SFO v ENRC: what did the Court of Appeal decide and what does it mean for lawyers?
A number of recent cases have adopted a narrow approach to the question of whether legal professional privilege can be claimed over documents created in the course of internal investigations (see in particular SFO v ENRC  1 WLR 4205, The RBS Rights Issue Litigation  EWHC 3161 (Ch) and PAG v RBS (No 3)  EWHC 3341 (Ch)).
Against that trend, the recent judgment of Bilta & Ors v RBS & Anor  EWHC 3535 (Ch) is a notable example of a more “realistic” and “commercial” approach to litigation privilege in the context of internal investigation materials.
Communications between parties or their solicitors and third parties will only attract litigation privilege if, at the time of the communication in question, the following conditions are satisfied:
Those conditions needed to be established by ENRC when it sought to resist disclosure of various documents that had been created in the course of an internal investigation into whistleblower allegations of bribery and financial wrongdoing. ENRC claimed that those documents, including notes of interviews conducted by ENRC’s solicitors, were subject to litigation privilege (as well as legal advice privilege). ENRC’s claim for privilege was largely unsuccessful. Ordering disclosure, Andrews J found that litigation privilege did not apply to any of the documents as:
Similar facts to ENRC underpin Bilta.
In Bilta, the claimants in a civil dispute sought disclosure of documents created in the course of an internal investigation by RBS’s solicitors in response to a letter from HMRC alleging that it had grounds to deny RBS’ claim for VAT input tax as RBS knew or should have known that it was participating in transactions connected with fraud. The documents included transcripts of interviews conducted by RBS’ solicitors.
RBS resisted disclosure as it claimed that the documents were subject to litigation privilege. Unlike in ENRC, the parties were agreed that conditions (a) and (c) above were in existence at the time the documents were created, so the case centred on condition (b): whether the documents were made with the sole or dominant purpose of conducting anticipated litigation.
Holding that litigation privilege did apply to the documents, Vos LJ placed emphasis on the following factors:
With public authorities and civil litigants buoyed by recent cases and taking a more aggressive approach to challenging assertions of privilege, similar issues are likely to crop up in future cases in relation to materials created during internal investigations. As each case will turn on its own facts, and as ENRC and Bilta are both first instance decisions, it would not be surprising if we see another case which appears analogous on its facts decided differently. That is particularly the case in the context of different investigating authorities or regulators, who more often than not have differing thresholds and methods of deciding whether or not to pursue an adversarial process. Accordingly, the issue of privilege will continue to be an important one for clients and practitioners, requiring careful attention and decision making throughout an internal investigation.
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