Don’t assume that documents recording discussions about commercial proposals for the settlement of a dispute will be protected from disclosure to your opponent. That’s the key message to be taken from the Court of Appeal’s recent decision in (1) WH Holding Ltd (2) West Ham United Football Club Ltd v E20 Stadium LLP  which considered the scope of litigation privilege.
West Ham Football Club brought proceedings against E20 in connection with a dispute about West Ham’s rights to use the London Olympic Stadium for its home football matches.
Shortly before trial, West Ham applied to court for inspection of a number of documents in which E20 had asserted privilege (i.e. the right to withhold inspection). The emails in question passed between E20’s board members and stakeholders and were said to have been composed with the dominant purpose of discussing a commercial proposal for the settlement of the dispute, at a time when litigation was in reasonable contemplation.
The question the Court of Appeal had to consider was whether the doctrine of litigation privilege extends to documents which relate to the settlement or avoidance of litigation where the documents do not seek advice or information for the purpose of conducting the litigation or reveal the nature of the advice or information. It decided that it did not.
The court summarised the application of litigation privilege as follows:
- It will be engaged when litigation is in reasonable contemplation.
- Once engaged it covers communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with the conduct of the litigation, provided it is for the sole or dominant purpose of the conduct of the litigation.
- Conducting the litigation includes deciding whether to litigate and whether to settle.
- Document in which this information or advice cannot be disentangled or which would reveal that information or advice will also be covered by privilege.
- There is no separate head of privilege which covers internal communications falling outside the scope of litigation privilege.
Whilst there was litigation in reasonable contemplation and it was accepted that litigation privilege could apply to settlement, the documents here failed to satisfy the second limb above in that they were not created for the purpose of obtaining information or advice. Whilst the specific content of the emails was not referred to in the judgment, it is fair to assume that the disclosure of these emails is likely to have been damaging to E20’s position.
Documents created with the dominant purpose of discussing a commercial settlement therefore do not fall within the scope of litigation privilege. In light of the decision, organisations need to be very alive to the limitations of litigation privilege when considering settlement and discussing options internally, before creating any documents that might subsequently need to be provided to an opponent. If in doubt, don’t put pen to paper without seeking legal advice first.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.