JP Morgan Multi-Strategy Fund LP v Macro Fund Ltd

• Jurisdiction: Cayman Islands
• Judge: (Kellock, Ag. J.)
• Judgment Date: 30 May 2003
• Court: Grand Court (Cayman Islands)
• Date: 30 May 2003

Grand Court

(Kellock, Ag. J.)

J.P. MORGAN MULTI-STRATEGY FUND L.P. and SIX OTHERS

and

MACRO FUND LIMITED, MACRO FUND (US) LIMITED and I.I.U. CAPITAL LIMITED

S. Proudman, Q.C. and I. Pierce for the plaintiffs;

A.J. Jones, Q.C. and M.W. Imrie for the first and second defendants;

K.J. Farrow for the third defendant.

Cases cited:

(1) Ablitt v. Mills & Reeve, [1995] T.L.R. 535, considered.

(2) Al Fayed v. Metropolitan Police Commr., UNK[2001] EWCA Civ. 780; (2002), 99 (30) L.S.G. 39, considered.

(3) Anderson v. Bank of British ColumbiaELR(1876), 2 Ch. D. 644, dicta of Jessel, M.R. considered.

(4) Ashburton (Lord) v. PapeELR, [1913] 2 Ch. 469; [1911–13] All E.R. Rep. 708; sub nom. Ashburton v. NoctonUNK(1913), 29 T.L.R. 623, dicta of Cozens-Hardy, M.R., Kennedy and Swinfen Eady, L.JJ. considered.

(5) Berd v. LovelaceENR(1577), Cary 62; 21 E.R. 33, referred to.

(6) Black & Decker Inc. v. Flymo Ltd., [1991] 1 W.L.R. 753; [1991] 3 All E.R. 158, dicta of Hoffmann J. distinguished.

(7) Bolton v. Liverpool Corp.ENR(1833), 1 My. & K. 88; 39 E.R. 614, referred to.

(8) Briamore Manufacturing Ltd., Re, WLR[1986] 1 W.L.R. 1429; [1986] 3 All E.R. 132, referred to.

(9) Calcraft v. Guest, [1898] 1 Q.B. 759; (1898), 78 L.T. 283, not followed.

(10) Copeland v. WattsENR(1815), 1 Stark. 95; 171 E.R. 412, referred to.

(11) Corsen v. DuboisENR(1816), Holt. 239; 171 E.R. 228, referred to.

(12) Derby & Co. Ltd. v. Weldon (No. 8), [1991] 1 W.L.R. 73; [1990] 3 All E.R. 762, dicta of Vinelott J. and Dillon, L.J. followed.

(13) Doe v. LangdonENR(1833), 5 B. & Ad. 864; 110 E.R. 1010, referred to.

(14) Doherty v. AllmanELR(1878), 3 App. Cas. 709, referred to.

(15) English & American Ins. Co. Ltd. v. Herbert SmithUNK(1988), 14 F.S.R. 232; 137 New L.J. 148, observations of Browne-Wilkinson, V.-C. referred to.

(16) Femis-Bank (Anguilla) Ltd. v. Lazar, [1991] Ch. 391; [1991] 2 All E.R. 865, referred to.

(17) Fisher v. Heming (1809), Leic. Lent. Ass.; Phillipps on Evidence, 6th ed. at 132 (1824), referred to.

(18) Goddard v. Nationwide Bldg. Socy., [1987] Q.B. 670; [1986] 3 All E.R. 264, dicta of Nourse, L.J. followed.

(19) Grant v. DownsUNK(1976), 135 C.L.R. 674, referred to.

(20) Greenough v. GaskellENR(1833), 1 My. & K. 98; 39 E.R. 618, dicta of Lord Brougham, L.C. distinguished.

(21) Guinness Peat Properties Ltd. v. Fitzroy Robinson Partnership, [1987] 1 W.L.R. 1027; [1987] 2 All E.R. 716, referred to.

(22) Hobbs v. Hobbs, [1960] P. 112; [1959] 3 All E.R. 827, dicta of Stevenson J. applied.

(23) Hughes v. BiddulphENR(1827), 4 Russ. 190; 38 E.R. 777, referred to.

(24) Istil Group Ltd. v. Zahoor, [2003] 2 All E.R. 252, dicta of Lawrence Collins J. distinguished.

(25) Kuruma v. R., [1955] A.C. 197; [1955] 1 All E.R. 236, referred to.

(26) Lion Laboratories Ltd. v. Evans, [1985] Q.B. 526; [1984] 2 All E.R. 417, considered.

(27) Lloyd v. MostynENR(1842), 10 M. & W. 478; 152 E.R. 558, dicta of Parke, B. distinguished.

(28) Marston v. DownesENR(1834), 6 C. & P. 380; 172 E.R. 1285, considered.

(29) Meath (Bishop) v. Westminster (Marquis)ENR(1836), 4 Cl. & Fin. 445; 7 E.R. 171, dicta of Lord Brougham considered.

(30) Minet v. MorganELR(1873), L.R. 8 Ch. App. 361, distinguished.

(31) Pearce v. FosterELR(1885), 15 Q.B.D. 114, dicta of Brett, M.R. considered.

(32) Pizzey v. Ford Motor Co. Ltd., [1994] P.I.Q.R. P15, considered.

(33) Quinn v. Leathem, [1901] A.C. 495; (1901), 85 L.T. 289, dicta of Lord Halsbury, L.C. considered.

(34) R. v. Ataou, [1988] Q.B. 798; [1988] 2 All E.R. 321, referred to.

(35) R. v. Barton, [1973] 1 W.L.R. 115; [1972] 2 All E.R. 1192, referred to.

(36) R. v. Derby Magistrates” Court, ex p. B, ELR[1996] A.C. 487; [1995] 4 All E.R. 526, dicta of Lord Taylor of Gosforth, C.J., Lord Lloyd of Berwick and Lord Nicholls of Birkenhead followed.

(37) Radcliffe v. FursmanENR(1730), 2 Bro. Parl. Cas. 514; 1 E.R. 1101, distinguished.

(38) Rawstone v. Preston Corp.ELR(1885), 30 Ch. D. 116; 52 L.T. 922, referred to.

(39) Say & Seal (Lord)”s CaseENR(1712), 10 Mod. 41; 88 E.R. 617, referred to.

(40) Southwark & Vauxhall Water Co. v. QuickELR(1878), 3 Q.B.D. 315, dicta of Cockburn, C.J. considered.

(41) Telesystem Intl. Wireless Inc. v. CVC/Opportunity Equity Partners L.P., 2001 CILR 444, dicta of Sanderson J. distinguished.

(42) Trade & Industry Secy. v. BakerELR, [1998] Ch. 356; sub nom. Barings plc., Re, UNK[1998] 1 All E.R. 673, referred to.

(43) Webster v. James Chapman & Co., [1989] 3 All E.R. 939, considered.

(44) Wentworth v. Lloyd(1864), 10 H.L. Cas. 589; 11 E.R. 1154, dicta of Lord Chelmsford considered.

Attorneys-at-Law-professional privilege-privileged documents-client”s communication to attorney requesting legal advice privileged and client may prevent disclosure of document unless privilege waived-remains privileged even if obtained by theft or fraud

Attorneys-at-Law-professional privilege-privileged documents-waiver-privilege may be waived expressly or impliedly-for implied waiver need positive action or fault by beneficiary-no waiver by mere disclosure of document to third party, e.g. theft by third party

The defendants applied for an injunction requiring the plaintiffs to return all copies of a fax sent by the third defendant (I.I.U.) to its London solicitors and preventing them from using it at trial.

The plaintiffs sought to redeem their investments in the defendants” funds without penalty. They claimed that the investments had been made on the faith of a special arrangement, evidenced by a side letter, which allowed early redemption without penalty in certain circumstances, and those circumstances had arisen.

The fax was a request for advice, sent by the third defendant to its solicitors, in relation to whether or not the plaintiffs could rely on the side letter. The plaintiffs claimed that the fax supported their case that a special agreement had been made. The third defendant”s assertion that the fax was a privileged document was not disputed by the plaintiffs and there was no evidence that the defendants had waived that privilege. The fax had apparently been stolen from the third defendant and, given the circumstances surrounding its acquisition, the plaintiffs would have been aware of that on receipt of it.

The defendants submitted that (a) the fax was a privileged document and, as they had not waived the privilege, the plaintiffs should be prevented from introducing it in evidence; (b) it retained its privileged status, despite the theft, because although stolen documents were generally admissible, this rule did not apply to privileged documents; (c) it would not be in the public interest to allow privileged documents obtained by theft or fraud to be introduced into evidence; (d) the Grand Court was bound by recent authority which reinforced legal advice

privilege; and (e) furthermore, they were entitled to refuse to disclose the fax to this court, and should not be prejudiced as a result of that decision.

The plaintiffs submitted in reply that (a) even if the fax had been privileged when received by the third defendant”s solicitors, mere disclosure of it to the plaintiffs necessarily destroyed that privilege and it could therefore be adduced in evidence; (b) alternatively, if it were still covered by the privilege, the court should balance the public interest in a fair trial against the public interest in maintaining legal advice privilege and permit disclosure of the fax in favour of a fair trial; (c) it was well established that stolen documents could be admissible in evidence, and even if the fax had been stolen that did not therefore make it inadmissible; (d) the court should assume, from the defendants” decision not to disclose the fax to the court, that it contained an unequivocal admission that the side letter had been properly executed by the third defendant; and (e) furthermore, the trial of the main issue, namely whether or not the side letter agreement had been properly made (so that the plaintiffs were exempt from the penalty), would proceed on a wholly false basis unless the plaintiffs were at liberty to make use of the fax.

Held, granting the injunction:

(1) The fax was protected by legal advice privilege, which prevented the plaintiffs from relying on it at trial. It was a communication from client to solicitor concerning the main legal issue in this litigation (namely, whether or not the side letter agreement had been made) and the privilege attaching to it entitled the third defendant to prevent its disclosure. The purpose of legal advice privilege was to protect communications between clients and their attorneys, so that a client might confide freely, in the assurance that whatever he confided would not be used against him in subsequent proceedings. As confidence in non-disclosure was essential for the privilege to achieve its objective, the fax remained privileged unless and until the privilege was waived (para. 42; para. 79).

(2) The third defendant had not waived the privilege either expressly or by necessary implication. For waiver to have been implied by the court, there must have been some positive act on the part of the third defendant (as beneficiary of the privilege) which the court could have concluded amounted to a waiver. Mere disclosure to a third party was insufficient to constitute a waiver. The plaintiffs could not therefore adduce the fax in evidence, despite the fact that it had been disclosed to them, as there had been neither fault nor waiver on the part of the third defendant (para. 21; para. 122; para. 124).

(3) Moreover, the fact that the plaintiffs obtained a copy of the fax by theft did not allow them to override the privilege. The general principle that a prima facie admissible document nonetheless remained admissible if it had been stolen did not apply to these circumstances. The theft or fraud of a hitherto privileged document did not destroy...