Weatherford UK Ltd v Forbes UKEATS/0038/11/BI
Appeal against an order in which the employer had to produce certain documents and provide additional information in connection with an employee’s claim of unfair dismissal. Appeal allowed.
The claimant was formally employed by the respondent, a subsidiary of a US organisation, as Vice President for the purpose of their operation in sub-Saharan Africa. He resigned when he was asked to following his conduct having been investigated by the respondent, in connection with allegations of violations of export control laws, including being involved in the making of illicit payments in both Angola and Congo and the claimant's negotiation of a 'consultancy agreement' with a company (company A). Investigations into the respondent activities by the US Department of Justice were started in 2006 and were still ongoing at the time of the ET proceedings. The claimant was interviewed by a US law firm acting for the parent company and the interview constituted a privileged conversation, the privilege belonging to the parent company, not the claimant. At the ET, the claimant asked for notes of this interview, which were being held by the parent company in the US, to be made available to him. The EJ concluded that the substantive rights involved were the right not to be unfairly dismissed or discriminated against and that the right of privilege arose only 'in the context of admissibility' – Scots law applied. He allowed disclosure of the material sought because he did 'not consider that the peculiar circumstances which we have here fall under the legal professional privilege.' The respondent appealed.
The issues addressed in the appeal were; i) whether or not the document orders pronounced by the Employment Tribunal were incompetent; ii) whether or not the Employment Judge had erred in concluding that Scots law applied when determining whether or not the documents sought were protected by privilege; iii) whether or not the Scots law of privilege protected the documents from disclosure; if so, had that protection been waived? And iv) whether or not the information orders were incompetent and improperly made. The EAT held that orders for production of documents can only be made against persons whom a sheriff has good reason to believe is in possession of them and it was not good enough for the EJ to expect the respondent to obtain the documents if they were in fact being held by the parent company in the US. The EAT concluded that the order for production of the documents was incompetent and the order fell to be revoked.
Appeal No. UKEATS/0038/11/BI
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF
At the Tribunal
On 20 & 21 December 2011
THE HONOURABLE LADY SMITH (SITTING ALONE)
WEATHERFORD UK LTD (APPELLANT)
MR CHARLES FORBES (RESPONDENT)
Transcript of Proceedings
For the Appellant
MR A KEMP (Solicitor)
Simpson and Marwick Solicitors
4 Carden Terrace
For the Respondent
Mr S A Saluja (Solicitor)
Paull and Williamsons LLP Solicitors
1 Union Wynd
PRACTICE AND PROCEDURE
Recovery of documents. Documents in USA. Haver in USA. Competency. Choice of law. Legal professional privilege. Post Litem Motam exclusion.**THE HONOURABLE LADY SMITH****Introduction**
- This is an employer's appeal from a judgment of the Employment Tribunal sitting at Aberdeen (Employment Judge R Christie), registered on 13 June 2011, which ordered the employer to produce certain documents and provide additional information in connection with an employee's claim of unfair dismissal. The employee (who I will continue referring to as the Claimant) was a Vice President of the employer when his employment was terminated. The employer is, hereafter, referred to as the Respondent.
- The Claimant was represented by Mr Saluja, solicitor, before the Tribunal and before me. The Respondent, a company incorporated in the UK, was represented by Mr Kemp, solicitor, before the Tribunal and before me. Mr Kemp also represented the interests of the Respondent's parent company, Weatherford International Limited ("WIL"), a company incorporated in Bermuda and having its headquarters in Houston, Texas.
- The Respondent is one of a group of companies which provides a variety of services to the oil and gas industry.
Procedure before the Employment Tribunal
- The Claimant was formerly employed by the Respondent as Vice President for the purpose of their operation in sub-Saharan Africa. He tendered his resignation on 1 October 2009. He claims that he was unfairly dismissed and he presented a complaint to the Employment Tribunal on 24 December 2009.
- The Claimant having sought an order for documents and for the provision of additional information, which was opposed, a Pre Hearing Review ('PHR') was fixed. It took place on 1 September and 26-28 October 2010 following which, in his judgment dated 10 June 2011, the Employment Judge ordered:
"In terms of Rule 10 of Schedule 1 to the Employment Tribunals (Constitution and Procedure Regulations 2004 the following orders are made:
A. PRODUCTION OF DOCUMENTS
Within 28 days after the date of this order the respondents shall disclose to the claimant the following documents held in any medium, whether hard copy, electronic or otherwise:
1. All transcripts, notes or minutes of meetings held between the Claimant and representatives of Fulbright and Jaworski LLP referred to in page 2 of the statement of William Jacobson.
2. All correspondence, documents, emails, drafts and minutes of meetings regarding the negotiation and conclusion of the Consultancy Agreement with company A referred to in paragraph 5 of the Notice of Appearance.
3. All of the work orders for company A referred to in the said statement of William Jacobson.
B. ADDITIONAL INFORMATION
Within 28 days after the date of this order the respondents shall provide to the claimant the following information:
1. In respect of the statement in paragraph 3 of the Notice of Appearance that "Weatherford International Limited…as required to instigate an investigation into activities primarily in West Africa into which the Claimant, among others, had been involved", specify: -
Precisely what matters were being investigated and for what purpose.
2. In relation to paragraph 4 of the Notice of Appearance specify:-
(a) What Fulbright and Jaworski LLP were instructed to investigate, for what purpose and by whom; and
(b) Precisely which admissions and comments were made by the Claimant that led to the decision to terminate his employment."
- The Respondent now appeals against the entirety of that order.
- There has, as yet, been no evidential hearing in this case. However, it is evident from the Tribunal's judgment and from the submissions made to me that there is a measure of agreement as to certain facts which were relevant to the Claimant's application for documents and information.
- The Claimant resigned when he was asked to do so following his conduct having been investigated on behalf of the Respondent, in connection with allegations of violations of export control laws. The allegations included that he had been involved in the making of illicit payments in both Angola and Congo. They included some relating to the Claimant's negotiation of a "consultancy agreement" with a company called company A and the making of payments to it.
- The above allegations are very serious and the implications for WIL regarding potential criminal and civil liability are substantial. Investigations into WIL's activities, in relation to those allegations, by the US Department of Justice, have been ongoing since 2006.
- On learning of these matters, WIL instructed their US attorneys, Messrs Fulbright and Jaworski LLP ("Fulbright"), to carry out an investigation for them into the alleged goings-on in West Africa. It can reasonably be inferred that the purpose of their instruction must have been to provide advice to WIL as to the nature and extent of their risks so far as exposure to potential civil law and criminal law liabilities were concerned. Their investigations are still ongoing. They have interviewed a large number of people all over the world, including the Claimant, who was interviewed in the UK on 15 July 2008, 8, 9 and 10 November 2008, and 7 and 8 September 2009. On each occasion, the Claimant was advised that Fulbright was a law firm acting for WIL, not for him, and that the interview constituted a privileged conversation with the privilege in it belonging to WIL, not him. On each occasion, he confirmed that he understood Fulbright's role. The Claimant was asked questions about information that Fulbright had gathered during their investigations and the Claimant made various admissions and comments with regard to his own role in matters.
- The interviews of the Claimant were not recorded. No transcripts were made of what was said. Notes were taken by the relevant Fulbright attorneys which were referred to as "summaries containing thoughts and impressions of counsel"1 and as 'only the attorneys' thoughts and "mental impressions" 2 .
- William B Jacobsen is Vice- President, Co-General Counsel & Chief Compliance Officer of WIL. He was appointed to act on behalf of the Respondents to ascertain whether or not it could be concluded that the Claimant had breached their policies and procedures in a manner that amounted to a material breach of his contract of employment. It was not appropriate that a senior employee of the Respondents be appointed to do so since the Respondent's senior employees had also been involved in the matters under investigation.
- The Respondent's answer to the Claimant's claim of unfair dismissal is that it cannot succeed because, shortly put, he was not dismissed, he was in material breach of contract before and when he resigned and even if he was dismissed, his dismissal was inevitable because of the nature and extent of his own wrongdoing. In their form ET3, the Respondent avers:
"In light of the statements that the Claimant had made in his interviews with Fulbright and Jaworski LLP and in light of the other available evidence including in particular emails sent by and to the Claimant, Mr Jacobson concluded that the Claimant had breached the policies and procedures of the company, in a manner that constituted a material breach of the terms of his contract of employment."
- A report prepared by Mr Jacobson, running to sixteen pages, dated 28 May 2010, was referred to at the PHR and during the appeal hearing before me. In paragraph 4 of the introduction, he states:
"Mr Forbes was asked to resign for violating his employment contract by, among other things, establishing contractual arrangements with a third party company that facilitated and made improper payments to others, participating in those improper payments, preparing and sending fictitious work orders, and exposing the Company to potential civil and criminal liability in both the United States and the United Kingdom."
- In the penultimate paragraph of the introduction, he states:
"The documents attached to this report, together with my understanding of Mr Forbes' statements given to Fulbright, form the basis for my conclusion about his wrongdoing."
- The documents referred to did not include any notes of the Claimant's interviews with Fulbright. Nowhere in his report does Mr Jacobson state that he had sight of or took possession of Fulbright's notes from the Claimant's interviews.
- Under the 'Allegations' section of his report, Mr Jacobson states:
"Mr Forbes stated that he was approached by Mr Fraser and Mr Haering to prepare a consulting agreement between the Company and company A. This is referred to in an email ….."
"According to Mr Forbes, for a lengthy period of time, Company A was paid commissions relating to work in the Congo. He stated that there was a longstanding arrangement to pay commissions. When asked what "management consultancy" meant in the context of these commissions, he stated that he did not know and did not want to ask because paying commissions "did not seem quite right." Mr Forbes also confirmed that he was aware that company A was passing on commissions to someone else……"
- Under the "Details of Payments Made through company A" section of his report, at page 7, Mr Jacobson states:
"Mr Forbes confirmed to Fulbright that he did not know what services company A provided for the Company in Angola. He stated that he did not know why payments had been made to company A based on a work order, and not an invoice…..Mr Forbes was aware that Mr Pounga was not a company A employee."
- Under the "Details of Other Illicit Payments" section of his report, at page 8, Mr Jacobson states:
"Mr Forbes stated in his interview with Fulbright that he was not sure what work company A would have done for the Company in Soya and that he did not know what the Soyo payment was for. He stated that he did not know who the final recipient of the payment was. When asked where he thought the payment was going at the time he stated that he did not want to speculate."
"Mr Forbes told Fulbright that he understood the company A invoice as a request for a commission payment based on the Cabinda contract and that he did not know who it was for. He also acknowledged to Fulbright that all of the employees involved should have asked what the purpose of the payment was."
- The above quotations from Mr Jacobson's report are the only points at which he refers to and relies on what the Claimant told Fulbright. Mr Jacobson did not interview the Claimant himself. He does not specify the source of his information about what the Claimant had said at interview. Fulbright could, obviously, have been the source but the 'understanding' to which he refers3 could have been Fulbright's interview notes, it could have been a separate report prepared by Fulbright for Mr Jacobson, and it could, equally, have been a conversation between him and Fulbright, as Mr Saluja accepted in the course of submissions.
- In a declaration of humility which – though laudable - seems somewhat misplaced coming from an Employment Judge who has, justifiably, earned considerable respect for his judicial work in a wide variety of complex cases over a considerable number of years, he presents his decision as being that of a 'simple employment judge'. The point he actually seeks to make is that the case threw up unusually complex issues which he openly found difficult to resolve.
- He first considered the extent of his powers under rule 10 of the 2004 Rules; he noted that the person against whom a documents order could be pronounced4 required to be in Great Britain but considered that that did not mean that the documents themselves required to be within that jurisdiction. The documents could, he concluded, be outwith the country. Further, he concluded that insofar as he was constrained within the limits of the powers available to a sheriff, that only applied to questions of the scope of the documentary recovery 5.
- The Employment Judge then noted that it was not seriously disputed that the documents sought were relevant to the dispute between parties. That was because "a contemporaneous record of what was said is inevitably of relevance and potentially of considerable significance."6
- He observed that the interviews of the Claimant were all said to have been conducted in a manner the effect of which was that the documents sought attracted legal privilege. There was, accordingly, a choice of law issue: was that right of legal privilege substantive or procedural? He concluded that the substantive rights involved were the right not to be unfairly dismissed and the right not be discriminated against7 and that the right of privilege, arose only: "in the context of admissibility". He added:
"...in the present context its application is in determining whether or not particular documents may or may not be admitted as evidence, and the associated grant of refusal of a relative interlocutory order is a matter of procedure." 8
- He proceeded, accordingly, on the basis that the applicable law was Scots law. Although he had been provided with a report from an American Professor (Professor Roger Fairfax, George Washington University Law School) advising that the documents would be protected from disclosure in the US, he did not consider that he required to have regard to it.
- The Employment Judge then determined that, under Scots law, the documents would not attract privilege because the Claimant was not Fulbright's client, because the relevant communication was not between lawyer and client - it was what the Claimant told Fulbright and not what Fulbright had told WIL9, because the Claimant was not seeking to discover what advice had been tendered by Fulbright to WIL10, and because there is no confidentiality if the purpose of recovery is simply to show that a statement was made11. For the latter proposition, he relied on Walkers: Evidence12 - that was what, in his assessment, the Claimant wanted:
"It is my understanding that that is essentially what the claimant wants i.e. a record of his own interview so that he may show the tribunal a contemporaneous record of what he himself said."13
- The Employment Judge added that while recognising that considerations of fairness or relevance had no part to play if a document was in fact privileged:
"However, because of the peculiarities mentioned above, I tend towards allowing disclosure of some of the material sought as I do not consider that the peculiar circumstances which we have here fall under the legal professional privilege."
- He turned to waiver and found that, in any event, the Respondent had waived any privilege in the documents. At paragraph 118, he explained:
"It does not meet my idea of fairness for the respondents to rely upon part of what the claimant is said to have said in the interviews and at the same time deny him access to a record of all that he said. I therefore agree with the submissions put forward on this issue by Mr Saluja and concluded therefore that for this reason in any event privilege can not be claimed."
- He finally considered whether or not the documents were protected from disclosure by the post litem motam exception and found that it did not apply because the proceedings that were in contemplation when they were prepared were the potential US proceedings not the present Tribunal proceedings; he explained:
"All the sources on this topic appear to me to involve material being sought in the course of proceedings in which it is said by the other party that it was prepared for the purpose of or in contemplation of these same proceedings. Indeed it seems to me that it is only in that context (i.e. in and for the same proceedings) that the purpose behind the rule makes any proper sense."14
- The Employment Judge observed that he could not see that WIL could have any interest in preventing access by the Claimant to these documents on account of the possibility of prosecution in the US where what was involved was information provided to them by the Claimant.
- Finally, the Employment Judge acknowledged that the fact that WIL were outwith the jurisdiction could be a problem but he dismissed it as not being a real difficulty:
"I have come to the position then of being inclined to grant orders to some extent. To take the document order first, I can only make it against the respondent company. It cannot be made against WIL since they are not in Great Britain. I am conscious of a potential enforcement problem if WIL hold the material and simply refuse to release it. However it seems to me that from the terms of his own written evidence Mr Jacobson must at some time have had access to the material – otherwise he could not have written as he did. It also seems to me that in taking a decision to dismiss the claimants he must in doing so have been acting as an agent for the employers, the present respondents. I would not regard it therefore as acceptable if the respondents were not to obtain and produce the documents when they have such a considerable bearing upon the reasons for these dismissals."15**The appeal**
- The issues addressed in the appeal were:
(i) Whether or not the document orders pronounced by the Employment Tribunal were incompetent?
(ii) Whether or not the Employment Judge had erred in concluding that Scots law applied when determining whether or not the documents sought were protected by privilege?
(iii) Whether or not the Scots law of privilege protected the documents from disclosure? If so, had that protection been waived?
(iv) Whether or not the information orders were incompetent and improperly made?
Submissions for the Respondent
- Mr Kemp referred to China National Star Petroleum Corporation v Thain & ors16 **in support of the proposition that he could appear to represent not only the Respondent but also its parent company who, though not a party to the Tribunal claim, had a direct interest in the orders sought. The competence of him doing so was not disputed by Mr Saluja and I was satisfied that, given the nature of the Claimant's application and WIL's clear interest in the matter, it was both competent and appropriate that he represent both companies.
- As a preliminary matter, he referred to the circumstances in which the Claimant was interviewed; at the start of each interview, the Claimant signed a document17 which included the following terms:
"5. First, please keep in mind that Fulbright represents the Company, and not any individual employee of the Company, including you. In other words, the lawyers of Fulbright are the Company's lawyers, and not your lawyers.
6. Nevertheless, because Fulbright represents the Company and you are an employee of the Company, your interview with Fulbright is protected by the attorney-client privilege under U.S law, meaning that the Company cannot under most circumstances be forced to reveal to anyone what is discussed at your interview.
7. At the same time, if you disclose what is discussed during your interview to anyone that attorney-client privilege can be lost. For this reason, it is important that you keep what we discuss today confidential. You should not discuss our conversations with anyone except other Fulbright lawyers.
8. Because Fulbright represents Weatherford, the attorney-client privilege belongs to Weatherford, and only Weatherford..."
- Those terms were what is known as an "Upjohn" warning, being in accordance with the decision in the case of Upjohn Co v United States18. "Upjohn" warnings are routinely given by U.S attorneys prior to the start of such interviews so as to ensure the protection of attorney- client privilege, as explained in Professor Fairfax's report, to which there was no contradictor. Professor Fairfax's advice was clear; attorney client privilege applied, under U.S. law, to any interview notes or memoranda prepared by Fulbright. An email exchange showed that the Claimant's solicitor, Mr Saluja, was advised by Fulbright that he would be free to take notes for the Claimant during his September interviews; it was not clear what the position was prior to that but Mr Saluja did not suggest, during the appeal hearing, that he could not have been present at all the interviews if that was what the Claimant had wanted. The Claimant did not, however, take Mr Saluja with him.
- Turning to the first issue, competency, Mr Kemp submitted that it was not competent to order production of the documents sought as they were (a) held by a person in the U.S.; and (b) were themselves in the U.S. The Tribunal was a creature of statute and one had to look for a statutory basis for the power to order recovery. There was no general duty of disclosure. It was plain that rule 10 only related to recovery of documents from a person situated in Great Britain, which WIL was not. The Tribunal could not evade that difficulty by ordering that a person within Great Britain, the Respondent, obtain those documents. The Tribunal could only order production of documents which were in the hands of the person against whom the order was sought: Leslie - Employment Tribunal Practice in Scotland19; In Re Asbestos Insurance Coverage Cases20. Further, the Employment Judge's powers were limited, in terms of rule 10, to those of a sheriff. A sheriff's writ did not extend beyond Scotland; if the Claimant had raised a claim for breach of contract in the Sheriff Court, he would have had to proceed by way of letters of request which, under the relevant Hague convention, could properly be refused if privilege applied, particularly in circumstances of sensitivity such as the present: In re Westinghouse Uranium Contract21. The question was a pure one of competency but the Employment Judge appeared to have considered that he had a discretion or, at least, was entitled to pronounce an order which had, as its purpose, putting pressure on the Respondent to obtain documents that were not in their possession.
- In any event, Mr Kemp submitted, if it was a matter of carrying out a balancing exercise, the Employment Judge had failed to recognise that Mr Jacobson would be a witness, that it was his mindset that mattered - not what had actually happened - that he could be cross examined, that the Claimant would be able to give evidence, that he had had access to legal advice prior to the interviews and that he had certainly had the opportunity to have his solicitor present at those which took place in September. There was no question of the lack of recovery prejudicing the Claimant's right to a fair trial.
- Mr Kemp then turned to the issue of whether or not the right of privilege was a substantive right or a procedural one and submitted that it was, plainly, the former. It was not a question of admissibility, as was stated by the Employment Judge. It was a matter of one party obtaining documents which may or may not, ultimately, become evidence in the case. Scots law and English law were not identical in relation to the law of privilege. However, the case of Three Rivers District Council and others v Governor and Company of the Bank of Scotland (No 5)22, was instructive on the issue of whether or not it was a substantive or procedural right. He referred to the speech of Lord Scott of Foscote, at paragraph 26, where he observed that it was both. He also referred to Todd v Armour 23as being the foundation stone for choice of law rules in Scotland and as indicative of it being appropriate to consider the geographical origin of the right in question. In Todd, the court applied Irish law, looking to what was the legal position when the horse was first transferred at market in Ireland; likewise, in the present case, although there were ongoing Scottish proceedings, there was a preceding U.S investigation which was highly relevant. He then referred to Armour v Thyssen Edelsthalwerke A.G 24 for Lord Mayfield's observation that there was clear authority for the view that the lex situs governed the creation of real rights in corporeal moveables and submitted that the situation where the recovery of documents situated in another jurisdiction was sought was no different in principle; U.S law applied here. Finally on this point, he referred to the case of James Miller & Partners v Whitworth Street Estates (Manchester) Limited*25* for Lord Reid's and Lord Hodson's observations26, on the principles applicable when determining the proper law of a contract, namely that it was a matter of identifying the system with which the transaction had its closest and most real connection, taking account of the context and parties' whole actings. Here, the context, the content of the documents and the nature and purpose of the interviews clearly pointed to U.S law being the appropriate choice, that being the jurisdiction with which the matter had its strongest connection. Then, if one looked at Professor Fairfax's opinion, it was clear that they attracted privilege and were not recoverable.
- Mr Kemp submitted that if he was wrong, and Scots law was the applicable system, the documents were, nonetheless, protected by legal professional privilege and were also protected as having been created post litem motam. The Employment Judge was wrong to say that the documents were not communications between lawyer and client; they plainly were. Anything in them which indicated what the Claimant told Fulbright was neutral. The reference to Walkers was of no assistance; the Claimant was not simply trying to recover a document to show that a statement was made. It was the content of his statements that he was interested in. The Employment Judge's analysis at paragraph 115 was flawed. Although the notes were about the Claimant, they were nonetheless communications between lawyer and client and, for the reasons discussed by Lord Rodger of Earlsferry at paragraphs 52, 54 and 56 of the Three Rivers **decision, were not recoverable. Their protection was in the public interest.
- Turning to post litem motam, Mr Kemp submitted that the Employment Judge's approach was fundamentally flawed. It was not correct to say that the protection only applied where the document was prepared in contemplation of the same proceedings. He referred, in that regard, to the case of Gavin v Montgomerie27where correspondence between a man and his law agent, relative to an indictment for forgery of a bill was held to be protected as confidential in civil proceedings against him for reduction of the bill; the post litem motam protection that arose in the context of the criminal proceedings had, Mr Kemp submitted, without question been extended into the separate subsequent civil proceedings. The protection applied, he submitted, not only to documents created after the commencement of proceedings but to those created after it was apparent that there was likely to be litigation: The Admiralty v The Aberdeen Steam Trawling and Fishing Co. Ltd 28 where, Mr Kemp observed, the Lord President had also made observations as to the risk that if the Admiralty did hold back the report that was sought, it might count against them before a jury but that was a matter for the Admiralty; it did not make the report recoverable. He also relied on the Lord President's comment in Micosta S.A v Shetland Islands Council29, that the general rule that communications between solicitor and client are confidential is of the highest importance, on the approach taken in Cuming and others v Gemmell (Cuming's Trustee)30 where notes, jottings and accounts made by an agent employed by a party to a litigation were held to be protected, on Lord Cameron's decision in Teece v Ayrshire and Arran Health Board31 which followed Micosta, on Secretary of State for Trade and Industry v Houston32, where the protection was afforded to a report made by a receiver regarding a director where disqualification proceedings were in contemplation, and on Hepburn v Scottish Power  SLT 859 where, delivering the opinion of the court, Lord McCluskey referred to the relevant question as being whether or not the report sought had been prepared in anticipation of litigation.
- Regarding waiver, Mr Kemp submitted that, on the facts, privilege had not been waived. Any waiver would have had to be by WIL, the party with the right of privilege. All that had happened was that, wearing a 'Weatherford UK hat', Mr Jacobson of WIL had considered the position of various individuals including the Claimant and the Respondent had disclosed his written statement. If the context was properly understood, there was no waiver. He referred to four authorities. First, he referred to Wylie v Wylie33 where, by disclosing one of a series of letters between a party and his solicitor, the pursuer was found to have waived his right of privilege in respect of the other letters; that was, Mr Kemp submitted, a decision which was understandable on the facts of that case which were far removed from those of the present. Secondly, he referred to Whitbread Group Plc v Goldapple Ltd34 where Lord Drummond Young rejected a submission made under reference to English procedure and rules of evidence because they differed from Scots law and also rejected a submission that by disclosing parts of communications between them and their solicitors, the pursuers had waived confidentiality in others; on the facts, what was disclosed was not sufficiently significant to lead him to conclude that there had been waiver of confidentiality. Thirdly, he referred to Brennan v Sunderland County Council35, a decision which, he submitted, required to be approached with caution since it was based on English law and procedure; it required careful analysis. Finally, he referred to the case of University of Southampton v Kelly**36 as an example of a case where examination of context demonstrated that waiver had not occurred, even although the respondent had made an express reference in a document that was disclosed to having acted on legal advice.
- Turning to the information orders, Mr Kemp submitted that the information covered by A had been provided, B(1) was irrelevant, privilege attached to B(2), the disclosure of Mr Jacobson's statement had met B(2)(b) and that, overall, there was no competent basis for the orders.
Submissions for the Claimant
- Mr Saluja's approach was that the Fulbright investigations should be regarded in the same light as an employer's disciplinary process. There had been no separate disciplinary proceedings and the Fulbright investigations had resulted in him being asked to resign. The Claimant ought to be put in a position to challenge the admissions it is alleged that he made. The 'disciplinary' context was important. The Claimant had also made a number of protected disclosures; they too were important. Mr Jacobson was acting on behalf of the Respondent, as was stated in the ET3 and in his report. He must have had some form of authority from the Respondent. On a fair reading of his statement, he was relying on information provided by Fulbright. Normally, an employee would be able to see the documents gathered during the investigation stage of a disciplinary process. These were the Claimant's own 'disciplinary' interviews and he ought to be able to have access to the record of them.
- Privilege was preventing disclosure but the Claimant accepted that he could not recover and was not seeking to recover details of legal advice tendered. Whilst it may be the case that the information in the Fulbright notes and memoranda was peppered with legal advice, that was just not known and it would be open to an Employment Judge to order recovery of the documents and examine them himself before handing any material to the Claimant.
- As to the whereabouts of the documents sought, Mr Saluja's position was that they may or may not be in Great Britain; he did not know. Mr Saluja did not point to any fact from which it could properly be inferred that the documents were in Great Britain nor did he assert that they were. What mattered was that the Respondent and WIL must have agreed that Mr Jacobson should have access to them, so why could they not be produced to the Tribunal?
- As to choice of law, Mr Saluja agreed that privilege was a right of substance to the extent that it was given a special place for a good reason. However, context mattered. This was an interlocutory application for recovery of documents; the context was at a procedural level. The documents required to be recovered and gone through to see whether they would be admissible into the Tribunal proceedings. He referred to Narden Services Ltd v Inverness Retail and Business Park Ltd37and Nasse v Science Research Council38 in support of that proposition. The lex fori applied and there were extensive protections available within it. Further, if applying the test of closest connection, that was the UK. The substantive issue was in Tribunal proceedings in Scotland, the parties were domiciled here, and the interviews had taken place in the UK. If he was wrong and US law applied, he accepted that Professor Fairfax's advice had to be followed, there being no contradictor. He suggested that he had not, however, dealt with this particular case or with implied waiver but he later recognised that that was not correct; Professor Fairfax did deal with waiver and it was to the effect that it did not help; even if there was waiver, a party could not be compelled to produce the privileged documents to a third party. I also, in passing, note that the issue addressed by Professor Fairfax contains a factual hypothesis which fits the circumstances of the present case.
- As to the issue of privilege under Scots law, Mr Saluja did not accept that it applied because he was not, he submitted, trying to recover legal advice. Notes of a meeting relating to issues of fact were not covered by privilege where the meeting was between a lawyer and a person who was not his client. He submitted that, by analogy, the decision of the Court of Appeal in Three Rivers District Council and Others v Governor and Company of the Bank of England39 assisted his argument in that it was stressed that privilege only applied to communications between a client and his legal advisers, to documents evidencing such communications and to documents that were intended to be such communications. He also referred to McSporran and Young: Commission and Diligence at paragraph 5.15 and McPhail, Sheriff Court Practice at paragraph 15.54. The communication had been between the Claimant and Fulbright. Interaction between Fulbright and Mr Jacobson would not, accordingly, be privileged.
- Regarding the protection given to documents prepared post litem motam, Mr Saluja accepted that it was a wider concept and could cover third party communications and communications prior to the raising of proceedings. Here, however, the potential proceedings – criminal prosecution in the U.S – were far removed from the current employment proceedings. That said, he accepted that the Employment Judge's approach as stated in paragraph 120 required qualification, as was demonstrated by the reference to the case of Gavin. The substantive issue here was, however, quite different and that ought to be taken into account so as to lead to the conclusion that the post litem motam exception did not apply.
- As to waiver, Mr Saluja submitted that two questions arose namely whether or not the person using the material had been deploying or using it as opposed to merely making reference to it; if the former, then waiver had occurred. Secondly, it was necessary to consider whether fairness indicated that the material should be disclosed and for the reasons to which he had already referred, in this case, it did. Relying on Wylie, Mr Saluja submitted that the circumstances showed that Mr Jacobson must have had the Fulbright documents and his statement did not provide a full account of matters. He also relied on the case of Brendan and on Dunlop Slazenger International Ltd v Joe Bloggs Sports Ltd40. A fair reading of Mr Jacobson's report showed that privilege had been waived. It was more than a matter of a passing reference. Fairness required full disclosure.
- Regarding the information orders, Mr Saluja undertook to check the position regarding the information referred to at part A; it was possible that it had been provided. Regarding B, he insisted on seeking the information because it was referred to in the Respondent's ET3. He was looking for what it was that Fulbright were instructed to do, not the content and it would be helpful to the Claimant to have the material.
- This is not a case where the party seeking recovery asserts that the documents in question are in Great Britain. Nor does he assert that any person in Great Britain has the documents in his possession or has, at any time, had them in his possession. At best, it can be inferred that the documents sought, which were prepared by US lawyers for US clients acting on the instructions of those US clients, are in the US, in the possession of those lawyers (Fulbright) or the client (WIL), or both.
- In these circumstances, can an Employment Tribunal in Scotland order a person in Great Britain – the Respondent, a subsidiary of WIL – to produce those documents? I am not persuaded that it is competent for it to do so. The Tribunal is a creature of statute and its powers are limited to those conferred on it by statute. The relevant statutory provision is rule 10(1)41 which empowers an Employment Judge to make such orders as he thinks fit including one of those listed in paragraph 10(2). Rule 10(2) states that an Employment Judge may, at a hearing, issue an order:
"Requiring any person in Great Britain to disclose documents or information to a party to allow a party to inspect such material as might be ordered by …(in Scotland) a sheriff."
- The Employment Judge also has power, under rule 18(7)(e) to strike out a claim or response, or part of either, if a party fails to comply with any order, including an order under rule 10(2)(d). Thus, the granting of an order for documents sets in train a course of events which could have very serious consequences for the party against whom it is made.
- The Employment Judge approached the Claimant's application on the basis that he required to look to rule 10(2) for the requisite power, rather than to the wider, more nebulous concept of "as he thinks fit". I consider that he was right to do so. The restriction in that paragraph to such recovery as could be ordered by a sheriff would be rendered meaningless if the rule was to be interpreted as also empowering an Employment Judge to issue an order for recovery of documents in terms or of a type which could not be ordered by a sheriff. Thus, if a sheriff could not, within the powers available to him, have pronounced an order for the disclosure to the Claimant of the documents sought by the Claimant, it was not within the power of the Employment Judge so to order save that, unlike the sheriff, he is not prevented from doing so by reason of the fact that the haver is in England or Wales.
- The Ordinary Cause Rules of the Sheriff Court, unlike their predecessor (1983) do not expressly confer power on the sheriff to order the recovery of documents but there is no doubt that it is within the power of the sheriff to do so; indeed, the power of the court to order recovery of documents has its roots in rules that were formulated in the seventeenth century42. Hence the reference in rule 21.1, which deals with a party's duty to lodge documents founded on by him in his pleadings, to that provision being "…without prejudice to any power of the sheriff to order the production of any document..." 43. The sheriff cannot, however, order the production of documents outwith Scotland. The procedure set out in the Evidence (Proceedings in Other Jurisdictions) Act 1975 (which applies to both court and tribunal proceedings) is available where the documents are in another part of the UK. Where the documents sought to be recovered are, however, outwith the UK, the Ordinary Cause Rules of the Sheriff Court provide for a letter of request procedure 44. Accordingly, if an application was made to the sheriff for recovery of documents situated in the US, the sheriff could, if satisfied as to their relevancy, issue a letter of request to the relevant court in the US, asking that that court order their production. It would not, however, be open to him to order their recovery. No party would be at risk of sanction by the sheriff in the event of non-production of the documents.
- I consider that the Employment Judge fell into error in three respects. First, he was wrong to interpret rule 10(2)(d) as requiring reference to the sheriff's powers only for the scope of the documentary material recoverable. The rule plainly limits the powers of the Employment Judge to order the recovery of documents to those available to a sheriff save only that, since the jurisdiction of the Employment Tribunal extends to the whole of Great Britain, he may go further than the sheriff and issue the order against a person outwith Scotland if they are situated elsewhere in Great Britain. To that extent, but only to that extent, the rule gives the Employment Judge greater power than that possessed by the sheriff.
- Secondly, whilst the rule does not, in terms, restrict recovery of documents outwith Great Britain, what is relevant is the power of the sheriff, which does not extend to such recovery. As above noted, the sheriff could not order recovery of documents in the US; the letter of request procedure would require to be used.
- Thirdly, there was no material before the sheriff on which he could conclude that the documents were in the possession or under the control of the Respondent yet he has ordered the Respondent to produce them, recognising that he cannot make the order directly against WIL as they are situated in the US. The Respondent is a subsidiary of WIL. It is not to be expected that it would be in a position to direct WIL, its parent company, in any respect. There is no indication of there being anything in the arrangements that subsist between WIL and the Respondent involving a departure from that norm. Whilst Mr Jacobson, an employee of WIL, appears to have acted as the Respondent's agent in some respect in relation to the assessment of the available evidence of misconduct by the Claimant, I do not consider that that assists the Claimant's case. It remains the position that the documents he seeks (which may never have been in Mr Jacobson's hands at all) are not held by or on behalf of the Respondent. Even if Mr Jacobson did, at some point, have access to them, I do not see that that can, as a matter of law, lead to the conclusion that WIL ceded control of them in favour of the Respondent. In fairness to the Employment Judge, he appears to have realised that there was a difficulty, given his frank acknowledgement in paragraph 123 that there might be a problem if WIL hold the documents and refuse to produce them. His means of disposing of the difficulty is to make it clear that he expects the Respondents to obtain the documents but that simply will not do. Orders for production of documents can only be made against persons whom a sheriff has good reason to believe is in possession of them. The same applies in the case of Employment Judges.
- Mr Saluja's response to the formidable competency challenge was to regard the documents as being akin to a record of investigatory interviews during a disciplinary process. That is, however, no answer to the competency point. The issue is not whether it would fair or reasonable to let the Claimant have sight of them, which is what his submission, in essence, amounted to. If the issuing of a particular order is not within the power of an Employment Judge, it matters not that it would seem fair or reasonable to grant it.
- I conclude, for the reasons stated above, that the order for production of documents pronounced by the Employment Judge was incompetent and, for that reason alone, it falls to be revoked.
- I turn to the remaining submissions in support of the appeal.
Choice of Law
- It was not disputed that privilege was properly claimed in respect of the documents sought; Mr Saluja appeared to accept that, in the circumstances, at least some of the material within them would be covered by legal professional privilege. Given that the documents are US documents, created by US attorneys for US clients, the issue then arises as to which law would apply when determining the nature, extent and effect of the privilege claimed.
- The Employment Judge was, I consider, wrong to categorise the right of privilege in issue as being one of procedure only. His reason for doing so was that it arose in the context of admissibility but that is not correct. At this stage, pre-recovery, the issue is not one of whether or not the documents may be referred to in evidence but whether or not they may be recovered at all. The effect of the order that the Employment Judge made was that privileged material would be disclosed to the Claimant, potentially to the detriment of WIL, depending what use he sought to make of it. Further, the Employment Judge's approach fails to recognise that privilege is a right of substance, as was recognised by the Lord Scott in the Three Rivers case. It is also, I consider, important to recognise that, in this case, it is a right being claimed by a foreign company in respect of documents which were created in that foreign jurisdiction for the purposes of an investigation into their potential liabilities in that jurisdiction by lawyers situated there. That is, the context is property situated abroad for purposes which had nothing to do with activities within this jurisdiction. It cannot be appropriate to sever all those characteristics from the application for recovery of them and focus only on the fact that that application constitutes a procedural step, which is what Mr Saluja sought to do. Even if the order had been competent, I would have been satisfied that the US law applied, the effect of which would have been, given the clear terms of Professor Fairfax's opinion, that the documents were not recoverable by reason of their being privileged.
Privilege: Legal Professional Privilege - Scots Law
- I consider that the Employment Judge erred in his analysis of the relevant law. He had no basis for concluding that the communications sought to be recovered did not constitute a form of communication between lawyer and client. They were not, as he states, communications between the Claimant and Fulbright. The documents in question were notes prepared by WIL's attorney in the course of investigations being carried out by them on the instructions of WIL. They contain the attorney's 'thoughts and impressions', the purpose of which can only have related to the client brief. They were plainly prepared for WIL's benefit and for communication to WIL. Indeed, the Claimant's position is that they must have been communicated to Mr Jacobson. Even if communication between Fulbright and the client had not previously occurred, it is plain that that was what was intended and, as referred to by the Court of Appeal in the Three Rivers case, that would suffice for them to attract privilege. Further, the Employment Judge was wrong to conclude that privilege would not have applied on the basis that the Claimant only sought to recover them to show that a statement was made; it was plain that the Claimant's purpose went well beyond that limitation. The purpose for which he wished to see the documents was to examine and rely on their content to counter the Respondent's contentions regarding his misconduct and to support his case of having made a protected disclosure. The documents would, I conclude, have been covered by privilege under Scots law, the rule being of the highest importance, as discussed in Micosta. Mr Saluja's approach was, at times, to stress that he accepted that he could not recover details of legal advice given. He suggested that an excerpting procedure could have been followed (not that that was what the Employment Judge ordered) similar to that which was envisaged in Nasse, where what was sought were confidential reports about a claimant's fellow employees. Whilst their Lordships concluded, in that case, that the Industrial Tribunal chairman should not have ordered the recovery of those documents without first inspecting them himself to determine whether disclosure was necessary for the fair disposal of the case, I would observe that the issue there was not one of privilege and that, since then, two sets of Employment Tribunal Rules have not made provision for such a procedure, nor indeed for one whereby an independent Commissioner may be appointed (cf. the procedure in the Sheriff Court). I do not accept that Narden, which was not an Employment Tribunal case, is indicative of such a power being vested in an Employment Judge; the issue there arose after the order for recovery had been made and the court was faced with having to decide on appropriate procedure thereafter.
Litigation Privilege – Scots Law
- Turning to post litem motam, ultimately Mr Saluja accepted that the Employment Judge's approach at paragraph 120 required qualification; it could not simply be matter of the protection being limited to documents prepared in contemplation of the same proceedings. He was right to do so. It cannot be the case that litigation privilege only applies to a document which was prepared in contemplation of the particular litigation which ensues. If, for instance, a document is prepared in contemplation of a risk that a party may be prosecuted, it cannot be right that that document becomes recoverable in the event that the party is saved prosecution but sued in a subsequent civil litigation at the instance of the victim. The case of Gavin affords reassurance in that regard. The documents sought in the present case were plainly prepared in contemplation of litigation, both criminal and civil; the risks of both were the reason for the instruction of Fulbright by WIL. Litigation privilege plainly attaches to them.
- If the documents order had been competent, would considerations of privilege been elided by reason of the right having been waived? I am not satisfied that a relevant case of waiver was made out by the Claimant, on whom the onus lay. First, any act of waiver required to be by WIL – or through one of their employees and the act would require, at least, to constitute disclosure of part or all of the document for which privilege is claimed.
- The only act relied on was the disclosure by Mr Jacobson, in his statement, of matters which could have had the interview notes as their source. As I have already observed, the precise means by which he obtained the information is not explained and it is not clear that he is relying on the documents that are the focus of the recovery application as opposed to having obtained the information from Fulbright by some other means. The disclosures made are limited. Mr Jacobson was, as the Claimant and the Employment Judge were at pains to point out, in these matters, acting not in his capacity as an employee of WIL – with whom rested the right of privilege - but as agent of the Respondent. It is not at all clear that any disclosures made are made by Jacobson in his WIL capacity.
- Secondly, the use made of the material appears to be as partially explanatory of Mr Jacobson's having arrived at his overall understanding as to the nature of the Claimant's conduct, it being his understanding and belief at the time he concluded that the Claimant should be asked to resign that matters; the issue for the Tribunal will not be that of what actually happened in West Africa. The circumstances are not, for instance, comparable to those in Wylie where the disclosure of one of a series of letters had the effect of providing only a partial and potentially misleading account. Mr Saluja did not suggest that there was anything misleading about the limited disclosure made or that there was likely to be prejudice arising from it. The Claimant was, I note, present at these interviews and, on the face of matters, in a better position than anyone to point to any unfair or misleading aspect of what was disclosed but he pointed to none.
- Thirdly, whilst the case of Brennan might appear to suggest that the test is one of fairness, that indication of the approach south of the border should be regarded with caution and it is interesting that on its facts, despite there having been partial disclosure, the application failed. It was also, in any event, recognised that legal advice privilege is an extremely important protection and waiver is not easily established. I would suggest that what is apparent from the authorities to which I was referred in the course of the debate is that it is only applies where the actions of the party claiming privilege clearly show that his actions ought properly to be interpreted as him having, given up that right, such as where he is relying on disclosure which provides but a partial, incomplete and otherwise potentially misleading picture of matters. Even, however, if the test was simply one of fairness, in these unusual circumstances where what the Claimant seeks to recover are documents about which only limited disclosures are made, where they are not being relied on to show what actually happened, where they relate to interviews at which he was present, where he was warned at the start of each interview that the interviews were privileged (with the right of privilege belonging to WIL) and where he could certainly have had a solicitor present to take notes on the last two occasions (and there being no indication of a likelihood of a request for such attendance at the earlier interviews being met with a refusal), I would have concluded that fairness did not require that WIL be held to have waived privilege.
- Part B1 of the information order may, I understand, have been complied with and will, in any event be dealt with by parties informally. It can, accordingly, be revoked. As regards part B2, (a) plainly attracts privilege and (b) has been responded to in the terms of Mr Jacobson's statement. I am satisfied that, accordingly, part B should also be revoked.
- In these circumstances, I will pronounce an order upholding the appeal and revoking the orders pronounced by the Employment Judge, in their entirety.
1 Letter from Fulbright dated 30 August 2010.*
2Affidavit of Glenn M Jones, attorney, dated 30 August 2010.
3 See the quotation in paragraph 15 above.
4 Rule 10(2)(d)
5 Employment Tribunal Judgment paragraph 94.
6 Employment Tribunal judgment paragraph 101.
7 Employment Tribunal Judgment paragraph 106.
8 Employment Tribunal Judgment paragraph 107.
9 Employment Tribunal Judgment paragraphs 111 and 112.
10 Employment Tribunal Judgment paragraph 113.
11 Employment Tribunal Judgment paragraph 114.
12 At paragraph 10.2.5.
13 Employment Tribunal Judgment paragraph 114.
14 Employment Tribunal Judgment paragraph 120.
15 Employment Tribunal Judgment paragraph 123.
17 Copy included in the appeal bundle at p.128.
18 449 U.S. 383, at 394-7(1981
19 At paragraph 6 -43.
20  1WLR 331 per Lord Fraser of Tullybelton at p.338.
21  AC 547 per Lord Diplock at p. 637.
22  4 AER 948.
23 1882 9R 901.
24 1986 SLT 452.
25  AC 583.
26 At pages 603,605 and 606.
27 1839 9S 213.
28 1909 1 SLT 2 at p.5.
29 1983 SLT 483, at p.485.
30 1896 SLT 121
31 1990 SLT 512
32 1994 SCLR 209.
33 1967 SLT (N) 9
34 2003 SLT 256
35  ICR 479
37 2008 SC 335.
38  IRLR 465.
39 (No 5)  QB 1556.
40  WL 213.
41 See the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Sch 1.
42 See e.g.: Paton, 1668, M. 3963.
43 Rule 21.1(2))
44 Rule 28.14.
Published: 26/01/2012 13:32