Litigation privilege hammered? Key points for sports organisations on the scope of litigation privilege from the West Ham Stadium case
Published 15 March 2019 By: Tom Rudkin
The recent decision of the Court of Appeal in WH Holding & West Ham United Football Club Limited v E20 Stadium LLP1 has occupied significant column space on the websites of solicitors' firms and barristers' chambers. This is for good reason, as the decision has a significant restrictive impact on the scope of litigation privilege. Notwithstanding the case's far-reaching significance, it is particularly important for sports organisations to be aware of given the variety of legal proceedings in which they are involved and in relation to which they may seek to withhold documents on the grounds of litigation privilege. This article reviews the case and identifies the key lessons for sports organisations when considering litigation privilege.
Facts of the case
The underlying proceedings concern the well-documented dispute2 between West Ham United and its landlord, E20 Stadium LLP (E20), around West Ham's use of the London Stadium. In particular, E20 asserted that West Ham was only entitled to use 53,500 seats, while West Ham contended that it is entitled to use all of the seats in the stadium.3 The proceedings before the Court of Appeal related to an application by West Ham pursuant to Civil Procedure Rule (CPR) 31.19(6)(a) for the Court to inspect a number of documents (Documents) over which litigation privilege had been asserted by E20. The Documents in issue on appeal consisted of six emails from January 2017 which passed between Board members of E20 and which were, on E20's case, "composed with the dominant purpose of discussing a commercial proposal for the settlement of the dispute".4
By way of reminder, the duty of standard disclosure in civil litigation, as set out in CPR 31.6, requires a party to disclose documents on which it relies and documents which: adversely affect its' own case; adversely affect another party's case; support another party's case; or it is required to disclose by a relevant practice direction. It was not in dispute that the Documents were relevant to the main proceedings. However, E20 sought to withhold them from inspection by West Ham on the grounds of litigation privilege.
As many readers will be aware, documents to which legal advice or litigation privilege attaches may be withheld from inspection by the other side at the disclosure stage of proceedings. This article concerns itself only with litigation privilege; legal advice privilege applies to confidential communications between a lawyer and the lawyer's client which come into existence for the purpose of giving or obtaining legal advice (and documents reflecting such communications). As such, legal advice privilege is distinct from litigation privilege in that a lawyer must be present in the communication and it must be for the purpose of obtaining or giving advice, but communications outside the scope of litigation can be protected. Nevertheless, communications may benefit from both legal advice and litigation privilege if the relevant tests are met. The rationale for the two types of privilege includes the important principle of enabling parties to communicate with their lawyers freely and to gather information for the purposes of proceedings without that process becoming open to inspection by the opposing party.
Returning to the case, West Ham's application was rejected by Norris J at first instance.5 However, he gave permission to appeal on two grounds, which were:
whether the scope of litigation privilege is restricted to documents concerned with obtaining advice or evidence for the conduct of litigation and
the correct approach to be taken by a court to an application for inspection of documents by the court where a claim to privilege is challenged.
A third ground was subsequently added following an application to Lewison LJ, namely that,
Norris J did not consider or apply the "dominant purpose" test for assessing whether litigation privilege applies.6
This article focuses on ground (1), although also briefly covers grounds (2) and (3).
Both West Ham and E20 accepted Lord Carswell's summary of the scope of litigation privilege in Three Rivers District Council and Others v Governor and Company of the Bank of England, which was as follows:
The conclusion to be drawn from the trilogy of 19th century cases to which I have referred and the qualifications expressed in the modern case-law is that communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the sole or dominant purpose of conducting that litigation; (c) the litigation must be adversarial, not investigative or inquisitorial.7
The key issue on appeal was whether points (a) to (c) were qualifications to the overarching principle that litigation privilege applies to communications "for the purpose of obtaining information or advice", or alternatively whether points (a) to (c) were sufficient on their own.
Norris J at first instance had concluded that documents prepared for the dominant purpose of "formulating and proposing the settlement of litigation that is in reasonable contemplation (or in existence) are protected by litigation privilege".8 He rejected West Ham's contention that litigation privilege was confined to documents generated to obtain advice or gather evidence. Norris J gave the example of a without prejudice offer which had arisen out of internal settlement discussions, stating that it would be odd if the offer itself would not be before the Court but the internal communications discussing and authorising the offer could be open to inspection and inclusion in the trial bundle (because they were not for the purpose of obtaining advice or information for use in the case).9 This point has some logic, but it was not accepted by the Court of Appeal.
Having considered the various authorities, the Court of Appeal found that the key principle was that the communication must be made "for the [sole or dominant] purpose of obtaining information or advice in connection with existing or contemplated litigation".10 As such, "purely commercial discussions", even if for the purpose of conducting litigation, could not be the subject of litigation privilege.11
Norris J had placed emphasis on the decision of the Court of Appeal in SFO v Eurasian Natural Resources Corporation Ltd.12 In that case, the Court had held that legal advice given to head off, avoid or settle reasonably contemplated proceedings could be protected by litigation privilege and rejected the idea that documents prepared for the purpose of settling or avoiding a claim are not created for the dominant purpose of defending litigation. However, the Court of Appeal in WH Holding & Another v E20, while accepting that conducting litigation encompassed avoiding or settling litigation (as held by the Court in ENRC), found that nothing had changed the requirement that the communications must be for the purpose of obtaining information or advice. This requirement had been satisfied in ENRC, but it was not in WH Holding & Another v E20. The Court of Appeal also rejected a more general argument by E20 that there was a privilege in internal communications within a corporate body, once litigation is in reasonable contemplation.13
As a result, the Court of Appeal held that litigation privilege did not apply to the Documents, overturning the decision of Norris J. It therefore did not need to rule on grounds of appeal (2) and (3), although it did make observations, obiter.
In respect of ground (2), the Court concluded that its power to inspect a document is a matter of general discretion14. The issue on ground (3) was whether, because of a contractual provision for expert determination of certain disputes and the fact that expert determination remained "in the air" at the time of the Documents, it could legitimately be said that the Documents were prepared for the dominant purpose of litigation. Norris J had held that the expert determination process in question did not amount to litigation15, but that Court-based proceedings were in reasonable contemplation from 31 August 2016 (i.e. before the Documents of January 2017).16 The Court of Appeal found that Norris J was entitled to find that the dominant purpose of the communications referred to in Documents was litigation reasonably in contemplation because he had found that Court-based proceedings were in contemplation from 31 August 2016 and, in any event, where two or more ways of resolving a dispute are in reasonable contemplation (one of which includes litigation), the dominant purpose requirement is met if the information or advice is obtained for the purpose of settling the dispute17. Of course, in this instance, the Documents had not been prepared for the purpose of obtaining information or advice.
In summarising its conclusions, the Court stated as follows18:
Litigation privilege is engaged when litigation is in reasonable contemplation.
Once litigation privilege is 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 also includes whether to settle the dispute giving rise to the litigation.
Documents in which such information or advice cannot be disentangled or which would otherwise reveal such information or advice are covered by the privilege.
There is no separate head of privilege which covers internal communications falling outside the ambit of litigation privilege as described above.
It is worth noting that these findings relate only to litigation privilege and do not impact the application of legal advice privilege. Nevertheless, the ruling is significant in the impact it is likely to have on how, when and whether parties decide to communicate, particularly internally, in the context of a dispute and in circumstances where legal advice privilege is unlikely to apply. As explained below, this is particularly relevant in the sports sector.
Key considerations for sports organisations
The key aspect of the Court of Appeal's decision is that it clarifies that litigation privilege requires that the communications in question must be for the purpose of obtaining "information or advice" in connection with litigation.
Written communications around litigation strategy, settlement proposals and other commercial considerations are therefore vulnerable to falling outside the scope of litigation privilege. Those practitioners who work closely with sports governing bodies and clubs will know that internal written communications at Board level or indeed between other employees are commonplace in the context of disputes (particularly where individuals may be based out of different premises or frequently work on the move). The mere fact that such communications relate to ongoing or contemplated litigation cannot found a claim to litigation privilege.
In sport, there is the added complication that arbitration and other dispute resolution procedures are frequently used. Experience again dictates that written communications internal to an organisation are very common in respect of these procedures. However, organisations must now be very mindful that there is a risk that such communications (while confidential) may be disclosable and open to inspection either in the context of any future Court proceedings or where there is an order for disclosure by the relevant arbitral or other tribunal. While not the subject of this article, there is the added issue that where the dominant purpose of the communications in question is an internal dispute resolution procedure, there is at the very least a risk that the procedure itself will not meet the requirement that litigation be "adversarial, not investigative or inquisitorial"19. Documents prepared in the context of an independent investigation into a governing body or an internal complaints procedure are unlikely to benefit from litigation privilege for this reason.
The consequences of these types of internal communication not being subject to litigation privilege extends beyond disclosure in Court or other proceedings. Paragraph 19 of Schedule 2 of the Data Protection Act 2018 provides an exemption to certain rights of the data subject set out in the General Data Protection Regulation, including the right of access under Article 15. The exemption applies where the personal data in question consists of information in respect of which a claim to legal professional privilege could be maintained in legal proceedings. Data subject access requests under section 7 of the old Data Protection Act 1998 and Article 15 GDPR are, in the author's experience, especially common in the sporting context (particularly in contentious cases), meaning that the ruling in WH Holding & Another v E20 will need to be considered when responding to a request. Importantly, case law prior to the General Data Protection Regulation20 determined that there is no restriction on the purpose for which a data subject access request may be made, meaning that it can be used with a view to obtaining information that might be used in future litigation. There is no reason in either the GDPR or the Data Protection Act 2018 to suspect the position has changed.
In the light of this case, sports organisations would be well served to consider the following practical steps in respect of written communications in the context of a dispute, if they wish to rely on privilege in future:
Communications around tactics or settlement should ideally be restricted to documents where a claim to legal advice privilege could also be asserted; in other words, confidential communications between lawyers and their clients for the purpose of giving or obtaining legal advice;
External solicitors, barristers or in-house counsel should be involved on all email communications and steps should be taken to maintain the continuum of legal advice on such communications. By way of example, email correspondence concerning settlement should only be employed in the context of seeking to obtain advice on any potential proposals. It is of course worth noting that simply copying a legal adviser onto correspondence will not in itself make a document privileged;
Written communications should only be used for obtaining advice or information for use in the dispute; and
If documents have been created which do not attract privilege, then consider very carefully whether they might not be disclosable because they are simply not relevant. The author expects that, as privilege continues to be curtailed, the prior test of relevance will become increasingly important (although note this does not impact upon disclosure obligations pursuant to a data subject access request).
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Associate - Farrer & Co
Tom provides reputation management and contentious media advice to the full range of Farrer & Co's clients. He is a member of the firm's Sports Group and, as well as assisting sports clients on reputational, media and other sensitive issues, he advises on sports-based disputes, rules and regulations and commercial contracts. Tom's work spans from advising National Governing Bodies to high profile sportsmen and women. He has also spent time in-house on secondment at the Lawn Tennis Association.