Handy client guide to privilege:
Dominant purpose of litigation

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 conducting 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 recurrence was at least as important as the litigation purpose. However, it all comes down to the facts of the particular case.

When is there a dual 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 this decision, and similar cases, that litigation privilege will cover reports or documents prepared for the dominant purpose of obtaining legal advice in order to take a decision whether or not to litigate, or defend litigation.

The High Court’s decision in SFO v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB) (“ENRC“)  took a stricter approach on dual purpose, finding that the primary purpose of an investigation was to find out if there was any truth in allegations made by a whistleblower and (if there was) to decide what to do about it, and this was not sufficient to meet the dominant purpose test – see “High Court decision takes restrictive approach to both litigation privilege and legal advice privilege” (11 May 2017). The Court of Appeal disagreed, however, finding that this was all part and parcel of preventing or defending litigation: see [2018] EWCA Civ 2006, considered here “Court of appeal decision in ENRC: orthodoxy restored on litigation privilege but narrow interpretation of client remains for now” (5 September 2018). The Court of Appeal said the judge had gone wrong in her understanding of the leading authorities of Waugh and Highgrade, referred to above.

However, in Sotheby’s v Mark Weiss Ltd [2018] EWHC 3179 (Comm), the High Court rejected a claim to privilege over correspondence with experts on the basis that it was prepared for two purposes, ie to take a commercial decision as to whether to rescind the sale of a painting, as well as for the purposes of the litigation that may follow that decision, and the claimant had not established that the litigation purpose was dominant. Although a decision to rescind would likely, perhaps inevitably, lead to litigation, the court found that the two purposes could not be regarded as one and the same, rejecting an attempt to draw an analogy with cases such as Highgrade and ENRC – see “Litigation privilege: High Court decision shows continued need to beware of dual purpose” (30 November 2018).

A strict approach

Although the Court of Appeal’s decision in ENRC is helpful in restoring a more realistic approach to the dominant purpose test, it is clear from both the Sotheby’s decision and from previous cases that the courts may take quite a strict approach in analyzing the purpose of a document or report to determine its dominant purpose – see for example Axa Seguros S.A. de C.V. v Allianz Insurance plc and others [2011] EWHC 268 (Comm). 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”, ie 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.

For other examples of the court’s strict application of the test see:

• “Court of Appeal decision underlines need for clear evidence of dominant purpose in maintaining claim to litigation privilege” (25 February 2014): This outlines Rawlinson and Hunter Trustees SA & ors v Akers & anr [2014] EWCA Civ 136, in which the Court of Appeal upheld a decision rejecting a claim to litigation privilege for reports obtained by liquidators. The decision confirms the court’s strict approach in analysing the purpose for which a report was prepared in determining a claim to litigation privilege, and consequently the need for those asserting the privilege to put forward clear and precise evidence of the dominant purpose.
• “Commercial Court rejects claim to litigation privilege” (13 January 2014): This looks at the decision in Starbev GP Ltd v Interbrew Central European Holding BV [2013] EWHC 4038 (Comm) in which the court rejected a claim to litigation privilege for an accountant’s report which had been commissioned and the underlying work completed at a time when litigation was not (as the court concluded) in reasonable prospect. Even if litigation was in reasonable prospect by the later stage when the account was instructed to put the conclusions in writing, the litigation was not the dominant purpose of the report.

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, the purpose (or purposes) of the report should be carefully considered.

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 legal advice or information / evidence

In WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652 the Court of Appeal held that, to fall within litigation privilege, a communication must be prepared for the dominant purpose of obtaining legal advice or information / evidence in relation to the conduct of litigation. It is not sufficient that it is for the dominant purpose of conducting litigation, in a broader sense – see “Court of Appeal finds litigation privilege is restricted to the purpose of obtaining advice or evidence, not the conduct of litigation more broadly” (4 December 2018). This is a point that had previously been unclear in the case law.

The court did not consider that the Court of Appeal’s decision in ENRC extended the scope of litigation privilege beyond the recognised categories of advice or evidence, though that decision confirmed that the conduct of litigation includes its avoidance or compromise (contrary to the view of the High Court judge in ENRC, who had held that documents prepared for the purpose of obtaining legal advice as to how best to settle or avoid contemplated litigation were not covered by litigation privilege).

The WH Holding decision leads to difficulties in the application of litigation privilege in practice, as there may be many communications or documents which are for the purpose of conducting litigation (including avoiding or settling litigation) but which do not fall within the category of obtaining advice or evidence. In WH Holding itself, privilege was denied for emails between Board members discussing a commercial proposal for the settlement of a dispute.

The court did accept, however, that litigation privilege will apply if advice or information obtained for the conduct of litigation cannot be disentangled from a document, or it would otherwise reveal the nature of such advice or information.

Whose purpose?

Ordinarily, where a solicitor arranges a meeting with a potential witness to take a proof of evidence, the discussions (and any record of them) will be privileged as they are for the dominant purpose of gathering evidence for use in litigation – regardless of whether the witness has some other motive for agreeing to meet.

However, in Property Alliance Group v The Royal Bank of Scotland PLC [2015] EWHC 3341 (Ch) (“PAG“), the High Court rejected a claimant’s claim to assert litigation privilege over secret recordings of meetings with potential witnesses (who were former employees of the defendant), because the witnesses were deceived into believing that the meetings were to discuss business opportunities rather than evidence for litigation. The court held that the meetings were not for the dominant purpose of litigation. The existence of the deception distinguished the case from the usual situation, where it is the solicitor’s purpose that is paramount – see “No litigation privilege where witnesses were deceived as to true purpose of meetings” (2 December 2015).

In contrast, in Victorygame Ltd v Ahuja Investments Ltd [2021] EWCA Civ 993, the Court of Appeal held that a pre-action letter sent by the claimant to a third party, and the third party’s response, were subject to litigation privilege as the claimant’s true purpose in instigating the correspondence was to obtain information for the present proceedings – even if the third party was deceived as to the true purpose of the request. The court declined to express any view as to whether the approach in PAG was correct, saying that that question was best saved for a case in which it directly arose – see “Court of Appeal confirms litigation privilege available even if third party misled as to purpose of information request” (7 July 2021).

Advice from non-lawyers

Another open question is whether communications with non-lawyers who are giving legal advice, as opposed to potential evidence, in the context of litigation are privileged under the head of litigation privilege. Legal advice from non-lawyers (ie 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.

See also “Court may order disclosure of solicitor’s attendance notes recording retiring expert’s opinions where very strong appearance of ‘expert shopping'” (13 November 2013) for discussion of the decision in BMG (Mansfield) Ltd v Galliford Try Construction Ltd [2013] EWHC 3183 (TCC) which suggests that it might in some cases be appropriate to require disclosure of a solicitor’s notes of discussions with the previous expert (as opposed to the expert’s reports or draft reports). The court does emphasise, however, that it would only be justified where there is a very strong appearance of expert shopping.

Note: Content up to date as at 9 February 2024