Yesterday, The Court of Appeal overturned a controversial ruling by the High Court from May 2017, which threatened to have significant implications for companies carrying out internal investigations.
At issue were documents generated during an internal investigation conducted by Dechert LLP, led by partner Neil Gerrard, that was first triggered by a whistleblower email. In a thorough vindication of ENRC's position, the Court of Appeal has overturned the original judgment and upheld ENRC's claim to privilege in respect of the overwhelming majority of the documents, including witness interview notes prepared by Dechert as well as a "books and records" review undertaken by forensic accountants.
This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing.
As the trial judge had found, ENRC took all the steps that might be expected of a responsible corporation in response to the whistleblower. Crucially, however, the Court of Appeal recognised that the dialogue with the SFO did not preclude the investigation from being privileged. Contrary to the SFO's case, ENRC had never intended or agreed to share materials from the internal investigation with the SFO, and the SFO had never even run an argument based on waiver of privilege.
ENRC maintains that the SFO's approach was fundamentally misconceived and that the proceedings, which have resulted in wholly unnecessary costs (both to ENRC and the taxpayer), should never have been brought. ENRC will now be seeking recovery of millions in fees from the SFO.
Michael Roberts, Partner at Hogan Lovells representing ENRC commented: “This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing. It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand all of the lawyers' work product."
ENRC also continues to pursue related legal proceedings against Dechert LLP and Neil Gerrard (the global co-head of Dechert's white collar and securities litigation practice), who conducted the internal investigation and advised on ENRC’s engagement with the SFO between 2011-13.
In the Particulars of Claim, which can be requested through http://www.enrcnews.com/, ENRC claims (amongst other things) that Neil Gerrard deliberately leaked privileged and confidential documents to the press in July 2011 in order to "kick start" an expansion of the investigation. Mr Gerrard arranged for an envelope of confidential and privileged documents to be collected from Dechert's reception. Those documents subsequently formed the basis of an article published in The Times on 9 August 2011, which directly led to the initial approach from the SFO to ENRC the very next day.
Mr Gerrard then described himself as being in "rape mode" and that he wanted to "screw" ENRC for millions of pounds in fees. True to his word, Mr Gerrard went on to bill ENRC over £16 million in fees.
The result is welcome indeed. It amounts to a re-calibration of the law of privilege, moving it in a more realistic and principled direction.
Separately, ENRC has launched disclosure proceedings against the SFO premised on ENRC having civil claims against the SFO for misfeasance in public office as a result of its unlawful collusion with Mr Gerrard, involving numerous unauthorised (and unfounded) disclosures by Mr Gerrard, covert (and subsequently deleted) text messages, and private meetings in "out of the way" places. One internal SFO document even acknowledged at the time that Mr Gerrard might be "up to no good".
Mr Gerrard was also the subject of an anonymous whistleblower letter to David Green QC in July 2012 which raised serious concerns about the unhealthy relationship between Mr Gerrard and a senior official at the SFO. The SFO has now admitted that it failed to take proper steps to investigate the allegations.
Further significant evidence continues to come to light and to support ENRC's claims against both Dechert and the SFO.
Nonetheless, Dechert LLP had commented:
"We stand by the work we did and look forward to the opportunity of defending it in open court. We note that the criminal investigation by the Serious Fraud Office into ENRC is continuing and deplore ENRC’s attempt to discredit that investigation by seeking now to publicise unwarranted allegations against Dechert and its personnel.
"We emphatically reject any suggestion of an improper relationship between Dechert/Neil Gerrard and the SFO or that there was any unauthorised disclosure of information to or from the SFO. The work we did during our investigation was with the authority and knowledge of the members of the independent committee of the board which was instructing us at the time. We shall in the ensuing court proceedings fully address these unfounded allegations”
Further to this, also working on the case was Eoin O’Shea, Partner at Reed Smith, who had advised The Law Society in its intervention in the case; he stated:
“The law of privilege is a vital element of the rule of law and a precondition for proper access to justice. Reed Smith was glad to be able to assist the Law Society with its intervention in this very important case.
“The result is welcome indeed. It amounts to a re-calibration of the law of privilege, moving it in a more realistic and principled direction. Privilege now clearly applies in circumstances where there is a genuine concern about future prosecution and there is no longer any artificial distinction between civil and criminal proceedings. The Court of Appeal also made clear that the problematic definition of “client” in the law of privilege is in need of review by the Supreme Court, which is another significant move forward.”
(Source: ENRC News)
