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Are your internal communications protected by litigation privilege?

WH Holding Ltd and another v E20 Stadium LLP [2018] is the latest case in which the scope of litigation privilege has been challenged. It serves as a reminder for employers to be aware that internal communications may not be protected if certain strict requirements are not met. We have set out the law; the basis for the decision and the take away lessons for employers below.

 1.    The law:

Litigation privilege is based on the principle that any potential litigant in the Civil Courts, should be free to seek evidence or advice, without being obliged to disclose the results of their research to their opponent. In order for this protection to be awarded, the document or correspondence in question must:

a)    be for the dominant purpose of litigation;

b)    relate to litigation which is pending, reasonably contemplated or existing;

c)    (in most cases) be confidential; and

d)    be a communication between the lawyer (acting in a professional capacity) and the client or between either of them and a third party.

As in this case, if either party wishes to challenge a claim to litigation privilege, they may do so under CPR 31.19(5). The courts also have the power, at their discretion, under CPR 31.19(6)(a) to inspect the documents that are being challenged.

 2.    The facts of this case:

The Appellants had made an application for disclosure under CPR 31.19(5), as the Respondent had refused to disclose 6 emails between the board and stakeholders of the Respondent. The Respondent’s refusal was on the basis that the emails had been composed with the dominant purpose of discussing a commercial proposal for settling the dispute between the parties, at a time when litigation was in reasonable prospect, and they therefore believed litigation privilege should apply.

At first instance, the judge agreed with the Respondent’s argument and dismissed the Appellant’s application. In making this decision, the Judge relied on Director of the SFO v Eurasian Natural Resources Corporation Ltd [2018] in which it was held that a document did not have to be concerned with obtaining advice or evidence for use in litigation in order to be protected by litigation privilege. Rather, the privilege would protect documents prepared for the dominant purpose of formulating and proposing the settlement of litigation that was either in existence or in reasonable contemplation.

Following this, the Appellant’s went on to appeal the decision to the Court of Appeal. The main issue for appeal being whether litigation privilege extended to documents which did not seek advice or information for the purpose of conducting litigation but were instead concerned with settling litigation.

An important point to note is the Respondent’s main argument on appeal, was that the phrase “conducting litigation” encompassed discussions relating to formulating, finalising, and setting out purely commercial settlement proposals.

 3.    The decision:

The Court of Appeal overturned the first instance decision and ordered disclosure of the 6 emails.

It was found that although the concept of “conducting litigation” included deciding whether to litigate and whether to settle the dispute giving rise to the litigation, there was no authority or justification for extending the scope of litigation privilege to purely commercial discussions (as the Respondent had tried to argue).

 4.    Employers lessons to take away:

From this case, employers should note the following:

a)    Internal communications are not protected by a blanket of litigation privilege and the contents of these discussions (including who was involved) will be the deciding factor.

b)    It will not be sufficient for an employer to simply copy their Solicitor into correspondence regarding commercial discussions and assume litigation privilege will apply. Genuinely seeking advice and evidence from the Solicitor with regards to the discussions will be required.

To talk to our employment team about any issues raised in this blog please do not hesitate to call 0345 872 6666.

This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice.

Co-Author:

Jennifer Smith - Partner, Employment Law 

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