knowledge | 11 January 2019 |

English Courts Narrow the Scope of Litigation Privilege

Background

The English Courts have recently signalled the continuance of a restrictive approach to privilege through two recent cases, despite the decision of the English Court of Appeal in SFO v ENRC1 which was widely thought to indicate the return of a more expansive approach to litigation privilege in England. While this restrictive approach has yet to be followed by the Irish courts, parties who may be subject to disclosure in England or involved in cross border disputes should be aware of this trend.

The dominant purpose test

The authoritative statement of the scope of litigation privilege in England comes from Lord Carswell in Three Rivers2:

“communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the sole or dominant purpose of conducting that litigation; (c) the litigation must be adversarial, not investigative or inquisitorial.”3  

In WH Holding Ltd v E20 Stadium LLP,the Court of Appeal was asked to consider whether confidential emails between the defendant’s board members and other stakeholders within E20, sent with the dominant purpose of discussing the commercial settlement of those proceedings, attracted litigation privilege.

Relying on the ENRC decision, the High Court held that the emails were protected by litigation privilege as litigation was reasonably in prospect during the relevant period and discussion of settlement of a dispute could be “for the dominant purpose” of conducting litigation. 

The plaintiff appealed, arguing that litigation privilege “covers communications which are directed at obtaining advice or evidence, including information or documents which might lead to evidence”. It argued that the emails were not so directed and so could not be privileged.

The Court of Appeal agreed. It applied the test set out in Three Rivers and held that part (b) of the test (the requirement that documents be “made for the sole or dominant purpose of conducting [the] litigation”) is not an expansion of the general principle that litigation privilege covers communications for the purpose of obtaining information or advice, but is a restriction of that proposition. This means that under English law, for litigation privilege to apply, the document must have been created “for the purpose of obtaining information or advice” in relation to reasonably contemplated litigation.

On this basis, the Court of Appeal held that the emails at issue, sent between members of the board of E20 discussing a commercial proposal for the settlement of a dispute, did not benefit from litigation privilege, as the emails were not created for the dominant purpose of obtaining advice or evidence in relation to the conduct of litigation. It was not sufficient that the emails were created for the dominant purpose of conducting litigation, in a more general sense.

The Court of Appeal summarised its overall findings:

“ i) Litigation privilege is engaged when litigation is in reasonable contemplation.

ii) Once litigation privilege is engaged it covers communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with the conduct of the litigation, provided it is for the sole or dominant purpose of the conduct of the litigation.

iii) Conducting the litigation includes deciding whether to litigate and also includes whether to settle the dispute giving rise to the litigation.

iv) Documents in which such information or advice cannot be disentangled or which would otherwise reveal such information or advice are covered by the privilege.

v) There is no separate head of privilege which covers internal communications falling outside the ambit of litigation privilege as described above.” (emphasis added) 

The West Ham decision confirms that under English law privilege will not generally protect documents from disclosure unless they were created, “for the purpose of obtaining information or advice”, with the exception of a document which contains such advice or information which cannot be “disentangled” or where a document would otherwise reveal the nature of the advice. Applying this decision in practice may cause difficulties in particular for documents or communications which are created for the purpose of conducting litigation (including settling it) but which may not fall within the definition of “obtaining advice or evidence”.

Dual purpose documents

The decision in Sotheby’s v Mark Weiss Ltd 5 arose from a dispute over an apparent art forgery.  The painting in questionwas sold by Sotheby’s on behalf of the defendant, but was later discovered to be a forgery.  Sotheby’s rescinded the sale and refunded the buyer.  It issued proceedings to recover this sum from the defendant.

The defendant then sought disclosure of certain communications between Sotheby’s and their art expert, including a report on the painting prepared by the expert. The expert was tasked with determining whether the painting was counterfeit and if so, Sotheby’s would rescind the sale and return the purchase price. Sotheby’s claimed that the documents were privileged as they were prepared for the dominant purpose of conducting or settling the litigation. The defendant claimed that they also had a commercial purpose, and that of the two purposes, the commercial one was the dominant purpose.

The High Court found that while the documents were created for the purpose of litigation, they were also created for the purpose of assessing the authenticity of the painting under the requirements of the sale contract.  That purpose was held to be the dominant purpose, as the documents would have been created even in the absence of the perceived litigation. The Court held that evaluation of dominant purpose is fact specific and it was “unsafe” to use the decision of dominant purpose from another case with different facts.

While this decision does not represent a significant restatement of the law in England regarding dual purpose documents, it is a clear reminder of the care which is required when creating documents which may have a dual purpose, including litigation.

What approach do the Irish courts take?

These two recent decisions delineate the scope of litigation privilege in England and highlight the need for care in respect of communications (for example board minutes and emails), which refer to litigation whether contemplated, in being or in the process of settlement, which may become subject to disclosure.

Under Irish law, the key criterion for assessing the existence of litigation privilege is the dominant purpose for which the document was created.   If it was created at a time when litigation had been started by or against the client or if the client believed there was likely to be litigation and the document was created for that sole or dominant purpose, then it is protected by litigation privilege.  For example, a set of board minutes which discusses (in part) on-going litigation cannot benefit from litigation privilege, unless the entire purpose of the board meeting was to discuss the litigation. If corporate governance was the true purpose of the minutes, or an equally important purpose, then litigation privilege will not attach.  However, emails between stakeholders for the dominant purpose of conducting litigation, including the settlement of litigation, would be protected by litigation privilege.

What steps should be taken to protect privilege?

It is important to consider how to deal with privilege issues in apprehended litigation as early as possible and seek legal advice on how to deal with these issues if required. At board meetings, privileged communications, whatever the nature of the privilege being asserted, should be minuted separately from other factual information relating to that agenda item to protect the privileged nature of the document, whether under Irish law or the English disclosure regime. If that is not possible, the privileged communications should be set out in a distinct section of the document.  This will facilitate the redaction of that privileged communication should the balance of the document prove relevant in the context of a request for discovery. Particular care needs to be taken in relation to dual purpose documents which would not be otherwise covered by legal advice privilege. If it is arguable that litigation is not in contemplation, or the dominant purpose of the communication is debatable, it is safest to assume that privilege will only apply if it is a lawyer/client communications to give/receive legal advice.

To protect litigation privilege in relation to particular communications or documents:  

  • always consider how to deal with privilege issues in apprehended litigation as early as possible and seek legal advice on how to best address these issues;
  • note in writing when you consider litigation to be reasonably apprehended;
  • consider the purpose of the document and whether that is the document’s sole purpose;
  • if the dominant purpose is litigation, record that purpose in writing. For example, emails falling into this category should be marked “Privileged and Confidential”;
  • if the document has a dual purpose, and would not be otherwise covered by legal advice privilege, be aware that the document may be ultimately disclosable to the other side, even if it contains sensitive material;
  • emails created for the dominant purpose of litigation, even if only apprehended, should be kept confidential if privilege is to be maintained;
  • keep non privileged materials as factual as possible, avoiding comments on sensitive issues;
  • when preparing board minutes for a meeting in which proceedings or apprehended litigation is discussed, consider whether separate minutes are needed.

  1. Serious Fraud Office (SFO) v Eurasian Natural Resources Corporation Ltd (ENRC) [2017] EWHC 1017.
  2. Three Rivers DC v Governor and Company of the Bank of England (No 6) [2004] UKHL 48.
  3. Three Rivers DC v Governor and Company of the Bank of England (No 6) [2004] UKHL 48.
  4. WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652.
  5. Sotheby’s v Mark Weiss Ltd [2018] EWHC 3179 (Comm).
  6. Woori Bank Limited v. KDB Limited [2005] IEHC 451.

This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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