UK: (Re)Insurance Weekly Update 42 - 2018

Last Updated: 14 December 2018
Article by Nigel Brook
Most Read Contributor in UK, March 2019

A summary of recent developments in insurance, reinsurance and litigation law.

WH Holding v E20 Stadium: Court of Appeal holds that litigation privilege cannot be claimed for documents discussing only settlement/considers the test for the court inspecting documents following a challenge to privilege

http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWCA/Civ/2018/2652.html&query=(wh)+AND+(e20)

The appellant appealed against a decision that the respondent had correctly claimed litigation privilege in respect of certain documents. The Court of Appeal has now held as follows:

  1. Litigation privilege cannot be claimed for documents which are concerned with the settlement or avoidance of litigation (which is in contemplation) but which do not seek advice or information for the purpose of conducting litigation or reveal the nature of such advice or information.

    For litigation privilege to apply, the relevant communications must satisfy certain conditions, including that they "have been made for the sole or dominant purpose of conducting litigation". As has been recently confirmed by the Court of Appeal in SFO v ENRC (see Weekly Update 31/18), "conducting litigation" includes avoiding or settling litigation. However, that is not a stand-alone condition: instead, any such settlement discussions must be "for the sole or dominant purpose of obtaining information or advice in connection with existing or contemplated litigation". The Court of Appeal noted that "We were not shown any authority which would extend the scope of litigation privilege to purely commercial discussions. In particular we do not consider that ENRC extended the scope of the documents covered by litigation privilege. The disputed documents in that case all fell within the recognised categories of advice or information going to the merits of the contemplated litigation. The only possible change attributable to the decision in ENRC was the confirmation that the conduct of litigation includes its avoidance or compromise."

    It was accepted that if, in the document in question, advice or information obtained for the sole or dominant purpose of conducting litigation cannot be disentangled, or disclosure would otherwise reveal the nature of such advice or information, litigation privilege can be claimed in respect of that document. Furthermore, the Court of Appeal said that "We cannot see any justification for covering all internal corporate communications with a blanket of litigation privilege". Accordingly, the appeal on this point was allowed.
  2. Although it was no longer necessary to consider the point in light of (1) above, the Court of Appeal also confirmed the correct test to be applied for deciding when a court should inspect documents to ascertain whether they are privileged. Contrary to the approach adopted in West London Pipeline v Total (see Weekly Update 30/08) (that it is difficult to challenge an affidavit asserting privilege), the Court of Appeal said that "the power to inspect a document is a matter of general discretion". There was no need for the court to be "reasonably certain" that the test for privilege had been misapplied. However, the court should exercise caution (especially as it is dangerous to look at documents out of context) and should bear in mind the overriding objective of dealing with cases justly and at proportionate cost.

COMMENT: In light of this decision, care should be taken to ensure that any settlement discussions taking place within a company with a view to settling ongoing litigation should not be recorded in written form, to avoid the risk of having to disclose details of those discussions. It might be argued, in any event, though, that a party's view of the value of a claim usually need not be disclosed on the basis that it is not relevant to the underlying dispute.

Glaxo Wellcome v Sandoz: Court gives permission for collateral use of disclosed documents in Belgium proceedings

http://www.bailii.org/ew/cases/EWHC/Ch/2018/3229.html

CPR r31.22 provides that a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it was disclosed, except where (inter alia) the court gives permission. Permission was sought in this case to use disclosed documents in separate proceedings in Belgium (where disclosure is only available in a very limited form). The two proceedings are part of global litigation between members of the same two groups of companies.

Chief Master Marsh noted that, under English law, "cogent reasons" are needed before a collateral use is allowed, and there has to be a balance between the competing interests of justice. Where the documents are proposed to be used in foreign proceedings, the English court must assume that European courts (absent cogent evidence to the contrary) will ensure that their proceedings are used fairly and therefore that there is no risk of injustice. Here, it was noted that "Use in legal proceedings in Belgium with its built-in safeguards is quite different to wider use, such as use by the press".

In this case, the application was for permission to use over 100 documents. Chief Master Marsh held that he would need to review each of the documents for their relevance to the Belgian claim and rejected an argument that a sampling approach could be adopted: "The sampling approach is more obviously suitable where the documents are an homogenous class", which was not the case here.

He went on to note that "where the court is asked for permission to use documents in foreign proceedings, it is not necessary for the court to do more than consider whether the documents are likely to be of relevance to the foreign proceedings. It is not for the court to determine whether the documents will, in fact, be thought to be sufficiently important to warrant introduction in the foreign claim by the foreign lawyers who review them, or that the foreign court will find them to be sufficiently compelling to give them weight in that court's determination". The claimants were able to demonstrate on the facts that the majority of the documents are likely to be relevant to the Belgian proceedings.

A working group of the Civil Justice Council has published a report considering approaches to encourage the use of mediation and other forms of ADR. It recommends that court documents, protocols, guidance material for litigants and case management should all express a presumption that ADR should be attempted at an appropriate stage on the route through to trial and that the claim form (and possibly defence) should include a requirement to certify attempts to contact the other party and achieve settlement. However, there is no call for the introduction of blanket compulsion to take part in ADR. The full report can be viewed here:

https://www.judiciary.uk/wp-content/uploads/2018/12/CJC-ADRWG-Report-FINAL-Dec-2018.pdf

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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