Litigation privilege: whose purpose really matters?

Deputy Judge Robin Vos's decision in Ahuja Investments Limited v Victorygame Limited and Pandher raises interesting issues in this regard.

Ahuja pursued the Defendants, V, for misrepresentations made in the context of a property transaction where a different firm, S, had acted for it.  Ahuja applied for disclosure of S's conveyancing file and having obtained it decided that further information was needed from S, and the solicitor handling the matter, J, so as to assist the conduct of the misrepresentation claim and assess J's potential as a witness in that action.  Ahuja sought J's input by way of sending a letter of claim under the pre-action protocol for professional negligence ("LoC") to his firm, S.  V's solicitors were informed of this and applied for disclosure of the LoC and S's insurers' solicitors' response.

In an unchallenged witness statement, Ahuja's current solicitor explained that this route was adopted because of J's apparent prior lack of co-operation such that the only way in which they could extract any substantive comment from him was via the LoC.  That statement emphasised that whilst Ahuja had approved sending this letter, no instructions had been given to issue proceedings against S.  Allowing an appeal from the Master, the Deputy Judge held that the LoC plus response were covered by litigation privilege. 

Ascertaining the purpose of the letter of claim

The route to this decision was the judge's objective assessment of the dominant purpose of the two letters by reference only to Ahuja's purpose, as the instigator, in sending them. In this regard, there was no other evidence challenging Ahuja's solicitor's witness statement as to his purpose in sending the LoC, other than the fact that it was sent under the relevant Pre-Action Protocol. The judge said that, looked at objectively, he could have treated this as evidence that indicated Ahuja's purpose was to consider a possible claim in negligence. However, that would have involved going behind the witness statement, which V expressly declined to do.

Accordingly, the purpose displayed by the form of the letter was merely one piece of evidence to be taken into account in determining the purpose of Ahuja in writing the letter, but that could not have itself amounted to a separate purpose in the absence of any evidence that Ahuja had any intention of pursuing a negligence claim against S. This was notwithstanding that Ahuja had told V's solicitors about the LoC. Therefore, while this was evidence which might support a suggestion that Ahuja had in fact a second purpose in writing the letter, rather than just obtaining information for the purposes of the present proceedings, V did not try to argue that Ahuja had in fact any such purpose.

This decision correctly adopts longstanding authority that the purpose of the instigator in sending the communication is key (but not conclusive) as to the court's objective assessment of what that purpose really is. Even so, I feel some considerable disquiet with this decision, for two reasons.

The impact of the deception

First, it distinguishes Birss J's decision in Property Alliance Group v The Royal Bank of Scotland Plc (No. 3) in somewhat unconvincing fashion. There, perhaps controversially, the Judge had taken into account the purpose or intention of the potential third party witnesses from whom information had been sought in that case, because they had been actively deceived as to the purpose of the meeting at which their views were secretly recorded.  Deputy Judge Vos distinguished PAG because that decision concerned a deception relating to the purpose of a meeting rather than merely seeking documents. As he put it:

"... the deception was not just as to the purpose for which information would be used but was as to whether the purpose of the meeting was to collect any information at all."

The trouble with this approach is that Deputy Judge Vos, while accepting Ahuja's submission that there was no deception in relation to the fact that information was being requested of S, nonetheless could not condone Ahuja's tactics and agreed that:

"... there clearly was an element of deception in the sense that Ahuja wanted information for the purposes of the present proceedings, anticipated that it would not get that information if it was requested on that basis, and so arranged for its solicitors to write a LoC with a view to obtaining the information which it was seeking. The purpose of the letter was to make S believe that a professional negligence claim was being considered (when in fact, it was not) and that it should therefore provide information in accordance with the professional negligence pre-action protocol."

Notwithstanding, the judge concluded that despite this element of deception, having found that the dominant purpose of the correspondence was to obtain information for the purposes of the current proceedings, there was "no principled reason why the protection of privilege should not be available in relation to that information." That meant that, despite the active deceit of the claimants in Property Alliance Group, that decision had to be confined to its unusual facts.

What troubles me about this is that it is apparent that J and S would not voluntarily have assisted their former client in the action against V, and presumably only did so because they believed that they had to respond to the LoC, thereby notifying their professional indemnity insurers who then had to instruct and pay separate lawyers to defend their interests. Furthermore, while the tactic deployed in extracting the information from S was not as egregious as that deployed in Property Alliance Group, it was still conduct which the judge was unable to condone and which he expressly found comprised an element of deception. It is worth asking, then, whether V should have challenged the propriety of Ahuja's conduct in approaching J and S under the guise of a LoC. Was there any basis for suggesting that this amounted to sharp practice, arguably inconsistent with lawyers' duties of integrity, and therefore worth examining from the perspective of the iniquity exception to privilege? While this point was not taken in Property Alliance Group either, there must be some scope for debating whether these communications were fully deserving of the privilege which the judge accorded them.

It may be that the circumstances of this case will not often be repeated, but it appears to open the gates to litigants being less than frank with third parties as to the purpose for which their help is being sought: will we have to check now whether a LoC is sent as a genuine pre-cursor to a potential claim, and if not, assess whether any deception is being practiced which may impact on whose motives are relevant when it comes to the court assessing dominant purpose? It is easy to say with hindsight, but perhaps it was surprising that in Ahuja, V did not attempt to probe the solicitor's evidence which was critical to the judge's decision. Whatever the reasons, this decision well demonstrates the risks of leaving an adversary's evidence unchallenged.

Confidentiality

A second point arising from this decision concerns the status of the LoC as between Ahuja and S. In order to attract privilege, the Deputy Judge rightly accepted that the LoC needed to be sent as a confidential communication, but how was that criterion satisfied as between would-be adversaries? While the point was not addressed in detail, the Deputy Judge held:

"... both Ahuja and [S] would have considered the correspondence to be confidential as far as third parties (such as [V]) were concerned. The fact that it was not confidential as between each other and could not therefore be subject to a claim for privilege in litigation between Ahuja and [S] does not, in my view, prevent Ahuja from maintaining a claim to privilege in these proceedings."

This is a surprising conclusion. Aside from the fact that for the Judge's analysis to work, this had to be a genuine LoC, which he found it was not, a LoC is not normally marked "confidential": a recipient would have little expectation that a publicity hungry claimant would have to keep the letter secret.  With respect to the judge, this part of his decision would have benefitted from a more rigorous analysis of the authorities (such as CoCo v A.N. Clarke (Engineers) Ltd [1969] FSR 468) as to how a legally enforceable right arose to require that the correspondence was kept confidential, and to consider how either party might have sued the other for breach of confidence if they disclosed the correspondence to third parties.

This article first appeared on the Practical Law Dispute Resolution Blog on 1 July 2021.