Leon Hurd reports on the English High Court's ruling in
Property Alliance Group Limited v Royal Bank of Scotland PLC 
In June 2015 the English High Court handed down its judgment in
Property Alliance Group Limited (PAG) v Royal Bank of Scotland PLC
(RBS)  EWHC 1557 (Ch). This case provides useful guidance on
the extent of legal privilege in connection with regulatory
investigations. The Jersey concept of privilege follows English
principles and the decision is therefore relevant to Jersey
PAG's claims related to alleged LIBOR manipulation and
mis-selling of interest-rate swaps. Its case depending upon
establishing that RBS did manipulate LIBOR. Therefore, it sought
disclosure of: (i) a number of internal reports; (ii) without
prejudice correspondence with the FCA leading up to the FCA's
Final Notice; (iii) privileged communications that had been shared
with the FCA (PAG asserted that privilege had been waived as a
result). Each will be taken in turn.
Without Prejudice Privilege
The Court held that there were important public interest
arguments for affording parties the benefit of WPP in settlement
communications with their regulators.
However, the Court found that if, in the context of litigation
with a third party, an entity advanced a positive case regarding
the basis for a Final Notice (for example, that there had been no
regulatory finding of misconduct) the benefit of WPP may be lost
and the documents liable to be disclosed.
Legal Advice Privilege
RBS asserted legal advice privilege over documents prepared by
lawyers for the Executive Steering Group (the internal group
dealing with the investigation (ESG)). Whilst accepting that ESG
was essentially the "client" for the purposes of the
regulatory investigation (so that communications could in principle
attract legal advice privilege), the Court questioned whether
certain documents, such as memoranda and factual summaries, were in
fact legal advice. The Court therefore ordered that the ESG
documents should be reviewed by it, in the first instance, to
ascertain whether claims to legal advice privilege were
Limited waiver of privilege
Provided documents remained confidential, RBS was entitled to
maintain its right to assert privilege against third parties such
as PAG even though they had been supplied (confidentially) to a
regulator. However, as with WPP communications, the Court would not
allow privilege to stand in circumstances where an entity was
relying on the lack of a regulator's finding of misconduct to
assert a positive defence against a thirdparty claim.
The Court's decision helpfully clarifies the application of
key principles on legal professional privilege. Regulated
persons should exercise caution:
when relying on regulatory findings to support arguments in
third-party litigation. To the extent that publicly available
documents do not support the arguments made, there is a risk that
the Royal Court will order inspection of communications produced
during the course of a regulatory investigation which would
otherwise attract WPP.
when making broad and general claims to legal advice privilege
over documents by virtue of the fact that they were provided by
lawyers. Careful consideration has to be given to the content of
these documents first.
In principle, privileged documents can be shared with a
regulator without there being a broader waiver of privilege,
although caution should be adopted if there are, or may be, third
On balance, the judgment is a positive one. As ever, privilege
is a complex area and advice should be taken if you are in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The claim followed the conclusion of two years of litigation (ORD 12/0035 & ORD 12/0034) between the parties in respect of the Bank's contractual claim for amounts owed by TSEL to the Bank pursuant to certain business loans.
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