Case Alert - [2018] EWHC 286 (Comm)

Judge decides whether litigation privilege can be asserted by a non-party who has controlled proceedings

The claimants challenged the defendants' right to assert litigation privilege over certain documents. These documents had been produced for proceedings in Peru. However, the defendants had not been a party to those proceedings – they had instead asserted a contractual right to assume control of those proceedings (which were brought in the name of the claimants). The following issues were considered in the judgment:

(1) Had the relevant documents been "disclosed"? The defendants sought to argue that they hadn't and so the claimants had erred in bringing an application for inspection, rather than specific disclosure. The basis for that argument was that the documents had been referred to by category rather than individually (by a numbered item) in the list. That argument was rejected by the judge, who noted that the rules allow for a large number of documents to be listed by category and "So far as describing documents in respect of which privilege is asserted, the authorities suggest that there is no need to describe the documents such that it would identify the document and thus thwart the assertion of privilege".

(2) Could the defendants claim litigation privilege when they had not been a party to the proceedings in Peru? The defendants sought to rely on the Court of Appeal decision in Guinness Peat Properties v Fitzroy Robinson [1987]. The judge said that in that case, the court had had to consider the dominant purpose for producing the relevant document (a notification of claim to insurers), and when taking into account the dominant purpose of both the insured and the insurer (who was going to take over the conduct of proceedings which had been brought against the insured), it was clear that the dominant purpose had been to seek legal advice (ie that the document was privileged). However, she said that Guiness Peat "is not authority for the proposition that a person controlling litigation can assert litigation privilege against the party which it is controlling and who is the party to the proceedings. I accept the Claimants' submission that it is an established principle that litigation privilege can only arise in favour of a person who is a party to the litigation in question".

The judge added that even if she was wrong on that point, there was no caselaw authority for a party to claim privilege where it had controlled not these proceedings, but other proceedings, in which it had not been a party (and for which the documents had been created).

(3) Could the claimants demand inspection of privileged documents on the basis of the parties' joint or common interest? As the judge had concluded that the documents were not privileged, this issue did not need to be decided. Accordingly, the judge was not required to decide the issue of whether common interest privilege can be asserted where the relevant documents were generated after the parties fell out.

(4) As the documents had been disclosed, were the claimants entitled to inspection? The defendants argued that, having re-reviewed the documents, they had concluded that they were not disclosable because they were not relevant. The judge accepted that a right to inspection does not arise automatically just because a document has been disclosed, but noted that "there is a general rule that a party to whom a document has been disclosed should be entitled to inspect that document … The question of whether inspection is necessary to dispose fairly of the proceedings is a relevant factor, but it is not "a free-standing hurdle to be considered and surmounted in isolation before inspection may be permitted"" (see NCA v Abacha, [2016]). Nor did it matter that the claimants' application had been made 9 months after standard disclosure took place.

Accordingly, an order for inspection was made.

COMMENT: This was not an insurance case but it is, of course, not unusual for insurers to take over control of proceedings (for example, to defend an insured against a third party claim, or to pursue subrogation rights against a third party). The effect of this decision is that insurers will not be able to assert privilege as against the insured over documents which are privileged in those proceedings (in which the insurers are not a named party). It may be that such documents are covered by common interest privilege anyway (which can in certain circumstances be used as a "sword" as well as a "shield") but (as the judge alluded to but did not resolve) it is unclear whether common interest can be asserted where the relationship between the parties has broken down before the relevant documents were created.