Transparency Vs. Privilege: Balancing Competing Public Interests In Respect Of Witness Statements

In a judgment delivered on 16 November 2016 in Primeo Fund (in Official Liquidation) v Bank of Bermuda (Cayman) Ltd & Anor., the Court of Appeal of the Cayman Islands ("CICA") held "not without hesitation" that litigation privilege ceases to have any application to signed witness statements at the time they are exchanged by the parties to litigation in advance of trial.

At issue was the question of whether a relevant witness statement made in foreign proceedings was liable to be produced on discovery in litigation in the Cayman Islands by a related entity of the party on whose behalf the witness statement was made, in circumstances where the witness statement was in the latter's possession, custody or power.

Draft witness statements are privileged. But when finalised witness statements are served before trial, as is now routinely ordered, is it the case that the essential character of the statement changes, such that litigation privilege ceases to apply? Alternatively, does the act of service (a) amount to a complete loss or waiver of privilege, or (b) lead only to a limited waiver of privilege, such that privilege may not be maintained by the server against the recipient, but privilege may still be maintained by the server against third parties?

These questions might well also arise frequently in cross-border litigation, particularly when companies within the same group, or linked onshore/offshore funds, are involved in similar litigation in different jurisdictions against different litigants, and seek to share statements and other privileged material under the cloak of common interest privilege.

Brief Background

The HSBC Group provided fund administration services to various funds that invested with Bernard Madoff. In Ireland, an Irish fund ("Thema") sued an HSBC Group entity ("HTIE"), amongst other defendants, for losses suffered by Thema arising out of the Madoff fraud. Meanwhile, in the Cayman Islands, another fund ("Primeo") issued proceedings against two other HSBC Group entities ("Ds") concerning losses arising out of the fraud.

The Irish litigation was settled during the course of trial - after exchange of witness statements, but before HTIE's factual witnesses had been called.

Three of the same witnesses who made witness statements in the Irish proceedings were to give evidence for Ds in the Cayman litigation. HTIE had shared with Ds the Irish witness statements of those same witnesses (the "Previous Statements").

Primeo and Ds...