Krishna Holdco Limited v Gowrie Holdings Limited & Ors

Litigation privilege is determined by the document’s sole or dominant purpose, assessed realistically and commercially. The court must consider the motivation for the transaction or communication and its connection with the wider dispute, rather than its formal description as a commercial transaction. The privilege may belong in substance to the person who instigated the document’s creation and whose interests were being protected, even where another entity instructed the valuer or paid for the work. At an interlocutory stage, the court should generally respect a carefully reviewed privilege assessment unless reasonably certain that something has gone wrong.

Krishna Holdco Limited and Gowrie Holdings Limited were co-shareholders in LBNS. Following a liability trial, GHL was required to buy Krishna’s shares, with valuation fixed by reference to 25 June 2019. In the forthcoming quantum trial, Krishna sought disclosure of PwC valuation reports concerning two LBNS subsidiaries. GHL claimed litigation privilege over both versions and without prejudice privilege over the final version, which had been used in a mediation.

Krishna also challenged the use of a March 2019 LBNS board minute referring to a proposed £47 million sale of the subsidiaries. The court had to determine whether the PwC reports were privileged, who was entitled to assert that privilege, whether the board minute should be admitted, and how the application’s costs should be ordered.

1. PwC reports. The application for disclosure failed. The reports were prepared for the sole or dominant purpose of responding to litigation-related hostilities and a threat to LBNS’s banking facilities. The proposed sale could not sensibly be separated from the wider defence strategy. The final report formed part of the same continuum and had been deployed in mediation on an expressly without prejudice basis.
2. Purpose is a question of fact. It requires a realistic and commercial assessment of the circumstances, including the motivation for the transaction and the reason the document was created. This approach was consistent with Director of the Serious Fraud Office v Eurasian Resources Corporation [2019] 1 WLR 791 and Re Highgrade Traders [1984] BCLC 151.
3. The privilege was GHL’s and/or Samit Hathi’s to assert, notwithstanding that PwC was instructed by LBNS and the reports were addressed to it. The court identified the instigator’s intention as important and held that the substance of the parties’ interests, rather than the formal position, determined whose interests required protection. The rationale in Three Rivers District Council v Bank of England (No 6) [2005] 1 AC 610 supported that conclusion.
4. The court adopted the interlocutory approach described in Property Alliance Group Limited v Royal Bank of Scotland EWHC 1515 (Ch), referring to West London Pipeline and Storage Ltd v Total UK Ltd [2008] 2 CLC 258. Although an affidavit was absent, GHL’s solicitors and counsel had carefully reviewed the material, and there was no proper basis for being reasonably certain that something had gone wrong. An affidavit was ordered for good order.
5. Board minute. Permission was granted for the March 2019 board minute to form part of the trial record. Its reference to an apparent willingness to pay £47 million, without discount, supplied a potentially useful cross-check on value, despite the absence of the underlying privileged valuations and the delay in raising the issue.
6. Costs between GHL and Krishna were ordered to be costs in the case because neither party was wholly successful. LBNS’s costs were reserved because it was a neutral party.