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Does what happens in the boardroom, stay in the boardroom?

Internal communications concerning a dispute, even those relating to settlement, will not automatically be covered by litigation privilege, said the Court of Appeal in WH Holding Ltd and another company v E20 Stadium LLP (2018).

This case will have significant implications for commercial claims, particularly where board minutes or other internal communications are key to the issues in dispute.

Whereas it had previously been considered that there was a freestanding privilege for internal communications within a corporate body (Bristol Corporation v Cox (1884)), this is no longer the case. A party cannot automatically claim litigation privilege over internal communications, even where proposals for the commercial settlement of a claim are being discussed.

WH Holding Ltd and another company v E20 Stadium LLP concerned a dispute between West Ham FC and its landlord, E20, over the number of seats in the London Olympic Stadium that West Ham was entitled to use. Contrary to previous indications and despite the stadium having more capacity than expected, in January 2017 E20 announced that it would not allow West Ham to use more seats.  In the lead up to E20’s announcement, its board members had held meetings and exchanged emails concerning the number of seats available and discussing a commercial proposal for settlement of the dispute. These emails and meeting minutes were either not disclosed to West Ham or were heavily redacted. E20’s reasoning was that these documents were protected by litigation privilege as they related to the conduct of the litigation.  West Ham applied to the High Court for disclosure of the documents.

The high Court agreed with E20 that the Court of Appeal in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd (2018) (SFO v ENRC) had extended the scope of litigation privilege to include communications concerned with the conduct of litigation, which would include efforts to avoid or settle litigation. 

The Court of Appeal, however, disagreed.  It concluded that the documents did not fall within the scope of litigation privilege, stating that:

“… [we] cannot see any justification for covering all internal corporate communications with a blanket of litigation privilege. Quite apart from anything else we do not see why corporations should have greater protection than, say, partners or bodies of trustees who in practice are equally likely to discuss matters among themselves… ”.

Commentary

The key is that litigation privilege will only apply where the communication is for the purpose of obtaining information or advice relating to the dispute. It is not sufficient that communications simply have the conduct of the litigation as their dominant purpose. This point had previously been unclear from the case law.

There is a glimmer of hope in the exception acknowledged by the court, that documents where information or advice already obtained for the conduct of the litigation “cannot be disentangled”  from the communication will still be covered by litigation privilege.

That said, this case could cause real practical difficulties with identifying the application of litigation privilege. 

It serves as a reminder that businesses should think carefully before creating any documents which contain discussions about a claim or dispute. If in doubt, businesses should consult their lawyers about what will and will not be privileged before putting anything in writing.  

It is certainly no longer the case that what is said in the boardroom, stays in the boardroom.


Winter 2019

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  • Stephanie Reeves
  • Associate Solicitor
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