Even if litigation is reasonably in prospect at the time a document is created, litigation privilege will not be available unless the document was created for the dominant purpose of that litigation. The litigation need not be the sole purpose of the document, but it is not sufficient to establish that the litigation was one of a number of purposes of equal importance.
In Waugh v British Railways Board [1980] AC 521 (HL) a claim was brought by a widow under the Fatal Accidents Act following the death of her husband, a train driver employed by the defendant Railways Board, in a collision. The House of Lords held that a report made by two officers of the Board shortly following the accident was not subject to litigation privilege. “The report was prepared for a dual purpose: for what may be called railway operation and safety purposes and for the purpose of obtaining legal advice in anticipation of litigation, the first being more immediate than the second, but both being described as of equal rank or weight.” The House of Lords concluded that, in order to claim privilege, the litigation purpose would have to be the dominant purpose. Accordingly, privilege was not available.
A number of subsequent cases have refused a claim for privilege on the basis that remedying a problem or preventing reocurrence was at least as important as the litigation purpose. However, it all comes down to the facts of the particular case.
Single over-arching purpose
In some cases, the courts have been prepared to find that what looked like separate purposes were in fact parts of a single, overarching purpose relating to the litigation. The leading authority on this point is Re Highgrade Traders Ltd [1984] BCLC 151 (CA), in which insurers commissioned reports into the cause of a fire which destroyed the insured’s business. The Court of Appeal said this:
“What then is the purpose of the reports? The learned judge found a duality of purpose because, he said, the Insurers wanted not only to obtain the advice of their solicitors, but also wanted to ascertain the cause of the fire. Now, for my part, I find these two quite inseparable.”
The insurers were not seeking the cause of the fire as a matter of academic interest, but to determine whether (as they suspected) it had been fraudulently started by the insured. If the insurance claim was persisted in and resisted, it was clear that litigation would follow. The insurers would decide whether or not to resist the claim based on the advice received, and the reports were prepared to enable that advice to be given.
It seems clear from Highgrade, and similar cases, that litigation privilege may be available for reports or documents prepared for the purpose of obtaining legal advice which will lead to a decision whether or not to litigate (or take some step that would inevitably lead to litigation – in Highgrade, for example, a decision to deny insurance cover).
A strict approach
The High Court decision in Axa Seguros S.A. de C.V. v Allianz Insurance plc and others [2011] EWHC 268 (Comm) demonstrates how strictly the purposes of a report may be analysed in determining the dominant purpose. In that case Axa had to pay out under an insurance policy in respect of a Mexican highway that had been damaged in a hurricane. It then brought a claim against reinsurers who refused cover under the reinsurance contract. The question arose as to whether reinsurers could assert privilege over reports commissioned from an engineering firm which investigated the condition of the highway before reinsurance cover was denied. The judge was satisfied that litigation was reasonably in prospect at the time the reports were produced, but held that they had been produced for the dual purposes of:
- assessing whether the highway had been constructed to the requisite standard – this purpose was relevant to the anticipated litigation between Axa and reinsurers; and
- assessing what caused the damage and the quantum of the claim – in relation to this purpose, Axa and reinsurers had a common interest.
Neither purpose was predominant, and the material could not be separated into distinct parts relating to the separate purposes. Accordingly, the claim for privilege failed. See “Litigation privilege: applying the test” (22 March 2011) for more detail on the case.
This decision may be seen as particularly harsh given that what the court considered to be a “non-litigation purpose”, i.e. assessing damage and the quantum of the insurance claim, was relevant to potential litigation in which the reinsurers would (as the court recognised) have had a common interest with Axa, even if they were not a party to that litigation.
Identifying the purpose
What these cases illustrate quite clearly is that before instructing a third party to prepare a report over which a party will wish to claim litigation privilege, it should carefully consider the purpose (or purposes) of the report.
It may be advisable to record the purpose, particularly if it may be subject to any doubt in future. Contemporaneous evidence as to the purpose of a communication or document may be helpful if seeking to assert litigation privilege at a later date. A party’s assertions as to the purpose of the communication will not however be determinative. Vague statements that a document has been prepared for the purpose of litigation may not be given much weight in the court’s analysis, particularly if they appear artificial or self-serving. Conversely, contemporaneous evidence which suggests that the dominant purpose is other than the litigation is likely to be damning.
Where there are multiple purposes for a report, and only one or some relate to the prospective litigation, parties should consider obtaining separate reports on the different issues.
Only advice or evidence?
As stated above, it is clear that in order to claim litigation privilege the dominant purpose must be a litigation purpose. What is less clear is whether that purpose must bear some particular relationship to the litigation, or whether it is enough that the litigation accounts for the document’s creation.
The test is sometimes described quite broadly, for example by the House of Lords in Three Rivers No 6: “Litigation privilege covers all documents brought into being for the purposes of litigation.” It is sometimes described more narrowly as for the purposes of obtaining evidence or advice in relation to the litigation. In the classic statement in Wheeler v Le Marchant 17 Ch. D. 675 (1881) the test was set out as “either for the purpose of obtaining advice as to such litigation, or of obtaining evidence to be used in such litigation, or of obtaining information which might lead to the obtaining of such evidence”.
Advice from non-lawyers
Another open question is whether communications with non-lawyers for the purposes of obtaining legal advice, as opposed to potential evidence, for the litigation are privileged under the head of litigation privilege. Legal advice from non-lawyers (i.e. solicitors or barristers or appropriately qualified foreign lawyers) does not attract legal advice privilege, as established in R (on the application of Prudential PLC & Anor) v Special Commissioner of Income Tax & Anor [2013] UKSC 1. However, Prudential did not address whether such advice could be subject to litigation privilege (as there was no litigation in prospect in that case).
In Walter Lilly and Company Limited v Mackay and DMW [2012] EWHC 649 (TCC) the High Court held that communications between a party and his claims consultants (in relation to a claim for extensions of time) were not subject to legal advice privilege, as the claims consultants had not been retained as solicitors or barristers (even if certain individuals dealing with the matter were qualified barristers). The court said it remained an open question whether advice and other communications from claims consultants in adjudication proceedings might attract litigation privilege. The court noted that there was “little authority” on this issue, and policy issues might have to be considered if and when the question arose in another case.
Statutory reports
The High Court decision in Re Barings [1998] Ch 356 suggests that the test for litigation privilege may be different for reports required by statute. In that case, the question arose as to whether privilege could be claimed for statutory reports prepared by solicitors acting for the administrators of Barings and provided to the Secretary of State under the Company Directors Disqualification Act 1986.
The judge pointed out that none of the authorities establishing the “dominant purpose” test involved a statutory report. In the case of a statutory report the maker is obliged by law to make the report and so, in the judge’s view, the only relevant purpose was a statutory purpose. He said the question of whether the reports were protected by privilege did not depend on their ‘dominant purpose’ but whether there was a public interest requiring protection from disclosure that was sufficient to override the administration of justice reasons underlying a litigant’s rights to disclosure. He concluded that there was not. (This was a decision of Richard Scott V-C who later, as Lord Scott in Three Rivers No 6, questioned the continuing justification of litigation privilege on the basis of the less adversarial nature of litigation under the Civil Procedure Rules.)
Experts
Under the Civil Procedure Rules (CPR 35.10) an expert’s report must state the substance of all material instructions (whether written or oral) on which the report is based, and those instructions are not privileged, even though it will normally be clear that they were for the dominant purpose of the litigation. However, the court will not order disclosure unless there are reasonable grounds to consider the expert’s statement of instructions to be inaccurate or incomplete.
In addition, a party may find that it is effectively forced to disclose a privileged (draft or final) expert’s report if it requires the court’s permission to instruct a different expert. In Edwards-Tubb v JD Wetherspoon PLC [2011] EWCA Civ 136, the Court of Appeal held that the court could not override privilege in an earlier expert’s report, but could and would normally require waiver of the privilege as a condition of granting permission to adduce evidence from a different expert. See “Disclosure of privileged report as condition of changing experts” (22 March 2011) for more on the case.
It seems the court may also be able to order a party to disclose another (privileged) report prepared by its expert, as a condition of being permitted to rely on that expert’s evidence, even where there is no change of expert: Odedra v Ball [2012] EWHC 1790 (TCC) – see “Court can require disclosure of privileged report even where no change of expert” (11 July 2012) for more on that case.
Note: Content up to date as at 31 January 2013
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