A recent tribunal decision has given a reminder of when a waiver of privilege will (or will not) extend further than a party intends: Fisher v HMRC  UKFTT 335.
The principle of collateral waiver, or the “cherry-picking rule”, is designed to prevent a party presenting the court with a partial view by relying on the good bits of its privileged material but hiding behind privilege to avoid having to disclose the bad bits. In these circumstances, the party will be required to disclose any further privileged material that goes to the issue for which the original material was deployed.
What is sometimes misunderstood is that (under English law) this principle only comes into play where privileged material is deployed in proceedings; it has no application outside that context, and mere disclosure is not sufficient if there is no reliance. Where the principle applies, the collateral waiver will extend only to documents which go to the same issue for which privilege was originally waived. Nonetheless, privilege should never be waived lightly: the precise impact of the waiver will often be difficult to predict in practice.
The underlying dispute related to appeals against assessments to tax. The parties agreed to disclose documents that would fall within “standard disclosure” under the Civil Procedure Rules, i.e. documents which support or adversely affect any party’s case.
The appellants disclosed to HMRC (and thereby waived privilege over) advice received from QCs on two occasions (the 1999 advice and the 2000 advice). They also included in their list of documents further advice from one of the QCs (the 2001 advice) but asserted privilege over that advice. HMRC sought an order requiring the appellants to provide the 2001 advice on the basis that privilege had been waived.
The tribunal refused to order disclosure, finding that privilege had not been waived. Waiver of privilege in respect of one document will not result in an implied (or collateral) waiver in respect of other documents unless the first document is deployed in relation to an issue the proceedings, and then only to the extent that the other documents are relevant to that same issue.
The first question was therefore which of the earlier advice the appellants would seek to rely on. Here the appellants had said they would only rely on the 1999 advice. The 2000 advice was therefore irrelevant to the question of collateral waiver, even though it had been disclosed.
The second question was to look at the issue or “transaction” for which the 1999 advice was relied on. The appellants had said they wished to rely on that advice to demonstrate the reason for a business transfer in 2000. The court concluded that the 2001 advice could not be relevant, since it was given 18 months after the transfer and could not have influenced it.
If the appellants’ position changed and they sought to rely on the 1999 advice in relation to a different issue, or sought to rely on the 2000 advice, that could open up a wider waiver of privilege.
This decision does not go beyond established principles, but the question of when a selective waiver of privilege can open up other privileged material is one that often causes confusion. It is therefore a useful reminder.