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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> McKenzie, R (On the Application Of) v Director of the Serious Fraud Office [2016] EWHC 102 (Admin) (27 January 2016) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2016/102.html Cite as: [2016] Lloyd's Rep FC 145, [2016] WLR 1308, [2016] EWHC 102 (Admin), [2016] WLR(D) 42, [2016] Info TLR 265, [2016] Lloyd's Rep FC 457, [2016] 1 WLR 1308, [2016] 1 Cr App R 23

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		27/01/2016

LORD JUSTICE BURNETT:

1. The issue in this rolled up application for permission to apply for judicial review is whether the procedure set out in the Operational Handbook of the Serious Fraud Office ["the SFO"] for dealing with material potentially subject to legal professional privilege ["LPP"] embedded in electronic devices that have been seized using statutory powers, or produced in response to a notice, is lawful. Mr Rees QC for the claimant submits that the procedures set out in the Handbook involving the use of in-house IT staff to isolate material potentially subject to LPP are inconsistent with the terms of the Attorney General's Supplementary Guidelines on Digitally Stored Material (2011) which appear as an Annex to the 2013 Guidelines on Disclosure. Further, he submits that the approach of the SFO gives rise to a risk that their investigative team will gain access to LPP material. For both reasons he submits that the approach of the SFO, which they intend to follow in connection with devices seized from the claimant and others associated with him, is unlawful. The claimant relies upon the decisions of the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 and of the Divisional Court in R (Rawlinson and Hunter Trustees) v Central Criminal Court [2012] EWHC 2254 (Admin); [2013] 1 WLR 1634 to support the proposition that the involvement of in-house IT staff is necessarily unlawful.
2. The complaint is that the SFO system uses its in-house technical staff to initiate an electronic search of the content of seized devices by reference to search terms provided by their owners, for the purpose of isolating potential LPP material for subsequent review by independent counsel. The claimant submits that this initial exercise should be contracted out by the SFO to independent IT specialists, even though the systems at the SFO are arranged so that investigators do not gain access to the isolated material before it is reviewed by independent counsel and thus should never gain access to LPP material. The claimant's case is that if electronic equipment is seized, and at that time it is suspected to contain material subject to LPP, no copy should be made of it by the seizing body until after it has been provided to, and processed by, the independent IT specialists. Only once the process of isolating material potentially subject to LPP, and a review by independent counsel of that material have been undertaken, should the devices be returned to the seizing body with all trace of material determined to be subject to LPP deleted.
3. If the possibility of the presence of LPP is not appreciated until after the content of the seized items had been downloaded onto the body's server, the claimant's position is that the equipment should be sent immediately to the independent IT specialist whilst all trace of the downloaded copy must be deleted from the server. That deletion exercise should also be undertaken by outside contractors. The equipment would be returned to the seizing body shorn of all trace of LPP material following, first, the isolation of potential LPP material and, secondly, a review by independent counsel. In paragraph 50 of the claimant's skeleton argument the problem was identified in this way:

"The involvement of teams of employees of the defendant and the uploading of the digital material, including the potential LPP material embedded within it, onto the defendant's digital review system, unnecessarily exposes the person to whom LPP attaches to an avoidable risk that LPP material may come to the knowledge of the defendant, directly or indirectly, accidentally, inadvertently or otherwise, and be used to his disadvantage."

4. The question becomes whether, as a matter of law, the process for isolating files that may contain LPP material into an electronic folder for review by an independent lawyer must itself be carried out by individuals who are independent of the seizing body.

The Facts

5. On 19 June 2015 the claimant was arrested at Heathrow Airport on suspicion on conspiracy to commit an offence contrary to section 1 of the Bribery Act 2010 in connection with a $54,000,000 contract for a company called MIB Facades Limited of which he is a director and major shareholder. He was with a colleague named Liam Daley. A USB stick, an iPhone 6, a Samsung mobile telephone and a Dell laptop computer were seized from the claimant pursuant to powers found in section 54 of the Police and Criminal Evidence Act 1984 ["PACE"]. Various devices were seized from Mr Daley. Six days later the SFO served a notice under section 2(3) of the Criminal Justice Act 1987 ["the 1987 Act"] which required the claimant to produce further items. In response he produced his gold iPhone and various pieces of computer equipment belonging to the company. There is no suggestion that at the time of seizure or taking possession the SFO had reason to suppose that any of this equipment contained material subject to LPP. No question arises concerning the legality of the seizures under section 54 of PACE or of the notices under the 1987 Act.
6. Even had it been the case that the police or SFO had reasonable grounds to suspect that the seized devices contained LPP material their seizure would have been authorised by section 51 of the Criminal Justice and Police Act 2001 ["the 2001 Act"] because it would not have been practicable to separate the LPP from the non-LPP material contained in the devices. The provisions of the 2001 Act apply not only to electronically stored material but also to material stored in hard copy. It then provides a detailed code for the later identification of material, including LPP material, that must be returned when it has been identified within the mass of seized material.
7. On 3 August 2015 the SFO notified the claimant's solicitors that it believed that the gold iPhone may contain some LPP material with the consequence that its content was being quarantined within the SFO's computer systems. The solicitors were asked to provide a list of search terms to enable potential LPP material to be identified so that it could be "isolated for review by independent counsel". The use of such search terms is commonplace to identify not only LPP material but also in searching electronic databases for material disclosable in litigation. The search terms are entered by hand but the search is then carried out automatically and the relevant files electronically separated. It was the request for search terms which prompted the claimant's solicitors to respond by saying that there was LPP material stored on all of the devices. They had not previously raised the question of LPP material in connection with any of the material seized or produced. They have refused to provide search terms on the basis that the SFO procedure is unlawful.
8. The policy and system for dealing with LPP material is explained in the Operational Handbook:

"Policy for handling LPP material

When the SFO requires the production of material, or seizes material pursuant to its statutory powers, all material which is potentially protected by LPP must be treated with great care to:

Minimise the risk that LPP material is seen or seized by an SFO investigator or a lawyer involved in the investigation

Ensure that any LPP material which is seized is properly isolated and promptly returned to the owner without having been seen by an SFO investigator or a lawyer involved in the investigation

Ensure that any dispute relating to LPP is resolved in advance of the material being seen by an SFO investigator or a lawyer involved in the investigation

Ensure that where an SFO investigator or a lawyer involved in the investigation inadvertently sees LPP material, measures are in place to ensure that the investigation and any subsequent prosecution is not adversely affected as a result. Care must always be taken that LPP material is not viewed by the SFO staff involved in the investigation."

This policy is of general application and not limited to material embedded in electronic devices. Issues relating to the handling of material potentially subject to LPP also arise in connection with the seizure or production of physical paper files. Its main focus is on LPP material which relates to the subject matter of an investigation itself. But it applies also to any LPP material even if unconnected to the investigation, or indeed any other criminal investigation.

9. The system relating to digital material is described thus:

"Digital Material

Digital material which potentially contains LPP material, such as the contents of a laptop will be processed and loaded onto the Digital Review System ("DRS"), but isolated from the case team's access.

The case controller should contact the owner or his or her legal representative to seek search terms to be applied to identify potential LPP material embedded in the digital material. Those search terms will be applied by a member of the Digital Review System team, who is independent of the case team. The results of the search terms applied will be confined in a separate folder to which the case team and case controller do not have access. The material will then be reviewed by an independent LPP lawyer.

Following the review, any material which is identified as LPP will be extracted from the non-LPP material. Only the non-LPP material (hard and digital) will be made available to the investigation team,

This process is consistent with the Attorney General's Guidelines on Disclosure including as an Annex "Supplementary Guidelines on Digitally Stored Material (2011)" …"

10. The DFU is the SFO's digital forensic unit to which seized or produced devices are first provided. Its staff download the content onto the digital review system named Autonomy. If that content is thought to contain LPP material it is immediately quarantined with the result that the investigation team is denied access. Thereafter the procedure identified in the Handbook of applying search terms is followed. A different team known as the DRS team applies the search terms which result in material responsive to those terms being confined to a separate folder. The staff of the DFU and DRS team are not part of the investigation team. Mr Munson, who has provided evidence on behalf of the SFO, describes them as "two independent technology specific departments" with specialist skills. Their work in this process is highly technical. A third team, known as RAVN, with specialist expertise in the functioning of the Autonomy system, ensures that the uploading has been successful. That team is not employed by the SFO but is a third party technical support team. No material located on the Autonomy system can be viewed by members of an investigative team until it has been "released" by the DRS. Access by investigators is thereby controlled. They have access only to areas which relate to their own cases. They have no access to any material quarantined for LPP purposes until it has been reviewed and released by the independent lawyer. No access is ever granted to material which has been found to be subject to LPP. Mr Munson explains that some members of the various technical units could gain access to the quarantined area, and thus read the material, but that is not any part of their function. Nor is it obvious why they should seek to do so, in the absence of a desire to act improperly in an attempt to breach privilege, perhaps by communicating privileged material to investigators. Their need to gain access to the quarantined area is only for quality control purposes to ascertain that the uploading has been completed successfully.

The Attorney General's Guidelines

11. The Attorney General has issued successive Guidelines on Disclosure to prosecuting authorities. The latest iteration was issued in December 2013. It was accompanied by a judicial protocol on disclosure of unused material in criminal cases designed to inform and assist the judiciary. The Attorney General's Guidelines were "for investigators, prosecutors and defence practitioners" and were concerned with the disclosure regime under the Criminal Procedure and Investigations Act 1996. The foreword explained that on questions of disclosure, the judiciary and Attorney General had worked together to "produce complementary guidance that is shorter than the previous iterations, but remains comprehensive". None of the Guidelines relating to disclosure is concerned with how an investigative body, which lawfully comes into possession of LPP material, should handle it.
12. The Guidelines have an annex entitled "Supplementary Guidelines on Digitally Stored Material (2011)". As the title suggests, those supplementary guidelines had first been issued in 2011. They were designed as an annex to earlier guidelines on disclosure (which had been published in April 2005). They were largely concerned with how prosecuting authorities should manage large volumes of digitally stored material, including that seized under the powers found in the 2001 Act referred to in paragraph 4 above, thought to contain material that could not itself be seized if it had been found in isolation. It was in that context that a discrete section was included devoted to LPP. It is changes between the version published in 2011 and that annexed to the 2013 Guidelines upon which the claimant's submissions focus.
13. The introduction to the 2013 Guidelines indicates that they outline "high level principles which should be followed when the disclosure regime is applied" and identify their status:

"The Guidelines are intended to operate alongside the Judicial Protocol … They are not designed to be an unequivocal statement of the law at any one time, nor are they a substitute for a thorough understanding of the relevant legislation, codes of practice, case law and procedure."

14. The current version in the Annex relating to LPP is as follows:

"Legal professional privilege (LPP)

A28. No digital material may be seized which an investigator has reasonable grounds for believing to be subject to LPP, other than under the additional powers of seizure in the CJPA 2001.

A29. The CJPA 2001 enables an investigator to seize relevant items which contain LPP material where it is not reasonably practicable on the search premises to separate LPP material from non-LPP material.

A30. Where LPP material or material suspected of containing LPP is seized, it must be isolated from the other material which has been seized in the investigation. The mechanics of securing property vary according to the circumstances; 'bagging up', i.e. placing materials in sealed bags or containers, and strict subsequent control of access, is the appropriate procedure in many cases.

A31. Where material has been identified as potentially containing LPP it must be reviewed by a lawyer independent of the prosecuting authority. No member of the investigative or prosecution team involved in either the current investigation or, if the LPP material relates to other criminal proceedings, in those proceedings should have sight of or access to the LPP material.

A32. If the material is voluminous, search terms or other filters may have to be used to identify the LPP material. If so this will also have to be done by someone independent and not connected with the investigation.

A33. It is essential that anyone dealing with LPP material maintains proper records showing the way in which the material has been handled and those who have had access to it as well as decisions taken in relation to the material.

A34. LPP material can only be retained in specific circumstances in accordance with section 54 of the CJPA 2001 i.e. where the property which comprises the LPP material has been lawfully seized and it is not reasonably practicable for the item to be separated from the rest of the property without prejudicing the use of the rest of the property. LPP material which cannot be retained must be returned as soon as practicable after the seizure without waiting for the whole examination of the seized material."

This guidance is concerned with the seizure of material which at the time of seizure is believed to contain LPP material. It is not directly concerned with the circumstances which arise in this case, namely (a) seizure of material at a time when there is no such belief, but one later develops, or (b) the production of material pursuant to a notice when no contemporaneous indication is given by the person concerned that it may contain LPP material. The practice of the SFO in such cases is to apply the procedure in the Handbook as soon as there are reasonable grounds to suspect the presence of LPP material.

15. Paragraphs A28, A29 and A30 are in the same terms as the equivalent paragraphs in the original version of the 2011 document, as is paragraph A32. The first sentence of Paragraph A31 makes clear that any review of material suspected of being subject to LPP must be undertaken by a lawyer independent of the prosecuting authority. The original equivalent sentence referred only to "an independent lawyer". Prior to the decision of this court in the Rawlinson and Hunter Trustees case that phrase had been understood by some to suggest that the lawyer could be an in-house lawyer so long as he was independent of the investigation in question. I shall turn shortly to that decision, but it is apparent that the change in the terms of that sentence was designed to reflect the conclusion of this court, albeit in a different context, that "an independent lawyer" could not be one employed by the investigating agency itself.
16. The current version of the Annex does not state by whom or how material "suspected of containing LPP" should be isolated. Paragraph A30 says it must happen and paragraph A31 assumes that the task has been completed before the review by the independent lawyer. The original 2011 Supplementary Guidelines contained the following paragraph between what are now A 30 and A31:

"Examination of material may be undertaken by a person independent of the investigation, who may be employed within the investigative body so long as he or she is not one of the investigators or anyone connected with the investigation, to determine whether material may attract LPP."

The original version of the 2011 Supplementary Guidelines thus drew an explicit distinction between the procedure for pulling together a body of material suspected of being subject to LPP and the task of deciding whether material was or was not subject to LPP. The latter was for an "independent lawyer" (in the 2013 Guidelines clarified to mean institutionally independent) whilst the former could be done in-house by a person independent of the investigation. Paragraph A32 (concerned as it is with voluminous material which may necessitate the use of search terms or filters) recommends that "someone independent and not connected with the investigation" should undertake this role. It echoes, indeed reproduces, the language of the paragraph which was excised from the original 2011 version. It is plain that in the earlier version it was referring not to someone independent in the sense that he was not employed by the investigating authority, but to someone who could be in-house but functionally independent of the investigation.

17. Mr Rees submits that in the absence of the excised paragraph the reference to "someone independent" in A32 must mean "independent of the prosecuting authority" because that is the way "independent" is used in A31. In other words, that the removal of the paragraph has changed the meaning of what remains.
18. I am unable to accept that argument for three reasons.
19. First, the technical linguistic argument would falter had the sentence ended "by someone independent of and not connected with the investigation." The inclusion of the word "of" would make the matter clearer but there remains a clear distinction between the quality of independence identified with respect to the reviewing lawyer (independent of the prosecuting authority) and that required of the person who applies filters electronically to isolate material suspected of being subject to LPP (independent and not connected with the investigation). The lack of connection to the investigation gives colour to what is meant by independent in this context. Read in a practical way the distinction is apparent.
20. Secondly, paragraph A32 is directed at electronic material. Yet the problem of first isolating potential LPP material for review by the independent lawyer arises in the same way with large volumes of hard copy documents. There is no hint in the Guidelines that, for example, a filing cabinet containing thousands of documents amongst which is suspected to be LPP material should be shipped out from the seizing body's premises and control for initial search by outside contractors. If the Guidelines were suggesting that electronic searching should be carried out by outsiders then logically the same should apply to hard copy material.
21. Thirdly, the original version of the 2011 Supplementary Guidelines unequivocally contemplated that the initial sifting exercise would be done in-house. The change suggested by the claimant to flow from the drafting changes in the version annexed to the 2013 Guidelines would, on any view, be a significant one with wide ranging implications for all investigating bodies that use statutory powers to seize or secure documentary materials, hard copy or electronic. Were it the intention of the Attorney General to suggest that investigators or prosecutors who have possession of a large body of material, some of which may be subject to LPP, immediately transfer it to a third party for preliminary examination it is to my mind inconceivable that the position would not have been spelt out explicitly and with clarity.
22. In my judgment, the procedures set out in the SFO Handbook are not inconsistent with the 2013 Guidelines and its Annex. In the light of that conclusion it is unnecessary to deal with what would have been the next issue, namely the legal consequences were the claimant correct in his argument that the Handbook and the 2013 Guidelines are inconsistent. That said, it should not be supposed that an inconsistency with the Guidelines would render the approach of the SFO set out in the Handbook unlawful. The Guidelines do not purport to be a statement of the law. They do not amount to a policy which the SFO is obliged to follow. The question would still arise whether the procedure contended for by the claimant was required by law.

The Bolkiah case

23. The Bolkiah case was brought by a long-standing client of KPMG, Prince Jefri of Brunei. KPMG had by virtue of that professional relationship become privy to confidential information, including material in which the prince held LPP. KPMG subsequently accepted instructions from a Brunei state agency to undertake work which involved scrutiny of the financial conduct of the prince. KPMG was alive to the need to protect the confidential material it held relating to Prince Jefri and set up a system of "Chinese walls". Prince Jefri sought an injunction restraining KPMG from acting for the Brunei government body. In the House of Lords Lord Millett, with whom all other members of the Committee agreed, reviewed the test for the grant of injunctive relief against a firm of solicitors which accepts instructions to act against a former client. The same test was applied on the facts of the case to the relationship between the Prince and KPMG. It involved a review of English authority and the treatment of the same issue in Commonwealth jurisdictions in the light of a substantial body of academic writing.
24. The essence of Lord Millett's reasoning on the approach to be applied when a former client seeks to prevent his solicitor from later acting against his interests is found between 234E and 238A. Whilst the claimant's submissions focussed on the penultimate and ante-penultimate paragraphs of the quotation that follows, it is necessary to set out rather more of Lord Millett's reasoning to understand both the context of the case and to consider the submission:

"The basis of the jurisdiction

    In Rakusen's case the Court of Appeal founded the jurisdiction on the right of the former client to the protection of his confidential information. This was challenged by counsel for Prince Jefri, who contended for an absolute rule, such as that adopted in the United States, which precludes a solicitor or his firm altogether from acting for a client with an interest adverse to that of the former client in the same or a connected matter. In the course of argument, however, he modified his position, accepting that there was no ground on which the court could properly intervene unless two conditions were satisfied: (i) that the solicitor was in possession of information which was confidential to the former client and (ii) that such information was or might be relevant to the matter on which he was instructed by the second client. This makes the possession of relevant confidential information the test of what is comprehended within the expression "the same or a connected matter." On this footing the Court's intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information.

    My Lords, I would affirm this as the basis of the court's jurisdiction to intervene on behalf of a former client. It is otherwise where the court's intervention is sought by an existing client, for a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. …

    Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. … The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.

    Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case. In this respect also we ought not in my opinion to follow the jurisprudence of the United States.

The extent of the solicitor's duty

    Whether founded on contract or equity, the duty to preserve confidentiality is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so. Moreover, it is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit. The former client cannot be protected completely from accidental or inadvertent disclosure. But he is entitled to prevent his former solicitor from exposing him to any avoidable risk; and this includes the increased risk of the use of the information to his prejudice arising from the acceptance of instructions to act for another client with an adverse interest in a matter to which the information is or may be relevant.

Degree of risk

    It follows that in the case of a former client there is no basis for granting relief if there is no risk of the disclosure or misuse of confidential information. This was the ground on which the Court of Appeal discharged the injunction in Rakusen's case [1912] 1 Ch 831. The test for disqualification was expressed in different terms by each of the three members of the court, but the case has been taken to indicate that the Court will not intervene unless it is satisfied that there is a "reasonable probability of real mischief." This test has been the subject of criticism both in this country and overseas, particularly in relation to solicitors, and a more stringent test has frequently been advocated: (see for example Professor Finn Conflicts of Interest and Professionals published by the New Zealand Legal Research Foundation in the volume Professional Responsibility) cited with evident approval by Gummow J. in National Mutual Holdings Pty. Ltd. v. The Sentry Corporation (1989) 22 F.C.R. 209. It has been abandoned in Canada: see Macdonald Estates v. Martin (1990) 77 D.L.R. (4th) 249 where it has been replaced by two rebuttable presumptions: (i) that confidential information will have been communicated by the former client in the course of the retainer and (ii) that lawyers who work together share confidences. The clear trend of the authorities is towards a stricter approach.

    My Lords, I regard the criticisms which have been made of the test supposed to have been laid down in Rakusen's case as well founded. It imposes an unfair burden on the former client, exposes him to a potential and avoidable risk to which he has not consented, and fails to give him a sufficient assurance that his confidence will be respected. It also exposes the solicitor to a degree of uncertainty which could inhibit him in his dealings with the second client when he cannot be sure that he has correctly identified the source of his information.

    It is in any case difficult to discern any justification in principle for a rule which exposes a former client without his consent to any avoidable risk, however slight, that information which he has imparted in confidence in the course of a fiduciary relationship may come into the possession of a third party and be used to his disadvantage. Where in addition the information in question is not only confidential but also privileged, the case for a strict approach is unanswerable. Anything less fails to give effect to the policy on which legal professional privilege is based. It is of overriding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret. This is a matter of perception as well as substance. It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest.

    Many different tests have been proposed in the authorities. These include the avoidance of "an appreciable risk" or "an acceptable risk." I regard such expressions as unhelpful: the former because it is ambiguous, the latter because it is uninformative. I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial.

…

The adequacy of the protective measures taken by K.P.M.G.

    Once the former client has established that the defendant firm is in possession of information which was imparted in confidence and that the firm is proposing to act for another party with an interest adverse to his in a matter to which the information is or may be relevant, the evidential burden shifts to the defendant firm to show that even so there is no risk that the information will come into the possession of those now acting for the other party. There is no rule of law that Chinese Walls or other arrangements of a similar kind are insufficient to eliminate the risk. But the starting point must be that, unless special measures are taken, information moves within a firm. In MacDonald Estates v. Martin 77 D.L.R. (4th) 249, Sopinka J. said at p. 269 that the court should restrain the firm from acting for the second client "unless satisfied on the basis of clear and convincing evidence that all reasonable measures have been taken to ensure that no disclosure will occur." With the substitution of the word "effective" for the words "all reasonable" I would respectfully adopt that formulation."

25. Mr Rees submits that precisely the same approach should apply when an investigating body lawfully comes into possession of LPP material as applies to a solicitor vis-à-vis a former client. Just as the solicitor must, in accordance with the test explained by Lord Millett, satisfy the court that there is no real risk of disclosure, so the seizing authority must establish that there is no real risk that LPP material will be disclosed to an investigator, and must do so with convincing evidence. If that is not established, the court should intervene. He submits that such a real risk will necessarily exist unless the preliminary sifting exercise, as well as the subsequent independent legal assessment, is undertaken by a third party organisation.
26. It is apparent from the final part of the quotation from Lord Millett's speech that "Chinese walls" were not objectionable in themselves to mitigate the risk with which that case was concerned. It was the inadequacy of the detail of the arrangements put in place by KPMG which led to the grant of the injunction (see page 239 A – E). It follows that the Bolkiah case provides no direct support for the proposition that the task of electronic sifting of the material in the possession of the SFO must, as a matter of law, be undertaken by a third party. In a case involving the former client of a solicitor the question is whether all effective measures have been taken to ensure that no disclosure will occur. That involves an examination of the measures put in place and whether they are effective.
27. Lord Millett's analysis of the test depended on the question before the House of Lords arising from the relationship of solicitor or litigation adviser and client. It was in that context that he was unable to discern a justification for exposing the client to "any avoidable risk, however slight" which in turn led to the conclusion that "the court should intervene unless it is satisfied that there is no [real] risk of disclosure." In formulating the test in that way the House of Lords was expressly enhancing the protection afforded by the common law to a former client in such circumstances. For reasons explained in the extract from Lord Millett's speech set out above, the less onerous formulation deriving from Rakusen v. Ellis, Munday and Clarke [1912] 1 Ch 831 was thought to be inappropriate. Thus the burden of proof on the former client was said "not to be a high one" with the reality being that the former solicitor would have to satisfy a court that, in the light of the circumstances obtaining within the firm, there was no real risk of disclosure. In my judgment, it would not be appropriate to apply the same reasoning to the relationship between a criminal investigating body and the subject of its investigation from whom material has been obtained using coercive statutory powers. The relationship is entirely different for obvious reasons. There is no solicitor and client relationship between an investigating body and those under investigation, from whom documents are seized or demanded, nor a fiduciary relationship of any sort. The body is exercising statutory powers for the public good in the investigation of suspected crime. The reasons for imposing a heavy burden on the former solicitor are absent. That is not to diminish the importance of protecting LPP material from disclosure to those who might have an interest in using against the person concerned. But the different context in which the possibility of disclosure arises should be reflected in the obligations imposed by law on those in possession of the material.
28. In the exercise of statutory powers, material which may contain documents or communications which are protected by LPP may inadvertently come into the possession of the investigating authority (as happened in this case) or may knowingly and lawfully be seized pursuant to the powers found in section 50 or 51 of the 2001 Act. Mr Hall QC, for the SFO, submits that the statutory scheme is not consistent with the onerous obligations contended for by the claimant and does not support the proposition that once LPP considerations arise, the preliminary examination necessary to isolate the material for review by the independent lawyer must be outsourced from the seizing body. He submits that the obligations on the SFO could not be more onerous in circumstances where the presence of embedded LPP material becomes apparent only after seizure, rather than before.
29. Section 50 covers seizure from premises and section 51 seizure from the person. Those provisions are concerned not only with LPP material which may be difficult to separate, but also excluded and special procedure material (as to which see section 9 of PACE) and, perhaps most commonly, material which does not fall within the terms of a search warrant. For example, a warrant may authorise the seizure of documents concerning a specific series of transactions or a named company's dealings and records, which are stored in a computer containing much else. The computer is seized and the task of extracting the relevant material follows. Alternatively, boxes of documents are seized which cannot be sorted through at the site of the search. The statute sets out at section 53 and following the obligations of the investigating authority when it has seized material under sections 50 or 51. Section 53 is concerned with the early examination of the seized material and return of that to which the authority concerned is not entitled. There is no suggestion in the 2001 Act that this should be undertaken by a third party. It covers the return of material subject to LPP (section 54).
30. I agree that the statute provides no support for the proposition advanced by the claimant in these proceedings that the preliminary sifting, whether electronic or manual (in the case of hard copy seizures) should be outsourced. But that does not answer the question of what legal test should apply to the seizing authority when it is sifting for LPP. The Act provides that disputes relating to whether seized material can be lawfully retained may be ventilated in the Crown Court (section 59). When an application is made for the return of seized material various safeguards are applied (section 61) which include securing "that arrangements are in force that ensure that … the seized property … is not examined." In reality this is the approach adopted by the SFO to material that the reviewing lawyer has determined is subject to LPP. But it does not bear directly on what should be done with material suspected to contain LPP material pending review by an independent lawyer.
31. It is common ground between the parties that LPP is an important right jealously guarded by the common law. Lord Millett adverts to that proposition in the Bolkiah case and it is supported by a constant line of authority at the highest level. The SFO recognises the fundamental importance of safeguarding the LPP vested in those whose conduct it is investigating and from whom material has been seized or demanded. Both its policy and the 2013 Guidelines reflect that importance. The question remains what criterion should be applied at the sifting stage by an authority lawfully in possession of bulk electronic or hard copy documents which may contain LPP material, given the context in which it came into its possession.
32. The essential aim of the SFO's policy is to ensure that LPP material relevant to an inquiry is not read by anyone involved in the investigation. That aim is uncontroversial, laudable and correct. But it would be imposing too onerous a legal obligation on an investigating authority, in the context of the exercise of statutory powers of seizure and production, to require it to demonstrate that there could be no real risk of that happening. It is inappropriate to equate a public body exercising statutory powers in connection with suspected crime with a solicitor who proposes to act against his former client. The material is lawfully in the possession of that public body acting in the public interest in investigating and prosecuting crime.
33. In the absence of a former solicitor and client relationship, but bearing in mind the great importance of legal professional privilege, the law must nevertheless require public authorities to have procedures in place which are intended to prevent investigators reading LPP material and which make it very unlikely that they will do so. The adoption of any test which has been developed in connection with the grant of injunctive relief in private law proceedings, particularly when the test is couched in terms that injunctive relief will issue unless a condition is satisfied, is likely be to inapt. The better approach is to identify the positive duty the law imposes upon a seizing authority to guard against the risk that an investigator will read a document protected by LPP.
34. In my judgment, a seizing authority has a duty to devise and operate a system to isolate potential LPP material from bulk material lawfully in its possession, which can reasonably be expected to ensure that such material will not be read by members of the investigative team before it has been reviewed by an independent lawyer to establish whether privilege exists. That approach to LPP material imports the necessary rigour required by the law for its protection in this context.
35. Moreover, the "no real risk" approach of Bolkiah requires the solicitor who has possession of the client's LPP material to demonstrate that there is no risk of a breach of LPP in his acting against that client. A claim for relief in judicial review proceedings against a public body lawfully in possession of LPP material provides no justification for what amounts to a reversal of the burden of proof. That is a further distinction between claims of this sort and Bolkiah. Burdens of proof rarely determine the outcome of judicial review proceedings but if a claimant suggests that the systems a seizing body has in place are deficient he must establish why.
36. The evidence in this claim does not suggest that any LPP material has in fact been read by an investigator. It may well be that mistakes are more likely to occur in connection with hard copy, rather than digital, material. Either way, there should also be clear guidance in place meaning that, if an investigator does by mischance read material subject to LPP, that fact is recorded and reported, the potential conflict recognised, and steps taken to prevent information which is subject to privilege being deployed in the investigation. There may be cases where it is necessary to remove the relevant investigator from the case. The last bullet point of the policy for handling LPP material quoted in [8] above shows that the SFO is alive to such matters.
37. It is unlikely that the test I have articulated and the one resting on the absence of real risk would deliver different answers if the system described by the SFO in its Handbook and Mr Munson's evidence is replicated by other investigating authorities and police forces. In my judgment, the risks of inadvertent disclosure argued on behalf of the claimant in this case are in truth fanciful. Both accidental and deliberate disclosure were canvassed by Mr Rees in argument, but the focus was on the physical proximity of the investigators and the IT teams (different floors within the same building) and the possibility of someone deliberately misbehaving. I would not accept that the system should be judged against the yardstick that either those in the IT department or investigating teams will act in bad faith. No guidelines or processes can provide complete protection against a deliberate breach of privilege. In any event, outside contractors would not obviously be less (or more) prone to acting improperly. It should be stressed that there is no basis for any suggestion of bad faith or deliberate breach in this case rather the opposite, since the whole concern with LPP arose from the prompting of the SFO's staff. I am satisfied that the system in place does not give rise to a real risk that LPP material might be read by investigators before the independent lawyer has done his job. Still less can it be suggested that the system operated by the SFO to isolate potential LPP material from bulk material lawfully in its possession, cannot reasonably be expected to ensure that such material will not be read by members of the investigative team before it has been reviewed by the independent lawyer.

The Rawlinson and Hunter Trustees case

38. The claimant's final submission is that the logic of the Rawlinson and Hunter Trustees case dictates that the exercise of isolating potential LPP material must be conducted by third parties.
39. This case was concerned with the execution of search warrants by the SFO. It was anticipated that in the course of the search LPP material would be encountered. Lawyers employed by the SFO attended the execution of the warrants to determine whether documents were protected by LPP or not. The case was not concerned with the question of who selected the documents to be looked at by the SFO lawyers to determine the substance of an LPP claim. It arose out of litigation between Robert Tchenguiz and Vincent Tchenguiz and the SFO in connection with the latter's investigation into their business dealings. There were many issues before the Divisional Court (see paragraph 72 of the judgment of the court) only one of which concerned the role played by SFO lawyers during the searches in deciding whether individual documents were protected by LPP. There were many issues relating to the conduct of the searches which were held over to civil proceedings in the Queen's Bench Division; but the court was able to determine the discrete argument about whether the policy of the SFO to use in-house lawyers as "independent" lawyers to determine questions of LPP was lawful. It was not. The reasoning of the court is found in the following paragraphs:

"(ii) The presence of independent lawyers

264. It is clear from R v HM Customs and Excise ex parte Poley [1999] All ER (D) 1048 and R v Middlesex Guildhall Crown Court ex p Tamosius [2000] 1 WLR 453 that the proper procedure is that an independent lawyer should be present to assess claims made for legal professional privilege, without prejudice to the right of the person being searched to go to the court.

265. In R (Faisaltex) to which we have referred at paragraph 171, an issue which the court considered was whether barristers who came from the same chambers as others retained in the case were independent. Unsurprisingly, the court held they were. It is long established that barristers in the same chambers are so independent of one another that they can appear on the opposite side of a case.

266. However five of the six lawyers sent to the premises of Consensus were not independent. The five were employees of the SFO; only one was independent as that lawyer was a barrister in independent practice. It is clear that in civil search orders, the independent lawyer has to come from a different firm: see CPR 25A.7.6. We do not see how the position in a criminal case can be different. The lawyer must be and be seen to be independent of the SFO; an employee of the SFO is not independent.

267. In our view, the policy of the SFO in using its own lawyers was misconceived, though it was, no doubt, adopted because of the lack of resources available to the SFO. How serious the consequences were in the circumstances of this case can only be determined by the evidence that will be heard on the conduct of the search."

40. There was no suggestion before the court that, before showing it to the lawyer, those conducting the search who first identified a document or file as potentially attracting LPP should themselves not have been employed by the SFO. That would provide the analogy with SFO staff applying search terms to material stored on computers to isolate that potentially subject to LPP. The authorities cited in this extract from the judgment support a long-standing legal requirement for decisions of substance relating to LPP to be made by "independent lawyers". The case clarified what was meant by that term. In my judgment it provides no support for the proposition advanced by the claimant in these proceedings that the preliminary sift of paper or electronic material must, as a matter of law, be conducted by third parties. There is a world of difference between determining whether something is protected by LPP, which involves close consideration of the content and context of a document or communication, and identifying a document, file or communication as potentially attracting LPP, which does not. As is plain from the description of the system for separating electronic files by the use of search terms there is in fact no need for the electronic file to be viewed at all.

Conclusion

41. The procedure set out in the SFO's Handbook for isolating material potentially subject to LPP, for the purpose of making it available to an independent lawyer for review, is lawful. Whilst I would grant permission to apply for judicial review I would dismiss the claim.

Mr Justice Irwin

42. I agree.