gov.uscourts.nysd.447706.57.2.pdf

Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 1 of 30 EXHIBIT 2  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 2 of 30 Neutral Citation Number: [2004] EWHC 373 (Ch) Case No: HC 00 04556 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION Royal Courts of Justice Strand, London, WC2A 2LL Date: 1 March 2004 Before : THE HONOURABLE MR JUSTICE MANN --------------------- Between : (1) USP Strategies Plc Claimants (2) Unicorn Strategies LLC - and - (1) London General Holdings Limited Defendants (2) AON Warranty Group Limited (3) AON Warranty Services Limited --------------------- --------------------- Mr Anthony Watson Q.C. (instructed by Denton Wilde Sapte) for the Claimants Mr Andrew Monson (instructed by Berwin Leighton Paisner) for the Defendants Hearing dates: 2nd, 3rd, 4th and 5th February 2004 --------------------- Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 3 of 30 Judgment  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 4 of 30 Mr Justice Mann : Background 1. The two applications before me are related applications which turn on the question of legal professional privilege and, to a more limited extent, general obligations of disclosure and listing. In 1998 the claimants prepared, or caused to be prepared, documentation for a warranty scheme which they sought to sell to retailers to replace insurance based schemes which had been rendered commercially unattractive by a change in the tax regime. A Mr Chan and a Mr Cooper, solicitors on the Isle of Man, devised a scheme involving moneys being held off-shore and in trust. In the course of devising the scheme a document known in these proceedings as a CAA (an acronym for Collections Account Agreement) was prepared. Copyright in that document vested in the second claimant; in due course it was transferred to the first claimant. I shall not distinguish between those two companies for the purposes of this judgment (because it is not necessary to do so) and shall treat all relevant copyright and confidentiality rights as being vested in what I will call "USP". The CAA came into the possession of the first defendant ("LGH") because that company was, at the time, the administrator of the scheme in question ("the Scottish Power scheme"), but it was the subject of a confidentiality agreement. Modifications were carried out to it, and a finalised version was used in that scheme. As a result of joint input into the final document, the judge at the hearing on liability referred to below found that copyright in that final version vested jointly in Scottish Power and USP. 2. In 2000 the claimants and LGH were rivals in bidding to participate in another scheme, this time for an entity which I will call Powerhouse. In this context LGH and the other two defendants, who are all companies in the same group (the AON group), used the final form draft CAA as a starting point for the drafting of a similar document which they put forward in their bid to devise and operate a scheme for Powerhouse. In doing so they are said to have been able to maintain a bidding position in competition with the claimants until Powerhouse ultimately decided that the claimants' scheme was one that they preferred. In a judgment delivered on 8th November 2002 HH Judge Weeks QC held that that use was an infringement of the copyright in the 1998 original and a breach of confidentiality, and he ordered an inquiry as to the damages arising from those wrongs. That inquiry is not confined to the actual breaches that he found; it is set to be held at the end of April before a Master. 3. In the context of the inquiry questions of privilege arise. In the course of considering their participation in the Powerhouse scheme LGH instructed lawyers on the Isle of Man. The results of their deliberations were apparently passed to Powerhouse. It is in relation to that advice and certain matters passing among the defendants and between the defendants and Powerhouse that privilege questions arise. In addition, the inquiry will consider infringements relating to another transaction in relation to a concern identified as Apollo. The defendants, or their group, did enter into a scheme with Apollo, and it is not alleged that the final scheme involved the use of any documents over which copyright or confidentiality is claimed. However, it is said that at some stage consideration was given  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 5 of 30 to using the CAA, and that there were infringements at that stage of the transaction. Questions of privilege and disclosure arise in relation to that too. The Powerhouse claim facts – detail 4. The background to this matter leading up to the infringements found by HH Judge Weeks is set out in some detail in his judgment; I do not propose to set them out again here. For present purposes I can take the story up at the beginning of 2000. At that point of time, as HH Judge Weeks QC stated, LGH and USP found themselves in competition. The claimants offered their scheme at a given price (the details do not matter). A Mr Brimacombe of LGH had a copy of the Scottish Power CAA on his computer. It was copied for a Mr Mian, a sales director of LGH, with names blanked out. In due course it was sent to Powerhouse's lawyers, on 7th March (which was the infringement relied on and established at the trial). Part of the case of the claimants is that the defendants did this in order to establish that they had a workable (or "robust", as it was put at the time) scheme, so that they remained in the game. That gave Powerhouse competing bidders and they were able to play one off against the other. As a result of this Powerhouse were able to come back to the claimants at the end of March and negotiate a reduction in the price quoted. A deal was done at that reduced price. This reduction in price forms part of the damages claim. The claimants say that the infringement helped to keep the defendants in the running, and the fact that they were in the running enabled Powerhouse to come back and require a reduction in price. I do not need to consider this chain of causation – that is a matter for the inquiry. 5. However, the claimants also now rely on earlier matters. The claimants seek to establish an earlier breach. I have already referred to a reduction of price at the end of March. However, earlier, on 1st March 2000 Powerhouse had been also been able to negotiate a reduction in price from the claimants. In the inquiry the claimants will seek to establish that that reduction was attributable to earlier infringements. In mid-February 2000 LGH had sought advice from Manx lawyers. According to a chronology submitted by Mr Monson, who appeared for the defendants, a letter from Mr de Freitas, the solicitor acting for the defendants, stated that: "The nature of the advice sought from the solicitors in the Isle of Man concerned whether a trust based arrangement could be set up to protect monies from the Powerhouse scheme from being merged, or treated as merged, with other moneys held by AWS for other clients"; but at the same time it was made clear that in providing those details privilege was not waived in the instructions and the advice. The claimants will seek to establish that in order to get that advice, the CAA was copied, and that copying was a further infringement of copyright and of confidentiality rights. The advice that was obtained was apparently passed on to Powerhouse; it is said that it was the subject of a confidentiality agreement operating between the defendants and Powerhouse. The agreement is dated  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 6 of 30 15th March 2000 and is made between "Aon Warranty Group" and Powerhouse Retail Ltd. The relevant clauses are as follows: In consideration of AON making available to the Recipient [i.e. Powerhouse] certain information, the Recipient hereby undertakes to AON in the terms set out below: Confidential Information For the purposes of this confidentiality agreement the expression Confidential Information includes information available (whether before or after this confidentiality agreement is agreed) in writing (including by fax) and other forms of electronic transmission (including but not limited to information relating to clients data belonging to AON, know-how, trade secrets and any other information concerning the Purpose and also any information or analyses derived from, containing or reflecting such information… The recipient shall: Keep the Confidential Information secret and confidential and not disclose any of it to any person other than the persons who need to know the same for the purposes of considering, evaluating, advising on or furthering the Purpose and whom the Recipient shall procure are informed of the terms of this confidentiality agreement and observe the terms of this confidentiality agreement as if they were party hereto; Only use the Confidential Information for the sole purpose of considering, evaluating, advising on or furthering the Purpose and, in particular, not for any other commercial purpose;… Keep the Confidential Information and any copies thereof secure and in such a way so as to prevent unauthorised access by any third party, shall not make copies of it or reproduce it in any form except for the purpose of supplying the same to those to whom disclosure is permitted in accordance with this confidentiality agreement. [There is a provision for the return of all written Confidential Information within 7 days of termination of the agreement]. The Purpose is defined as being the wish of the group to "[launch] an offshore extended warranty programme". 6. In late February 2000, Mr Borrill of the claimants was told by Mr Turner of Powerhouse that their bid was still too high, and on 1st March 2000 Mr Turner was able to negotiate a drop in the price that the claimants had originally quoted for their scheme. This price drop was bigger in amount than that negotiated at the end of the month. The case of the claimants is that Mr Turner was only able to do this because of what he had been told by the defendants; and the defendants were only able to say what they said by dint of their legal advice; and they were only able to get that legal advice by infringing copyright in  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 7 of 30 the CAA, and breaking the confidentiality agreement. Since this earlier price drop is greater than the later one, it is a more valuable part of the claimant's claim. The losses flowing from this price drop are a material part of what the claimants seek in this action as flowing from the wrongs alleged. Again, it is not for me to comment on the merits of this chain of causation. 7. It is in the context of that earlier part of the claim that the material which is the subject of this part of the present application came into existence. I am not asked to rule on relevance; both parties accept that the documents and material that I have to consider are relevant. The question for me is whether it is privileged. The material, and the issues relating to each part of it, can be summarised as follows: a. There are documents or parts of documents where the documents have already been disclosed by the defendants but in respect of which privilege is claimed in whole or as to part. Where privilege is claimed as to the whole, the document has not been produced for inspection. Where it has been claimed in part, the allegedly privileged part has been obscured for the purposes of inspection. These documents are e-mail or letter correspondence passing between one or more of the defendants of the one part and Powerhouse of the other, one e-mail from the Manx solicitors to the third defendant, and one e-mail from the third defendant to the first defendant. b. I am asked to strike out parts of certain witness statements which are said to refer to privileged communications in a manner which makes it improper for the witnesses to give evidence of that material. The witnesses are witnesses for the claimants. One is Mr Turner, who at certain points in his evidence makes reference to the legal advice which the defendants had told him they had received, and at one point sets out the terms of an e-mail referring to it. The second and third are Mr Borrill (a director of each of the claimant companies) and Mr Chan, another director and also a Manx solicitor. The allegedly objectionable parts of their witness statements are those containing what Mr Turner told them in the negotiations leading up to the Powerhouse contract, and in which Mr Turner made reference to the advice which the defendants had obtained on their (the defendants') scheme. In Mr Chan's case objection is taken to a reference to legal advice which, it is to be inferred, he heard about from Mr Turner and one paragraph in an e-mail that he sent at the time which refers to the same sort of thing. c. I am asked to order the removal from the evidence of part of two Powerhouse internal memoranda which Powerhouse has disclosed to the claimants and which contain, among other things, a reference to the legal advice which had been obtained in the Isle of Man. It is that reference which I am asked to order the deletion of. d. There was one document, a copy letter from LGH to Powerhouse (document 15), in respect of which privilege was originally maintained, but which on reflection was sought to be excluded from inspection on the grounds that further consideration of the letter indicated that it was not relevant. The parties agreed  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 8 of 30 that that dispute would be resolved by my looking at the document and ruling on the point. The claimants have not seen it, but were happy to adopt that expedient. e. I am asked to strike out parts of the Particulars of Claim in the inquiry on the footing that they are abusive because they refer to and rely on privileged material, or can only be pleaded because the claimants are in possession of material which has been obtained in infringement of the rights of the defendants. f. I am asked to order that the defendants serve a formal list of documents in relation to the inquiry. The contentions of the parties 8. Mr Monson, for the defendants, maintains that privilege exists in all the material that he seeks to have excluded, and that it has not been waived. That being the case, the documentary material containing privileged material ought to be excluded, with limited exceptions. All the material fell within the proper definition of material that was the subject of legal professional privilege. For the purposes of the exercise of analysis, and to distinguish various types of material for the purposes of the debate, the written material was divided into three categories or levels: a. Level 1 – this was a reference which merely referred to the fact of getting solicitors advice, without indicating the instructions, advice or even the subject matter. b. Level 2 – these were indications that advice had been obtained from solicitors, and indicating its subject matter but not its content or the instructions given. c. Level 3 – written advice, or written instructions, or paraphrases, summaries or extracts from that advice. Using this categorisation he was able to go through the redacted documents and explain the basis, in respect of each, on which privilege was claimed. The same categorisation was adopted for the purposes of considering the witness statement material and the Powerhouse documents, but Mr Monson did abandon his claims to strike out the Level 1 and 2 material from those statements and documents, which narrowed the scope of the debate (but not by much). 9. The principal dispute between the parties was the extent to which the defendants could claim privilege in relation to the substance of communications between the client (in effect, the defendants) and a third party where what was communicated was, or referred to, privileged advice given to the client. Mr Monson's case was that the advice started out as privileged and it remained privileged notwithstanding its wider dissemination, as a result of two strands of authority. The first is The Good Luck [1992] 2 Lloyds Rep 540, which demonstrates that privileged material disseminated within the client company that obtained it is capable of retaining its privilege, but he seeks to apply it to show that privilege exists in documents communicated to a third party on the facts of this case. The second is Gotha City v Southeby's [1998] 1 WLR 114. That case is said to demonstrate that it is possible to disclose advice to an outsider without destroying or waiving the privilege which attaches to it other than as between the privilege owner and the third party. Those principles entitle the defendants to redact material which would otherwise  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 9 of 30 be disclosed. So far as restraining material which emanates from Powerhouse is concerned (the Powerhouse documents, Mr Turner's evidence and evidence from USP witnesses as to what Mr Turner told them at the time about legal advice) Mr Monson says that the defendants are entitled to restrain that on the footing that the material was and remained privileged, and its use ought to be restrained on principles to be gleaned from Lord Ashburton v Pape [1913] 2 Ch 469 and Goddard v Nationwide Building Society [1987] QB 670. This applies whether or not Mr Turner, Mr Chan or Mr Borrill is giving evidence of it, or whether it is in documents revealed voluntarily by Powerhouse. So far as the Particulars of Claim go, the claim which attempts to base itself on this material must similarly be struck out as an abuse of the process. 10. Mr Watson QC, for the claimants, comes at this from a slightly different angle. He obviously starts by accepting that there is privilege in the original advice from the Manx lawyers. He also accepts that it remains privileged while being passed within the client company, and he accepted that there would be common interest privilege where the advice was shared between the defendants. (This last concession makes it unnecessary for me to distinguish between the various defendants and enables me to treat the defendants as if they were one body for the purposes of considering the issues I have to decide). However, with the exception of a passing on of the advice verbatim and in whole, which he accepts remains privileged, he says that passing on summaries or parts of the advice to a third party does not amount to a privileged communication. This is because those communications do not fall within what he says are the requisite elements of privileged communications (which he extracts from the decision of Moore-Bick J in United States of America v Philip Morris & others, unreported, 10th December 2003) because: a. They are not communications passing between lawyer and client – they are communications passing between client and a third party. b. They are not confidential, on the facts of this case. This means that the communications were not privileged, and if privilege might otherwise attach it has been waived. c. They were not for the dominant purpose of obtaining or giving legal advice – the legal advice was conveyed as part of a sales pitch. 11. Mr Watson goes on to submit that so far as Level 1 and Level 2 communications are concerned, they do not even contain a sufficient reference to advice to get a privilege case off the ground, and in any event there has been waiver of privilege because of material already deployed by the defendants in this litigation. Gotha is irrelevant, he says, because it is a case about waiver, and the question of whether a communication is privileged has to be answered first. So far as restraining the use of information that has already been obtained is concerned, he says that the principles to be extracted from Goddard and Lord Ashburton do not apply so as to restrain officers of the claimants giving evidence of what they were told in negotiations by Mr Turner, and Mr Turner should not be constrained from giving the evidence sought because his communications did not infringe any confidentiality rights of the defendants. He has various particular points on the wording which is sought to be excluded and in addition says that even if some of the material would otherwise be within an unwaived privilege, I should exercise my discretion not to strike it out, or otherwise restrain witnesses from giving evidence, because the defendants are using privilege to cover up wrong-doing (a sort of "clean hands" point), the claimants  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 10 of 30 were innocent recipients of the information from Powerhouse and there has been delay on the part of the defendants in making their application. 12. In relation to this last point Mr Watson relies on an e-mail which has already, as a matter of form, already appeared in evidence in this case. He relies on this as showing not only that the defendants were or ought to have been aware of disclosures by Mr Turner as long ago as August 2001, when it was disclosed in this action as part of the disclosure process, but also in support of a proposition that much if not all of the position that the defendants seek to protect has been put in the public domain by the previous (and current) use of that e-mail. I need to set out this material. 13. On 6th March 2000 Mr Chan, who it will be remembered is a director of the Claimant companies, wrote to Mr Turner in the course of his negotiations. Apparently, Mr Turner had asked for a copy of the Claimants' collection account agreement for the purpose of comparing it with the scheme proposed by the AON Group. He declined to supply it. The email observes that at that stage Mr Chan suspected that the Defendants had used "a draft prepared from our precedent". The sentence relied on by Mr Watson is a paragraph which reads as follows: "The solution promoted to you by AON and their advisors is that a Collections Account Agreement (sic) in the form of a trust will attain this and that therefore they have demonstrated the robustness required of them." (This, I would observe, is the passage that the defendants seek to have removed from the evidence, as referred to above. It will appear below that I am against redacting this material, so I am free to set it out in this judgment.) This email was annexed to a witness statement used by Mr Chan at the trial on liability. Mr Watson says that this email points to the fact that Mr Turner was saying things about legal advice, and that accordingly the Defendants have been aware of his disclosures, or the possibility of his disclosures, ever since the discovery process. So far as publicity is concerned, Mr Watson also relies on this email as demonstrating that the present position which the Claimants rely on in their particulars of claim is already in the public domain because the judge will be taken to have read this material at the trial, and it was formally part of Mr Chan's evidence on that occasion, although it does not appear that any specific reference was made to it at the trial. I shall deal with the significance, if any, of this email below. The legal principles involved 14. One doctrine can be put on one side for the purposes of this judgment, and that is the doctrine of common interest privilege. I have already indicated that Mr Watson for his part accepted that common interest privilege existed as between the three defendant companies, so that communications of advice between the three of them attracted this form of privilege. Mr Monson for his part accepted that the doctrine did not operate as between the defendants on the one hand and Powerhouse on the other, because one of the tests which have to be fulfilled in order for joint privilege to exist is that the parties in question have to be capable of acting by the same solicitor in the matter in question, which requirement could not be fulfilled in the case of the defendants and Powerhouse.  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 11 of 30 15. It is therefore necessary to consider the extent to which privilege is maintained in material which is communicated to a third party by the client, which is the issue lying at the heart of these applications. This involves considering whether the communication was capable of being privileged, and if so whether the privilege has been waived. 16. Mr Watson's submissions rely heavily on the effect of the Court of Appeal decision in Three Rivers District Council v The Governor & The Company of the Bank of England (no 7) [2003] EWCA Civ 474. He claims that that authority confines privilege to communications between solicitor and client, or vice versa. Communications with a third party fall outside that, because they do not fall within the description of communications between solicitor and client. While the case allows evidence of the contents of communications to attract privilege, that is limited to internal communications disseminating the information in question. Since the communication of advice to Powerhouse was not a solicitor/client communication, it cannot be privileged. 17. I do not think that that is a correct application or analysis of the Three Rivers case. That case concerned not advice given by the solicitors, but preparations for the giving of instructions which were to lead to advice. In that context it was held that information gathered for that purpose was not within the privilege, because only communications were. But before too much is read into that, it must be born in mind that it concerns instructions, not advice. The Court of Appeal in that case did not have before it the extent to which the product of those instructions (the advice) was or was not communicated and what might happen to it thereafter, and care must be taken before taking the concept of "communication" too literally for these purposes. 18. In my view, a correct reading of the case indicates that it does not support Mr Watson's proposition, and that reading is consistent with authority preceding Three Rivers. In paragraph 19 of his judgment Longmore LJ stated that "By the end of the nineteenth century it was, therefore, clear that legal advice privilege … [applied] only to communications passing between [the] client and his solicitor (whether or not through any intermediary) and documents evidencing such communications" (my emphasis). A document evidencing the communication cannot be the communication itself, so Longmore LJ's formulation goes beyond the communication itself. Again, at paragraph 21 he concludes that the 19th century authorities allowed privilege to "documents … passing between the client and his legal advisers and evidence of the contents of such communications", (again, my emphasis) and went on to apply that principle. Again, therefore, records of communications were privileged. If emphasis be needed, it can be seen in the form of order made by the Court of Appeal, which is set out in a judgment of Tomlinson J in a later hearing in the same case ([2003] EWHC 2565 (Comm)) – the declaration as to privilege encompassed: "(1) Communications passing between the Bank and its legal advisers (including any solicitor seconded to the Bank) for the purposes of seeking or obtaining legal advice; (2) Any part of a document which evidences the substance of such a communication." 19. That extended formulation would be capable of catching a number of things beyond the actual communication (oral or written) between solicitor and client, when applied to advice rather than instructions, all of which would be consistent with the policy Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 12 of 30 underlying privilege and with a common sense application of that policy to the practicalities of everyday commercial life. a. First, it obviously applies to a letter of legal advice, or a letter containing legal advice. b. Second, it would cover the client's own written record of what his solicitor had told him orally. There is every reason why it should. c. Third, it would cover the situation where a client representative who obtains the advice passes that advice internally in the organisation in question. This would apply whether the advice is passed on verbatim or whether it is summarised or extracted. This is in line with The Good Luck, referred to above. In that case the relevant issue was whether or not breaches of duty by insurers were causative of a bank lending money to the owners of a vessel. The bank obtained some legal advice, and parts of the advice were disseminated internally so that the bank could decide whether to lend the money. It was submitted that the advice so extracted was not privileged because "such documents cannot be described (using the words of Lord Justice Taylor in Balabel v Air India) as part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate nor (again using the words of the Lord Justice) as documents made confidentially for the purposes of legal advice …". That argument looks rather like an argument that only solicitor/client communications strictly so called can be privileged. Saville J rejected that argument. First, he pointed out that if the argument were right then in a great number of commercial cases the ability of a client to get legal advice in confidence (which underlay the doctrine of privilege) would be destroyed. He saw "no good reason or valid reason for the suggestion that the confidence which it is accepted attaches to the lawyer client communication itself, should somehow be lost once the advice is put to the commercial use for which it was sought in the first place". After pointing out that the logic of the argument he was rejecting would allow cross-examination of the officers of the client company about privileged advice, which would be a strange conclusion, he ended this section in his judgment by saying: "[The argument] is, in truth, based on the false premise that that which is communicated ceases to be a communication and thus loses the privilege attaching to lawyer-client communications." This last sentence is, perhaps (and with all due respect) a little dense. In The Sagheera [1997] 1 Lloyds Rep 160 at p 169 Rix J wondered whether it should not be understood in the sense "the false premise that that which is communicated internally ceases to be confidential" (his emphasis). Without wishing to pore over the sentence as if it were a statute, I think that it probably has a different meaning. I take it to mean that a record of a privileged communication has the same sort of quality as the communication itself for the purposes of privilege. In a literal sense a communication ceases to be that once it is communicated; but the law of privilege is not so blinkered as to regard privilege as attaching just to that event and to nothing else whatsoever. For privilege purposes a record of a communication is the same as the communication itself, and that is as true of Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 13 of 30 summaries as of the verbatim original communication. That, I think, is what Savile J is saying. That formulation and reasoning recognises that something beyond the initial communication itself, strictly so called, is and should be within the privilege. It remains good law after Three Rivers, and is consistent with it. d. It would continue to cover cases such as Gotha City and the examples discussed in that case. In Gotha City, the apparent owner of a picture wished to sell it through Sothebys. It took advice from Messrs Herbert Smith (presumably relating to the sale, though the report does not say so) and sent a copy of the letter of advice to Sotheby's. Sotheby's also sat in on a meeting between the seller and Herbert Smith in respect of which an attendance note was produced. The plaintiff, who claimed to own the picture, sought inspection of the letter and attendance note. The argument was, in effect, about waiver of privilege, and it was held on the facts that there was no waiver. I shall return to that in the context of the present case. For the moment it should be noted that privilege was assumed to exist in both documents; it was not argued that the copy letter sent to Sotheby's was not a privileged communication. If Mr Watson's argument were correct then logically it ought not to be, subject to his distinction between verbatim content (privileged) and summarising content (not privileged); yet the argument did not occur to anyone in that case. In fact, it is quite clear that Staughton LJ had no difficulty with the concept of preserving privilege in privileged advice notwithstanding that it was communicated by the client to the third party, because at page 119 he cited, obviously with approval, a passage from Style & Hollander on Documentary Evidence: "If A shows a privileged document to his six best friends, he will not be able to assert privilege if one of the friends sues him because the document is not confidential as between him and the friend. But the fact six other people have seen it does not prevent him claiming privilege as against the rest of the world." I think that it follows from that that A would be able to restrain each of the friends from disclosing to the outside world what they were told on the basis that it remained privileged. The friends could not give secondary evidence of the privileged material – it would be "evidence of [privileged] communications", or their evidence would be "evidencing such communications" within the formulation in Three Rivers. By the same token, if a client summarises or extracts advice in a letter to a third party, that written communication is capable of retaining or attracting the privilege which attached to the original advice, subject to waiver. It, too, is something which evidences a privileged communication. e. This analysis gives rise to a regime which maintains intellectual consistency and maintains the policy underlying privilege, which is that a man is entitled to make a clean breast of matters to his lawyers without fear of disclosure, a policy which covers both the giving of instructions and the receiving of advice. It means that a  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 14 of 30 client can reproduce the advice for his own purposes without necessarily risking that reproduction not being privileged, which in my view is essential to the sensible operation of the doctrine. It also means that he can discuss the advice with others without necessarily risking the same thing. A client may well wish to discuss advice received with a partner, or with another adviser, or (as in Gotha City) with a contractual counterparty who might be affected. The effect of privilege would be seriously dented if those communications were held to be not privileged so that, if evidence of them could be obtained, an insight as to the advice would become available. That is not a sensible result. 20. The position therefore seems to me to be as follows. Where privileged advice is disclosed to a third party the privilege is capable of attaching to the third party communication because that communication is evidence of the privileged advice within the formulation in Three Rivers. It does not matter whether that third party communication is of the whole of the advice (like the letter in Herbert Smith) or a paraphrase of or extract from the advice. To be fair to Mr Watson, he conceded that privilege would be maintained in relation to actual full copies of written advice obtained, so that in the present case he did not press for inspection of one document, or part of a document, which (on the evidence) is a straight reproduction, or forwarding, of the Manx legal advice verbatim. However, he sought to distinguish between the complete advice and summaries, extracts or paraphrases. Those, he said, were not privileged. The only justifications he was able to advance for this distinction were first that the paraphrases were not the original communication, and second that there was a potential for inaccuracy in any summary or paraphrase. Any inaccurate summary would not be the original advice. These submissions are not convincing. If it is right that the original verbatim advice remains privileged, then it is illogical to exclude paraphrases or parts of it. If 100% is privileged, then would communicating 99% of it remain privileged? – it is hard to see why not. But if that is right, then why not 90%, or 75%, or 50%? There is no reason to draw a line anywhere, and every reason not to. Mr Watson's demarcation would also, in practice, mean that any passing on of oral advice would be likely to be unprivileged, because it is most unlikely that it would be passed on in whole and verbatim. That, again, is an unmeritorious distinction. The proper analysis, consistent with Three Rivers, is to continue to afford privilege to material which evidences or reveals the substance of legal advice (subject, of course, to waiver). The possibility of inaccuracy is not a reason for departing from this principle. If the passed on "advice" were so inaccurate that it could no longer be properly described as a summary of the advice, then it might be that that communication would not be privileged (though even then it might attract privilege if it tended to reveal instructions given, which it might well), but there is no suggestion that that is the case here and I need not consider it further. Short of that, I do not see why some degree of inaccuracy, even if it exists, should necessarily destroy the privilege; so there is all the more reason for saying that the possibility of inaccuracy should not destroy the privilege which would otherwise exist in paraphrases or summaries. 21. This means that the subsistence or otherwise of privilege, where advice is communicated to a third party, turns on the extent to which there is a waiver of privilege on that occasion. Gotha City demonstrates that it is not inevitable that there is a waiver in those circumstances. In that case it was held that the receipt of the advice by Sotheby's was attended by a degree of confidentiality which meant that, while there was waiver as  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 15 of 30 between the owner and Sotheby's, there was no waiver vis-à-vis the outside world. The question in the present case, therefore, is whether and to what extent there was a waiver. I consider the application of these principles to the facts of this case below. 22. In these proceedings the question was raised whether the Level 1 and Level 2 references were capable of being privileged. This raises (in theory) the question of whether, after Three Rivers and its emphasis on privilege attaching only to communications, there can be privilege attaching to evidence of the fact of instructing solicitors or getting advice from them (Level 1), or to evidence of the fact of instructing solicitors and getting advice on a particular subject (Level 2) because those facts are not communications or evidence of communications. I do not propose to consider this as a matter of principle, because on the facts of this case there has been a plain waiver even if there was privilege. 23. The next question of law which arises is the extent to which a party entitled to an unwaived privilege is entitled to restrain those in possession of the information from disclosing it or otherwise making use of it. It arises in this case if and insofar as Mr Turner received privileged information in confidence and then disclosed it to representatives of the claimants, if and insofar as Powerhouse has disclosed documents which contain unwaived privileged material. It is accepted by both sides that this material contains some Level 3 documents, though they do not always entirely agree as to which pieces of evidence fall into that category. 24. There is not much disagreement between the parties as to the principles applicable in this area, although there is serious disagreement as to how they should be applied. It is sufficient for these purposes to refer to only two authorities. The first is Goddard v Nationwide Building Society [1987] Q.B. 670. In that case the Court of Appeal was asked to consider whether or not to restrain the use of a note, containing privileged information, which a solicitor, who had at one stage been acting for both the plaintiff and defendant, had passed to the defendant. Privilege in the material contained in the note was held to belong to the Plaintiff. Having determined that, the Court of Appeal granted relief restraining use of the material contained in that note, which relief included striking out allegations in the pleading which were based on that note, an injunction restraining the Defendant from relying upon the note and orders for delivery up of all copies. In his leading judgment May L.J. considered the case of Lord Ashburton v Pape [1913] 2 Ch. 469 and another authority, and pronounced the following proposition (at page 683): "If a litigant has in his possession copies of documents to which legal professional privilege attaches he may nevertheless use such copies as secondary evidence in his litigation: however, if he has not yet used the documents in that way, the mere fact that he intends to do so is no answer to a claim against him by the person in whom the privilege is vested for delivery up of the copies or to restrain them from disclosing or making any use of any information contained in them." His citation of authority indicates, I think, that he considered that he would normally expect the restraint to be ordered. That last point is rather clearer in the judgment or Nourse L.J. He made the following points, relevant to this application:  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 16 of 30 "The crucial point is that the party who desires the protection must seek it before the other party has adduced the confidential communication in evidence or otherwise relied on it at trial. "… Although the equitable jurisdiction [that is to say, the jurisdiction to restrain the misuse of confidential information] is of much wider application, I have little doubt that it can prevail over the rule of evidence [viz the rule of evidence which allows secondary evidence to be given of primary material where the latter is privileged] only in cases where privilege can be claimed … "Once it is established that a case is governed by Lord Ashburton v Pape, there is no discretion in the court to refuse to exercise the equitable jurisdiction according to its view of materiality of the communication, the justice of admitting or excluding it or the like. The injunction is granted in aid of privilege which, unless and until it is waived, is absolute. In saying this I do not intend to suggest that there may not be cases where an injunction can properly be refused on general principles affecting the grant of a discretion remedy, for example on the ground of inordinate delay." 25. From this it is clear that not only does the court have jurisdiction to grant appropriate relief to prevent reliance upon privileged material where privilege has not been waived, the starting point is that one would expect that relief to be granted. That was certainly the view of Lawrence Collins J in the second relevant authority, ISTIL Group Inc. v Zahoor [2003] 2 All E.R. 252. At paragraph 91 of that judgment (at page 273) he observed that "in such cases the court should 'ordinarily' intervene". The court is "not concerned with weighing the materiality of the document and the justice of admitting it". (Paragraph 92). He went on to say this: "93 Fifth, there is nothing in the authorities which would prevent the application of the rule that confidentiality is subject to the public interest. In this context, the emergence of the truth is not of itself of sufficient public interest. The reason why the balancing exercise is not appropriate is because the balance between privilege and truth has already been struck in favour of the former by the establishment of the rules concerning legal professional privilege. "94 Sixth, other public interest factors may still apply. So there is no reason in principle why the court should not apply the rule that the court will not restrain publication of material in relation to misconduct of such a nature that it ought in the public interest to be disclosed to others… there is no confidence as to the disclosure of iniquity. But the defence of public interest is not limited to iniquity." He went on to hold that on the facts of his particular case, the public interest in the proper administration of justice meant that equitable relief, which would otherwise be granted to preserve the confidentiality in the privilege material, should not be granted. The facts of  Case 1:15-cv-07433-RWS Document 57-2 Filed 03/14/16 Page 17 of 30 that case were very strong. They involved a clear forgery, and the apparent possibility of the court actually being misled by the proposed evidence. 26. I therefore approach this point on the footing that the normal starting point would be for appropriate relief to be granted to restrain the use of privileged material. So far as I have a discretion to do otherwise, it is not to be exercised merely on the footing that if I do not exercise it, the truth is more likely to come out. There must be some other factors, such as delay, acquiescence or other equitable defences which must be sufficiently strong to override the normal, very strong principle, that privileged communications are protected from disclosure. I shall consider the application of these principles to the facts of the case before me in a separate section of this judgment below. The application of the law to the facts 27. It follows from the above that, subject to waiver, communications by the Defendants to Powerhouse which contain or refer to the content of legal advice are capable of being privileged. This includes Level 3 communications. Whether or not it includes Level 1 and Level 2 communications I do not have to decide, because on any footing there has been a waiver of such privilege as