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Privilege: Sports Direct get the 'dominant purpose' test wrong in latest judgment

  • Market Insight 16 October 2020 16 October 2020
  • UK & Europe

  • Professional Practices

In this latest instalment of the Sports Direct series of decisions on privilege, Tim Crockford, James Roberts and David Milner consider how the 'dominant purpose' test applies in practice and the importance of context for the Court's assessment of it.

Privilege: Sports Direct get the 'dominant purpose' test wrong in latest judgment

In another development in the long running The Financial Reporting Council Ltd -v- Frasers Group Plc (formerly Sports Direct International Plc) [2020] EWHC 2607 (Ch) litigation which we have previously reported on here and here, the Court has handed down its more detailed reasons for having previously ruled that litigation privilege did not attach to three Deloitte documents belonging to (then) Sports Direct International plc ("Sports Direct").

This decision is a useful reminder of one of the first principles of litigation privilege: this species of privilege only arises where documents are produced for the sole or dominant purpose of litigation in contemplation at the time they are created. Readers may recall the similar reminder in Sotheby's v Mark Weiss Ltd [2018] EWHC 3179 (Comm) (which we covered here) in which a competing purpose for the creation of a document can obstruct the 'dominant purpose' test from being met.

In this latest case, despite there having been litigation in reasonable contemplation at the relevant time, the Court held that the documents in issue were not created for use in that litigation having regard to the circumstances of their genesis, their subject matter and the purpose which they served. In fact, the Court found that no aspect of the three documents was directed at assisting in the litigation. Rather, they were created for the purpose of helping Sports Direct to operate its and/or its affiliates' online retail businesses according to the optimal corporate structure.

So don't forget – part of the 'dominant purpose' test requires having a nexus between the purpose of the document over which privilege is claimed and the issues in the litigation reasonably in contemplation at the relevant time.

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