Tchenguiz & Anor v Serious Fraud Office & Ors

Third-party disclosure under CPR 31.17 requires the documents to be likely to support the applicant’s case or adversely affect another party’s case, disclosure to be necessary for fair disposal or saving costs, and the case to be appropriate for the court’s discretion.

Litigation privilege depends on the document having been created for the dominant purpose of obtaining legal advice or information in connection with litigation, or conducting such litigation. The prospect of litigation must be reasonably in prospect and more than a mere possibility. Investigatory documents prepared to establish a company’s financial position or identify possible claims do not acquire privilege merely because they may later assist litigation. The party asserting privilege must provide sufficiently reliable evidence of the documents’ purpose.

The claimants sought third-party disclosure under CPR 31.17 from joint liquidators of Oscatello Investments Limited. The application concerned five Grant Thornton reports which had been shown to the Serious Fraud Office during its investigation into the claimants, but which had not been copied by the SFO.

The claimants argued that the reports were likely to support their damages claims against the SFO and to undermine the SFO’s case. The joint liquidators resisted disclosure on grounds of relevance and necessity, litigation privilege, confidentiality and discretion. The central questions were whether the CPR 31.17 conditions were satisfied and whether the five reports had been created for the dominant purpose required for litigation privilege.

1. Disclosure. The court held that the requirements of CPR 31.17(3) were satisfied. The reports were likely to support the claimants’ case or adversely affect the SFO’s case because they had played a central role in the investigation and in preparing the Information relied on for the warrants. Disclosure was necessary because the SFO had notes, rather than complete copies, and the reports were relevant to allegations that the SFO had relied uncritically on Grant Thornton. The case was an appropriate one for exercising the disclosure jurisdiction, subject to confidentiality and privilege.
2. Applicable privilege principles. Litigation privilege requires the dominant purpose of obtaining information or advice in connection with pending or contemplated litigation, or conducting or aiding in its conduct. The litigation must be reasonably in prospect, rather than merely possible. The burden lay on the joint liquidators, and the court was required to scrutinise the evidence carefully. The evidence could be given by a person who was not involved in creating the documents, but that increased the need for anxious scrutiny.
3. Application to the reports. None of the five reports satisfied the dominant-purpose test. The first two Guernsey reports included investigations and financial analyses needed to understand transactions, liabilities and distributions, functions which were independent of litigation. The remaining three reports referred only generally to potential defendants, possible claims and civil recovery opportunities. That evidence did not establish that litigation was reasonably in prospect. Later transmission of reports to lawyers could not create privilege retrospectively.
4. Confidentiality. The court considered, but did not need to decide, whether public disclosure of detailed notes made from three reports had caused loss of confidentiality in the reports themselves. On the assumption that the information in the notes was public, the reports themselves remained confidential because only the information actually reproduced in the notes had entered the public domain.
5. Order. The claim to litigation privilege failed. The parties were directed to seek agreement on an order for disclosure, including suitable confidentiality and use restrictions, costs and consequential matters.

The application was determined at first instance by the High Court. The judgment referred to earlier judicial review proceedings decided by the Divisional Court in [2012] EWHC 2254 (Admin) , but this was not an appeal from that decision.