Litigation privilege and the dominant purpose of correspondence

Nicola Sharp of Rahman Ravelli details a case that considered the evolving issue of litigation privilege.

In the recent case of Ahuja Investments Ltd v Victorygame Ltd and others [2021], the High Court granted an appeal that allowed a letter of claim between Ahuja Investments Ltd (the claimant) and a third party to benefit from litigation privilege. This was because the dominant purpose of the letter was to obtain information for the relevant misrepresentation proceedings.

Case Background

The underlying claim was for damages against Victorygame Ltd (the defendants) in respect of misrepresentations relating to a property transaction. What was central to this appeal was the intention and understanding of the claimant’s previous solicitor (Mr Jandu of Stradbrooks), and what he had told the claimants leading up to the transaction. The two documents to which this appeal related were a letter of claim under the pre-action protocol for professional negligence written by the claimant’s current solicitors to Stradbrooks in February 2020, and the response from their insurers in December 2020.

The claimant’s position was that despite the letter being written under a certain pre-action protocol, the real purpose of the letter was to obtain information from Mr Jandu to assist the claimant in the underlying claim. If this contention were proven, the letter would be protected by litigation privilege in the claimant’s favour and thus could not be disclosed to the defendants. The defendants argued that this was not the dominant purpose of the letter and, therefore, it should not be protected by litigation privilege.It was claimed that Mr Jandu had relevant information. However, he was not forthcoming in providing said information. The claimant, therefore, thought the only way in which to obtain that information was to threaten professional negligence proceedings against Stradbrooks. Despite sending the letter, there were no instructions to issue proceedings against the firm.

The Law

The three requirements for litigation privilege were summarised by Lord Carswell in Three Rivers District Council v Bank of England (no. 6) [2005], as follows:

"Communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied:

1. litigation must be in progress or in contemplation;
2. the communications must have been made for the sole or dominant purpose of conducting that litigation;
3. the litigation must be adversarial, not investigative or inquisitorial."

Another case which expands on the dominant purpose requirement is Re Highgrade Traders Limited [1984], where Aikens J stated:

"Oliver LJ also emphasised, however, that each case depended on its facts. He said that it was the task of the court, in each case "to determine the actual intention of the party claiming privilege and where it [the court] discerns a duality of purpose, to determine what is the dominant purpose.’’’’

Decision

The court in this case held that in objectively assessing the dominant purpose of the documents for which privilege is claimed, it is the purpose of the instigator, or party claiming privilege (e.g., the claimant), which is relevant. It was not the third party’s purpose which was relevant regarding whether privilege applied.

Interestingly, the judge also noted that while the deception by the claimant (in the type and format of the letter sent to Stradbrooks) was not condoned, that should not preclude privilege from applying to the documents. Had evidence been provided which could demonstrate that the dominant purpose was not to obtain information for the underlying claim, then this could have affected the outcome.

It should be noted that litigation privilege has been explored in numerous cases of late which have built on the above premise and extended the case law. In some of these cases, there have been contradicting judgments and so the position remains unclear. It is an ever-evolving area, and we await further clarification from the courts on the same.