UK: Determining Dominant Purpose For Litigation Privilege After ENRC

Last Updated: 21 December 2018
Article by Daren Allen, Felicity Ewing, Thomas Leyland and Tanya Alfillé

For a document to be protected by litigation privilege, it must have been produced for the sole or dominant purpose of obtaining information or advice in connection with existing or contemplated litigation. That principle and, in particular, the "dominant purpose" test was scrutinised by the Court of Appeal in its recent decision in the ENRC case: Director of the Serious Fraud Office v. Eurasian Natural Resources Corporation Ltd [2018] EWCA Civ 2006. In two decisions concerning litigation privilege since then, the courts have considered the dominant purpose test in light of ENRC: WH Holding Ltd, West Ham United Football Club Ltd v. E20 Stadium LLP [2018] EWCA Civ 2652 and Sotheby's v. Mark Weiss Limited & others [2018] EWHC 3179 (Comm). In neither case were the courts persuaded that ENRC assisted in the assessment of dominant purpose.

ENRC and dominant purpose

Litigation privilege

In ENRC, one of the issues the Court of Appeal considered was whether certain documents were protected by litigation privilege (a summary of the decision can be found here). The documents had been generated in the context of internal investigations undertaken by the company's lawyers and forensic accountants in response to allegations of corruption and fraud notified to it by a whistle-blower. The SFO investigated the company with a view to pursuing a possible criminal prosecution and successfully challenged the company's claim that the documents were subject to legal professional privilege. The company appealed.

The requirements of litigation privilege were set out by Lord Carswell in Three Rivers DC v. Governor and Company of the Bank of England (No 6)[2004] UKHL 48. This stated 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; and

(c) the litigation must be adversarial not investigative or inquisitorial."

Having found that litigation was reasonably in contemplation when the company initiated its internal investigation, the Court of Appeal in ENRC turned to the dominant purpose test (as set out in the second condition). The court considered two aspects of the test: first, what was encompassed by the purpose of "conducting" litigation; and second, the determination of dominant purpose where a document was created for more than one purpose.

Conducting litigation

The issue was whether documents created to obtain legal advice on how to avoid contemplated litigation could be said to be for the dominant purpose of conducting that litigation. The Court of Appeal decided that legal advice given so as to head off, avoid or even settle reasonably contemplated proceedings was as much protected by litigation privilege as advice given for the purpose of resisting or defending such proceedings; it made no difference that the proceedings were contemplated rather than ongoing.

Determining dominant purpose

The next issue was to determine the dominant purpose of documents generated in the context of the company's internal investigation: ascertaining the facts for compliance and governance reasons or conducting the contemplated litigation.

The court answered this by looking at the motivation for the investigation, suggesting that the "stick" used to enforce appropriate standards in the conduct of a company's business was the criminal law. Where there was a clear threat of a criminal investigation, therefore, the reason for investigating whistle-blower allegations must be "brought into the zone where the dominant purpose may be to prevent or deal with litigation", rather than being viewed as a separate purpose. The need to investigate the existence of corruption was just a subset of the defence of contemplated legal proceedings.

The West Ham case

This was an appeal in the context of a dispute between West Ham and E20 about the number of seats West Ham was entitled to use at the former London Olympic Stadium under a contract with E20. West Ham had applied for disclosure of six emails which E20 had withheld from inspection. E20 asserted that the emails, passing between its board members and between them and third parties, were subject to litigation privilege on the grounds that they had been created with the dominant purpose of discussing commercial proposals for settling the dispute between the parties when litigation was in reasonable contemplation.

The judge at first instance held that the emails were protected by litigation privilege. West Ham appealed.

The scope of litigation privilege

The main issue on appeal was whether litigation privilege extended to documents which were concerned with the settlement of litigation, but did not seek advice or information for the purpose of conducting litigation.

Much of the debate centred on the meaning of the phrase "conducting litigation". Relying on the ENRC decision, E20 argued that "conducting litigation" encompassed avoiding or settling litigation. The Court of Appeal agreed that ENRC had made it clear that "conducting litigation" covered legal advice given to "head off, avoid or even settle" such litigation. However, there was no authority or justification for extending the scope of litigation privilege to purely commercial discussions about settlement, and it was wrong to suggest that ENRC went that far. The disputed documents in ENRC fell within the recognised categories of advice or information obtained in connection with existing or contemplated litigation; the dominant purpose test, requiring such documents to be for the sole or dominant purpose of conducting such litigation, did not extend that principle, but rather restricted it.

The court accepted that documents in which such information or advice could not be disentangled or which would otherwise reveal such information or advice were covered by the privilege. However, it concluded that documents created with the dominant purpose of discussing a commercial settlement (as opposed to obtaining information and advice) did not fall within the scope of litigation privilege.

The Sotheby's case

Mark Weiss Limited (the seller) appointed Sotheby's as exclusive agent to sell a painting purported to be by the Dutch artist Frans Hals. Sotheby's sold the painting by private treaty in June 2011. The sale contract included a term by which Sotheby's offered to rescind the sale and repay the purchase price if the buyer provided written evidence raising doubts as to the authenticity or attribution of the painting and Sotheby's determined that the painting was a counterfeit.

In 2016, having considered the opinions of two experts, Sotheby's concluded that the painting was a counterfeit. It therefore rescinded the sale and repaid the buyer. Sotheby's commenced proceedings against the seller, seeking rescission of their contract and the return of the purchase price.

The seller applied for inspection of correspondence between Sotheby's (and its lawyers) and the two experts, which Sotheby's claimed was protected by litigation privilege.

Sotheby's claim to litigation privilege

Sotheby's argued that litigation was in prospect once its expert had taken a negative view about the authenticity of the painting. At that point, Sotheby's lawyers wrote to the expert, explaining that all subsequent correspondence with him was in the context of anticipated litigation and so privileged. They advised him to mark any correspondence as "Prepared in anticipation of litigation: Legally Privileged".

Following the expert's initial view, Sotheby's instructed him to produce a formal report of his findings. They also instructed a second expert to conduct a peer review of the report. Sotheby's argued that its communications with both experts concerning these reports were privileged as they were for the dominant purpose of being deployed in the anticipated litigation.

Dual or dominant purpose?

While the court agreed there was no doubt that litigation with the seller was contemplated, it found on the evidence that the correspondence with the experts had had two purposes:

  • to enable Sotheby's to decide whether the painting was a counterfeit and, if so, to rescind the sale (under its contract with the buyer); and
  • to assist Sotheby's case in the anticipated litigation.

That dual purpose was reflected in Sotheby's letter of instruction to the expert, which stated that all correspondence "... is in the context of [the] anticipated litigation to enable Sotheby's to understand the strengths and weaknesses of its position and to make the right legal and commercial decision in anticipation of that potential litigation ...".

Both purposes were clearly important to Sotheby's, but the judge found that it had been unable to show that the anticipated litigation was the dominant purpose of the correspondence. In particular, the court rejected Sotheby's argument that it was unrealistic to suggest that the communications with the experts would have existed had there been no threat of litigation. It was clear from the evidence that before Sotheby's could embark on litigation to recover the sale price from the seller, it had to be sure that it was entitled to rescind the sale.

The court did not accept the suggestion that the decision in ENRC had changed or clarified the law in relation to cases where a document was brought into existence for two purposes, one of which was for use in litigation. It rejected Sotheby's argument that the position was analogous to that in ENRC. The contemplated litigation could not be said to be a "stick" in the sense used in ENRC, motivating the correspondence with the experts so that its dominant purpose could be regarded as assisting Sotheby's in the litigation. In any event, the assessment of dominant purpose was fact sensitive so it would be unsafe to use the analysis in ENRC to assist in determining the dominant purpose in this case.


Although ENRC has provided clarification on aspects of the dominant purpose test and, in particular, confirmation that the conduct of litigation includes its avoidance or settlement, the determination of dominant purpose is a determination of fact and must be assessed on the facts of each case.

Labelling a document as "privileged" will obviously not ensure that it is protected, and a court will look at all the evidence to determine the actual intention of the party claiming privilege. In the Sotheby's case it was not sufficient that Sotheby's lawyers considered that the purpose of their correspondence with the experts was for conducting the litigation that they rightly anticipated; the court looked at all the evidence, including the terms of Sotheby's contract with the buyer and the terms under which it instructed the expert, and was satisfied that its lawyers had misconceived the character of the documents. As this and other decisions in this area demonstrate, determining the dominant purpose of a document is a difficult call.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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