In another episode in the Scottish Lion saga the Inner House of the Court of Session (the Scottish Court of Appeal) has confirmed the first instance decision, on a preliminary point, that where a document which might be the subject of privilege is disclosed for a particular purpose, the privilege will be deemed to have been waived in relation to closely related purposes.
In Scottish Lion, certain creditors had disclosed documents to the scheme advisers in connection with the valuation of their claims for the purposes of voting at the meetings of scheme creditors convened to approve the scheme. When the petition for sanction of the scheme was opposed in the Scottish Court, the creditors objected to disclosure of these documents to the court and to those opposing the scheme, claiming that they were privileged. The Scottish Court of Appeal held that when disclosing the documents in connection with the valuation of their votes, the creditors concerned must be taken to have known that those documents might have to be disclosed to the court, the reporter and opposing creditors if questions relating to the valuation of votes arose in connection with satisfying the court that the requisite majority had voted in favour of the scheme, an essential requirement for the court to have jurisdiction to sanction the scheme. Voting in respect of the scheme at the creditors’ meeting and the application for sanction are both parts of one single process by which a scheme becomes binding on a company and its creditors. Where documents are disclosed for one purpose, the person concerned cannot maintain the confidentiality of those documents where they are required for a closely related purpose. Consequently, having submitted documents in connection with the valuation of their claims for the purpose of voting at the creditors’ meetings, the creditors must be taken to have waived any right to object to disclosure of those documents to the extent that disclosure of those documents is necessary for the court to deal with questions going to the court’s jurisdiction to sanction the scheme.
The court added that disclosure of a privileged document for a limited purpose does not mean that privilege is lost and does not involve any wider waiver of the privilege. Moreover the confidentiality of the documents should continue to be protected so long as that was consistent with the necessary use of those documents in the current court process.
Although this is a Scottish decision, and so not binding on English courts, it is not believed that Scottish law differs from English law on this topic.
