FM Capital Partners Ltd v Marino & Ors

Documents prepared for litigation attract litigation privilege where litigation was reasonably in prospect and was the dominant purpose of their preparation. A document may lose confidentiality, and therefore privilege may be waived, when disclosed to another person. Mere provision does not necessarily waive privilege: the extent of any waiver depends on the express or implied restrictions governing subsequent use. Where a privileged report is supplied during disciplinary proceedings without an express restriction, and the circumstances objectively indicate that it may be used to defend threatened litigation, disclosure of the report in those proceedings may make it usable by other parties to the litigation.

The claimant sought relief against several defendants alleging dishonest breaches of duty and related unlawful conduct. The third defendant, Mr Ohmura, applied for specific disclosure of documents, including an accountancy report prepared by BDO during an investigation into complaints concerning the claimant’s chief executive, documents relating to disciplinary proceedings, communications with the National Crime Agency, and terms of settlements with another defendant and with the claimant’s client.

The central issues were whether the BDO material was protected by litigation privilege, whether provision of the BDO report to Mr Marino waived privilege, and which settlement terms were relevant and disclosable.

1. Litigation privilege. The evidence established that litigation was seriously contemplated when BDO was instructed and that contemplated litigation was the dominant purpose of the investigation. The possibility that the investigation also served a disciplinary purpose did not displace privilege. The same conclusion applied to the interim BDO report, despite its use in the disciplinary process.
2. Waiver and subsequent use. The court applied the principles in British Coal Corporation v Dennis Rye Ltd [1988] 1 WLR 1113 and Berezovsky v Hine [2011] EWCA Civ 1089. Provision of a privileged document does not itself necessarily waive privilege. The question is factual and turns on the express or implied terms governing its use.
3. No express restriction had been imposed on Mr Marino’s use of the BDO report. Objectively, it was unreasonable to infer that he could use it only for the disciplinary hearing when litigation against him was in prospect and the report had been prepared principally for litigation. He was therefore entitled to deploy it in the proceedings. His disclosure of the report meant that privilege had been lost as against the other parties for the purposes of those proceedings.
4. The application failed in relation to the other categories of documents. Settlement terms concerning cooperation were relevant only insofar as they provided for payment for evidence beyond reimbursement of actual expenses. Payment obligations or other relief generally did not affect another defendant’s liability; a release could do so if the agreement contained, or arguably contained, such a term. A settlement with LAP would be relevant if it imposed, or arguably imposed, a limit on the claimant’s liability, but the evidence established that it did not.
5. The application was granted for the BDO report only. There was no order as to costs.

First-instance application in the High Court (Commercial Court). The judgment does not state any prior appellate decision.