What you need to know following the Court of Appeal decision in WH Holding V E20
The Court of Appeal has held that internal emails between a company’s board members exchanged for the purposes of discussing commercial proposals for settlement were not privileged from disclosure. Richard Swan looks at what the decision in (1) WH Holding Ltd (2) West Ham United Football Club Ltd v E20 Stadium LLP  EWHC 2578 (Ch) – referred to below as West Ham v E20) means for clients.
West Ham United Football Club have a lease from E20, the owner of the Olympic Stadium, which allows them to use the Olympic Stadium for home football matches. The parties were locked in a dispute over how many seats West Ham were entitled to use. During the course of the dispute, E20’s board members and stakeholders exchanged six emails from January 2017 in which they discussed commercial terms to settle the matter. E20 asserted that these emails were privileged from disclosure on the basis that they were prepared “for the dominant purpose of discussing a commercial proposal for the settlement of the dispute … at a time when litigation was in reasonable contemplation”.
Whereas legal professional privilege exists to protect communications and advice between lawyers and their clients created for the purpose of seeking or giving legal advice, litigation privilege protects confidential communications between lawyers and their clients, or lawyers and third parties, which are created in connection with anticipated (or ongoing) litigation.
The precise scope of litigation privilege has been (ostensibly until now) unclear, and the Court of Appeal has sought to clarify the matter in West Ham v E20.
The Court of Appeal held that the starting point was the well-known case, Three Rivers District Council v Governor and Company of the Bank of England No 6  UKHL 48. In that case, Lord Carswell set out a summary of what has come to be considered the authoritative position on the matter:
“Communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied:
- litigation must be in progress or in contemplation;
- the communications must have been made for the sole or dominant purpose of conducting that litigation;
- the litigation must be adversarial, not investigative or inquisitorial.”
What the Court of Appeal considered in West Ham v E20 was the scope of litigation privilege in light of Lord Carswell’s remarks, ie whether the privilege applied to documents created for the dominant purpose of “conducting litigation” (a broad test) or whether the privilege is more limited to those created “for the [dominant] purpose of obtaining information or advice in connection with existing or contemplated litigation” (a stricter test).
As will be apparent from the summary above, the court favoured the stricter test.
Whilst “without prejudice privilege” will continue to apply to communications and documents created and exchanged during the course of a genuine attempt to settle an existing dispute (many of which would fall within litigation privilege as defined in West Ham v E20 anyway), what we are concerned with here are internal communications between members of an organisation that discuss commercial matters as a precursor to settlement. It is not enough that the emails or documents be created for the general purpose of conducting litigation. They must also have been brought into existence for the (dominant) purpose of obtaining advice or information in connection with that litigation. The emails in the present case did not fall within that category and were therefore disclosable.
It is now par for the course in modern litigation for parties to be advised, normally during the very first stages of retainer, not to generate any new documents with regard to the dispute lest these become disclosable. West Ham v E20 provides a timely cautionary tale on the consequences of doing so.
If organisations are in any doubt about litigation privilege in relation to any discussion, commercial or otherwise, pertinent to settlement of a matter, they would be well advised to speak to their lawyers first.