged documents that are easily accessible to the public at large, the sooner you intervene, the greater your chances of success. 

Legislators and regulators still look at privilege with a degree of scepticism, and debate will no doubt continue both in the courts and Parliament. In the meantime, while we can still have confidence in privilege in the courts post Panama, the battle to keep privileged information confidential in this internet age rages on. 

This article was published in Commercial Litigation Journal in August 2016.

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