Single Buoy Moorings Inc v Aspen Insurance UK Ltd

Privilege must be established by reference to the document’s objective purpose. Litigation privilege requires litigation to have been reasonably contemplated and the dominant purpose of the document to be obtaining or preparing evidence, legal advice or information for use in the proceedings, including settlement. Internal commercial analysis is not privileged merely because litigation exists.

Without prejudice privilege generally protects genuine settlement negotiations from disclosure and use, including after settlement and by third parties. Exceptions require an established principle or a principled incremental extension. The exception for construing a settlement agreement does not permit negotiations to be used simply to prove the factual cause of loss.

The claimant sought an indemnity under an insurance policy for damage to an offshore production and storage unit. The defendant applied for permission to use documents said to have been disclosed by mistake, specific disclosure of further documents, and review of redactions.

The documents concerned disputes and settlement negotiations between the claimant and Talisman, including the possible termination, transfer or decommissioning of the project. The central issues were whether the documents were protected by litigation privilege or without prejudice privilege, and whether the defendant should be permitted to use or obtain them.

1. Documents disclosed by mistake. Applying Al Fayed v Commissioner of Police of the Metropolis [2002] EWCA Civ 780, use is not confined to tendering a document in evidence. Reading and evaluating documents supplied to advance the disclosing party’s case may amount to use. The defendant’s solicitor had read and evaluated the March 2012 documents before the privilege claim was made, and it was not then obvious that a mistake had occurred. Permission to use them was therefore granted. In any event, justice and equity favoured that result because the claimant had deployed the documents to persuade the defendant of the merits of its case.
2. January 2012 documents. The claimant had not established litigation privilege. The objective character of the documents showed analysis of commercial options for reducing costs. The evidence did not identify litigation as their dominant purpose, and the description of them as analysing legal options and strategies was insufficient. The defendant was permitted to use unredacted copies, save for a table in respect of which legal advice privilege was accepted.
3. Litigation privilege and settlement. Documents prepared to assess commercial proposals for settling existing disputes may be privileged where the dominant purpose is resolving those disputes. The claim was not shown to be misconceived for documents created during the August 2012 to March 2013 settlement negotiations. The court would not, however, assume that documents created earlier were privileged merely because arbitration existed or was anticipated.
4. Without prejudice privilege. The negotiations from August 2012 to March 2013 remained protected after settlement and against use by the defendant. The proposed use was to establish the cause of the project’s subsequent damage, not to construe the settlement agreement. The exception recognised in Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44 did not extend so far.
5. Orders. Documents created between June 2011 and August 2012 were to be disclosed where privilege was claimed, subject to any valid legal advice privilege. The claimant was also required to reconsider redactions for documents from that period. No order was made concerning the requested financial documents.