June 21, 2021
The English High Court has recently confirmed that litigation privilege applies to correspondence between a client and a third party, even where the third party has been misled as to the purpose of the correspondence. In doing so it has continued to take an expansive approach to the circumstances in which litigation privilege will apply.
In Ahuja Investments Ltd v Victorygame Ltd, the claimant (“C”) had brought a claim in respect of misrepresentations allegedly made by the defendant (“D”) in the context of a property transaction (the “Misrepresentation Proceedings”). When C had difficulty obtaining the conveyancing file for the transaction from their then solicitors (“J”) for the purpose of the Misrepresentation Proceedings, they sought an order for third-party disclosure from J.
During discussions with D about such disclosure, C’s solicitors told D that they had sent a letter before action to J regarding a potential professional negligence claim. D sought copies of the letter and any related correspondence, but C asserted that the materials were protected by litigation privilege.
Litigation privilege protects from disclosure communications between a client (or its lawyer) and a third party if the communications are made for the dominant purpose of litigation (which is either ongoing or reasonably contemplated).
C argued that it had not issued proceedings against J, nor given instructions to do so, and that the letter was merely intended to put pressure on J to cooperate with C’s requests for information in the Misrepresentation Proceedings i.e. to obtain the information other than through the third party disclosure application. C argued that the letter (and related communications) were therefore made for the dominant purpose of conducting the Misrepresentation Proceedings and were thereby protected by litigation privilege. In the absence of such a purpose, the letter would have “crossed the line” between parties to a dispute (or at least an apparent one) and could not, therefore, be privileged on another basis.
At first instance, C’s claim to privilege was rejected because the alleged dominant purpose of the correspondence was merely that of one of the parties to the communication, not both of them. This was not sufficient to show that the communications were made for the dominant purpose of conducting the Misrepresentation Proceedings, or any other proceedings (nor was it privileged on the basis of legal advice privilege, as it was not sent to J for the purpose of obtaining advice).
On appeal to the High Court, however, it was held that the dominant purpose of the communication must be identified objectively by reference only to the purpose of the instigator of the communication (in this case, C), and not also (or instead) by reference to that of the recipient. Therefore, as C had intended to send the letter before action for the purpose of obtaining information in connection with the Misrepresentation Proceedings, the dominant purpose test was satisfied.
The purpose of the relevant third party was taken into account in another case, but there the claimant had actively deceived the third parties in question, leading them to believe that meetings, which were actually arranged and secretly recorded by the claimant in order to obtain information from the third parties in connection with proceedings, were being held for reasons other than information collection. By contrast, J was aware in the present case that C was seeking the relevant information (even if J believed the information was sought for the purpose of C’s threatened negligence proceedings, rather than the Misrepresentation Proceedings).
The Court also concluded that there was no broader principle preventing a claim to litigation privilege in circumstances where the instigating party acquires information it would not otherwise have obtained by concealing the purpose of the request. Litigation privilege, therefore, applied to the communications in question.
Ahuja Investments suggests that a party should be able to rely upon litigation privilege even where the true purpose of the relevant protected communications has been concealed from the party receiving it. It remains an open question for a future case to decide where precisely the line between such circumstances and those involving active deception falls (or, indeed, whether both situations should be treated in the same way). As this case demonstrates, any such line may often be a fine one in practice.
  EWHC 1543 (Ch).
 Property Alliance Group Ltd v Royal Bank of Scotland plc  EWHC 3341.