High Court decision supports orthodox view of litigation privilege

The High Court has found that documents prepared by the defendant in the course of an investigation into allegations by HMRC were protected by litigation privilege: Bilta (UK) Ltd (in liquidation) & ors v Royal Bank of Scotland Plc & anor [2017] EWHC 3535 (Ch).

The decision arguably departs from the reasoning in the controversial decision in SFO v ENRC [2017] EWHC 1017 (considered here), where the court took a very strict approach to the question of whether documents prepared in the course of an investigation were for the dominant purpose of litigation. The court in ENRC found that the primary purpose 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 took the view that this was not sufficient to meet the dominant purpose test. It also drew a rather problematic distinction between documents prepared in order to take legal advice in relation to litigation, which would be privileged, and those aimed at trying to avoid contemplated litigation, which it said were not. The ENRC decision is subject to an appeal which is due to be heard by the Court of Appeal in July this year.

In the present case, the court expressed the view that there was “something of a tension” between ENRC and the Court of Appeal’s decision in Re Highgrade Traders[1984] BCLC 151 (CA), in which the court was prepared to find that discovering the truth and enabling advice to be given in relation to litigation both formed part of a single overarching purpose. Similarly, on the facts of the present case, the court found that the defendant’s subsidiary purpose of avoiding litigation if possible could be “subsumed into” the dominant purpose of preparing for litigation which it considered almost inevitable. The court said it was necessary to take a “realistic, indeed commercial, view of the facts”, which supported the defendant’s case.

The court emphasised that determining the dominant purpose is a question of fact in each case, and so conclusions reached in one case cannot simply be applied across to another context. However, the present decision is encouraging in that it appears to return to what may be considered a more orthodox view of litigation privilege than that underlying the decision in ENRC. Until the Court of Appeal has considered these issues in ENRC, however, parties may wish to take a cautious view.

For more detail, read our litigation blog post.