Key Point
It is not uncommon for employees in an organisation to exchange emails between themselves and with external advisors discussing apprehended litigation. However, these communications do not always attract litigation privilege and in a recent Commercial Court case, a Defendant was directed to hand over a series of emails to a Co-Defendant as it could not prove that they were written for the dominant purpose of the apprehended litigation. This decision serves as a reminder of how critically important it is to be mindful of committing sensitive information to writing as it may have to be disclosed to an opponent.
Background
Kelland Homes Limited (Kelland) was the developer of a residential property development in Tallaght and it commenced proceedings against Ballytherm Limited (Ballytherm) over defective insulation material used in the construction. The proceedings were also against Covestro B.V. (Covestro) which was the supplier of a chemical component of the insulation.
When Covestro furnished its affidavit of discovery to Ballytherm, it claimed privilege over a number of emails. However, Ballytherm challenged this claim of privilege and sought a court order directing that the emails be released.
The emails in dispute were sent between Covestro and agents of its insurance company. They were sent after Covestro was put on notice of the potential litigation and discussed matters such as the arguments being relied on by Ballytherm in support of its case against Covestro.
Covestro argued that due to the content of the emails, they did not have to be provided to Ballytherm as the dominant purpose behind the creation of the emails was the litigation.
Decision
Mr Justice Quinn held that Covestro failed to discharge the burden of proving that the dominant purpose behind the creation of the documents was for the purpose of defending the litigation. For this reason, he found that Covestro was not entitled to claim litigation privilege over them and directed that they be provided to Ballytherm.
In the Court's view, the dominant purpose of the emails related to a discussion about a goodwill compensation offer already made by Covestro to Ballytherm. The Court recognised that the emails may have contained requests for information in the context of the litigation. However, even if the emails had a dual purpose, Covestro failed to provide direct evidence as to which purpose was dominant.
Takeaway
A common misunderstanding is that internal communication discussing a claim will be automatically protected by litigation privilege. This is not always the case. Generally, correspondence passing between a client and their lawyer will be protected by privilege if it contains legal advice. However, extreme care should be taken when creating any other type of document, as it may easily fall into the hands of the opposing parties and reveal a litigation strategy being deployed.
Kelland Homes Limited v Ballytherm Limited, Clondalkin Builders Providers Limited, James McMahon (Dublin) Limited and Covestro B.V. [2019] IEHC 305
