Disclosure and privilege update: increasing transparency and guidance on the dominant purpose test

The proceedings brought by the Tchenguiz brothers against the SFO are throwing up interesting decisions on disclosure and privilege.

Tchenguiz and another -v- Rawlinson and Hunter Trustees SA and others¹ concerned whether the SFO was barred from disclosing documents it had obtained from third parties under section 2 of the Criminal Justice Act 1987 (CJA). Was consent of the third parties to such disclosure required?

Eder J held that there was no express prohibition in the CJA that would prevent disclosure and that it would be improper to imply such a restriction. Although he recognised that the absence of an express prohibition is not necessarily determinative, his decision suggests that arguments for a bar on disclosure are unlikely to succeed absent express and precise statutory drafting. This decision is illustrative of a greater reluctance by the courts to suppress disclosure.

Tchenguiz and another -v- Serious Fraud Office and others,2 another decision of Eder J, is of interest as it concerned the dominant purpose test in litigation privilege - an area where there is little authority. For a refresher on the scope of litigation privilege see our Quickguide on Privilege. The claimants sought third party disclosure of five reports that had been prepared by accountants Grant Thornton (GT) at the request of the joint liquidators of one of the relevant companies. These reports had been shown by GT to the SFO as part of the latter's investigation into the claimants, but copies were never made by the SFO. The documents clearly fell within the scope of disclosure, but could they be withheld on grounds of litigation privilege?

Eder J thought not. In order for litigation privilege to apply, the court has to be satisfied that the document was created for the dominant purpose of the litigation. It is not enough to show that it was created in connection with the litigation. As Eder J pointed out, the test imposes a relatively high threshold. In his view, the reports did not satisfy the test; they were prepared in connection with work that was required of the liquidators in their position as liquidator in any event.

This decision illustrates how high the threshold is for the dominant purpose test. Where a party wants to be able to claim litigation privilege over a document, as much detail as possible about the contemplated litigation should be provided so as to maximise the ability to argue that litigation was indeed contemplated, and was the main reason for production of the document.

Copies of the judgments are available on Bailii:

Tchenguiz and another -v- Rawlinson and Hunter Trustees SA:
http://www.bailii.org/ew/cases/EWHC/QB/2013/2128.html

Tchenguiz and another -v- Serious Fraud Office and others:
http://www.bailii.org/ew/cases/EWHC/QB/2013/2297.html

Please click on the links below for the other articles in the commercial litigation newsletter

• Jackson update
• Hot-tub: lessons from Australia
• The importance of clarity when it comes to the terms of, and costs associated with, settlement
• Third party funder entitled to terminate funding agreement
• Asymmetric jurisdiction clauses valid as a matter of English law
• Service: retrospective validation of the claim form permitted and receipt by fax sufficient for French courts to be seised
• Can the corporate veil ever be pierced?
• Part 36: valid acceptance and "near-miss" offers
• CPR 66th update
• Chancery Modernisation Review
• Collective actions update: "opt-out" coming to a competition claim near you
• Judicial Review: reforms made and more to come
• Courts to become self-financing?

_Notes:

_{¹ [2013] EWHC 2128 (QB).}

_{² [2013] EWHC 2297 (QB).}