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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Kousouros v O'Halloran & Anor [2014] EWHC 2294 (Ch) (10 July 2014) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2014/2294.html Cite as: [2014] EWHC 2294 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
On appeal from the Central London County Court

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/7/2014

Mr Justice Simon:

Introduction

1. This is an appeal from the Judgment (dated 28 November 2013) and the Order (dated 17 December 2013) of Her Honour Judge Faber, sitting in the Central London County Court, in relation to the disclosure of documents by the 2nd Defendant.
2. The Claimant and 2nd Defendant are brother and sister. They are the children of George Kousouros who died in Cyprus in March 2007. George Kousouros (and his wife, who predeceased him) had lived in England before returning to Cyprus, where they had both been born, in 2000.
3. They had bought a large house in Offord Rd, Islington ('the Property') in about 1960, and had lived there with the Claimant until their return to Cyprus. The Property had always produced a rental income and the Claimant continues to live there and to take the rental income.
4. The Claimant claims that the Property was transferred to him inter vivos under an oral agreement made with his parents in June 2001, and that for this reason it does not form part of his father's estate. One of the terms of that oral agreement is said to have been the payment of £50,000 to the 2nd Defendant. Another term was that the Claimant agreed to pay the living and nursing-home costs of his parents, which would previously have come from the rental income. He contends that pursuant to the terms of the oral agreement his parents executed a Deed of Transfer of the Registered title to the Property in form TR1, and that his sister was aware of the transfer and was present when it was executed. Although the Form TR1 was not registered at HM Land Registry, he claims that on his father's death, the legal interest in the Property vested in his father's Personal Representative, subject to his own beneficial interest.
5. The 2nd Defendant relies on her father's Cypriot will executed in 2004, by which she and the Claimant were to receive equal shares in his estate.
6. The main issue between the parties is whether the Property forms part of the estate of George Kousouros.
7. Following the death of her father, she instructed the First Defendant, Mr O'Halloran, a partner in the firm of Hunters, to recover her share of the English estate. The firm accepted instructions in the terms of a letter of 17 January 2008. The contents of an attendance note of 16 January 2008 and, in particular, what the 2nd Defendant may or may not have told Mr O'Halloran about the oral agreement is at the centre of the disclosure issue.
8. The nature of Mr O'Halloran's retainer was that he would act on behalf of the 2nd Defendant in connection with her claim on the estate and that his assistant (Ms Martin) would deal with the administration of the estate.
9. The first step was to obtain a grant of probate in respect of the Cypriot will and which named a Cypriot lawyer, Mr Ioannou, as executor.
10. Mr O'Halloran began by obtaining the instructions of Mr Ioannou to act his attorney in obtaining a grant of probate. The Judge found that by (at the latest) 13 February 2008 there was a 'joint retainer' from the 2nd Defendant in relation to obtaining her share of the Estate and from Mr Ioannou to administer the Estate.
11. The matter did not progress swiftly. On 8 July 2009 Mr O'Halloran arranged for the payment of Inheritance Tax on the English estate on the basis that the Property was part of the estate. A loan was obtained from Messrs C Hoare & Co in the sum of £100,000 and the 2nd Defendant executed a deed of indemnity in his favour.
12. After considerable further delays the application on behalf of Mr Ioannou was rejected by the Probate Registry on technical grounds which are not material to the present issue. On 5 January 2010 Mr O'Halloran applied as attorney for the 2nd Defendant for the purposes of obtaining letters of administration with the Will attached, 'for my use and benefit limited until further representation be granted.'
13. On 8 June 2010 he was granted letters of administration on the basis that it was 'for the use and benefit' of the 2nd Defendant. He then applied to the Land Registry to transfer the Property into his sole name as executor of the Will, and legal title to the Property transferred to him.
14. The dispute over ownership of the property came to a head in September 2010. In a letter of 15 September 2010 written on behalf of the Claimant, Mr O'Halloran was asked to transfer the Property into the Claimant's sole name and to concur in the registration of his ownership of the Property at HM Land Registry.
15. At least at this stage, if not before, it must have been clear to Mr O'Halloran, that there was a potential conflict of interest between his duty to act on behalf of the 2nd Defendant as a beneficiary claiming a half interest in an estate that included the Property and his duty to act on behalf of the estate in circumstances where there was an issue as to whether the Property formed part of the estate.
16. In October 2010 Mr O'Halloran ceased to act for the 2nd Defendant; and in letters dated 4 November 2010 and 28 January 2011 he sought repayment of the Inheritance Tax from Her Majesty's Revenue & Customs ('HMRC') on the basis that the Property did not form part of the estate. The tax was subsequently repaid.

The litigation

17. On 22 June 2012 Particulars of Claim were served against Mr O'Halloran and the 2nd Defendant seeking declarations that the Claimant was entitled to the entire beneficial interest in the Property and that it did not form part of the estate, and an order that Mr O'Halloran execute a transfer of property or concur in the registration of the Claimant as the proprietor of the Property at HM Land Registry.
18. §23.2 of the Particulars of Claim was in the following terms:

The First Defendant by letters dated 10 November 2010 and 28 January 2011 ... applied to HM Revenue and Customs for, and ... subsequently obtained the repayment of inheritance tax incorrectly paid on the basis that the said property did not form and part of the Deceased's estate and no inheritance tax should have been paid.

19. In her Defence dated 23 October 2012 at §30, the 2nd Defendant addressed this point as follows:

The 2nd Defendant continues to make inquiries as to the matters set out in paragraph 23.2 and makes no admissions for now.

20. The letter of 10 November 2010 was a letter from Mr O'Halloran to the Claimant's solicitors explaining that he was no longer acting for the 2nd Defendant, and envisaging that an application would be made to HMRC for the repayment of Inheritance Tax, 'which was paid on the mistaken belief that the [Property] formed part of the Estate in view of the non-disclosure of the Land Registry Transfer until recently'. This was a reference to the TR1 form.
21. As explained below, the 3rd paragraph of the letter of 28 January 2011 from Mr O'Halloran to HMRC and the nature of his explanation as to why he was seeking recovery of the payment of inheritance tax is at the heart of the issue on this appeal. It is clear that he was conveying information which he had received from the 2nd Defendant at a time when he was acting as her solicitor in relation to his claim as a beneficiary under George Kousouros's will. On the face of it the contents of the 3rd paragraph were subject to Legal Advice Privilege.
22. The 2nd Defendant's solicitors did not seek inspection of the letters of 10 November 2010 and 28 January 2011 as they were entitled to do under CPR Part 31.14(a), and the letters were subsequently disclosed by Mr O'Halloran (as the 1st Defendant) to the other parties.

The issue before Judge Faber

23. On 23 July 2013 Mr O'Halloran disclosed the files relating to his actions as Personal Representative of the estate of George Kousouros.
24. The other parties also provided lists and witness statements for the purposes of a CMC which was to be heard on 3 October 2013.
25. On 1 October the 2nd Defendant applied for an order:

(1) preventing the use of any reference to the 3rd paragraph of the 28 January 2011 letter from Hunters to HMRC;

(2) preventing the reference to that paragraph in a witness statement of Mr Economides (the Claimant's solicitor) and for redaction of the 3rd paragraph of the letter as it appeared as an exhibit to his witness statement;

(3) for redaction of the second sentence of an email from Ms Martin to Ms Lewis (of Hoare & Co) dated 14 January 2011.

26. This application related to documents which had already been disclosed. There were also other documents which had not been disclosed in respect of which legal advice privilege and litigation privilege was asserted by the 2nd Defendant. These were the subject of further argument in front of the Judge.
27. It is plain that the Judge took considerable care to see that the issue of disclosure was dealt with properly. She asked for submissions on how the matter should be dealt with, and was referred to three cases which provided guidance as to the issues which may arise when a party makes a claim for privilege and the Court may have to see the documents in order to form its own view of the matter, see National Westminster Bank Plc v. Rabobank Nederland [2006] EWHC 2332 (Comm), Atos Consulting Ltd v. Avis Europe Plc [2007[ EWHC 323 (TCC) and West London Pipeline and Storage Ltd and anor v, Total UK Ltd and others [2008] EWHC 1729 (Comm).
28. Bundles of documents were provided to the Judge with pages said to be relevant to the privilege issue flagged, and pages in respect of which privilege was claimed by the 2nd Defendant separately flagged.
29. On 4 October 2013 the Judge made an order dealing with the disposal of the application. By this stage it was clear that the claim for privilege extended considerably further than the 3 matters which had been raised on 1 October 2013. The Judge identified 5 letters from Hunters to the 2nd Defendant, one attendance note and 44 further documents.
30. I was told by counsel that the hearing in relation to the privilege issue took 2 days, and that the Judge spent a further 2 days reading the material. There were 4 skeleton arguments on behalf of the Claimant, 2 on behalf of Mr O'Halloran and 5 on behalf of the 2nd Defendant (74 pages in all).
31. In broad summary the Judge concluded that where a solicitor acts for a beneficiary claiming under a will, legal advice privilege constitutes a bar to disclosure. However, if the solicitor acts as the Personal Representative of the estate, the beneficiaries under the will have a joint interest in the administration of the estate, legal advice privilege is held jointly between them and cannot be asserted by one against the other.

The issues on the appeal

32. By the time of the appeal it was clear that the issue could be expressed more narrowly than previously. It was common ground that the real issue was whether the Claimant could deploy the material in the 3rd paragraph of Mr O'Halloran's 28 January 2011 letter to HMRC.
33. Mr Wilson (for the 2nd Defendant) submitted that the Judge's approach was wrong. Mr O'Halloran has acted in two different capacities: on behalf of the 2nd Defendant as a beneficiary and as Personal Representative on behalf of the estate. The information he received from the 2nd Defendant in the former capacity was privileged at the time he received it and remained privileged. Were that not the case the principle of legal professional privilege would be grossly and unpredictably undermined.
34. Mr Armstrong (for the Claimant) submitted that the Judge's order for disclosure was correct for two reasons. First, for the reasons she gave in her judgment, although he accepted that the joint interest may have arisen later than the Judge decided, when the estate incurred fees to Mr O'Halloran. Secondly, on the narrower ground that (even if it were privileged in the hands of Mr O'Halloran) once it was disclosed to the Claimant the 2nd Defendant could only succeed in restraining its use by the grant of an injunction, which should be refused in the circumstances.

The legal principles which apply

35. The nature of the interest which the 2nd Defendant relies on is legal advice (or legal professional privilege). Although there are many cases in which the privilege is discussed, it is convenient to refer (as the Judge did) to the decision of Lawrence Collins J in ISTIL Group Inc and another v. Zahoor and another [2003] EWHC 165 Ch The issue in that case was the extent to which a party could restrain the use of privileged communications with a witness or potential witness, which the latter had disclosed to a third party, see [1] of the judgment.
36. At [52]-[66] Lawrence Collins J described the two aspects of privilege: legal advice privilege (or legal professional privilege) on the one hand and litigation privilege on the other. Legal advice privilege extends to all communications between the client and the legal advisor for the purpose of obtaining legal advice, and exists whether litigation is anticipated or not. At [53]-[54] he set out the reasons why the law attaches importance to this privilege. It is based on the ability of legal advisors to give honest and candid advice on a sound factual basis, which is a fundamental condition on which the administration of justice as a whole rests.

[53] The policy reason behind the first category of privilege, legal advice privilege, is that it is 'necessary, to use a vulgar phrase, that [the client] should be able to make a clean breast of it to the gentleman who he consults with a view to the prosecution of his claim, or the substantiality of his defence against the claim of others' (see Anderson v. British Bank of British Columbia (1876) 2 Ch D 644 at 649 per Jessel MR.

[54] In Ventouris v. Mountain, The Italia Express [1991]1 WLR 607 at 611, Bingham LJ referred to the public interest in clients being 'free to unburden themselves without reserve to their legal advisers' and their legal advisors being 'free to give honest and candid advice on a sound factual basis, without fear that these communications may be relied on by an opposing party if the dispute comes before the court for decision'. He went on:

It is the protection of confidential communications between client and legal advisor which lies at the heart of legal professional privilege, as is clear from the classical exposition of the law by Jessel MR in Anderson v. Bank of British Columbia (1876) 2 Ch D 644 at 648-9.

In R v. Derby Magistrates' Court, ex p B [1996] AC 487 at 507 Lord Taylor of Gosforth CJ said that legal professional privilege is 'much more than an ordinary rule of evidence ... It is a fundamental condition on which the administration of justice as a whole rests.'

37. From [55] Lawrence Collins J considered litigation privilege which attaches to communications which come into existence with the dominant purpose of being used in aid of pending or contemplated litigation, and concluded that the rationale for the privilege was that the communications relevant to the preparation of the case for litigation were inextricably linked to advice on whether to fight the case or settle and if so, on what terms.
38. I bear in mind the importance which the law attaches to legal advice privilege as set out above. Two questions arise in relation to the privilege in the present case:

(1) in what circumstances does the law treat the privilege of one party as joint or shared (the first issue), and

(2) how may it be lost (the second issue)?

The first issue

The judgment below

39. In her Judgment of 28 November 2013, the Judge started with certain basic principles.
40. First, the Claimant was not automatically entitled to all documents relevant to the administration of an estate by virtue of being a beneficiary; just as a beneficiary under a trust has no automatic right to disclosure of the terms of the trust (see §1). Secondly, disclosure was best approached as one aspect of the Court's inherent jurisdiction to supervise, and where appropriate to intervene in, the administration of trusts. It was necessary for the Court to evaluate the claims of a beneficiary to disclosure against other issues of personal confidentiality relevant to trustees, other beneficiaries and third parties. Disclosure may have to be limited and safeguards may have to be put in place, see Schmidt v. Rosewood Trust [2003] 2 AC 709.
41. Schmidt v. Rosewood was a decision of the Privy Council on appeal from the Staff of Government Division of the Isle of Man; and the proposition, uncontroversial as far as it goes, is taken from the head-note which correctly reflects the conclusions of the Board at [66]-[67]. The relevance of the point to the issues of legal advice privilege is however in issue.
42. At §2 of her judgment the Judge noted that at trial the main issue would be the determination of what property remained in the estate at the testator's death and how his intentions, as expressed in his life and in his will, should be given proper effect. Accordingly, the Court's supervisory powers were engaged and the documents in Hunters' files were relevant to the exercise of those powers. She indicated that a balancing act might be called for in the event that the 2nd Defendant's confidential interests required protection.
43. To the extent that the Judge intended to convey that the case called for a close analysis of the obligations owed by a solicitor to a client who was beneficiary (on the one hand) and to the general body of beneficiaries in his role as administrator of an estate (in the other hand), she was plainly right.
44. At §4 the Judge set out the issues at trial based on the pleadings. The Claimant was relying on the inter vivos transaction and the effect of the TR1 executed in 2001 and/or a proprietary estoppel; and the 2nd Defendant relied on the 2004 will to support her claim to the half share in the total estate.
45. She recognised that the Claimant plainly saw the documents which were in dispute as a means of potentially undermining his sister's credibility; although that would not ground an application for disclosure; and it was for this reason that the Claimant had advanced his case on disclosure on the basis of his rights as a beneficiary under the will. The Judge also identified the issue of the potential waiver of privilege (the second issue), although she did not rule on the issue since she found in favour of the Claimant on the first issue.
46. At §§8-18 of the Judgment she concluded that from the outset Hunters and Mr O'Halloran acted in two capacities. First, for the 2nd Defendant in relation to obtaining her share of the estate, and secondly (and as a means to achieve this) acting on behalf of the executor to enable the estate to be administered.
47. At §10 of her Judgment the Judge held.

So, as of, at the latest, about 13 February 2008 there was a joint retainer: on behalf of D2 to obtain her share of the estate and on behalf of [Mr Ioannou] to administer the estate. The Claimant had a joint interest in the subject matter of communications about the administration of the estate and thus a joint privilege in communications which came into existence while Hunters were acting on behalf of the executor. According to The Law of Privilege edited by Bankim Thanki QC (which Mr Armstrong and Mr Wilson treated as an authoritative text) the same principles apply to joint interest privilege as to joint retainer privilege and thus D2 cannot assert privilege as against C while that joint interest continued.

48. In the view of the Judge, since the Claimant had a joint interest in the subject matter of the estate and in communications about the administration of the estate, he shared a joint privilege in communications which came into existence while Hunters were acting on behalf of the executor. It followed that, since there was a joint interest legal advice privilege (of the Claimant and the 2nd Defendant) it could not be asserted by the 2nd Defendant against the Claimant (see her judgment at §§10 and 15).
49. At §16 the Judge concluded.

Although in October 2010 [Mr O'Halloran] ceased to act for the 2nd Defendant personally, the joint interest in estate matters continued and [Mr O'Halloran] and the 2nd Defendant cannot assert privilege in relation to any document relevant to its administration. That continues to the present day.

50. At §17 the Judge considered the matters which were relevant to the administration of the estate.

The matters relevant to the administration of the estate include identifying the assets of the estate, preserving them, dealing properly with them and applying the for the benefit of those interested (see Williams, Mortimer and Sunnucks on Executors, Administrators and Probate 20^th Ed 57-04). They also include delivery of the IHT account to the revenue (see Williams at 21-47). Thus neither the 2nd Defendant nor [Mr O'Halloran] could assert privilege as against the Claimant in relation to the gathering of information for and submission of that account.

Discussion on first issue

51. In circumstances where a solicitor acts in more than one capacity there is always a potential conflict between different duties which may be owed. It is clear that Mr O'Halloran sought to avoid the conflict by himself acting for the 2nd Defendant and getting his assistant to act on behalf of the executor.
52. Whilst I agree that the Claimant and the 2nd Defendant had a joint interest as beneficiaries under the will in ensuring that it was properly administered, as Mr Wilson accepted in argument, I do not accept that the consequence was that the 2nd Defendant was unable to maintain the legal advice privilege in relation to her original instructions to Mr O'Halloran and in relation to the advice she received.
53. In §6.07 of Thanki on the Law of Privilege, 2nd Ed. the editor deals with the subject of Joint Interest.

Joint interest can also arise where, even though party A and party B have not jointly retained a lawyer (and only one of them is party to the relevant lawyer-party relationship), they have a joint interest in the subject matter of the communication. The defining characteristic of this aspect of joint privilege is that the joint interest must exist at the time that the communication comes into existence ... the documents must have come into being for the furtherance of the joint purpose or interest.

54. At §6.08 there is a discussion about the consequences of the Joint Interest privilege

Accordingly, neither party can assert privilege as against the other in respect of communications coming into existence at the time the joint interest subsisted; hence, each party to the relationship can obtain disclosure of the other's (otherwise privileged) documents so far as the concern the joint interest or purpose.

... The concept is less well developed or defined in case law than joint retainer. It is questionable, for example, whether a client is necessarily precluded from waiving privilege in advice he has obtained simply because someone else (of necessity a stranger to the relevant lawyer-client relationship) can assert a joint interest in the advice.

55. Three points may be noted. First, the joint interest must exist at the time that the communications which are in issue come into existence. Secondly, the communications must have come into being for the furtherance of the joint interest. Thirdly, it remains unclear whether a client is necessarily prevented from asserting privilege in advice he has obtained simply because someone else, who was not a party to the original lawyer-client relationship, can assert a joint interest in the advice.
56. In §15-01 of Documentary Evidence, Hollander, 11th Ed, 2012, the author states:

Where one of the parties who jointly instructs the solicitor consults the solicitor confidentially on matters in dispute between the persons who have created the joint interest, he may claim privilege against the other for those communications.

57. One of the authorities cited in support of this proposition is the decision of the Court of Appeal in Goddard and another v. Nationwide Building Society [1987] QB 670. In that case a solicitor acting for both the purchasers and the Building Society in the purchase of property took a note of something that was said by one of the purchasers. The note was subsequently disclosed to the Building Society who wished to deploy it in its defence to a claim for negligence on the part of its surveyor. The judgments of May and Nourse LJJ were primarily concerned with the issue of whether copies whose originals were privileged could be used as secondary evidence. However both members of the Court were clear that, in the light of the way in which the document came into existence, the only legal professional privilege was that of the purchasers.
58. In the present case the privileged information came into existence either on 16 or 17 January 2007. At this point Mr O'Halloran had no role in the administration of the Estate and there was no question of a joint interest with anyone else. To adopt the words of Bingham LJ in Ventouris v. Mountain (above), the 2nd Defendant was entitled to unburden herself to her legal advisor without reserve and on the basis that he would be able to give her honest and candid advice, without fear that the opposing party might rely on the communications if a dispute came before the Court for decision.
59. Whatever falling out there may have been, it was not open to Mr O'Halloran to decide that he was no longer bound by the duty of confidence to his client. If he came to the view that there was a conflict between his duties as an administrator of the estate and his duties to the 2nd Defendant, he should have withdrawn entirely. Instead, it seems that he regarded himself as no longer under any duty of confidentiality to the 2nd Defendant. In my view he was mistaken.
60. Although it is unnecessary to decide the point I am persuaded by Mr Wilson's argument that, to the extent that a joint interest arose, it cannot be said to continue (at the very latest) beyond the point at which proceedings were commenced, see for example, Talbot v. Marshfield (1865) 2 Dr and Sm 549 and O'Rourke v. Darbyshire [1920] AC 581.
61. So far as is relevant to the present appeal, the Claimant was entitled as one of the beneficiaries to know the broad circumstances in which the payment of Inheritance Tax was paid and then reclaimed. However, the third paragraph of the letter 28 January 2011 contained privileged material which was properly the subject of an obligation of confidentiality, and the 2nd Defendant is entitled to the protection of the Court in maintaining privilege in relation to it.
62. At §18 of her judgment Judge Faber gave 'a further and separate reason' for finding that the 2nd Defendant was not entitled to claim legal advice privilege.

... the court has to exercise its jurisdiction to supervise the exercise of [an administrator's] functions in the administration of the estate. Were the 2nd Defendant to succeed in claiming privilege for any information she supplied about her case as to what were and what were not the assets of the estate then the Court would be denied relevant information which is vital to proper supervision. That consideration outweighs any such claim for privilege.

63. It appears that the Judge had in mind the decision in Schmidt v. Rosewood Trust (see above). However the reasoning in ISTIL at [93] (see below) makes clear that the public interest in maintaining legal advice privilege is not to be weighed against other the public interests: whether those interests are designed to promote the emergence of 'the truth' or the 'proper supervision' of estates.
64. I have focussed on the letter of 28 January 2011 because the third paragraph is at the heart of the issue between the parties, and the information demonstrably came from the 16 and/or 17 January 2008 meetings. The email of 24 January 2011 from Ms Martin to Messrs Hoare & Co did not in fact contain material which was relevant beyond an evidentially inadmissible repetition of what was later conveyed in the 28 January 2011 letter; and the references in Mr Economides's witness statement and exhibits were to the 28 January 2011 letter. The other documents considered by the Judge did not take the matter further.

The second issue

65. It is clear that, once a privileged document comes into the hands of an opposing party, the law in relation to breach of confidence comes into play and the Court may intervene under its equitable jurisdiction to prevent an actual or threatened breach of confidence.
66. The circumstances in which the Court will exercise its jurisdiction was considered by Lawrence Collins in the ISTIL case and, after a full review of the authorities, he summarised the effect of the cases.

[74] The position on the authorities is this. First, it is clear that the jurisdiction to restrain the use of privileged documents is based on the equitable jurisdiction to restrain breach of confidence. The citation of the cases on the duty of confidentiality of an employees makes it plain that what the Court of Appeal was doing in Lord Ashburton v. Pape was applying the law of confidentiality in order to prevent disclosure of documents which would otherwise have been privileged, and were and remained confidential. Second, after a privileged document has been seen by the opposing party, the court may intervene by way of injunction in exercise of the equitable jurisdiction if the circumstances warrant such intervention on equitable grounds. Third, if the party in whose hands the document has come (or his solicitor) either (a) has procured inspection of the document by fraud or (b) on inspection, realises that he has been permitted to see the document only by reason of an obvious mistake, the court has the power to intervene by the grant of an injunction in exercise of the equitable jurisdiction. Fourth, in such cases the court should ordinarily intervene, unless the case is one where the injunction can properly be refused on the general principles affecting the grant of a discretionary remedy, e.g. on the ground of delay.

67. He went on (at [75] to [94]) to consider the discretion to grant equitable relief and, in particular, the extent to which the Court may conduct a balancing exercise in the interests of justice and truth. His conclusion, at [92] was that it could not

[93] ... there is nothing in the authorities which could prevent the application of the rule that confidentiality is subject to the public interest. In this context, the emergence of the truth is not a sufficient public interest. The reason why the balancing exercise is not appropriate is because the balance between privilege and truth has already been struck in favour of the former by the establishment of the rules concerning legal professional privilege (see The Aegis Blaze [1986] 1 Lloyd's Rep 203 at 211, Ex. p B [1996] AC 487 at 508).

68. It is clear from the ISTIL case that the Court will ordinarily intervene if the recipient of the material has acted unconscionably. That is not the case here. However, there was a reference in §23.2 of the Particulars of Claim to the letter of 28 January 2011 from Mr O'Halloran to HMRC and it seems likely that the letter was disclosed by Mr O'Halloran to the Claimant's solicitors before Particulars of Claim were served on 22 June 2012. The letter was then disclosed to both parties in Mr O'Halloran's 2nd list of documents on 26 July 2013. On 27 August 2013, Mr Economides exhibited the letter to his witness statement and referred to its contents. No steps were taken to prevent the Claimant from using the contents of the document until 1 October 2013.
69. In my view the starting point is that the Court will normally intervene to prevent the use of the confidential information and that it is not concerned with a balance between a public interest in the emergence of the truth (on the one hand) and the maintenance of confidentiality (on the other), see Lawrence Collins J in the ISTIL case at [93]. On the other hand, once the party asserting the privilege or confidentiality of the document becomes aware of the facts, it must act promptly. Doubtless in many cases this will mean a request for an undertaking not to use the information and, if the undertaking is refused, an application for an injunction. It may not always be possible to apply immediately for an injunction, there may (for example) be funding or listing difficulties, but it will usually be possible to write a letter asserting the confidentiality and providing the reasons for it. In the present case the sending of such a letter would have focussed the attention of all concerned on what precisely was said to be confidential and the reasons why.
70. Nevertheless, it is important to bear in mind the issue of proportionality. I am clear that in the light of the arguments which were deployed in front of Judge Faber and me that, if a letter had been written seeking undertakings, none would have been forthcoming. In circumstances in which the 2nd Defendant may have had funding difficulties during part of the period, I am satisfied that the delay from July to October 2013 in seeking relief is not fatal to the 2nd Defendant's claim for an injunction to restrain the use of the confidential material in the 28 January 2011 letter.

Conclusion

71. I have therefore concluded that:

(1) The Judge was wrong in her conclusion that the material documents and/or their contents were not subject to legal advice privilege.

(2) To the extent that the material has come into the hands of the Claimants an order should be made maintaining its confidentiality and precluding its use.

Accordingly the 2nd Defendant's appeal is allowed.