Judge considers whether claim to litigation privilege had been made out
The defendant in this case sought to withhold documents (including transcripts of interviews with its employees) from disclosure on the basis that they were covered by litigation privilege (the litigation in question being a different one from the present case – namely, litigation between the defendant and HMRC).
In order to qualify for litigation privilege, it must be shown that the relevant communications were made "for the sole or dominant purpose of conducting that litigation". In this case, the interviews took place after HMRC had commenced an investigation into the defendant's activities. The claimant argued that the defendant's internal investigation after that point had been conducted to inform itself of its position and to persuade HMRC not to issue an assessment. The defendant countered that a letter sent from HMRC to it before the interviews took place had changed the investigation into a tax dispute.
The judge agreed with the defendant. It did not matter if the litigation purpose was the sole or merely the dominant purpose of the interview. There is no general legal principle that attempts to settle will prevent the litigation purpose being the dominant purpose.
Here, the defendant was not spending large amounts of money in the hope of dissuading HMRC from issuing an assessment, and even if it was, that was only a subsidiary purpose: "Here, fending off the assessment was just part of the continuum that formed the road to the litigation that was considered, rightly, as it turned out, to be almost inevitable". In short, the interviews had taken place because the defendant was "gearing up for the litigation".
This case confirms that the question of whether communications are produced for the sole or dominant purpose of aiding or conducting litigation is necessarily highly fact-sensitive. The key issue is why the document has come into existence: was it to aid potential litigation or was there an additional, and entirely separate, purpose (of equal importance to the party)?
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