No privilege for “purely commercial discussions” on settlement

London Stadium: Seating dispute

“Purely commercial discussions” within a business about settling a dispute before litigation has begun are not protected by litigation privilege, the Court of Appeal has ruled.

In a joint ruling, the Master of the Rolls, Sir Terence Etherton, Lord Justice Lewison and Lady Justice Asplin found no justification for “covering all internal corporate communications with a blanket of litigation privilege”.

WH Holding Ltd & Anor v E20 Stadium LLP [2018] EWCA Civ 2652 was an expedited appeal arising out of the now-settled dispute over the seating at the London Stadium when used by Premier League football club West Ham United.

West Ham applied for the court to inspect a number of documents, by way of a sample of redacted disclosure in relation to which privilege had been asserted.

Mr Justice Norris dismissed the application save in respect of whether two documents had been properly redacted.

The appeal focused on whether litigation privilege applied to six emails sent on same day between the board members of E20 Stadium and between the board members and stakeholders.

E20 asserted that each email was composed with the dominant purpose of discussing a commercial proposal to settle the dispute at a time when litigation was in reasonable contemplation.

The question was whether litigation privilege extended to documents which were concerned with the settlement or avoidance of litigation where the documents neither sought advice or information for the purpose of conducting litigation nor revealed the nature of such advice or information.

Allowing the appeal, the court agreed that “conducting litigation” encompassed avoiding or settling litigation.

But it continued: “We were not shown any authority which would extend the scope of litigation privilege to purely commercial discussions… We do not consider that there is any justification for extending the scope of litigation privilege in that respect.”

Here, privilege was claimed on the basis that the documents were created “with the dominant purpose of discussing a commercial settlement of the dispute when litigation with [West Ham] was in contemplation”.

The ruling said: “We do not consider that a claim in those terms falls within the scope of litigation privilege…

“We cannot see any justification for covering all internal corporate communications with a blanket of litigation privilege.

“Quite apart from anything else we do not see why corporations should have greater protection than, say, partners or bodies of trustees who in practice are equally likely to discuss matters among themselves. Nor is the fact of agency sufficient of itself to attract litigation privilege.”

The court concluded:

  • 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 of 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 the privilege.
  • There is no separate head of privilege which covers internal communications falling outside the ambit of litigation privilege.

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