Property Alliance Group Ltd v The Royal Bank of Scotland Plc

Litigation privilege depends on the dominant purpose for which a communication was created. The assessment is objective in the sense that the court determines the issue by considering all the evidence, including the participants’ stated intentions. A recording or transcript of a non-privileged conversation does not become privileged merely because it was created for litigation. Where a party deliberately deceives a witness or potential witness about the purpose of a meeting, the dominant purpose may properly be assessed from the other participant’s perspective. An inadvertently disclosed privileged document may be used only with the court’s permission, and an application for permission should be made promptly.

The claimant brought proceedings alleging that the defendant mis-sold interest-rate swap contracts and made misrepresentations concerning LIBOR. It also alleged breach of contract concerning its transfer to the defendant’s turnaround division. The defendant applied for inspection of covert recordings and transcripts of meetings between the claimant’s managing director and two former employees of the defendant, permission to use an inadvertently disclosed privileged email, and a further review of the claimant’s privilege claims.

The central issues were whether the meetings, recordings and transcripts were protected by litigation privilege; whether the defendant had complied with CPR r31.20; and whether a further privilege review was proportionate.

1. Privilege review. It was right and proportionate to require the claimant to re-review every privilege claim in its list of documents and provide a new list with further particularity. The claimant’s approach had caused difficulties across the categories of privilege claimed.
2. Recordings and transcripts. The essential litigation-privilege requirements identified in Three Rivers District Council v the Bank of England (No.6) [2005] 1 A.C. 610 were satisfied as to litigation in contemplation and its adversarial character. The issue was dominant purpose.
3. The dominant-purpose inquiry is objective in the sense that it is a decision for the court based on all the evidence, including evidence of the intentions of those involved. It does not require the court to consider only information openly communicated between the participants.
4. A verbatim recording or transcript of a non-privileged conversation is not privileged merely because it was created for use in litigation. The relevant question is whether the underlying conversation was privileged. That principle applied whether the conversation was with a party to the litigation or with a witness or possible witness.
5. Although the claimant’s managing director intended to gather evidence for the claim, he deliberately induced the former employees to attend and speak by representing that the meetings concerned a business catch-up and possible future work. Their purpose was not litigation. The deception distinguished the meetings from a solicitor taking a proof of evidence from a witness. The meetings were therefore not privileged, and neither were the recordings or transcripts. The defendant was entitled to inspection.
6. Inadvertent disclosure. Permission under CPR r31.20 was granted for the defendant to use the inadvertently disclosed email in making the inspection application. However, the defendant had used the email before obtaining permission. Given the obvious likelihood that the email was privileged, the appropriate sanction was in costs. The defendant should have notified the claimant and applied for permission at the earliest opportunity.