Property Alliance Group Limited v Royal Bank of Scotland PLC [2015] EWHC 1557 (Ch)

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Property Alliance Group Limited v Royal Bank of Scotland PLC [2015] EWHC 1557 (Ch)

Published 1 July 2015

The Court has provided useful guidance on obligations of disclosure and legal privilege in the context of claims relating to LIBOR manipulation and the alleged mis-selling of interest rate swaps.


The Claimant ("PAG") is a property developer with a portfolio worth about £200 million. Between 2004 and 2008 it entered into four swaps with the Royal Bank of Scotland ("RBS") which used GBP LIBOR as a reference rate. Following investigations brought by numerous regulators across the world, RBS admitted misconduct in relation to the Japanese Yen and Swiss Franc LIBOR rates, but not in respect of GBP. PAG's case is that in proposing GBP LIBOR as a reference, RBS impliedly represented that it was not manipulating the rates for its own benefit.

The hearing

PAG's case is predicated on establishing that RBS did indeed manipulate GBP LIBOR. In order to do this, PAG needs to see (so it argued) documents created by RBS as part of its internal investigation into the LIBOR scandal. At a hearing in November 2014, RBS was ordered to disclose internal reports, reviews and summaries relating to the allegations of LIBOR misconduct. RBS duly disclosed a number of such high-level documents, but objected to PAG inspecting the majority of them on the grounds of legal privilege. PAG challenged the claims to privilege. In summary, RBS objected to inspection of three different categories of documents:

  • Documents created for a special RBS committee, the Executive Steering Group, which was at the centre of RBS's investigations into LIBOR rigging, in respect of which RBS asserted legal advice privilege ("the ESG Documents");
  • Communications passing between RBS and the FCA and/or their lawyers in the context of the FCA's investigation into LIBOR which resulted in the bank being fined £87.5 million. These documents were marked "without prejudice" and constituted negotiations in connection with the FCA's Final Notice. RBS asserted without prejudice privilege over these documents ("the Without Prejudice Communications");
  • Documents shared with regulators by RBS over which legal advice privilege and/or litigation privilege was otherwise asserted. PAG contended that privilege had been waived by the act of these documents ("the Waiver Documents") being shared.


The Judge was not satisfied that RBS's claim to legal advice privilege in respect of the ESG Documents was correctly made. He ordered the ESG Documents to be produced to the court for a judge to consider the documents.

In respect of the Without Prejudice Communications, the judge held that although something analogous to without prejudice privilege would attach as a matter of principle to communications between the FCA and a firm, if the firm puts in issue before a court the basis on which a Final Notice was produced, then those communications should be inspected.

The judge applied similar reasoning in ordering inspection of the Waiver Documents. He held that RBS could not have it both ways, relying on absences from regulators' findings as indicating the limits of its misconduct while at the same time objecting to inspection of what it put to those regulators. Inspection of the Waiver Documents was also therefore ordered.


This judgment confirms that communications with a regulator might benefit from without prejudice privilege (or something like it), so long as the party asserting that privilege does not seek to rely on the documents in question. In the wider context, those seeking remedies against banks for swap mis-selling will await the outcome of the trial (currently listed for May 2016) with interest.

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