Vital that companies understand why they’re producing documents
A recent case on litigation privilege shows the importance of seeking specialist legal advice as early as possible, lawyers say.
The High Court held that litigation privilege can apply to internal bank documents produced as part of an internal investigation, in a decision published at the end of January, Bilta (UK) (in liquidation) v Royal Bank of Scotland [2017] EWHC 3535 (Ch). Sir Geoffrey Vos said interview transcripts and other documents relating to an internal investigation by RBS into an alleged fraud were privileged.
The liquidators of Bilta sought disclosure of the documents from RBS since the alleged fraud involved Bilta’s former directors. RBS said the documents were privileged because they had been prepared in contemplation of litigation.
The test for litigation privilege, set out in the 2005 Three Rivers case, is that litigation must be in contemplation, litigation must be the sole or dominant purpose of the communications, and the litigation must be adversarial.
The liquidators argued that the dominant purpose of RBS’ investigation was to inform itself of its own position and for tax reasons rather than litigation. RBS countered that its dominant purpose was litigation, and that assembling evidence to ascertain the strength of one’s position is an ordinary part of litigation.
Delivering his judgment, Sir Geoffrey said all the parties agreed ‘that the exercise of determining the sole or dominant purpose in each case is a determination of fact’. He said RBS’ meetings with HMRC to provide updates on its investigation were unsurprising and did not ‘preclude the investigation being conducted for the dominant purpose of litigation’.
Alan Sheeley, partner at Pinsent Masons, who acted for RBS, said the decision was ‘a reminder that large companies seeking to launch an investigation should seek specialist legal advice at the earliest opportunity,’ since solicitors are not only able to advise but also provide evidence of ‘dominant purpose’.
Sheeley said it was vital that companies understand why they’re producing documents and what the purpose of them is, during internal investigations. He advised that best practice is to title each document ‘privileged’ and ‘in contemplation of litigation’ so that everyone knows straight away what the document has been created for.
