Arizona Antelope Canyon

Litigation privilege and third parties

June 24, 2021

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.