About this case:

• Citation:
  [2024] IEHC 228
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Ms Justice Nuala Jackson

Delivering judgment for the High Court, Ms Justice Nuala Jackson determined: “The present case comes within the category of cases in which the crime/fraud exception is engaged. The plaintiff contends that the termination of her employment was linked to duplicitous practices which she was obliged to be engaged in the context of her work… The proceedings involve circumstances of ‘moral turpitude or of dishonest conduct even though it may not be fraud’ such that the application of legal professional privilege may be ‘injurious to the administration of justice’.”

Background

The plaintiff sought various reliefs against the defendant arising out of the termination of her employment by the defendant in April 2008, including damages for personal injuries, breach of contract, intimidation, bullying, ageism, and tortious interference with contractual relations.

In her replies to particulars dated 6 August 2013, the plaintiff alleged a change in workplace atmosphere following a meeting in 2008. The plaintiff contended that she was being blamed and scapegoated for disclosing the existence of a duplicate accounting system to a newly-appointed manager, and further alleged that the Foreign Exchange Bureau had continued to operate as before but discontinued this secondary accounting system which filtered out all transactions in excess of €2,000 from turnover figures as disclosed to its landlord, Dublin Airport Authority, which were used in the computation of the monthly rental charge under the terms of the lease. The plaintiff asserted that she was forced to engage in this duplicate accounting system. She later amended her pleadings to formally include pleas relating to those contentions.

An order compelling discovery by the defendant was made in March 2017, obliging the defendant to discover information including the lease between it and Dublin Airport Authority, its turnover figures in respect of its Dublin Airport premises, and daily tally tolls generated from its Forde Electronics Calculators for July 2007. The defendant asserted legal privilege over a number of relevant documents.

The plaintiff applied to the High Court pursuant to Order 31, rule 20(2) of the Rules of the Superior Courts for the judge to inspect the documents over which privilege was claimed in order to determine if legal privilege was validly asserted.

In particular, the plaintiff argued that the privilege should be lifted to permit inspection of the privileged documents on the basis of the crime/fraud exception, which prevents legal privilege attaching to communications in the furtherance of inter alia criminal and fraudulent conduct.

The High Court

Having considered inter alia the types of legal professionals who could claim legal professional privilege and the types of communications over which privilege could be claimed, Ms Justice Jackson proceeded to examine case law on the crime/fraud exception to legal privilege, including Murphy v Kirwan [1993] 3 IR 501 and McMullen v. Kennedy [2008] IESC 69.

Noting the defendant’s contention that all of the privileged documents post-dated the commencement of proceedings, the court highlighted the conclusion of Schiemann LJ in Barclays Bank Plc v. Eustice [1995] 1 WLR 1238 that “…to me the most important consideration is that we are here engaged not in some semantic exercise to see what adjective most appropriately covers the debtor’s course of conduct but in deciding whether public policy requires that the documents in question are left uninspected”.

Turning to the standard of proof required to invoke the crime/fraud exception, Ms Justice Jackson observed: “Having regard to all of the authorities, it appears that a clear and definite statement of the grounds upon which the exception is invoked is required together with prima facie evidence in support of this.”

Moving to the application of the exception, the court relied upon McMullen v. Kennedy [2008] IESC 69 which stated that “the correct approach is for the court, having inspected the documents in question, to review their contents and to come to a decision as to whether or not they include any relevant material which should be disclosed. If any of them fall into that category, of course, it will be necessary then to consider the appropriate steps to be taken at that stage so as to permit Kent Carty and Co., in whom the privilege may vest, to be heard…”

Ms Justice Jackson commented that in the course of the parties’ affidavits, there had been “considerable distraction” caused by their focus on the behaviour and attitudes of the lawyers on behalf of the defendant. In the circumstances, the court found that “the relevance of the role of lawyers concerned is succinctly addressed in Abrahamson and Others, ‘Discovery and Disclosure’ (2019, 3rd Edn) at Paragraph 40 – 107: ‘In order for the crime-fraud exception to apply, the lawyer need not be aware that the client intends to use his or her advice for a criminal or fraudulent purpose…’”

The court examined the plaintiff’s affidavits, finding her averments that “concealment and denial of a financial fraud against the DAA, a semi-State body, has arisen”, that “no investigation or enquiry has been undertaken by the defendant”, that the “loss and destruction of records has been admitted to” and that “spoliation has occurred” to be the “most relevant” in the context of the present application.

Ms Justice Jackson confirmed that the defendant had proved that the documents were ones to which legal privilege attached. The judge was also satisfied that the crime/fraud exception to privilege was engaged, stating: “The proceedings involving circumstances of ‘moral turpitude or of dishonest conduct even though it may not be fraud’ such that the application of legal professional privilege may be ‘injurious to the administration of justice’.”

The court concluded that prima facie evidence had been adduced by the plaintiff to support her contention that the proceedings involved moral turpitude, having regard to the documents presented to the court derived from the defendant’s ‘Stor System’ and the inspection thereof by the plaintiff and her averments in that regard. The court also determined that the fact that the privileged documents were “post-proceedings” did not preclude the crime/fraud exception.

Conclusion

Accordingly, Ms Justice Jackson agreed to inspect the documents in question and to come to a decision on whether they included relevant material which should be disclosed to the plaintiff no later than 29 May 2024.

McNulty v. The Governor and Company of Bank of Ireland [2024] IEHC 228