Litigation privilege and third parties

A recent decision in the English High Court has provided further guidance on the application of the ‘dominant purpose’ test to claims of litigation privilege in respect of correspondence involving third parties.

In Ahuja Investments Ltd v Victorygame Ltd and others [2021] EWHC 1543 (Ch), the court held that litigation privilege could apply to correspondence between the Claimant and a third party, even though the third party may have been misled as to the true purpose behind the correspondence.

Facts

This case arises out of an underlying claim for misrepresentation brought by the Claimant against the Defendants in connection with a property transaction. An important issue in that claim concerned the knowledge that the Claimant’s then solicitor (the Previous Solicitors) had at the time of the property transaction and what he had told the Claimant.

On 10 February 2020, the Claimant’s current solicitors sent a letter of claim to the Previous Solicitors, under the pre-action protocol for professional negligence. The letter included various statements in connection with the property transaction and requested responses from the Previous Solicitors. The Previous Solicitors sent a response on 19 December 2020.

The Claimant subsequently tried to claim litigation privilege over this exchange with the Previous Solicitors. In order to be able to claim litigation privilege successfully, a party needs to show the document was created for the sole or dominant purpose of use in adversarial proceedings. The Claimant sought to justify its claim to privilege by explaining that the real reason it had sent the letter of claim was to obtain information it needed for its claim against the Defendants. The Defendants disputed whether privilege could apply in such circumstances, arguing that the Previous Solicitors would have understood the dominant purpose of the Claimant’s letter to concern a claim for professional negligence. A question therefore arose as to whether the Previous Solicitor’s understanding of the reason for the letter of claim was relevant to the ‘dominant purpose’ test stated above.

Decision

The court held that the exchange between the Claimant and the Previous Solicitors was covered by litigation privilege. In doing so, Mr Robin Vos stated that when assessing whether something has been created for the dominant purpose of use in the proceedings, it is the purpose of the instigator (i.e. the Claimant in this instance) that is relevant. The fact that the Previous Solicitors may have been misled as to the true reason behind the Claimant’s letter of claim did not prevent litigation privilege from applying. While the court accepted that there was an element of deception in the Claimant’s actions, this did not prevent the claim to privilege from succeeding. Mr Vos also refused to recognise the principle that a party cannot claim privilege where another party (be it the defendant or a third party) is induced to provide information which they would not have provided had they known the true purpose behind the request, and that purpose was concealed from them.

Confidentiality argument

The Defendants also sought to challenge the claim to privilege by arguing that the exchange between the Claimant and the Previous Solicitors was not confidential, and therefore the Claimant could not claim privilege over the exchange vis-à-vis the Defendants. This was rejected by the court, however, who found that both the Claimant and the Previous Solicitors would have considered their exchange to be confidential as against any third parties (such as the Defendants), such that privilege could be maintained.

Key takeaways

The case provides a clear reminder that when assessing a claim to privilege, it is the purpose of the party who instigated the creation of the document(s) that is relevant to the assessment of the dominant purpose. Even if a party is misled into providing information, it will not automatically prevent a claim to privilege over that exchange.

Postscript

This case was subsequently brought before the Court of Appeal (Ahuja Investments Ltd v Victorygame Ltd and others [2021] EWCA Civ 993), following an appeal by the Defendants. Dismissing the Defendant’s appeal, the Court upheld the decision of Mr Robin Vos and held that litigation privilege did apply to the exchange between the Claimant and the Previous Solicitors.

As part of the appeal, the Defendant had submitted that the Claimant’s claim to privilege should be overridden, on the basis that if a party requests information from another party and deliberately misleads that party as to the purpose for which the information is required, the requesting party should not be entitled to claim privilege over the information received. The Court refused to recognise such a principle, however, and instead repeated the principle that privilege is absolute unless waived by the person entitled to it or by statute.

As part of its appeal, the Defendant further submitted that the Claimant had waived privilege over the exchange by referring to the letters in a witness statement filed by the Claimant’s current solicitors. This argument was also rejected by the Court, with Lady Justice Andrews finding that the very limited references contained in the witness statement were included in order to rebut the suggestion that the Claimant had acted fraudulently or deceptively when seeking to obtain information from the Previous Solicitors. As the Court considered it difficult to see how else this suggestion would have been rebutted, it held it would be grossly unfair to find that the very limited references to the exchange amounted to a waiver.