The Court of Appeal (Rose and Lewison LJJ and Sir Terence Etherton MR) has allowed, in part, the appellant’s appeal, holding that the appellant was not required to disclose privileged documents to the regulator (the Financial Reporting Council (FRC)) investigating its auditors. The Court of Appeal held that the judge at first instance had erred in ordering disclosure of privileged documents to the FRC, finding that the FRC’s statutory powers did not override the privileged status of the documents. However, it agreed with the judge at first instance that the fact that an email was privileged did not confer privilege on an otherwise non-privileged attachment to that email, and therefore, such attachments were disclosable.
The Court of Appeal considered that there was no justification for regarding Morgan Grenfell & Co Ltd v Special Commissioners of Income Tax [2002] UKHL 21 as authority for the principle that the production of documents to a regulator may in some circumstances not infringe the legal professional privilege (LPP) of clients of the regulated person. Following the test laid down in Morgan Grenfell, the Court of Appeal considered that its task was to look at the wording of the relevant statute to see whether Parliament intended to override LPP. In this case, the wording of paragraph 1(8) and (9) of Schedule 2 to the Statutory Auditors and Third Country Auditors Regulations 2016 (SI 2016/649) (which governed the FRC’s powers) precluded any such implication.
However, it considered that non-privileged attachments to emails sent to the appellant’s solicitors were disclosable. In the court’s view, if an email was itself privileged, that did not confer privilege on the pre-existing document (Ventouris v Mountain (Italia Express) (No 1) [1991] 1 WLR 607).
This decision contains a robust defence of LPP and emphasises that there are no exceptions to the protection afforded by LPP, except for the limited circumstances recognised in R v Derby Magistrates’ Court Ex p B [1996] AC 487 (the iniquity exception and the modification or abrogation of LPP by statute). It should provide comfort for those seeking to resist disclosure of privileged documents in response to a request from a regulator under the regulator’s statutory powers, as long as the relevant statute does not expressly override privilege. (Sports Direct International plc v Financial Reporting Council [2020] EWCA Civ 177 (18 February 2020).)
