Realistic and commercial approach to "dominant purpose" for litigation privilege
In Krishna Holdco Limited v Gowrie Holding Limited & Others [2025] EWHC 341 (Ch), the High Court held that litigation privilege could apply to a valuation report prepared by PwC in connection with the potential sale of a company’s trading subsidiaries. The Court emphasised the need to take a “realistic and commercial view of the facts” when determining the dominant purpose of a document in the context of a claim to litigation privilege. Here, the Court found that litigation privilege applied to the valuation report as PwC was asked to prepare the valuation for the dominant purpose of responding to a strategic threat arising from a wider dispute (which had already prompted two ongoing pieces of litigation).
This decision affirms the courts’ willingness to adopt a flexible and commercial approach when considering the dominant purpose of relevant documents. In assessing that dominant purpose, the courts may look beyond the immediate transaction and ask why that transaction was happening.
Background
The decision relates to an application for disclosure within ongoing proceedings between Krishna HoldCo (Krishna) and Gowrie Holding Limited (GHL). Krishna and GHL jointly own the company LBNS.
The documents produced by GHL in the wider proceedings included a signed board minute of LBNS referring to a valuation report relating to two of LBNS’s subsidiaries (GLL and LL, or the Subsidiaries) which was prepared by PwC, who were acting for LBNS.
When the board minutes were prepared in March 2019, there was a risk that LBNS’s banking facilities might be imminently withdrawn by its bank as a result of Krishna failing to provide certain “Know Your Client” information. The board minutes reflected the possibility that GHL could buy the Subsidiaries from LBNS, thereby insulating them from the effects of any withdrawal of LBNS’s banking facilities and enabling them to continue trading.
PwC prepared two versions of the valuation report: (i) an initial draft, which was referred to in the board minutes; and (ii) a final version, which was deployed in a mediation that took place in April 2019.
Krishna pressed for disclosure of the PwC valuation report. GHL resisted disclosure on the basis that the work undertaken by PwC was privileged.
Issues for determination
The High Court sought to resolve the following issues:
- Whether the PwC valuation report had been created for the sole or dominant purpose of conducting litigation (as per the test for litigation privilege in Three Rivers District Council v Bank of England No6 [2005] 1 AC 610); and
- Who would be able to assert privilege over the valuation report.
Sole or dominant purpose of litigation
For litigation privilege to apply, a document must have been created for the dominant purpose of obtaining legal advice, information or evidence to conduct litigation which is in reasonable contemplation. Krishna submitted that the exploration of a sale of the subsidiaries to GHL could not properly be described as “conducting litigation”, whether or not the motivation of the sale was anticipated litigation.
The Court found that Krishna’s approach was too narrow. In determining the question of dominant purpose, it was necessary to look beyond the form of the transaction proposed (the potential sale of the Subsidiaries) and ask why it was intended to happen, and relatedly why PwC’s valuation work was carried out.
Specifically, the Court took into account the fact that two sets of proceedings had been commenced between Krishna and GHL in January 2019 and February 2019 respectively. The issue of the potential withdrawal of LBNS’s banking facilities was part of the ongoing and developing set of hostilities which had begun to separate the parties. In light of this, the Court concluded that PwC’s valuation work was undertaken for the sole or dominant purpose of responding to one of the key issues forming part of the ongoing hostilities.
In respect of the final version of the report that was deployed in the mediation, the Court found that this formed part of the same continuum and was prepared for the sole or dominant purpose of bringing the ongoing hostilities to an end. The Court agreed that the report was disclosed only in the context of discussions which were plainly intended to be, and in fact were, protected by without prejudice privilege.
The Court therefore held that both versions of the PwC report were protected by litigation privilege, and the final version of the report also attracted without prejudice privilege.
Who can assert the privilege over the report?
Although the reports were addressed to and paid for by LBNS, the Court found that this was at the joint direction of LBNS and Samit Hathi (the leading figure in the Hathi family, who owned GHL). Therefore, GHL was entitled to assert privilege over the PwC report.
The Court noted that, in determining a document’s dominant purpose, the position of the person who instigated its creation will usually be relevant. This is because the underlying rationale for litigation privilege is to allow each party to prepare its case without the risk of its opponent obtaining the material generated as a result. In this case, Samit Hathi and GHL were the parties whose interests fell to be protected, as they were the ones who were in a dispute with Krishna. Although the dispute focussed upon LBNS, the protagonists of the dispute were the shareholders.
Key takeaways
The Court’s willingness to consider the underlying context and motivations behind the creation of a document illustrates how the courts are prepared to take a pragmatic and commercial view when determining the dominant purpose of a document in the context of litigation privilege. This case follows a similar approach taken in earlier decisions such as Director of the Serious Fraud Office v Eurasian Resources Corporation [2018] EWCA Civ 2006, which highlighted the need for the courts to take a “realistic and indeed commercial view of the facts.”
With thanks to Mahika Gogi for her assistance in preparing this post.