Court of Appeal holds litigation privilege in documents had ended

Speedread

The Court of Appeal has held, that documents which were protected by litigation privilege in legal proceedings were not protected by litigation privilege in subsequent proceedings in circumstances where the original proceedings had concluded, and the subsequent proceedings were not 'closely related' to the original proceedings. 

Facts

In Ryanair Limited v The Revenue Commissioners & Ors, Aer Lingus Plc v The Minister for Finance & Ors [2018] IECA 222, Court of Appeal, Hogan J, 22 June 2018, the Plaintiffs appealed from a judgment of Barrett J where he held that the State was entitled to claim litigation privilege in respect of documents deployed by it in defending proceedings brought by the European Commission and that privilege continued for the purposes of defending separate proceedings subsequently brought by the Plaintiffs.

Background

Section 55(2)(b) of the Finance (No.2) Act 2008 provided for the establishment of an airport travel tax. This was a differentiated tax whereby certain short-distance flights were subject to a (per passenger) €2 air travel tax rate, with longer distance flights being subject to a €10 air travel tax rate. The European Commission took issue with the tax and declared it to be an unlawful State aid. That finding was set aside on appeal to the General Court, but that decision was successfully appealed by the Commission to the Court of Justice. The net effect was that the State was obliged to recover the difference between the lower rate of travel tax and the higher rate from both Aer Lingus and Ryanair and it issued proceedings for this purpose.

Both Ryanair and Aer Lingus sought discovery of material generated by the State in its dealings with the Commission on the issue.  The State parties objected to making discovery of this material on a number of grounds including public interest privilege and litigation privilege. Barrett J held that litigation privilege applied to the documents generated in the Commission proceedings, on the basis that the Aer Lingus and Ryanair proceedings were 'closely related' to the Commission proceedings. 

The sole question before the Court of Appeal was whether the State could raise litigation privilege arising from the Commission proceedings, in order to defend the applications for discovery in the separate Ryanair and Aer Lingus proceedings. 

Decision

The Court of Appeal noted that the Ryanair and Aer Lingus proceedings traversed similar ground to the Commission proceedings in that they concerned travel tax, State aid and the repayment of the differential payments generated by the tax. However, it held that those proceedings were not 'closely related' litigation in the sense described by Finlay Geoghegan J in University College Cork v ESB [2014] 2 IR 525, chiefly because the parties were entirely different and there was no direct linkage between the (now concluded) Commission proceedings and present litigation.

The Court was of the view that the zone of privacy which the State required to defend the Commission proceedings - and which gave rise to the litigation privilege in the first place - was no longer required as those proceedings had ended. Nor could it be said that Ryanair or Aer Lingus were somehow proxies for the Commission or that the outcome of the litigation could in any way affect the Commission proceedings involving the State which had long concluded.

Accordingly, the Court held that the litigation privilege which the State enjoyed for the purposes of defending the Commission proceedings had ended once those proceedings had terminated. It followed that the State was not entitled to plead litigation privilge in respect of the documents now sought by Ryanair and Aer Lingus. 

Comment

The decision of the Court of Appeal takes quite a narrow view of what is to be considered 'closely related' litigation and parties to litigation should not assume that just because there is a connection between sets of proceedings that a Court will take the view that it is closely related so as to preserve privilege. 

It is also important to note that the law on this point differs between England and Ireland and documents which will be covered by litigation privilege under English law might not be considered privileged under Irish law. 

For further information please contact Paula Mullooly.

Date published: 13 July 2018