Victorygame v Ahuja: Court of Appeal confirms that deception as to the purpose of a communication is not enough to defeat a well-founded claim to legal professional privilege

The dispute concerned whether two documents in the possession of the Claimant, Ahuja Investments Limited ("Ahuja"), were subject to litigation privilege; specifically, a letter of claim sent under the pre-action protocol for professional negligence written by Ahuja's solicitors, Cardium Law Limited, to Ahuja's former solicitors, Stradbrooks, and a response to that letter from solicitors instructed by Stradbrooks' insurers (the "Correspondence").

A document is subject to litigation privilege if it is a communication between a party or its solicitor and a third party, which is made for the dominant purpose of obtaining information for use in actual or contemplated, adversarial litigation. The issue in this case concerned the dominant purpose for which the Correspondence was created.

Ahuja's underlying claim against the Defendants (together "Victorygame") was for damages arising from misrepresentations alleged to have been made by Victorygame in the context of a commercial property transaction. In the context of discussions between the parties regarding the disclosure of the conveyancing file relating to that transaction, Ahuja's solicitors advised Victorygame's solicitors that they had sent a letter of claim to Stradbrooks under the pre-action protocol for professional negligence. Victorygame made an application for disclosure and inspection of the Correspondence.

Ahuja contested the application on the basis that the Correspondence was subject to litigation privilege and could therefore be withheld from inspection. Ahuja's solicitor, Mr Davies, made a witness statement in which he stated that the dominant purpose of the Correspondence was obtaining information relevant to the proceedings against Victorygame, which could not be gleaned from the conveyancing file, rather than the pursuance of proceedings against Stradbrooks.

At first instance, Master Pester decided that, in determining the dominant purpose of the Correspondence, he should look at both Ahuja's intention in sending the letter before claim and the perception of the letter before claim by its recipients. He accepted Mr Davies's evidence that Ahuja had intended to use the Correspondence to elicit information for use in the litigation against Victorygame. However, he also concluded that Mr Jandu (a solicitor at Stradbrooks) and Stradbrooks' insurers would have regarded the purpose of the letter before claim as intimating a professional negligence claim against them. He did not accept that Ahuja's purpose in instigating the Correspondence was the "dominant purpose". He concluded that Ahuja's behaviour had not been deceptive, such that the question of whether the information had been procured deceptively was immaterial.

Ahuja appealed. The appeal was heard by Mr Robin Vos, sitting as a deputy judge of the High Court. The Judge concluded that Master Pester had erred as a matter of law in determining that a second purpose was objectively established by looking at the Correspondence from the point of view of Mr Jandu and Stradbrooks' insurer. He determined that, whilst the dominant purpose of the Correspondence had to be assessed objectively on the basis of the available evidence, it is the purpose of the party instigating the communication, in this case Ahuja via its solicitors, that is relevant. He held that Ahuja's dominant purpose in instigating the Correspondence was the purpose articulated in Mr Davies's witness statement.

The Judge also disagreed with Master Pester's conclusion as to whether Ahuja had acted deceptively. He concluded that Ahuja had deceived Stradbrooks and its insurer as to why the information was being requested. However, the Judge held that whilst he did not condone the tactics used, the deception did not preclude Ahuja from successfully establishing that the Correspondence was privileged. Victorygame sought permission to appeal to the Court of Appeal.

Henderson LJ refused to grant Victorygame permission to appeal against the Judge's finding that, in ascertaining the dominant purpose of a document, what matters is the purpose of the party instigating the document in question, who may or may not have been its author. In her leading judgment, Lady Justice Andrews, with whom the other Lord Justices agreed, observed that the Judge's conclusions in this regard were in accordance with principle and authority and could not be challenged. The dominant purpose must be determined objectively based upon all the evidence, including, but not necessarily limited to, the subjective intention of the party instigating the document in question. Henderson LJ also refused to permit Victorygame to challenge the Judge's finding that Ahuja was the instigator of the relevant documents.

However, Henderson LJ did grant Victorygame permission to appeal on two limited grounds. Victorygame was permitted to argue before the Court of Appeal that (i) contrary to the Judge's finding, Ahuja's purpose in instigating the Correspondence was not for the dominant purpose of the litigation against Victorygame; and (ii) that there is a principle of law to the effect that a party cannot maintain privilege over information it has procured by deliberate deception, that this principle extends to situations involving third parties, rather than just parties to litigation, and that the Judge had erred in finding the contrary.

The Court of Appeal dealt swiftly with the argument that Ahuja's dominant purpose in instigating the Correspondence was not to use the information elicited in the litigation against Victorygame. The Court held that there was no error of law in the Judge's approach and that he was entitled to reach the conclusion he did. Leading counsel for Victorygame submitted that where a communication had been made for two purposes, one patent and one latent, the court had no basis for refusing to treat the patent purpose as the dominant one. The Court rejected this submission as a "highly unattractive proposition", which would be tantamount to allowing the form of a communication to take precedence over the substantive reason it was sent.

On the issue of whether a party can maintain privilege over information procured deceptively from a third party, the Court of Appeal referred to what Lord Scott of Foscote said in Three Rivers (No 6): "… if a communication or document qualifies for legal professional privilege, the privilege is absolute. It cannot be overridden by some supposedly greater public interest. It can be waived by the person, the client, entitled to it and it can be overridden by statute … but it is otherwise absolute".

The Court of Appeal suggested that Lord Scott's reference to waiver was likely shorthand for waiver and estoppel and relied on Three Rivers (No. 6) as authority for the principle that legal professional privilege, once acquired, is absolute, subject to waiver, estoppel, and any overriding statute. There was no suggestion of an estoppel in this case, and the Court of Appeal dismissed Victorygame's argument that Ahuja had waived privilege over the Correspondence through the production of a further witness statement from Mr Davies made in the second appeal proceedings.

The Court of Appeal held that what the Judge had described as an "element of deception" in Ahuja's procurement of information from Stradbrooks was irrelevant to the question of whether the Correspondence remained privilege. Indeed, the Court of Appeal held that "[t]here is room for more than one view about [Ahuja's] tactics", and that Ahuja was likely entitled to the information ultimately supplied by Stradbrooks. Stradbrooks and their insurers were not deceived into handing the documents over on the basis of a misleading impression that Ahuja was not going to use those documents for the purposes of the underlying litigation against Victorygame. The Court of Appeal concluded that the implicit misrepresentation of Ahuja’s intentions towards Stradbrooks, even if deliberate, was not a principled basis on which to deny an otherwise well-founded claim for privilege.

The decision in Ahuja is further authority for the proposition that in applying the dominant purpose test for the purposes of assessing a claim to litigation privilege, the purpose that matters is that of the party instigating the material over which privilege is claimed. The purpose of that party must be objectively assessed, such that the stated purpose of the party in question is not necessarily determinative. The decision is also further authority for the proposition that legal professional privilege, once acquired, is absolute (subject to any overriding statute); unless the party entitled to claim privilege is estopped from asserting it or found to have waived it.