Property Alliance Group Ltd v Royal Bank of Scotland Plc (20 November 2015)

The court held that where a litigant had secretly recorded meetings he had made with two of the defendant’s former employees, the recorded conversations and their transcripts were not privileged information.

Facts

The Royal Bank of Scotland Plc (RBS) applied for Property Alliance Group Limited (PAG) to allow inspection of certain audio recordings and transcripts of those recordings over which PAG has asserted privilege.

In the months preceding and subsequent to filing its claim form, PAG’s managing director had arranged meetings with two men who had worked for RBS.

The managing director led them to believe that he was interested in setting up business relations between PAG and the men’s new companies. However his real motive for arranging these meetings was to seek assistance in PAG’s claim against RBS.

He secretly recorded the meetings in the hope that they would yield evidence to support PAG’s claim.

In the course of disclosure during the claim’s proceedings, PAG accidently included an email to its solicitors that mentioned the recordings and the meetings, inadvertently bringing their existence to RBS’s attention.

The issues the court had to consider were whether RBS should be permitted to inspect the audio recordings and their transcripts and the email referring to the recordings. PAG contended that both the recordings and transcripts were subject to litigation privilege as they were created for the purpose of gathering evidence for use in its claim, and that the situation was indistinguishable from one where a solicitor arranged a meeting with a potential witness to take a proof of evidence.

Outcome

The court granted the application. It held that the test for establishing litigation privilege was whether the recordings and transcripts had been produced for the “dominant purpose” of conducting litigation. However, litigation privilege could not apply to a verbatim recording of a conversation for use in litigation, or the transcript of such a recording, unless the conversation itself was privileged.

The question of whether the conversations between PAG and RBS’s former employees turned on the dominant purpose of the meetings. The court held that this is an objective question, which should take into account all the evidence, including what the parties involved said their intentions were.

The court decided that it was clear that the managing director arranged the meetings to gather evidence for litigation. Equally clear was the fact that the former employees attended these meetings with the purpose of discussing future business. From just these facts, it was not possible to distil a dominant purpose as they are two clear entirely divergent purposes.

The critical point was that the managing director had actively deceived RBS’s former employees. This deception distinguished the situation from the example of a solicitor taking a proof of evidence from a potential witness.

Therefore, it was held that the dominant purpose of the meetings had not been litigation, thus the meetings were not privileged and neither were the recordings, transcripts or email. Consequently RBS was entitled to inspect them.

Points to note

This case highlights the importance of the “dominant purpose” requirement in litigation privilege. Where there is not one clear dominant purpose, privilege cannot be asserted. The test is an objective one.

Where you are seeking to assert litigation privilege over a document, ensure that all parties are aware that the dominant purpose is the prospect of litigation.