On litigation privilege the Court of Appeal brought much better news. The judgment at first instance, which held that litigation privilege could not apply until a prosecution had been commenced or the company had seen evidence suggesting a prosecution was likely to succeed, was overturned. The Court expressly recognised that companies need to investigate what has occurred and that litigation privilege can apply during this process, as long as a prosecution is in reasonable contemplation and the dominant purpose of the communications in question is to prepare for that. The Court also held that the fact that a company intends to cooperate with the prosecutor, or has stated that it will, does not prevent litigation privilege applying.
This case and others illustrate the need to adduce evidence of the contemplation by the company of prosecution or litigation. Highlighting a trigger for this concern, often in the form of some contact from a prosecutor, and the company’s response (eg instructions to litigation lawyers) is key to successfully asserting privilege.
In Bilta v RBS, the Court upheld RBS’s claim of litigation privilege over documents generated during a tax fraud investigation, including transcripts of interviews conducted as part of the investigation. In this case, litigation was reasonably in contemplation from a “watershed moment” when RBS received a letter from the HMRC and its subsequent actions indicated its anticipation of litigation.
Prior to the Court Appeal's decision in SFO v ENRC, in April 2018, SFO Case Controller John Gibson commented that “where the SFO sees an overly ambitious claim of privilege, we will, and indeed should, challenge such a claim…There is also an argument to suggest that in specific circumstances [the SFO] may be obliged to challenge overly ambitious privilege claims”. If a company wants to undertake an internal investigation but retain litigation privilege, Mr. Gibson suggests that the question is: what is motivating the company to preserve litigation privilege? He goes on to suggest that part of the answer would be to communicate with the SFO about what the company is doing and how it is conducting its investigation. It is likely that, following ENRC, the SFO will emphasise the need to waive privilege in order to be considered cooperating, rather than frequently challenging privilege asserted over investigation materials. The fact that Rolls Royce waived privilege over a large amount of documentation generated in its investigation of bribery allegations was highlighted as a key reason for it being appropriate to resolve the allegations with a Deferred Prosecution Agreement.