In this latest Environmental Law News Update, Charles Morgan, Gordon Wignall, William Upton and Nicholas Ostrowski consider a landmark case on litigation privilege, the opening up of the EU Commission’s pre-legislative file, a set of principles for future collaboration between stakeholders within the water industry, and the revised NPPF.
Landmark case on litigation privilege
In Serious Fraud Office v Eurasian National Resources Corporation Ltd  EWCA Civ 2006 the Court of Appeal overturned the High Court decision in Serious Fraud Office v Eurasian Natural Resources Corporation Ltd  EWHC 1017 (QB), holding that documents produced during an internal investigation are protected by litigation privilege.
The background to the High Court case was set out in the blog here and is not repeated, suffice to say that Andrews J held that notes made by ENRC’s former solicitors of interviews with ENRC’s current and former employees conducted as part of an internal investigation into allegations of corruption were not protected by litigation privilege and should be disclosed to the SFO. Fundamentally, Andrews J found that an SFO investigation (as opposed to a criminal prosecution) does not constitute adversarial litigation for the purpose of litigation privilege and that as the internal investigation conducted by ENRC’s former solicitors was to find out if there was any truth in a whistleblower’s allegations, they did not engage litigation privilege.
In the Court of Appeal a heavyweight bench (Lord Justices Leveson, Vos and McCombe) found that criminal proceedings against ENRC were reasonably in contemplation when it initiated its investigations noting that :
‘the whole subtext of the relationship between ENRC and the SFO was the possibility, if not the likelihood, of prosecution if the self-reporting process did not result in a civil settlement.’
Significantly, even if at the time it starts its own inquiry, a company cannot be said to be under formal investigation, that does not prevent it from asserting litigation privilege over the documents prepared in its internal investigation :
‘Andrews J was not right to suggest a general principle that litigation privilege cannot attach until either a defendant knows the full details of what is likely to be unearthed or a decision to prosecute has been taken. The fact that a formal investigation has not commenced will be one part of the factual matrix, but will not necessarily be determinative.’
The Court of Appeal then went on to find (at  to ) that the disputed documents were brought into existence for the dominant purpose of avoiding or resisting criminal proceedings and thus litigation privilege was engaged. The Court of Appeal confirmed the continuing importance of the House of Lords regulatory case of Waugh v British Railways Board  AC 520 which revolved around a report prepared by the British Railways Board into a fatal railway accident. In a passage that is particularly helpful to companies considering the appropriate response to an allegation of regulatory non-compliance the Court of Appeal held that :
It is, however, obviously in the public interest that companies should be prepared to investigate allegations from whistle blowers or investigative journalists, prior to going to a prosecutor such as the SFO, without losing the benefit of legal professional privilege for the work product and consequences of their investigation. Were they to do so, the temptation might well be not to investigate at all, for fear of being forced to reveal what had been uncovered whatever might be agreed (or not agreed) with a prosecuting authority.
The judgment goes on to consider the law in relation to legal advice privilege which is outside the scope of this note.
The importance of this decision for any corporate entity considering an investigation into regulatory non-compliance is clear. As a starting point lawyers advising a company in such a situation should identify if adversarial proceedings with the regulator are reasonably contemplated and, if so, can advise their client that investigations can be conducted without fear that the regulator will later be able to demand the lawyers’ entire work on the investigation.
Access to the EU Commission’s pre-legislative file
ClientEarth has succeeded in using a combination of the EU’s and Aarhus principles as to openness in order to obtain pre-legislative files which the Commission held whilst deliberating as to what legislative steps to agree with Member States.
The files in question concerned (a) a draft impact assessment report relating to access to justice at Member State level (and an opinion of the Impact Assessment Board) and (b) proposals for a strategic framework for inspections and surveillance in environmental matters.
The key tools of battle were to be found in TEU Art.17 (the EU’s own legislative process) and Regulations 1049/2001 and 1367/2006 (which concern requests for environmental information and exceptions) and the Aarhus Convention.
The Commission argued that the process of producing a legislative outcome would be hindered if access were to be granted, and what is more, that it would have to start adding NGOs to its list of communicants during the early stages of legislative drafting. Disclosure would result in the requirement for multiple dialogues with interested parties. ClientEarth argued that this was all in accordance with the transparency promised by EU instruments.
The ECJ (case C-57/16) sided with ClientEarth (supported by Finland and Sweden), against the General Court. The Court decided that the Commission would have to make itself more open to ordinary citizens as well as to NGOs; this was the way to ensure the level playing field, the absence of which, the Commission had hinted, would itself be unfair.
Of more interest than the final result, was the argument presented by the Commission as to “general presumptions”. The Commission argued that there was a legal principle that it did not have to examine particular documents, but that the type of information sought was covered by a general presumption which meant that the class of documents requested should not be disclosed.
In response to this, the ECJ identified five limited categories of documents in respect of which there was a “general presumption of confidentiality” (para.81). These all concerned procedures that might result in sanctions (whether concerning State Aid, infringement, mergers, or EU court proceedings and related administrative or judicial proceedings). The attempt on the part of the Commission to establish a wider general presumption was brought to a close (or perhaps we should just say that it was “interrupted”).
Blue sky thinking for bluer waters
Blueprint for Water is a coalition of 18 third sector organisations sharing an interest in the English aqueous environment, the quality of which is greatly dependent upon the responsible conduct by the water and sewerage undertakers of their business activities. For many years Blueprint and its members have worked in collaboration (and from time to time in adversarial combat) with the water industry. In anticipation of the PR19 round of quinquennial price review Blueprint for Water and the undertakers have reached agreement upon a set of ‘shared principles’ for future work together. This follows close on the heels of the companies’ 2020-2025 business plans and Water UK’s ‘Manifesto for Water’, on which we commented last week (see here). The principles are, in summary:
- collaboration in policy and planning, based on a joint recognition of the importance of the catchment-based approach (as enshrined in the Water Framework Directive)
- joint recognition of respective roles as environmental stewards
- joint work to support the principles of and to deliver the obligations in the Water Framework Directive and the effective implementation of current legislation
- data-sharing, ‘making key datasets openly available’
- joint recognition of the importance of maintaining services to customers and protecting the environment.
This is a laudable formal acknowledgement of the desirability of future co-operation rather than antagonism between those who in modern parlance are all ‘partners’ or ‘stakeholders’ in the management of the water environment. It strongly reflects the existing legal order, including the requirements of the Water Framework Directive and the Aarhus Convention and the outcome of the Shirley/Fish Legal litigation over environmental information (and the agreement is careful enough to qualify the data-sharing principle with the footnote “noting some data may be commercially or otherwise sensitive”). It is highly unlikely that it creates (or was ever intended to create) any new or enhanced legal relationship, save possibly in the realms of the doctrine of legitimate expectation. Of note is the express reference, in the context of the implementation of current legislation, to the European Union (Withdrawal) Act 2018 and its statutory introduction in section 16 of the precautionary principle (that principle’s first outing in primary legislation).
Blueprint for PR19 – Shared Principles for Collaboration can be found here.
The revised NPPF
The required summer reading for the planning professions has been the replacement National Planning Policy Framework (NPPF, 24 July 2018). Whilst the document is a revision, rather than a rewrite, it will repay careful reading. It is not just that there is an even greater emphasis on increasing the delivery of new housing, but also that the paragraphs have all been re-ordered and there are plenty of changes to the policy wording and footnotes.
For instance, the so-called ‘Presumption in favour of Sustainable Development” remains, and the ‘tilted balance’ in favour of granting permission where development plan policies are out of date will continue to apply. But it is now numbered as para 11 rather than para 14, and we will have to grapple with defining what is or is not “clear reason” for concluding that permission should be refused to protect an asset of particular importance, as opposed to what may be a “strong reason” for having a particular policy that prevents providing for the full needs of an area. Footnote 7 now states that policies can be ‘out of date’ not just because of a lack of a 5-year housing land supply but also if the planning authority fails the annual Housing Delivery Test. Apparently, it is indeed going to be their fault if the private developers are not building what they said they would build. It is also the case that whilst Design and the creation of high quality buildings and places has been given a greater emphasis in Chapter 12, this comes at the same time as emphasis is placed in Chapter 11 on significantly increasing densities and relaxing the daylight and sunlight rules. Quite how one elegantly squares that circle remains to be seen.
There will therefore be much to discuss, and digest. One additional nugget that may also cause considerable controversy is the inclusion of the ‘Agent of Change’ (whoever he or she may be) in para 182. On its face, it was included to deal with the problem of building housing near live music venues (such as the Koko Club in Camden) but it is much more widely-worded. We will come back to this and other points in next week’s blog.
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