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19Dec2018

Litigation Privilege and the Limits of its Application to “Purely Commercial Discussions”

Litigation Privilege and the Limits of its Application to “Purely Commercial Discussions”

In a recent Court of Appeal case, an important judgment was handed down in relation to the scope of litigation privilege.

In WH Holding Ltd-v-E20 Stadium LLP [2018] EWCA Civ 2652, the court rejected an attempt to widen the scope of litigation privilege to documents which are concerned with settlement or avoidance of litigation but which neither seek advice or information for the purpose of conducting litigation nor reveal the nature of such advice or information.

Background

The case arose out of a dispute between West Ham FC and E20 Limited, the owner of the club’s Olympic Stadium, over the number of seats in the stadium that West Ham are entitled to use. E20 contended that West Ham was only entitled to use 53,500 seats whereas West Ham asserted that it was entitled to use all of the seats, subject only to necessary permissions being granted by the appropriate authorities.

E20 claimed privilege over a number of e-mails exchanged between E20 board members and between E20 board members and stakeholders. West Ham wanted those emails disclosed.

The High Court upheld E20’s claims of litigation privilege and the decision came on for appeal on 15 November 2018. The sole ground upon which E20 asserted privilege over the documents was that the emails were created, “with the dominant purpose of discussing a commercial settlement of the dispute when litigation with [West Ham] was in contemplation.”

Following Lord Carswell’s summary of the scope of litigation privilege in Three Rivers DC-v-Governor and Company of the Bank of England (No 6) [2004 UKHL 48], a party can withhold a document from being disclosed on the basis that:

“communications between parties or their solicitors and third parties for the purposes of obtaining information or advice in connection with contemplated or existing 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; and (c) the litigation must be adversarial, not investigative or inquisitorial.”

Judgment

E20 concentrated on sub paragraph (b) of Lord Carswell’s summary. It submitted that “conducting litigation” encompassed avoiding or settling litigation which the Court of Appeal agreed with. However, the Judgment made clear that the scope of litigation privilege would not extend to “purely commercial discussions.”

It was found that E20 had incorrectly treated sub-paragraph (b) as an extension to Lord Carswell’s general proposition, that “communications must be made for the purpose of obtaining information or advice in connection with existing or contemplated litigation”, rather than “a qualification or restriction on the width of that principle.” Fundamentally, the principle itself must be satisfied, it is not enough to simply satisfy paragraphs (a)-(c).  

E20 also submitted that there was privilege for internal communications within a corporate body. The Court of Appeal decisively rejected this submission and stated, “we cannot see any justification for covering all internal corporate communications with a blanket of litigation privilege.”

What does this mean?

The Judgment acts as a reminder to businesses to take careful steps if internal documents are being created before or during litigation. It is important that anyone within the business creating documents related to existing or contemplated litigation is aware that documents must have been created for the “purpose of obtaining information or advice about litigation” if litigation privilege is to be relied upon. The fundamental limits to the scope of litigation privilege must be understood correctly to avoid the risk of an unwanted disclosure order.

The Court accepted that litigation privilege would still apply to documents in which the information or advice obtained for the dominant purpose of litigation cannot be “disentangled” or where a document would otherwise reveal the nature of such advice or litigation. Further, a document which is not covered by litigation privilege may still be protected by legal advice privilege.

However, the safest course of action is to contact your solicitors if you are unsure. If you require any further information about anything covered in this note, please contact Jessica Chappell, jc@calibrate-law.com.

This paper is intended to be a brief note for clients and other interested parties. The information is believed to be correct at the date of publication but should not be relied upon as a substitute for professional advice. Please speak to a member of our team.

Jessica Chappell Solicitor Dispute Resolution & Litigation 0203 988 2020