AXA Seguros, S.A. De C.V. v Allianz Insurance plc (Allianz) and others  EWHC 268 (Comm) concerned a claim for privilege in reports produced by an engineering firm in relation to damage to the Don Nogales highway in Mexico. AXA had insured a company which had responsibility for the Don Nogales highway. Allianz and others (the Reinsurers) reinsured AXA. The reinsurance policy only covered damage to highways constructed to "internationally acceptable standards". In 2001, Hurricane Juliette damaged parts of the highway. AXA and the Reinsurers appointed loss adjusters to investigate the loss. In addition, the Reinsurers appointed an engineering firm, Halcrow Group Limited (Halcrow), to inspect the highway. A dispute followed between AXA and its insured as a result of which AXA made a payment to its insured under the insurance policy. AXA then sought to recover from the Reinsurers. The Reinsurers denied liability and proceedings followed.
During the proceedings between AXA and the Reinsurers, an issue came before the Commercial Court concerning whether the reports produced by Halcrow were subject to litigation privilege. The Court noted that litigation privilege required two conditions to be satisfied: (1) litigation must be reasonably in prospect and not a mere possibility at the time that the document in question was created and (2) the document in question must have been made with either the sole or, at least, the dominant purpose of using it for obtaining advice about actual or anticipated litigation. In this case, the Court found that litigation was reasonably in prospect at the time the Halcrow reports were produced. However, the Court found that the reports were not produced for the sole or dominant purpose of using them for obtaining advice about the anticipated litigation. The issue in dispute between AXA and the Reinsurers was whether the highways had been constructed to internationally acceptable standards. The reports were produced to address this issue but they were also produced to address questions of quantum which were not in dispute between AXA and the Reinsurers. Therefore, the reports had a dual purpose, one of which was not in relation to the anticipated litigation. Accordingly, the reports were not privileged.
This case demonstrates the difficulties faced by parties attempting to claim litigation privilege in reports produced by third parties investigating the loss under the (re)insurance policy."