Related People Alasdair Maher, Trainee Solicitor
Litigation privilege is a familiar and long established feature of English court proceedings, and provides a party means to make further enquiries in connection with a dispute without risking disclosure down the track. A document will be subject to litigation privilege where it is a confidential communication between the lawyer and the client, or between either of them and a third party, it relates to litigation which is pending, reasonably contemplated or existing, and it is made for the dominant purpose of litigation.
But what happens where a party misleads another party as to the purpose of such enquiries? Can a party choose to elicit information from another party by claiming it is required for a purpose other than the proceedings in question, and still maintain a claim to privilege over such information? Or will the deception of a party invalidate their claim to privilege?
The Court of Appeal considered these issues in the recent case of Victorygame Ltd v Ahuja Investments Ltd1.
In March 2016, Ahuja Investments Limited ("Ahuja") and Victorygame Limited ("Victorygame") exchanged contracts for the purchase of a commercial property (the "Property"), the sale of which was completed in August 2018. Ahuja subsequently issued proceedings against Victorygame in May 2019 for fraudulent (or alternatively negligent) misrepresentations made with regards to the Property (the "Misrepresentation Proceedings").
Ahuja's legal representatives determined that further information was required from Stradbrooks, who were the solicitors who had acted for Ahuja in the purchase of the Property, to assist in the preparation of their claim. Stradbrooks had previously proven to be uncooperative, and Ahuja had already been required to make a third party disclosure application against the lawyers, including in relation to the conveyancing file.
In order to ensure Stradbrooks' co-operation in providing the further information required, Ahuja's legal representatives decided to employ the threat of issuing proceedings against Stradbrooks. Accordingly, a letter in the form of a Letter before Action was sent to Stradbrooks on 10 February 2020 (the "Letter"). On 19 December 2020, a letter of response was sent to Ahuja by legal representatives acting for Stradbrooks' professional indemnity insurers, which included the information requested from Stradbrooks (the "Letter of Response", and together with the Letter, the "Letters").
After Ahuja's legal representatives informed Victorygame's legal representatives about the Letters, Victorygame applied to the court for their disclosure. Ahuja contested disclosure of the Letters, arguing that they were both subject to litigation privilege.
At first instance, Master Pester ordered for disclosure of the Letters by applying the principles in Property Alliance Group v Royal Bank of Scotland plc (No.3)2 ("PAG"). He determined that the Letters were not subject to litigation privilege, as the dominant purpose of a document "is not determined solely by what one party says it is"3. Accordingly, as from the perspective of Stradbrooks and their insurers the dominant purpose of the Letters was to threaten proceedings against them, as opposed to their use in the Misrepresentation Proceedings, the Letters were not subject to litigation privilege.
On appeal to the High Court, the deputy judge (Mr Robin Vos) reversed this decision, upholding Ahuja's claim to litigation privilege over the Letters and stating that the dominant purpose of a document is ascertained with reference to "the purpose of the person who was the instigator of the document…and that the purpose of that person must be determined objectively based upon all the evidence, including their subjective intention"4. The deputy judge also concluded that, on the matter of whether deception affected Ahuja's ability to claim litigation privilege over the Letters, whilst there was an "element of deception as to the purpose of the correspondence"5, this did not prevent Ahuja from claiming privilege over the Letters.
Victorygame sought and obtained permission to appeal to the Court of Appeal, on the limited grounds that:
- Ahuja's purpose in initiating the exchange of the Letters was not for the dominant purpose of obtaining information for use in the Misrepresentation Proceedings; and
- there is legal principle which prevents a party from claiming privilege over information obtained from another party to litigation by means of intentional deception, and which extends to situations involving third parties.
Henderson LJ refused Victorygame permission to appeal the deputy judge's finding that the dominant purpose of a document is ascertained with reference to the purpose of the instigator of the document. As noted by Andrews LJ in her leading judgment for the Court of Appeal, the deputy judge's findings were in accordance with principle and authority and could not be challenged.
Objective assessment of dominant purpose of document
The Court of Appeal dismissed Victorygame's argument that the dominant purpose of the Letters was not to obtain information for use in the Misrepresentation Proceedings. Andrews LJ held that the deputy judge was entitled to accept Ahuja's explanation for why the Letters took the form of a Letter before Action and Letter of Response, and that the form of a document was only "one factor"6 in the objective assessment of the dominant purpose for which a document is created. Trompeter QC, acting for Victorygame, submitted that where a document is created for two purposes, one patent and one latent, the court had no basis for refusing to treat the patent purpose as the dominant one. The Court of Appeal rejected this submission, as it would effectively allow the form of the communication to take precedence over the substantive reason why it was sent. Indeed, Andrews LJ noted that the objective assessment of the dominant purpose for the creation of a document did "not involve the application of an objective bystander test"7, and that whilst the deputy judge had correctly taken account of the fact that the form of the Letters suggested the alternative purpose of threatening proceedings against Stradbrooks, he was not bound to treat that as a "trump card"8 to Ahuja's intention as instigator of the document.
No legal principle for litigation privilege not to apply on grounds of deception
In determining whether Ahuja had lost the right to maintain privilege over the Letters due to a competing public interest, Andrews LJ found that the authorities did not establish a legal principle which excluded a claim to litigation privilege as a result of a party's deception. In fact, in Three Rivers District Council v Bank of England (No 6), the Court of Appeal determined that litigation privilege once acquired is absolute, subject to waiver, estoppel and statute: "legal professional privilege, if it is attracted by a particular communication between lawyer and client or attaches to a particular document, cannot be set aside on the ground that some other higher public interest requires that to be done" 9.
Andrews LJ noted that there was no suggestion of an estoppel in this case, and she rejected the submissions that the service of a further witness statement by Ahuja constituted a waiver of privilege claimed over the Letters. The witness statement made only very limited references to privileged correspondence which pre-dated the Letters in any event. Indeed, the evidence was led simply to rebut the presumption that Ahuja had sought information from Stradbrooks by means of deception, and to prevent the Court of Appeal from drawing the inference that Stradbrooks were unaware that the information was sought for the purpose of the Misrepresentation Proceedings, when in fact they were aware of this. Andrews LJ noted that it would be difficult for Ahuja to have otherwise rebutted the presumption that they had obtained information from Stradbrooks by means of active deception, which Victorygame had advanced as an argument for why Ahuja could not claim privilege over the Letters. In such circumstances, Andrews LJ determined that a finding that these limited references to privileged correspondence amounted to a waiver of privilege would be "grossly unfair" 10.
Andrews LJ determined that the "element of deception" identified by the deputy judge in Ahuja's conduct was very limited, and that it was very different from the reprehensible behaviour considered in the authorities cited by Victorygame. Whilst Andrews LJ noted that there was "room for more than one view about [Ahuja's] tactics"11, Stradbrooks were most likely obliged to provide the information required to Ahuja as a former client, and it would seem would have refused to do so voluntarily – by sending the Letter in the form of a Letter before Action, Ahuja left Stradbrooks "no room for manoeuvre" 12.
This case confirms that when determining the dominant purpose of a document in order to establish whether it is subject to litigation privilege, it is the objective assessment of the purpose of the instigator of the document which is of key importance in establishing whether privilege applies.
The "element of deception" in this case did not prove sufficiently serious to undermine a party's claim to privilege – no party was deliberately misled into providing information which the other party was not entitled to. However, the court did consider that the use of deliberate deception by a party to coerce the opposing party in litigation into providing information they did not wish to provide, and to which it was not entitled, may be "good foundation"13 for estoppel of a party's claim to privilege. Whilst the court considered that such circumstances were "likely to be rare"14 in the context of coercing third parties into providing information, it did not go so far as to rule that such circumstances would never arise.
The court did not provide guidance as to what level of deception used by a party to secure information from another party would result in a loss of a claim to privilege over such information. Accordingly, parties should take care when considering whether to adopt such tactics, or themselves risk losing a well-founded claim to privilege.