With great privilege – Ahuja Investments v Victory game

The English High Court rules on the issue of litigation privilege between legal clients and third parties

What has happened?

The High Court of England and Wales has made a definitive ruling in June 2021 on the case of Ahuja Investments Ltd v Victorygame Ltd, deciding that litigation privilege applies to correspondences taking place between a legal client and third parties. This principle also applies when there are misrepresentations as to the purpose of correspondence, but the purpose must be the dominant one.

Litigation privilege provides protection of confidential written or oral communications between clients and lawyers on one side and third parties on the other side. Third parties include those who create documents on behalf of the client or lawyer to be used in the litigation proceedings.

The facts:

In Ahuja, a claimant brought an action on misrepresentations by the defendant regarding a property deal. In the course of the proceedings, the claimant asked for the documents relating to the transaction from their conveyancing solicitors (third parties) to be used as evidence in the proceedings, but faced difficulties obtaining these documents. The claimant then decided to apply for a court order for third-party disclosure from the conveyancing solicitors.

The claimant informed the defendant that they sent a letter to their conveyancing solicitors due to the risk of a professional negligence issue arising from these events. While the defendant tried to obtain any relevant correspondence, the claimant affirmed that relevant correspondence was protected through litigation privilege.

What does this mean?

The High Court used an expansive approach to the principle of litigation privilege.

It was held that the main purpose of the correspondence must be determined objectively. This is to be done through referring to the purpose of the claimant in carrying out such correspondence. As the claimant wanted to send their letter to their conveyancing solicitors to obtain the documents before bringing an action, and the conveyancing solicitors were aware that the claimant was seeking to obtain relevant documents for the litigation proceedings, this stood out as their main purpose and fulfilled the dominant purpose test.

This stands in stark contrast to Property Alliance Group Ltd v Royal Bank of Scotland plc, where the claimant had misrepresented to the third parties, resulting in the third parties concluding that the meetings were held for various reasons, whereas the actual reason was for the claimant to secretly record the meetings to obtain information for their proceedings. As the dominant purpose of the meetings was not for litigation proceedings, the meetings were not awarded litigation privilege by the court.

What are the impacts?

In Ahuja, the High Court mentioned that there was no broader principle preventing a claim to litigation privilege in cases where the party obtaining information would not otherwise be able to do so if it did not conceal the purpose of the information request. Vos J held that the reason that litigation privilege applied to misrepresented information was because the purpose of litigation privilege is to allow claimants to obtain information that will be used later in pursuing litigation proceedings. This prevents concerns over whether such information will eventually be disclosed to the defendants.

Nevertheless, it is vital for lawyers to be aware of cases where there are obvious and clear deception involved. In these instances, litigation privilege does not always apply, as shown in Waugh v British Railways Board. The House of Lords held that litigation need not be a sole reason for obtaining documents, but it is insufficient to argue that litigation was the one of a few purposes that all held equivalent importance.As the report in Waugh was prepared for dual purposes (railway operations and obtaining legal advice to be used in litigation) the House of Lords decided that litigation privilege was unavailable as litigation was not the dominant purpose.

A useful suggestion would be to advise clients to physically record the purpose of documents to avoid any uncertainties in the event of litigation proceedings. In particular, contemporaneous evidence about the purpose of documents or correspondence may be useful in claiming litigation privilege as such evidence lends huge weight to a court’s analysis. Conversely, ambiguous statements about preparing a document for the purpose of litigation will not be so persuasive as it is difficult to ascertain whether the evidence was procured in the interests of benefitting a party’s claim in proceedings.

To avoid the dual/multiple purpose issue encapsulated in Waugh, claimants should get separate documents for the different purposes that the information is being procured for. In proceedings, the document that is to be used for litigation should then be presented as evidence in order to stand a high chance of achieving litigation privilege.

Ultimately, Ahuja proposes that litigating parties will very likely enjoy litigation privilege although there are misrepresented purposes being provided to third parties to obtain information for use in litigation proceedings. However, there is a pressing need for future courts to decide and draw a distinction between cases like Ahuja and other situations where there is a clear and active deception to third parties. Future courts also need to consider the implications of identical judicial treatment to these two scenarios. This difficult distinguishment may be achieved in the hands of higher judicial authorities – the Court of Appeal and Supreme Court.
 

By Nickolaus Ng

This article does not constitute legal advice and is accurate at the time of writing.

Assessing Firms:

#NortonRoseFulbright #ParkSquareBarristers #HerbertSmithFreehills #Shearman&Sterling #Latham&Watkins

This article was based on the following sources:

Ahuja Investments Ltd v Victorygame Ltd [2021] EWHC 1543 (Ch)

<https://www.bailii.org/ew/cases/EWHC/Ch/2021/1543.html>

Norton Rose Fulbright, ‘Privilege Under English Law’ (Thought Leadership Global Publication, May 2016) <https://www.nortonrosefulbright.com/en-sg/knowledge/publications/6c6dfda0/privilege-under-english-law>

Property Alliance Group Ltd v Royal Bank of Scotland plc [2015] EWHC 3341

<https://www.bailii.org/ew/cases/EWHC/Ch/2015/3341.html>

Waugh v British Railways Board [1980] AC 521

<https://www.bailii.org/uk/cases/UKHL/1979/2.pdf>

Simon Anderson, Covert Recordings and Litigation Privilege: Property Alliance Group Ltd v Royal Bank of Scotland plc [2015] EWHC 3341’ (Park Square Barristers, 3^rd December 2015) <https://www.parksquarebarristers.co.uk/news/covert-recordings-and-litigation-privilege-property-alliance-group-ltd-v-royal-bank-of-scotland-plc-2015-ewhc-3341/>

Jonathan Swil and Chris Collins, ‘THE PRIVILEGE WAS ALL MINE – ENGLISH HIGH COURT CLARIFIES SCOPE OF LITIGATION PRIVILEGE’ (Shearman&Sterling Perspectives, 21^st June 2021) <https://www.shearman.com/Perspectives/2021/06/The-Privilege-Was-All-Mine-English-High-Court-clarifies-scope-of-litigation-privilege>

Herbert Smith Freehills, ‘Dominant Purpose of Litigation’ (Herbert Smith Freehills Litigation Notes, 22^nd April 2021) <https://hsfnotes.com/litigation/privilege-guide/dominant-purpose-of-litigation/>

Daniel Smith and Mair Williams, ‘English Court Finds Litigation Privilege In Documents Obtained By Deception’ Latham.London Dispute Resolution, 15^th June 2021) <https://www.latham.london/2021/06/english-court-finds-litigation-privilege-in-documents-obtained-by-deception/#page=1>