BGC Brokers LP & Ors v Tradition (UK) Ltd & Ors

Without prejudice privilege protects communications made for a genuine attempt to compromise a dispute. It does not protect the settlement agreement itself. Where earlier privileged material is reproduced or incorporated into contractual warranties, the relevant communication is the settlement agreement. Its purpose is to conclude the dispute and define enforceable obligations, not to negotiate.

Litigation privilege is assessed by reference to the dominant purpose of the communication over which privilege is claimed. A party cannot rely on the evidence-gathering purpose of antecedent communications when their inclusion in a settlement agreement served to obtain representations and warranties. The Court left open whether litigation privilege can protect communications between opposing parties in a three-party case.

BGC Brokers LP and associated claimants brought proceedings against Tradition and other defendants concerning the disclosure of confidential information. BGC settled with the Third Defendant, Simon Cuddihy, and provided the Tradition Defendants with a redacted settlement agreement.

The Tradition Defendants sought inspection of the unredacted agreement, including schedules reproducing earlier without prejudice communications and a referred email. Master Davison rejected BGC’s claims to without prejudice and litigation privilege and ordered inspection: [2019] EWHC 1569 (QB). Moulder J dismissed BGC’s appeal: [2019] EWHC 2590 (QB). The issue before the Court of Appeal was whether the settlement agreement and the incorporated or reproduced material were protected from inspection by either form of privilege.

1. Appeal. The appeal was dismissed. The relevant parts of the Settlement Agreement and the email of 25 October 2017 were not protected from inspection by either without prejudice privilege or litigation privilege.
2. Without prejudice privilege. The privilege generally protects communications made for a genuine attempt to compromise a dispute and protects such communications from inspection by other parties in the same litigation. In a three-party case, protection against the non-negotiating party rests on public policy. However, the status of the communication must be assessed by reference to its purpose. A settlement agreement resulting from without prejudice negotiations is not itself privileged: Walker v Wilsher (1889) 23 QBD 335.
3. The relevant communication was the Settlement Agreement, whose purpose was to conclude the dispute between BGC and Mr Cuddihy. It was not a negotiating communication. Reproducing earlier communications in schedules did not preserve their privileged status. Incorporating the 25 October email into the contractual terms likewise removed its protection, since the information became capable of founding a claim for breach of warranty.
4. Litigation privilege. The claimant bears the burden of establishing that litigation was in progress or contemplation, that the relevant communication was made for the sole or dominant purpose of conducting adversarial litigation, and that the litigation was not investigative or inquisitorial. Although BGC’s dominant purpose in obtaining the antecedent communications was accepted to be evidence-gathering, the purpose of including them in the Settlement Agreement was to obtain representations and warranties and to enable BGC to police and enforce them. That was a distinct purpose and did not attract litigation privilege.
5. Arnold LJ left unresolved whether litigation privilege may attach to communications between opposing parties in a three-party case where the parties lack a common interest against the third party. David Richards LJ agreed. Lewison LJ agreed with Arnold LJ’s reasons at paragraphs [10]–[27] and concurred in dismissing the appeal.

• Court of Appeal (Civil Division): The appeal was dismissed, leaving in place the order for inspection.
• High Court of Justice, Queen’s Bench Division: Moulder J dismissed BGC’s appeal from the Master’s decision: [2019] EWHC 2590 (QB).
• High Court of Justice, Queen’s Bench Division, Master Davison: The claims to without prejudice privilege and litigation privilege were rejected and inspection was ordered: [2019] EWHC 1569 (QB).