BMO REP Asset Management Plc v Friends First Managed Pension Funds Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice McGovern
• Judgment Date: 15 November 2018
• Neutral Citation: [2018] IECA 357
• Date: 15 November 2018
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2018] 357 Record No. 2017/332

[2018] IECA 357

THE COURT OF APPEAL

McGovern J.

Peart J.

Whelan J.

McGovern J.

Neutral Citation Number: [2018] 357

Record No. 2017/332

BETWEEN/

BMO REP ASSET MANAGEMENT PLC

APPELLANT/PLAINTIFF

- AND -

FRIENDS FIRST MANAGED PENSION FUNDS LIMITED

RESPONDENT/DEFENDANT

Privilege – Final order – Interlocutory application – Appellant seeking to claim privilege – Whether the respondent was entitled to inspection of certain documents

Facts: The appellant, BMO REP Asset Management Plc, appealed to the Court of Appeal from an order of the High Court (Murphy J) dated the 1st June 2017 in which the court determined that the respondent, Friends First Managed Pension Funds Ltd, was entitled to inspection of certain documents identified in a notice to produce over which privilege had been claimed in the appellant’s affidavit of discovery sworn on the 21st November 2016. In the proceedings the appellant sought a declaration that it was entitled to a performance fee of STG£5,243,325 and, if necessary, declarations that a formula contained in a management agreement (IMA) between the appellant and the respondent contains a common mistake and/or should be rectified. The IMA was executed in the context of the appellant’s engagement by the respondent in relation to the Orion Fund. Under the terms of the IMA the appellant agreed to manage the Fund’s property investments, evaluate and recommend potential acquisitions and dispositions of properties and oversee the performance of the Fund’s property portfolio in the light of certain specified objectives and limitations. The IMA provided that in return for the appellant’s performance of various specified services the Fund would pay to the appellant two fees namely: (a) an asset management fee; and (b) a performance fee. The parties were in dispute as to whether a performance fee was payable. While there had been discussions as to what figure was payable under the IMA the position changed on the 30th August 2013 when the respondent contended for the first time that no fee was payable to the appellant under the IMA. The Court of Appeal had to determine whether or not the High Court judge was correct in concluding that the application before her was for a final order and was not an interlocutory application; this had implications for the admission of hearsay evidence in an affidavit and was also relevant as to whether or not the Court should admit into evidence a further affidavit which had been sworn since the matter was heard in the High Court, given the absence of any application for leave to admit new evidence under O. 86A, r.4 RSC. The Court also had to consider the High Court judge’s ruling on the appellant’s claim of privilege under the heading of ‘legal advice privilege’ and ‘litigation privilege’.

Held by McGovern J that once the High Court judge concluded that the affidavit of Mr Hegarty should be excluded the appellant was left in the difficult position that it had no evidence to offer on the issues of legal professional privilege and litigation privilege as Mr Meads was not available to swear an affidavit at that time. McGovern J noted that in those circumstances it was not difficult to see why the High Court judge rejected the claims of privilege, but the basis on which she excluded the affidavit evidence of Mr Hegarty was that it was a final determination and not a interlocutory hearing and there was some uncertainty as to the extent to which that point was argued before her; if it had been then it was reasonable to assume that the appellants would have argued that in the event that she determined the hearing was a final one that they should be permitted to introduce evidence from Mr Meads.

McGovern J held that as he would admit the evidence of Mr Meads the Court had a more complete picture than that presented to the High Court judge. McGovern J held that he would allow the appeal and the claim of legal professional privilege in respect of all the documents which were at issue in this appeal, including those prepared between the 5th September, 2013 and the 19th September, 2013.

Appeal allowed.

JUDGMENT of the Court delivered on the 15th day of November 2018 by Mr. Justice McGovern

1 This is an appeal from an order of the High Court (Murphy J.) dated the 1st June 2017 in which, for reasons contained in an ex tempore judgment, the court determined that the respondent was entitled to inspection of certain documents identified in a notice to produce over which privilege had been claimed in the appellant's affidavit of discovery sworn on the 21st November 2016.

2 In the proceedings the appellant seeks a declaration that it is entitled to a performance fee of STG£5,243,325 and, if necessary, declarations that a formula contained in a management agreement (‘IMA’) between the appellant and the respondent contains a common mistake and/or should be rectified. The IMA was executed in the context of the appellant's engagement by the respondent in relation to what is known as the Orion Fund (‘the Fund’). Under the terms of the IMA the appellant agreed to manage the Fund's property investments and to evaluate and recommend potential acquisitions and dispositions of properties and to oversee the performance of the Fund's property portfolio in the light of certain specified objectives and limitations.

3 The IMA provides that in return for the appellant's performance of various specified services the Fund would pay to the appellant two fees namely:

(a) an asset management fee; and

(b) a performance fee.

4 The parties are in dispute as to whether a performance fee is payable. While there had been discussions as to what figure was payable under the IMA (with certain figures being suggested from time to time) the position changed on the 30th August 2013 when the respondent contended for the first time that no fee was payable to the appellant under the IMA.

5 There are a number of issues to be decided on this appeal. In the first place the Court will have to determine whether or not the High Court judge was correct in concluding that the application before her was for a final order and was not an interlocutory application. This has implications for the admission of hearsay evidence in an affidavit and is also relevant as to whether or not this Court should admit into evidence a further affidavit which has been sworn since the matter was heard in the High Court, given the absence of any application for leave to admit new evidence under O. 86A, r.4 RSC. The Court also has to consider the High Court judge's ruling on the appellant's claim of privilege under the heading of “legal advice privilege” and “litigation privilege”.

Was the application in the High Court for a final order?

6 The appellant complains that this issue was never argued in the High Court. However, it is clear that the judge did give some thought as to whether or not an affidavit containing hearsay evidence could be admitted and she concluded that the order being sought was a final one in that it amounted to a determination of two privilege issues once and for all. That decision resulted in the judge ruling inadmissible the hearsay evidence in the affidavit of Mr. Derek Hegarty sworn on the 26th April 2017. The evidence which Mr. Hegarty purported to give in his affidavit was addressed the issue of the role played by Mr. Paul Meads in the plaintiff/appellant's company, and whether or not the appellant was entitled to claim legal professional privilege over certain documents.

7 The evidence is that Mr. Paul Meads was unavailable to swear an affidavit at the relevant time because he was away on holidays. He subsequently swore an affidavit which the appellant seeks to introduce in the appeal. If the order made in the High Court was interlocutory in nature then under Ord. 40, r. 4 RSC the affidavit of Mr. Hegarty would be admissible even though it contained hearsay evidence, and the affidavit evidence of Mr. Meads could be received by this Court without special leave but only in respect of matters arising after the decision. If it was a final judgment, then leave of the Court would be required. (See Ord. 86A, r. 4).

8 In the course of her judgment the High Court judge referred to Minister for Agriculture v. Alte Leipziger A.g. [2000] 4 I.R. 32 and Salter Rex & Co. v. Ghosh [1971] 2 Q.B. 597. In Salter Rex & Co. Denning L.J. referred to the uncertainty that surrounds the question of whether an order is ‘final’ or ‘interlocutory’ and suggested that the courts would have to do the best they can on a case by case basis when this issue arose. In Alte Leipziger A.g. at p. 40, Hardiman J. said:

‘In his judgment in this case the Chief Justice has thoroughly set out the diverse and sometimes inconsistent English authorities and I agree with him that, generally speaking the difference of judicial approach has been as to whether one looks to the order as made, or to the ‘application’ for the order, and to ask in either case if the order itself or the ‘application whichever way it is decided’, will...