Litigation Privilege Does Not Apply to Accountant’s Stories

The Large Court has resolved that a collection of reports well prepared by the accountants Deloitte LLP (“Deloitte”) for Athletics Immediate Global PLC (“Athletics Immediate”) (now identified as Frasers Group Ltd) in relation to a proposed tax construction were being not geared up for the sole or dominant function of litigation, and were being consequently not protected from disclosure by litigation privilege.


This most recent judgment is part of a series, which arose out of an application by the Monetary Reporting Council (“FRC”) for an buy requiring Athletics Direct to provide them with many documents to support with an investigation of an auditor. The investigation was sparked by stories of one of Athletics Direct’s subsidiaries, Retail Minimal (“Sporting activities Immediate – Retail”), participating a corporation to deliver delivery expert services as aspect of a tax composition adopted subsequent advice from Deloitte.

In accordance with the order, Sports activities Immediate handed in excess of about 2000 documents to the FRC, but withheld 40 proclaiming that legal professional privilege utilized. The FRC commenced a declare to challenge irrespective of whether privilege did in fact utilize to the paperwork, and whilst thriving in the Significant Court docket, sections of the final decision had been overturned in favour of Sporting activities Immediate at the Court docket of Charm.

The dispute then returned to the Substantial Court, where Lord Justice Nugee was needed to occur to a final decision above irrespective of whether 3 reviews geared up by Deloitte could be afforded the security of litigation privilege.

The Judgment

By way of reminder, litigation privilege applies to a document which is a communication involving a lawyer and customer, or among either of these functions and a 3rd occasion, created for the dominant function of litigation and relating to litigation which is pending, reasonably contemplated or existing.

In implementing this properly-recognized examination, Lord Justice Nugee discovered that the reports organized by Deloitte were not prepared for the sole dominant intent of litigation. Alternatively, the purpose of the to start with report (and subsequently the other two reports) was to advocate a new tax arrangement to endure additional robustly a problem from the tax authorities.

This was the case even although Athletics Immediate – Retail did assume there to be litigation more than the tax composition. As the Court put it – “even if it is contemplated that the unique composition will be probably to be attacked by the relevant authorities and that there will be litigation, the tips as to how to carry out the new structure…is not mostly suggestions as to the perform of the future doable litigation”.

In deciding that litigation was not the sole or dominant goal for the reports, Lord Justice Nugee concluded that there was no require to go on to look at irrespective of whether Sports activities Direct – Retail did moderately ponder litigation when the report was written. On 8 Oct 2020, Lord Justice Nugee refused to grant Sports activities Immediate permission to enchantment this judgment.


While this scenario is most likely a uncomplicated software of the undisputed lawful ideas that use when pinpointing no matter whether litigation privilege is relevant, it serves as a helpful reminder that not all assistance offered in conditions wherever litigation might arise will receive the reward of litigation privilege.

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