Rawlinson And Hunter Trustees SA & Ors v Akers & Anor

Litigation privilege requires more than an assertion that litigation was contemplated or that a document was later supplied to lawyers. The party claiming privilege must show, with sufficiently specific evidence, that adversarial litigation was in progress or reasonably in prospect and that the document’s sole or dominant purpose was its conduct or obtaining advice for it.

A prospect of litigation need not exceed 50 per cent, but it must be more than a mere possibility. The generally litigious character of an insolvency does not meet that standard. A liquidator must identify a real likelihood of litigation against a particular person or class and explain why any concurrent fact-finding purpose was not dominant.

The respondents, associated with Robert and Vincent Tchenguiz, claimed damages from the Director of the Serious Fraud Office following arrests, searches and an investigation. They sought five Grant Thornton reports which had informed material used to obtain search warrants.

The appellants were joint liquidators of the Oscatello companies and accepted that they could disclose the reports. They resisted third-party disclosure on the ground of litigation privilege. Eder J ordered disclosure and rejected that claim in [2013] EWHC 2297 (QB).

The appeal concerned only whether the evidence established that the five reports had been created for the dominant purpose of actual or reasonably contemplated litigation.

Appeal dismissed. The court upheld the order for disclosure of all five reports. The judge had correctly directed himself on litigation privilege and was entitled to find that the appellants had not discharged the burden of establishing it.

1. Litigation privilege protects communications with third parties only where adversarial litigation is in progress or reasonably contemplated, and the communication was made for the sole or dominant purpose of conducting that litigation or obtaining legal advice for it. Litigation need not be more likely than not, but it must be more than a mere possibility. The court endorsed the formulation in [2005] 1 AC 610 and the approach in [2004] EWCA Civ 330.

2. The question of dominant purpose requires an objective assessment of all the evidence. The assertion of the expression “dominant purpose” is insufficient. The evidence must explain, with clarity and specificity, why litigation was the predominant purpose when the document was created. Its later delivery to counsel cannot retrospectively create privilege.

3. The judge had not treated the liquidators’ ordinary duty to investigate assets, liabilities and recoveries as necessarily independent of litigation. The error alleged by the appellants therefore did not arise. However, where there are plausible multiple purposes, the claimant must demonstrate their relationship and establish that conducting litigation predominated.

4. The first two Guernsey reports were not shown to have been made predominantly for the existing Guernsey litigation rather than to understand accounting treatment, inter-company balances and financial consequences. The other reports referred only to potential causes of action, possible defendants and civil recovery opportunities. Even in a complex and likely litigious liquidation, that did not establish litigation reasonably in prospect. The long absence of proceedings further weakened the evidence, although it was not conclusive.

Lord Justice Ryder and Lord Justice Moore-Bick agreed with Lord Justice Tomlinson.

• Court of Appeal (Civil Division): Dismissed the joint liquidators’ appeal and upheld the disclosure order: [2014] EWCA Civ 136.
• High Court, Queen’s Bench Division: Eder J held that disclosure of the five reports was necessary and appropriate, rejected litigation privilege, and directed disclosure: [2013] EWHC 2297 (QB).