Emails between board members and stakeholders were created for the dominant purpose of discussing a commercial settlement and were not protected from disclosure by litigation privilege.
West Ham United Football Club and its holding company were in dispute with E20 Stadium LLP about the terms of a contract. West Ham asked the High Court to consider whether various documents created by E20 should be disclosed as part of the proceedings. The documents that were the subject of the appeal to the Court of Appeal consisted of emails passing between members of E20's board, and between the board members and stakeholders. E20 described these emails as having been composed with the dominant purpose of discussing a commercial settlement for settling the parties' dispute at a time when litigation was in reasonable contemplation. The High Court held that the emails were protected by litigation privilege. West Ham appealed to the Court of Appeal. The key question in the ground of appeal was whether litigation privilege extended to documents concerned with the settlement or avoidance of litigation where the documents did not seek advice or information for the purpose of conducting litigation and neither did they reveal the nature of such advice or information.
The Court of Appeal held that there was no authority for extending the scope of litigation privilege to purely commercial discussions, as these discussions were. The recent case of SFO v Eurasian Natural Resources Corporation (which we discussed in our alert) did not extend the scope of documents which were covered by litigation privilege.
The Court of Appeal summarised its conclusions as being:
- Litigation privilege is engaged when litigation is in reasonable contemplation.
- Once litigation privilege is engaged it covers communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with the conduct of the litigation, provided it is for the sole or dominant purpose or the conduct of the litigation.
- Conducting the litigation includes deciding whether to litigate and also includes whether to settle the dispute giving rise to the litigation.
- Documents in which such information or advice cannot be disentangled or which would otherwise reveal such information or advice are covered by privilege. (E20 had not claimed that the documents had been protected by privilege on this basis).
- There is no separate head of privilege which covers internal communications falling outside the ambit of litigation privilege as described above.
What this means for employers
This case demonstrates the reluctance of the courts to extend the scope of privilege. Employers who are considering whether discussions about settlement may be covered by litigation privilege may find the Court of Appeal's conclusions (above) useful. However, where the line is drawn between purely commercial discussions and those which involve litigation or potential litigation may be blurred in practice. Employers may also wish to involve lawyers at an early stage in settlement discussions, to try to ensure that any internal discussions are protected by legal advice privilege.