Our quick updates include: Legal advice privilege – iniquity exception; Default judgment where acknowledgement filed late and more...

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Legal advice privilege - iniquity exception

In X v Y Ltd, Slade J in the Employment Appeal Tribunal (EAT) held that the employment judge had erred in accepting a claim for legal advice privilege in respect of an email. 


In April 2016, the Defendant company, Y, announced a program of voluntary redundancy. The Claimant X (who had previously made a discrimination claim in respect of Y to the Employment Tribunal (ET)) was placed in a 'redundancy consultation process' and ultimately made redundant. 

Later, X received, from an anonymous source, an internal email sent between Y's lawyers. The email discussed the redundancy process and made reference to X's discrimination claim should there be 'ongoing employment'. 

The parties disputed whether the email attracted legal advice privilege, and in particular whether it fell under the "iniquity exception" (a well-established principle of English law that impropriety can defeat a claim to legal advice privilege).


The dispute was taken to the ET. The ET held that the email was covered by legal advice privilege on the following grounds:

  • The email was 'legal advice aimed at avoiding rather than evading possible legal action…' and was typical of 'what lawyers do day in day out';
  • That 'the giving of legal advice does not as a matter of course raise iniquity'; and
  • That 'whilst of course protection against discrimination and victimisation is important, it is a tort, and to elevate it to the status required to dis-apply legal advice privilege goes too far.'

The ET's decision was subsequently appealed to the EAT. The EAT found that the email gave advice on how to cloak what would otherwise be a disability discrimination dismissal as a dismissal for redundancy and, properly interpreted, amounted to iniquity. In doing so, the EAT held that:

  • Advice that a certain course of action runs a risk of being unlawful is not itself iniquitous, but giving advice that a certain course of action, which may be unlawful, could be taken, shades into iniquity;
  • Advice to commit the tort of discrimination may be different in degree from advice on how to commit fraud or breach of fiduciary duty. However, depending on the facts, the discrimination advised may be so unconscionable as to make it contrary to public policy; and
  • A strong prima facie case has to be established of an iniquity which reaches the high threshold of something of an underhand nature which is entirely contrary to public policy. Each case depends on its facts.

The way in which X came to learn of the contents of the email makes this a particularly unusual case. It may arguably widen the scope of the iniquity exception to legal advice privilege, and is, in any event, a reminder that legal advice privilege is not absolute. 

Employers and their lawyers should think carefully about the nature of advice given in the context of internal restructuring or redundancy exercises. 

X v Y Ltd (UKEAT/0261/17/JOJ)

For further information, please contact Josh Knowles

Default judgment where acknowledgement filed late

In McDonald & Anor v D&F Contracts Ltd, Jefford J held that in the absence of an extension of time, the late filing of an acknowledgement of service or defence will not prevent a default judgment being entered. 


The Claimants, Mr and Mrs McDonald, and the Defendant, D&F Contracts Limited, entered into a contract for the refurbishment of the Claimants' property. Disputes arose between the parties and the Claimants alleged that the Defendant's repudiatory breaches terminated the contract. The Claimants issued proceedings for loss and damage suffered.

Pursuant to CPR r.6.3(2) and CPR r.6.35(2)(a), the date for filing an acknowledgement of service or defence is 21 days from the date of service of the particulars of claim. The Defendant did not acknowledge service and no defence was filed within this timeframe. Three weeks later, a defence was filed and the Claimants, who were ostensibly unaware of the filing of the defence, made a request for judgment in default under CPR r.12.3.1. The Claimants' request was declined on the basis that there was a defence on file. 


The issue before the court was whether there had been a valid acknowledgment of service or defence filed in accordance with CPR r.12.3.1. 

Jefford J held that unless the Defendant had obtained an extension of time, the late filing of an acknowledgement of service or defence will not prevent a default judgment being entered, even if the acknowledgement of service or defence was filed before a request or application for default judgment. 

The Claimants were therefore entitled to a judgment in default. 


This case clarifies the position where an acknowledgment of service or defence is filed outside of the time limit but before a request for default judgment was heard. 

It therefore highlights the importance of filing an acknowledgment of service or defence (or, if necessary, a request for extension of time) within the specified time limits. If a defendant fails to do so, judgment in default may be entered and the burden is then on the defendant to apply to the court to set the judgment aside. 

Note, however, that court staff may wrongly reject applications for default judgment where a defendant has filed an out of time acknowledgement of service or defence. This could cause delay and increase costs as a claimant would have to make an application to the court under CPR 23 to resolve the issue.

McDonald & Anor v D&F Contracts Ltd [2018] EWHC 1600 (TCC)

For further information, please contact Charlotte Rivers

Part 36 cannot cover unpleaded claims (except pre action)

In Hertel v Saunders, the Court of Appeal held that an offer was not a valid Part 36 offer where it related to a proposed amendment to the Particulars of Claim, rather than a part of the claim as already pleaded at the time of the offer. 


Part 36 of the Civil Procedure Rules encourages parties to settle disputes without going to trial. If a party does not accept a "Part 36" offer made by the other side, and the other side then does better at trial than its Part 36 offer, the recipient of the Part 36 offer will usually be ordered to pay more costs than if the offer had not been made. CPR 36.2(3) requires an offer to be made in respect of "a claim" or "part of a claim" or "any issue"

At a Case Management Conference, the Claimants indicated that they wished to serve amended Particulars of Claim adding a new claim. The Defendants did not take issue with the amendment, but permission to add to the pleaded case was not formally granted. 

The Defendants made a written offer to settle the new claim, declaring it to be a Part 36 offer. The Claimants accepted this offer. 

A dispute arose as to the validity of the Defendants' Part 36 offer, and in particular whether it could relate to part of a claim which had not been pleaded at the time of the offer.


At first instance, Deputy Master Lloyd held that the offer was valid and made in accordance with the provisions of Part 36, and ordered the Defendants to pay the Claimants' costs of the abandoned claim. 

On appeal, the Defendants changed their position and argued the offer was invalid as a Part 36 offer. Morgan J ordered the Claimants to pay the Defendants' costs of the abandoned claim. 

The Court of Appeal unanimously upheld Morgan J's decision and concluded that the Defendants had not made a valid Part 36 offer because it did not relate to the claims formally in issue. It stated that "In civil proceedings, claims/parts/issues can only properly be defined by reference to the pleadings"


This case serves as a reminder that Part 36 is a stringent procedural code. When considering the validity of a Part 36 offer the Court will consider the parties' compliance with this code, regardless of their intentions or any agreements which had been made.

It is worth noting that parties can make Part 36 offers before proceedings are commenced, at which stage there will be no pleaded claims. Following this judgment it is clear that once a claim is commenced a Part 36 offer must relate to the pleaded case, or part of it.

Hertel v Saunders [2018] EWCA Civ 1831 

For further information, please contact Megan Goodman

Non-party access to documents lodged for trial

In Cape Intermediate Holdings v Dring, the Court of Appeal held that the Court did not have jurisdiction to grant a non-party access to the entirety of the hard copy trial bundles in a case which settled prior to judgment. 


The underlying case related to two sets of claims brought against Cape Intermediate Holdings relating to damages paid out to mesothelioma victims. The case settled before judgment but after a full trial. A non-party, the Asbestos Victims Support Group, applied without notice for all of the documents used or disclosed for the trial.  The High Court Master granted an order permitting access to the entirety of the hard copy trial bundles. 

Court of Appeal

On appeal by the Claimant, the Court of Appeal accepted that there may be some documents covered by the order for which there was jurisdiction to allow inspection, however there are so many problems raised by the terms of the order, it should be aside.  It stated further the documents for which it is likely there was jurisdiction include witness statements (but not exhibits), expert reports and written submissions and skeleton arguments.  It may also be that there is jurisdiction to allow inspection of a number of documents relied on at trial but not on the generalised basis set out in the order.     

It held the Court does not have inherent jurisdiction to allow non-parties access to:

  • trial bundles; and 
  • documents referred to in skeleton arguments/written submissions, witness statements or expert reports (although if read out in court the position will be different - see below).  

However, the Court does have jurisdiction to permit access to:

  • witness statements and expert evidence, where that evidence stands as evidence in chief and would have been available during the course of the trial;
  • documents which have been read in open court or by the judge;
  • skeleton arguments/written submissions or similar advocate's documents read by the court provided there is a public hearing; and
  • any specific document or documents which it is necessary for a non-party to inspect to meet the principle of open justice.

In exercising its discretion, the Court has to balance the non-party's reasons for seeking inspection against the parties' interests in preserving confidentiality.  In this balancing exercise the Court will have regard to factors such as the extent to which the open justice principle is engaged, whether there is a legitimate interest in seeking copies of the documents, and the harm (if any) which may be caused to the legitimate interests of other parties by access to the documents. The Court of Appeal confirmed that the principle of open justice is engaged as soon as there is a hearing of the matter, whether or not it settles before judgment. 


The decision clarifies the boundaries of the Court's discretion in allowing access to Court documents.  

The limitation on the Court's discretion is beneficial for parties concerned about preserving confidentiality in advance of documents being used at hearings.  It could help to prevent fishing exercises by non-parties seeking documentation in relation to a case already under way in order to assess their own potential related claims. 

Cape Intermediate Holdings Ltd v Dring (for and on behalf of the Asbestos Victims Support Groups Forum UK) [2018] EWCA Civ 1795, [2018] All ER (D) 16 (Aug)

For further information, please contact Kirsten Oakes

No duty to point out your opponent's errors

In Phoenix Healthcare Distribution Ltd v Woodrward & Anor, the High Court held that the overriding objective does not impose an obligation on a party to point out the mistakes of another party. In this case there was no good reason to retrospectively validate service when the Claimant's solicitors had made an error, which the Defendant's solicitors had noticed, but not raised. 


The Claimant's solicitors issued proceedings one day before the claim was due to be time barred in June 2017. 

The claim form had to be served by midnight on 19 October 2017 and on 17 October 2017, they sent the claim form via fax to the Defendant's solicitors, who had never indicated they were authorized to accept service. 

On 20 October 2017, the day after the validity of the claim form expired, the Defendant's solicitors notified the Claimant's solicitors that they had not been authorized to accept service, the attempt at service was invalid and the claim form having expired,  the proceedings were no longer live. 


The Claimant applied for an order to validate service retrospectively under CPR 6.15. 

A Master granted the application, ordering that the Defendant's solicitors were in breach of their duty to the Court under the overriding objective in CPR 1.3. The Master noted that whilst there was no professional obligation to draw attention to the other party's mistake, the purported service had come to the attention of the defendant within its period of validity. The Defendant appealed. 

The High Court set aside the order. The judge held that the overriding objective does not require a party's solicitors to draw attention to a mistake.

Distinguishing this case from Abbott & Anor v Econwall UK Limited & Anor [2016] EWHC 660 (IPEC), where the Defendant failed to correct the claimant’s misunderstanding about the extent of an extension of time which had been offered, the judge pointed out that in this case, the Defendant and its solicitors had not contributed to the mistake, and that the mistake arose in a situation that did not require a response from the Defendant. 

The judge was critical of the Claimant's solicitors' conduct in delaying service of the claim form until the end of its period of validity. 


Following this case, lawyers can be confident that there is no obligation to notify the other side of a mistake (unless you have contributed to that mistake, or in a situation that requires a response). Parties therefore need to bear in mind that they cannot expect the other side to notify them of any errors they have made.  

In the judgment it was noted that the Claimant's solicitors could have sought specific confirmation that service was to be treated as effective. However, the judge did not address what the position may have been had the question been asked – for example what would have been a reasonable period of time for the defendants to respond.  So the position in this regard is not clear.

Phoenix Healthcare Distribution Ltd v Woodward & Anor [2018] EWHC 2152 (Ch) (26 July 2018)

For further information, please contact Hannah Harrison

Worldwide freezing order against unidentified defendants – a first!

In CMOC Sales & Marketing Ltd v Person Unknown and 30 others, the Commercial Court ordered the first worldwide freezing order against unidentified defendants. The Court also permitted service of the claim form and other court documents by Facebook Messenger, WhatsApp and via a virtual data room. 


The Claimant found itself the victim of fraud following the hacking of a director's email account. The perpetrators successfully diverted over US$6.9m and €1.2m into accounts held with 50 banks in 19 jurisdictions. 

The Claimant brought multiple claims relating directly to the fraud against the recipients of the stolen funds, some of whom were named, but others categorised as 'persons unknown' because they could only be identified as holders of various bank accounts into which the funds had been transferred. 

In order to preserve the stolen money and identify the recipients of the funds, CMOC applied for a freezing order and disclosure order against various banks joined to the claim as 'no cause of action' defendants.

Worldwide freezing orders

The Court granted the Claimant's application for a worldwide freezing order against 'persons unknown'. Although the Court's jurisdiction to make orders against 'persons unknown' was established in 2003, UK courts have only previously exercised this jurisdiction in relation to other types of order. This decision confirms that the Court's jurisdiction against 'persons unknown' extends to freezing orders. 


For the first time, the Court permitted service by private, rather than public, social media channels in the form of WhatsApp and Facebook Messenger. HHJ Waksman QC commented on the benefit that these methods offer by notifying the sender of whether the message has been read by the recipient. 

The Court also permitted service via a virtual data room, which facilitated the simultaneous service of all relevant documents upon the defendants obtaining access, without the necessity of sending them to numerous individual defendants by post or email. This was noted as being particularly useful for the banks. 


The decision demonstrates the Court's willingness to adapt to the challenges faced by the victims of highly complex fraud. 

In addition, this case is a significant extension of the law as it sets a precedent for the granting of freezing orders against 'persons unknown'.  

Parties should remain aware that while novel methods of service were used in this case, they were only permitted on application for orders for alternative service. However, keen to show that the courts are responding positively to the challenges of digital business methods, HHJ Waksman indicated that the Court will "proactively" consider such alternative methods where they are "justified and appropriate"

CMOC Sales & Marketing Ltd v Person Unknown and 30 others [2018] EWHC 2230 (Comm)

For further information, please contact Kayleigh Brady 

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