Judge considers whether an insured's documents were privileged

The defendant insurer made an application to rely upon inadvertently disclosed documents, pursuant to CPR 31.20, which provides that where a party has inadvertently allowed a privileged document to be inspected, the party who has inspected the document may use it only with the permission of the court. The defendant insurer also made an application for specific disclosure in relation to certain categories of documents which had not been seen but which were known to exist but over which the claimant had asserted privilege. Relevance was not in dispute.

The following issues regarding disclosure and privilege arose for consideration:

(1) Should the defendant be allowed to use privileged documents in circumstances where the claimant disclosed the documents multiple times, deployed them against the defendant by specifically referring to them in correspondence and then subsequently asserted privilege over the documents?

The Court of Appeal in Al Fayed v Commissioner of Police [2002] laid down various principles in relation to the discretion given to the court under CPR 31.20, including that the court might refuse to allow the privileged documents to be used if they were made available as a result of an obvious mistake. An "obvious mistake" included where "the solicitor appreciates that a mistake has been made before making some use of the documents".

The claimant sought to argue that the second defendant had not used those documents, as they had not been tendered in witness evidence, and therefore permission should be refused on that basis. Teare J held that this was too narrow a meaning of "use". The claimant had deployed the documents in support of an argument which it wished to persuade the defendant was correct. When the defendant's solicitors had then read and evaluated those documents, this was enough to amount to "use" in this context.

(2) Although a solicitor's witness statement is normally conclusive on privilege, here the judge rejected the claim to litigation privilege in relation to certain documents for two reasons. Firstly, although there had been a reference to "legal options and strategies" in one of the alleged inadvertently disclosed documents, the judge concluded that "On an objective basis the purpose of all the options appears to have been to consider how costs could be reduced. That is not a purpose which would attract litigation privilege". Similarly, in relation to other documents, just because arbitration was in existence or anticipated, did not mean that an internal consideration of options to reduce expenditure was subject to litigation privilege.

Secondly, even if that was one purpose, the judge stated that the claimant had made "no assertion... that the dominant purpose... was for use in the actual or anticipated proceedings or in settling the actual and anticipated disputes" and concluded that "in a claim for litigation privilege I find that omission striking". Teare J permitted use by the defendant insurer of the inadvertently disclosed documents and ordered the claimant to re-review all of the documents falling within a specified period (some 11,000 documents) over which it had asserted litigation privilege and provide a privilege log in respect of any documents in respect of which a claim to privilege is maintained.

(3) The usual application of "without prejudice" privilege is to deny the admissibility in evidence of an admission made in the course of without prejudice negotiations. But that is not the sole reason behind the rule and the fact that that was not the situation here (the insurer was instead seeking to prove an issue in dispute) did not mean that the privilege could not apply. Instead, a party wishing to rely on the document must show that it falls within an accepted exception (eg construction of a settlement agreement). No relevant exception applied here.

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