The High Court has recently considered when an insurer can claim litigation privilege over its investigations in Rhatigan & Ors v Eagle Star Life Assurance.
In this case the plaintiff’s personal representatives sought inspection of the insurer’s communications with its reinsurers following notification of the policyholder’s death on 30 August 2004. The insurer claimed that as it had litigation in contemplation from 24 August 2004 when a terminal illness form was requested, these documents were protected by litigation privilege. The plaintiffs argued that the first intimation of litigation was not until 10 August 2006. As these documents were written prior to that date, it was therefore argued that the insurer could not claim litigation privilege over them.
The court referred to Mr Justice McCracken’s observation in Fyffes v DCC that a litigant must be able to communicate freely with legal advisors and experts in not only the preparation of a case, but also in the assessment of whether there is any case to be made.
Cooke J pointed to the significance in this case of the insurer’s investigations having immediately focused on the possible avoidance of the policy due to misrepresentation and non-disclosure. He considered that a decision to avoid a policy on these grounds is so likely to provoke litigation that the steps taken by the insurer towards making such a decision must be characterised as steps taken in apprehension of litigation. In this case, as the claim was substantial and would be shared by both the defendant insurer and its reinsurers, it was necessary and inevitable that the insurer should discuss and plan its reaction to the claim with the reinsurers. The claim for privilege was therefore upheld.
While the court’s judgment is helpful to insurers, it should serve as a reminder of the risk that a plaintiff may later seek to rely on documents created early in an insurer’s investigations into a claim. If in doubt as to whether privilege can be claimed over certain documents, insurers and their service providers should always seek legal advice before these documents are created.