THE SOCIETY OF LLOYD'S v KITSONS ENVIRONMENTAL SERVICES Ltd and Others

Queen's Bench Division (Official Referees' Business)

41 Con LR 20, 67 Build LR 102

HEARING-DATES: 27 May 1994

27 May 1994

CATCHWORDS: 
Discovery -- Legal professional privilege -- Waiver by the bringing of proceedings -- Recovery of sums paid to compromise a claim -- Privilege in relation to settlement negotiations 

HEADNOTE: 
The society of Lloyd's ("Lloyd's") decided to refurbish its offices at 51 Lime Street, in the City of London. It employed the defendants in connection with the refurbishment. The first defendants were specialist asbestos removal contractors. The second to tenth defendants were the architects. The eleventh defendants ("the Engineers") were the structural, mechanical, and electrical engineers. The refurbishment was delayed and went over budget. The main contractor, Fairclough Building Ltd, applied for and was granted extensions of time for completion totalling 52 weeks. It was dissatisfied with this extension and began an arbitration claiming further extensions, and making financial claims amounting to £15m. The Fairclough claim was compromised by agreement and Lloyd's paid further sums to Fairclough under that agreement. 

Lloyd's brought proceedings alleging that the defendants were responsible for the delay and disruption to the project and for the consequential costs and losses. They claimed damages which included the amounts paid to Fairclough under the compromise agreement. The Engineers disputed the reasonableness of that compromise. They applied for discovery of documents relating to the compromise, namely: 

Correspondence and memoranda passing between the plaintiffs and Fairclough, minutes of meetings between the plaintiffs and Fairclough, internal memoranda of the plaintiffs explaining the rationale behind the agreement for settlement or the views of the plaintiffs' experts or consultants on the reasonableness of the settlement. 

Lloyd's claimed that most of those documents were privileged. 

The Engineers conceded that Lloyd's were entitled to rely upon the privilege protecting without prejudice correspondence. But they argued: 

(1) that legal professional privilege had been waived in correspondence, and 

(2) that privilege had also been waived by bringing proceedings in which the reasonableness of the compromise was a material issue. 

HELD: ordering discovery of documents relating to advice on the settlement, but reserving for further argument the scope of such discovery: 

(1) On the issue of express waiver in correspondence: although consenting to inspection of privileged documents is a waiver, it is a waiver that can be withdrawn at anytime before inspection. Goldman v Hesper [1988] 1 WLR 1238 at page 1240 applied. 

(2) On the issue of implied waiver by bringing proceedings: Lloyd's pleadings entitled them to support their case by the fact and nature of the legal advice they had received. Therefore the fact and the nature of the advice received by Lloyd's in connection with the compromise with Fairclough were material to the reasonableness of the settlement, and by bringing proceedings claiming the settlement sum as a reasonable sum, Lloyd's had impliedly waived their privilege in such advice. 

(3) When a plaintiff claims damages quantified as the amount of a reasonable settlement, as he may on the authority of Biggin v Permanite [1951] 2 KB 314, the fact that he has received legal advice will be material as soon as he pleads a case which might be supported in evidence by reference to the fact or the nature of such advice. 

COUNSEL: 
Nicholas Dennys QC appeared for Lloyd's; Martin Bowdery appeared for the Engineers. 

PANEL: His Honour Judge Harvey QC 

JUDGMENTBY-1: JUDGE HAVERY QC 

JUDGMENT-1: 
JUDGE HAVERY QC: This is a summons for further discovery brought by the eleventh defendants [Oscar Faber Consulting Engineers Ltd] against the plaintiffs. 

The action arises out of a project for the refurbishment of the plaintiffs' office building at 51 Lime Street, in the City of London. The first defendants were involved in the project as specialist asbestos removal contractors; the second to tenth defendants were the plaintiffs' architects for the project; and the eleventh defendants were the plaintiffs' structural, mechanical and electrical engineers for the project. The project was delayed and went over budget. The plaintiffs' claim that the defendants were responsible for delay and disruption and for consequential cost and losses incurred by the plaintiffs. 

The main contractor for the project, Fairclough Building Ltd ("Fairclough"), applied for and was granted extensions of time amounting to 52 1/2 weeks for completion of the project. The project was eventually completed 104 weeks after the original contractual completion date. Fairclough, being dissatisfied with the extensions of time granted and with the loss and expense certified on account of their works, referred the matter to arbitration, making claims against the plaintiffs amounting to £15m. The claims made by Fairclough in the arbitration were compromised by an agreement made on 6 March 1992. Under that agreement, a notional period of reimbursable delay of 76 weeks was agreed, and the plaintiff agreed to pay and did pay to Fairclough the unpaid balance of a sum of approximately £4.9m. That amount is claimed against the defendants in this action. 

In Schedule 8 to the statement of claim, the plaintiffs make the following plea: 

"It should be stressed that Lloyd's justify the overall settlement as being reasonable both since it represented a conservative estimation of the claims, and having regard to the heavy costs which would have been incurred in challenging FBL's entitlement in arbitration. If it should be shown that the claim was unreasonably high having regard only to the claims (and financing costs) in whole or in part, then Lloyd's will allege that other parts of the apportionment are an underestimation, or alternatively that the costs of contesting that entitlement would have exceeded any further reduction in FBL's claims below the Settlement Sum. The costs of the arbitration are and would have been recoverable in damages against the defendants." 

In paragraph 25 of their defence, the eleventh defendants plead: 

". . . it is denied that the compromise award and agreement should have been made and/or it is denied that the said compromise was a reasonable compromise as alleged or at all because the award was made without any consideration or any investigation of Oscar Faber's view or opinions as to Fairclough's claim and in any event was excessive and unwarranted. The matters relied upon injustification of the award and set out of page 3 of Schedule 8 to the Consolidated Statement of Claim and summarised below 

'(v) It should be stressed that Lloyd's justify the overall settlement as being reasonable both since it represented a conservative estimation of the claims, and having regard to the heavy costs which would have been incurred in challenging FBL's entitlement in arbitration' 

were not proper grounds for the said settlement or any settlement of any claim." 

Thus the reasonableness of the settlement on which the plaintiffs base their claim is in issue. The eleventh defendants claim to be entitled to inspect documents relating to the settlement and to its reasonableness. The present position of the plaintiffs is that they claim privilege in respect of those documents. 

The documents of which discovery is sought by the eleventh defendants are correspondence and memoranda passing between the plaintiffs and Fairclough, minutes of meetings between the plaintiffs and Fairclough, internal memoranda of the plaintiffs explaining the rationale behind the agreement for settlement or the views of the plaintiffs' experts or consultants on the reasonableness of the settlement. Mr Michael Tiplady, a solicitor employed by the plaintiffs' solicitors, has categorised as follows the documents which the plaintiffs contend are privileged: 

(a) documents evidencing without prejudice negotiations between the plaintiff and Fairclough Building Ltd; 

(b) documents seeking advice from the project quantity surveyor in relation to the reasonableness of the settlement with Fairclough; 

(c) advice obtained from experts who were engaged to advise the plaintiff on the reasonableness of the proposed Fairclough settlement; and 

(d) letters of advice from solicitors and/or counsel. 

Mr Martin Bowdery, counsel for the eleventh defendants, has put forward a two-fold argument. First, he says that the plaintiffs have expressly waived their privilege in correspondence; secondly, he says that the plaintiffs have impliedly waived their privilege by bringing these proceedings in which the reasonableness of the settlement is in issue. He does not argue that privilege in respect of without prejudice correspondence has been waived. His argument is directed to legal professional privilege. 

I shall consider first Mr Bowdery's argument that privilege has been expressly waived in correspondence. The correspondence in question is correspondence between the solicitors acting for the plaintiffs and the solicitors acting for the eleventh defendants. The eleventh defendants' solicitors wrote to the plaintiffs' solicitors on 14 December 1993 asking for discovery of documents of the classes that I have mentioned above relating to the reasonableness of the settlement. In reply on 16 December the plaintiffs' solicitors said: 

"The expert and/or legal advice given to Lloyd's at the time of the settlement with Fairclough was and remains privileged. However, we are, as part of our preparation of the witness statements, considering with counsel the question of privilege in relation to any advice given. We will be reverting to you on this in due course". 

In reply to a further letter from the eleventh defendants' solicitors, the plaintiffs' solicitors stated by letter dated 24 December 1993: 

"With regard to the reasonableness of the settlement with Fairclough we will, as we have previously stated, be considering with our counsel the question of privilege which attached to advice to our clients at that time. Dependent upon that advice, then it would be our intention to serve a supplemental list of documents and a statement from Nicholas Phillips dealing with the advice that was given." 

On 4 January 1994 the eleventh defendants' solicitors wrote to the plaintiffs' solicitors: 

"With reference to your first letter of 24th December 1993, we should be obliged if you could let us know your position regarding the documents relating to the reasonableness of the settlement with Faircloughs in the light of the advice you receive from counsel within the next 14 days, failing which we propose to issue a summons for specific discovery of this documentation." 

Then on 11 January 1994 came the reply principally relied on by Mr Bowdery: 

"We thank you for your second letter of 4th January 1994. The documents relating to the reasonableness of the settlement with Fairclough will be served in a supplemental list within the next 14 days." 

That was followed up, and the plaintiffs' solicitors wrote a further letter promising the supplemental list of documents shortly. Thereafter, on 8 February, the eleventh defendants' solicitors wrote: 

"We should be obliged if you would now serve the supplemental list of documents promised without further delay, failing which we will be obliged to issue a summons", 

to which on 11 February there came the reply: 

"We thank you for your letter of 8th February 1994. As we have indicated, we are considering the matter of documents in relation to the reasonableness of the Fairclough settlement with counsel and will be reverting to you shortly in this regard." 

The summons was issued on 17 February. 

Mr Bowdery did not argue that the correspondence gave rise to a legally-binding agreement to waive privilege, but he contended that the correspondence constituted an agreement between the solicitors that privilege would be waived. The promise was extracted under threat of issuing a summons, and the court should enforce it as though it were a consent order made after the issue of the summons. 

I reject that argument. Mr Nicholas Dennys QC, counsel for the plaintiffs, relied on a passage in Matthews and Malek on Discovery (1992 edn) at page 223, to the effect that an express consent to the opposing party's inspecting material known to be privileged is a waiver, though it can be withdrawn at any time before the inspection takes place. I accept that proposition, which is supported by the authority of Goldman v Hesper [1988] 1 WLR 1238 at page 1240. Mr Bowdery sought to distinguish Goldman's case on the ground that the waiver in that case was made by a lay person who subsequently changed her mind on taking advice, whereas in the instant case the waiver was made by a solicitor with full knowledge who did not change his mind. In my judgment, the proposition stated in Matthews and Malek is of general application. If there was any waiver in the correspondence, it was withdrawn by the plaintiffs' opposing this summons. 

I turn now to the question of implied waiver. Mr Bowdery relies principally on two cases: the decision of the Court of Appeal in Lillicrap v Nalder & Son [1993] 1 WLR 94, and the unreported decision of His Honour Judge Fox-Andrews QC in Wessex Regional Health Authority v HLM Architects, delivered on 8 November 1993. 

In the last-mentioned case, the facts were similar to those in the present case in that the plaintiffs were claiming as part of their damages a sum they had paid by way of settlement of an arbitration. The defendants put reasonableness of the settlement in issue. The issue was whether the settlement was reasonable in all the circumstances. It does not appear whether the question of the advice received by the plaintiffs was expressly raised. Judge Fox-Andrews found that the defences raised were reasonably foreseeable to the plaintiffs at the time they issued their proceedings. That suggests to me (by no means conclusively) that the defendants did not deny any allegation on the part of the plaintiffs that the settlement was reasonable, but themselves raised the issue by alleging that it was unreasonable. The judge, applying the principles in Lillicrap, held that in bringing the action the plaintiffs did implicitly waive their unilateral privilege in the documents brought into existence for the purposes of, or in contemplation of, the arbitration. 

Lillicrap v Nalder & Son was a negligence action brought by developers against solicitors who had acted for them in several transactions. The defendants admitted negligence but contended that the damage, if any, suffered by the plaintiffs was not caused by that negligence because the plaintiffs would not have taken their advice in any event. The defendants sought to rely on the facts of earlier transactions in which the plaintiffs were said not to have followed the defendants' advice. 

The matter that is presently relevant that came before the Court of Appeal was an appeal on the part of the defendants against an interlocutory order in favour of the plaintiffs for delivery up of privileged documents relating to the previous transactions and for injunctive relief. Counsel for the plaintiffs in that case conceded that there is an implied waiver where the client brings proceedings for professional negligence against the solicitor. The argument was over the extent of the waiver, and specifically, whether in that case it extended to earlier retainers. The Court of Appeal, in allowing the appeal, held that it did. 

Dillon LJ said at page 99A: 

"For my part, I accept May J's formulation of the scope of the waiver. He said in his judgment: 

'I return to what I regard as the heart of the matter -- waiver. A client who sues his solicitor invites the court to adjudicate the dispute and thereby, in my judgment, waives privilege and confidence to the extent that is necessary to enable the court to do so fully and fairly in accordance with the law including the law of evidence. I suspect that at the fringes each case will depend on its own facts. Normally the waiver will extend to facts and documents material to the cause of action upon which the plaintiff sues and to the defendant's proper defence to that cause of action. The bringing of a claim for negligence in relation to a particular retainer will normally be a waiver of privilege and confidence for facts and documents relating to that retainer, but not without more for those relating to other discrete retainers.' 

I agree with that. The waiver can only extend to matters which are relevant to an issue in the proceedings and, privilege apart, admissible in evidence. There is no waiver for a roving search into anything else in which the solicitor or any other solicitor may have happened to have acted for the clients. But the waiver must go far enough, not merely to entitle the plaintiff to establish his cause of action, but to enable the defendant to establish a defence to the cause of action if he has one." 

Russell LJ said at page 101F: 

". . . once it is conceded that there is implied waiver of privilege when proceedings are instituted against a solicitor, I can see no warrant for the submission that the waiver is confined to the documents and communications between solicitor and client within the specific retainer forming the subject matter of the proceedings. The parameters of the retainer, to my mind, erect an artificial barrier. In my judgment, by bringing civil proceedings against his solicitor, a client impliedly waives privilege in respect of all matters which are relevant to the suit he pursues and, most particularly, where the disclosure of privileged matters is required to enable justice to be done. This is another way of expressing the view that May J expressed in his judgment in the passage to which Dillon LJ has referred." 

Farquharson LJ agreed with both judgments. 

Mr Bowdery relied on the passage from the judgment of May J approved by the Court of Appeal, arguing that it applied not only to an action for professional negligence against a solicitor. He submitted that the plaintiffs, by relying on the reasonableness of the settlement, invited the court to adjudicate the dispute and thereby waived privilege and confidence to the extent that it was necessary to enable the court to do so fully and fairly in accordance with the law including the law of evidence. 

I do not think the matter is as simple as that. Mr Bowdery's argument proves too much. If, for example, one substituted the words "A plaintiff who sues a defendant for damages for personal injuries" for the words "A client who sues his solicitor", in May J's formulation of the scope of the waiver, the statement would not be true. Privilege in respect of an admission by the injured plaintiff to his solicitor for the purpose of taking advice over the proceedings would clearly not be waived by the taking of proceedings, even though if admitted in evidence it might have an important bearing on the result. Mr Bowdery is inviting me to extend the decision in Lillicrap to the instant case, and I must consider what principles are enshrined in that decision. 

Mr Dennys argued that Lillicrap was not a case about implied waiver. He said that it was a case about the extent to which a party, having waived privilege in one transaction, will be taken to have waived privilege in other material transactions. I dare say that Mr Dennys was strictly correct, in the sense that waiver was in principle conceded; but the case is in my judgment an authoritative decision that by suing his solicitor for professional negligence the client waives privilege in respect of all matters which are relevant to the suit. 

There are two statements relating to legal professional privilege in the Supreme Court Practice 1993 which may bear upon the question. They are contained in the notes to RSC Ord 24, r 5, in para 24/5/6. The first, at page 443, is this: 

"Legal professional privilege does not protect from production documents by which legal advice is sought or given, if the question whether, and in what terms, advice was sought, and the nature of such advice, are themselves material facts, as, eg upon an application under the Limitation Act 1939, section 2D, as added by the Limitation Act 1975." 

The second is at page 444: 

"This privilege . . . does not extend to a communication which took place in the presence of the opposite party, or with the opposite party . . ." 

It may be that the second statement does not apply where the opposite party receives the communication in circumstances where, as in the case of solicitor and client, he is under an obligation of confidence towards the first party, and I say no more about it. 

The first statement, in my judgment, goes to the heart of the matter. Mr Dennys submitted that the case cited in support of it, Jones v GE Searle & Co Ltd [1978] 3 All ER 654, does not support so wide a proposition. In that case, which was a personal injury action in which the plaintiff sought an extension of the limitation period, the Court of Appeal ordered the plaintiff to answer an interrogatory asking the plaintiff whether legal advice she had previously received from counsel was favourable or unfavourable to her prospects of success in an action against the defendants. Roskill LJ referred at page 656a, to what he described as the all-important statutory provision, s 2D of the Limitation Act 1939, and quoted from subs (3)(f) of that section, which provides that one of the circumstances to which the court shall have regard is the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received. Roskill LJ concluded at page 657j: 

"It seems to me that Parliament has said that, if a plaintiff seeks the benefit which s 2D confers so as to deprive a defendant of his entitlement to rely on a time limit to which he would otherwise undoubtedly be entitled, the plaintiff has to satisfy the court of certain matters. One is that the plaintiff has acted promptly and reasonably after obtaining the relevant information. Plainly the obtaining of the relevant medical, legal or other expert advice will or may in certain cases bear on the degree of expedition which a plaintiff has shown. Therefore it is right that a plaintiff should, when it is relevant, be required to state quite generally 'the nature of the advice' he or she has received. What is relevant here is whether that advice was favourable or unfavourable to his or her case. That is the order the defendants seek against the plaintiff. For those reasons, with great respect to the district registrar and the learned judge who took the opposite view, I think that the appeal should be allowed and that the defendants are entitled to the seventh interrogatory." 

Eveleigh LJ's judgment, at page 658b, was as follows: 

"I agree. I think that the court would be slow to take away a well-established privilege from a plaintiff and certainly would require some positive indication that the legislature so intended. If counsel's argument had rested on the wording of s 2D(3)(e) in isolation, I think there would be strong reason to reject his submission on the basis that there was no sufficient positive indication that the principle was to be taken away. However, the wording of s 2D(3)(f) refers specifically to 'the nature of any such advice he may have received'. Thus the provision is that the court is under a duty to consider the nature of advice received by the plaintiff; and if the court is under a duty to consider the advice, it seems to me that the court must be in a position to demand evidence as to what the nature of the advice was. I agree that this appeal should be allowed." 

Michael Davies J agreed with both judgments. 

Mr Dennys argued that the decision turned on the statutory provision, which took away the privilege which otherwise undoubtedly existed. The privilege was not waived by the plaintiff, but abrogated by the express provisions of s 2D of the Limitation Act 1939. I reject Mr Dennys' analysis. The statutory provision requires the court to consider the nature of the advice but does not in terms abrogate privilege. It was the court that decided that privilege did not avail the plaintiff, for the simple reason expressed by Eveleigh LJ that if the court is under a duty to consider the advice, the court must be in a position to demand evidence as to what the nature of the advice was. Whether the privilege was impliedly waived by the plaintiff in making her application or lost in some other way does not appear. 

In that case the extent of the disclosure asked for and ordered was limited. Since the advice would otherwise be the subject of privilege, and its disclosure could be prejudicial to the prosecution of the plaintiff's case at trial, one can well see that a court might be reluctant to order wider disclosure than was absolutely necessary for the purposes of the balancing exercise required by the provisions of s 2D of the Limitation Act 1939. 

It is unnecessary for me to decide whether the proposition for which Jones v Searle is cited as authority in the Supreme Court Practice is correct as a general proposition. If its justification is the principle of waiver, then it may be that it applies only to the party who raises the issue. For example, if a plaintiff in a second action claims as damages a sum he has been ordered to pay in a first action, the defendant in the second action may (to the plaintiff, perhaps unexpectedly) plead that the plaintiff unreasonably failed to mitigate his loss by unreasonably rejecting advice to accept a settlement of the first action for a lesser sum. It is unnecessary for me to decide whether, in such a case, the plaintiff would lose his privilege in relation to such advice. Nevertheless, in my judgment it is plain from the reasoning of the Court of Appeal in Jones v Searle that a plaintiff whose claim for damages involves proof of the existence and nature of legal or, I would add, technical advice he has received loses his privilege in relation to the relevant documents. 

I thus hold that legal professional privilege will not protect the plaintiffs from disclosure of documents by which legal or technical advice was sought or given in relation to the settlement, if and to the extent that the question whether, and in what terms, such advice was sought, and the nature of such advice, are themselves material facts. It is to the latter question that I now turn. 

Where a party seeks to rely on the reasonableness of a settlement he has entered into, he may seek to rely in support on the fact or the nature of legal advice pursuant to which he has entered into the settlement. If he does, the existence, nature and terms of the advice are themselves material facts; but in my judgment not otherwise. 

It appears clear on the authority of Biggin & Co Ltd v Permanite Ltd [1951] 2 KB 314 that a party can in support of the reasonableness of a settlement rely on legal advice that he has received. Somervell LJ said at page 317: 

"The plaintiffs' . . . submission was that, if it can be shown that a settlement has been made under competent advice and if the advisers are submitted to cross-examination, that is enough. I do not accept that view, as will appear; but Mr Beyfus, who now appears for the plaintiffs, put it in another way, and Sir Walter Monckton agreed that it was so put below as follows: evidence may be called which may not strictly prove every item of the damage, but which will show that this was a reasonable settlement, having regard, not to the wisdom of the advisers, but to the evidence as called. That also has to be considered." 

And at page 321: 

"The question, in my opinion, is: what evidence is necessary to establish reasonableness? I think it relevant to prove that the settlement was made under advice legally taken. The client himself could do that, but I do not think that the advisers would normally be relevant or admissible witnesses. I say 'normally'. It may be that in special cases they might be. The plaintiff must, I think, lead evidence, which can be cross-examined to, as to facts which the witnesses themselves prove and to what would probably be proved if, as here, the arbitration had proceeded, so that the court can come to a conclusion whether or not the sum paid was reasonable. The defendant may, by cross-examination, as was done here, seek to show -- and perhaps successfully show -- that it was not reasonable." 

Singleton LJ said at page 324: 

"The plaintiffs must prove their damages. It is not enough for them to say: 'We were advised to settle for £43,000, we did so, and we now claim that sum.' Before the court can award a sum as damages, there must be evidence on which it can act. Therefore, in a case such as this, the plaintiffs must call evidence to establish their case. If the evidence which they call satisfies the judge or jury that the settlement was a reasonable one, the damages awarded will be the amount of the settlement and the costs reasonably incurred. I do not think that any good purpose is served by calling counsel who advised the settlement to say that he did so advise, even if the evidence is admissible. It could only be followed by questions why he so advised, and that would be asking him to do the work of the judge. Moreover, the duty of the judge at the trial is to determine the damages; and the facts proved before him might be quite different from those known to counsel at the time of his advice to settle for so much. The trial judge must make up his own mind on the facts he finds proved before him. At the same time, I am far from saying that the settlement ought to be disregarded. No one can think that a person or a company will agree to pay £43,000 damages likely. It is a matter for consideration that the settlement was arrived at under advice, the more so as the party settling may be quite uncertain as to whether he can recover anything against someone else. If upon the evidence, the judge is satisfied that the damages would be somewhere around the figure at which the plaintiffs had settled, he would be justified in awarding the settlement figure. I do not consider that it is part of his duty to examine every item in those circumstances. The plaintiffs put forward their claim and call evidence to establish it. The defendants have an opportunity of cross-examining the plaintiffs' witnesses and of calling evidence themselves. The plaintiffs must establish a prima facie case that the settlement was a reasonable one. If the defendants fail to shake that case, the amount of the settlement can properly be awarded as damages." 

Birkett LJ agreed with both judgments. 

Clearly, in that case the Court of Appeal considered that the question of advice was relevant to the reasonableness of the settlement. Evidence from the adviser of the reasonableness of the advice would clearly be unhelpful, if not inadmissible, where, as evidently was the position in that case, the advice was as to English law. 

Reverting to the pleadings, my own view of them is that the plaintiffs have tied themselves down to a case which does not involve reliance on advice. They seek to justify the reasonableness of the settlement on the ground that it represented a conservative estimation of the claims, and having regard to the prospective heavy costs of the arbitration. The eleventh defendants put that in issue and also invoked the absence of any consideration or investigation of the eleventh defendants' views or opinions as to Fairclough's claim. On that view of the pleadings, the existence, nature and terms of the legal advice are not themselves material facts, and privilege in relation to them subsists. The plaintiffs could not (waiving privilege at the trial) adduce the advice in evidence without obtaining leave to amend their case to make such advice a relevant issue. 

However, Mr Bowdery and Mr Dennys were of one accord in submitting to me that it was open to the plaintiffs on the pleadings to support their case by the fact or the nature of legal advice the plaintiffs had received. Mr Dennys wished to claim privilege at present, but foreshadowed that he might at his option waive privilege later, at the trial if necessary. Thus he opposed the summons, without tying himself down as to his case. He sought the best of both worlds. 

In my judgment, by contending, whether rightly or wrongly, that the pleadings allow him to adopt that course, Mr Dennys was admitting that the existence, nature and terms of the advice received by the plaintiffs are material facts. Since that involves loss of privilege, the admission, in my judgment, constitutes a waiver of privilege in relation to the documents in question. 

I shall thus order the plaintiffs to give further discovery. Mr Dennys has submitted that in the exercise of my discretion I should limit the scope of the discovery. I shall hear counsel further on that point and on the question of the time within which further discovery must be given. 

DISPOSITION: 
Judgment accordingly. 

SOLICITORS: 
Herbert Smith; Beale & Co.