SAR wars: Episode III - A new hope for privilege?

The decision gives significant comfort to trustees and their English advisers, adding to the welcome clarity already provided by updated English data protection legislation in 2018.

Episodes I and II: Dawson-Damer at the High Court (2015) and the Court of Appeal (2017)

Ashley Dawson-Damer is a beneficiary of the Glenfinnan Settlement (the Trust), a Bahamian-law trust of which Grampian Trust Company Limited is the trustee (the Trust and the Trustee). The Trust previously held over $400m in assets until 2006 and 2009 when all but $9m was appointed to trusts from which Mrs Dawson-Damer and her children did not benefit.

Mrs Dawson-Damer wanted information about why this had happened. However, s.83(8) of the Bahamian Trustee Act 1998 allows a trustee to withhold trust documents from beneficiaries and so her requests were refused. This provision goes much further than the position in England, although there are a number of principles used by the English courts to restrict beneficiaries’ rights to information, including the rule in Re Londonderry, which provides that trustees are not obliged to give reasons for their decisions, and are entitled to keep their decision-making process confidential.

In light of the position under Bahamian law, Mrs Dawson-Damer chose another route to try to obtain information: she served a SAR on the Trustee’s English lawyers, Taylor Wessing, seeking copies of her personal data held by them. Taylor Wessing refused to provide documents containing these data on the ground that the documents were covered by legal professional privilege (relying on one of the grounds for refusing to provide information in respect of a SAR under the old Data Protection Act 1998, known as the DPA). She therefore applied to the English Court for a declaration that Taylor Wessing had failed to comply with its DPA obligations.

At first instance in 2015, the Court held that Taylor Wessing was entitled to exclude from the scope of the SAR any documents that a trustee would be entitled to protect in Bahamian proceedings.

However, Mrs Dawson-Damer appealed this decision to the Court of Appeal, which held that only documents that attract legal professional privilege as strictly understood in English law could be excluded from the scope of a SAR. Documents that would ordinarily be protected only as a matter of trust law, for example under the Re Londonderry principles, could not be excluded. This caused trustees and their advisers some considerable concern: what if the carefully crafted trust legislation in jurisdictions around the world could be circumvented by SARs against lawyers in England? We now have the answer: that is not something the English Court will permit.

Episode III: Dawson-Damer back in the High Court (2019)

The Court of Appeal asked the High Court to decide the issue of whether any particular document in the Dawson-Damer case carried legal professional privilege (LPP) under English law.

This issue was the subject of the most recent judgment in the High Court.

Taylor Wessing had identified a category of documents they held that contained Mrs Dawson-Damer’s personal data (the Documents) but which would attract LPP. The issue for the High Court was whether the Documents ought to be provided to Mrs Dawson-Damer pursuant to her SAR.

The Court divided the issue into two questions: (i) do the Documents attract LPP at all; and (ii) could Mrs Dawson-Damer “pierce” the claim of LPP asserted by the Trustee and enforce the Documents’ disclosure in any event?

Do the Documents attract LPP?

The High Court considered the Court of Appeal’s judgment, which said that “when [the LPP Exemption] refers to legal professional privilege which may be recognised in legal proceedings, it means proceedings in any part of the UK. That is the only form of privilege which the domestic rules of the law of any part of the UK recognise”. The High Court affirmed the Court of Appeal’s decision that Taylor Wessing could not rely on Bahamian trust law to support its claim to privilege. The only question which mattered was what English law defined as a privileged document.

Under English law, there are two types of legal professional privilege: legal advice privilege (in relation to documents setting out legal advice or created for the purposes of obtaining or giving legal advice); and litigation privilege (in relation to documents created for the dominant purpose of use in actual or contemplated litigation). The Court held that documents in those categories would “be subject to LPP as a matter of English law” – and that LPP belongs to the Trustee. Consequently, personal data that fell within these categories would ordinarily be outside the scope of a SAR.

Can Mrs Dawson-Damer go behind that LPP?

The real issue in Dawson-Damer was the ability of a beneficiary to obtain copies of trust documents even when covered by LPP.

It was common ground that Mrs Dawson-Damer could not obtain documents covered by litigation privilege (that is, documents created in relation to the litigation by her against the Trustee). This means the key primary controversy was over legal advice privilege.

In relation to documents in that category, Mrs Dawson-Damer’s case was that under long-established procedural law in England, a trustee and a beneficiary share a joint interest and, where documents came into existence during the time of that joint interest, neither can assert privilege against the other. That joint interest will exist where a trustee obtains advice to “guide himself in the administration of his trust”. That advice is taken for the benefit of the persons entitled to the trust estate, who ultimately will have paid for it. On that basis, Mrs Dawson-Damer argued she should be provided with her personal data even where covered by the Trustee’s legal advice privilege.

The High Court disagreed in this case (although had it been an English law trust the result might well have been different). It decided that the law of the Trust was the law under which to consider whether Mrs Dawson-Damer had a claim to joint privilege in the Documents.

With all trust documents protected from disclosure to a beneficiary under the Bahamian Trustee Act, “no ‘joint privilege’ can exist under that law”, and so Mrs Dawson-Damer had no right to the Documents. Her attempt to use an English SAR to avoid the implications of Bahamian trust law and to defeat claims to privilege thus failed.

The Court characterised the question not as the Trustee importing a “foreign species of privilege”, but as Mrs Dawson-Damer “trying to overturn the privilege that would otherwise exist”, and which, in the Court’s view, should still apply.

Implications

Whilst no doubt this decision may be the subject of an appeal, first and foremost this is positive news for trustees. They can have confidence that potential SARs are not a weak link in their structure, and that their English lawyers cannot be used as a “back door” to obtain privileged documents which would not otherwise be available to beneficiaries.

This additional comfort comes on top of helpful developments in the UK’s data protection legislation in 2018, when the Data Protection Act 2018 came into force, repealing and replacing the old DPA and implementing the EU’s General Data Protection Regulation (GDPR).

First, as we have noted previously ourselves, the GDPR exempts a person from complying with a SAR where doing so would “adversely affect the rights and freedoms of others”. During a debate in the House of Lords recorded in Hansard, the Government stated its view that this would include a trustee’s deliberations because disclosure of those would adversely affect the rights and freedoms of trustees and beneficiaries. This would ensure that trustees and their advisors could still rely on the Re Londonderry principle to withhold information about the reasons for their decisions when responding to a SAR.

Secondly, under the Data Protection Act 2018, there is an additional exemption for  “information in respect of which a duty of confidentiality is owed by a professional legal adviser to a client of the adviser”. The effect of this is to allow a trustee’s lawyers to assert their duty of confidentiality to avoid providing information in response to a SAR, rather than having to rely on narrower concepts of legal professional privilege.

Although the new provisions will no doubt themselves soon be tested in court, these changes and extended exemptions already provided a high degree of comfort to trustees and lawyers who were concerned that their sensitive documents would be within a beneficiary’s reach. The position is now significantly further improved by the most recent judgment in the Dawson-Damer litigation.