Alleged fraud of third party expert witness does not engage iniquity exception to privilege

18/01/18

Sir Andrew Smith (sitting as a deputy judge of the High Court) has handed down an important judgment on the scope of the so-called “fraud” or “iniquity” exception to legal professional privilege where the alleged fraud is that of a third party (i.e. not the client privilege holder), in this case an expert witness.

The claimants in the underlying proceedings, the Accident Exchange group (“AE”), provided replacement motor vehicles on credit terms to clients whose vehicles had been damaged in road accidents. AE then pursued proceedings on the client’s behalf against the defendant at-fault driver or his or her insurer. The level of AE’s recoverable damages would depend on what the rate of hire would have been from other firms on the market on non-credit terms. This led to the widespread use by defendants to such claims of evidence on this question from a firm known as “Autofocus”.

In the underlying proceedings, AE contends that Autofocus systemically, across many thousands of claims, produced deliberately false evidence about what rates of hire were available in the market in order to supress the level of recoverable damages.

Various firms of solicitors who had acted for defendants on the underlying claims where Autofocus evidence had been deployed (including Morgan Cole, Lyons Davidson and Keoghs) held documents relevant to the conduct of these claims. These were withheld from inspection on the basis that they were subject to legal professional privilege, vesting in the defendant drivers and/or their insurers, which had not been waived. AE applied for an order that inspection be provided, on the basis that these documents were not subject to privilege because they had been produced pursuant to Autofocus’ fraudulent scheme.

Sir Andrew Smith rejected that application. It was established in R v Central Criminal Court ex p. Francis & Francis [1989] 1 AC 356 that the fraud exception to privilege would apply where the client was taken to have had no improper purpose, but was nevertheless used as an “innocent tool” of the wrongdoer. Whether or not this is the case requires examination of whether the communications between lawyer and client can be said, because of the third party’s conduct, to have been made within or outside of the scope of the ordinary relationship between them, which is a question of fact and degree to be determined in each case.

In the present case, the mere fact that Autofocus’ evidence had been deployed via the innocent client did not mean that the communications between the clients and their lawyers were not made within the ordinary course of the professional relationship. In the cases where third party iniquity has deprived an innocent client of the protection of privilege, the wrongdoer and the client had a separate relationship which was used by the wrongdoer to advance the wrongdoing. The Judge considered that such relationship is the hallmark of cases where the fraud exception applies in third party cases. However there was no such relationship on the facts of the present case. Rather, Autofocus’ wrongdoing was parasitic upon an existing lawyer/client relationship, which was created and continued for a normal and legitimate purpose.

The judgment appears here.