Executive Summary
In a recent judgment, the High Court in Krishna Holdco Ltd v Gowrie Holdings Ltd [2025] EWHC 341 (Ch) has found that litigation privilege did apply to a valuation report prepared for the potential sale of a subsidiary company because that sale was driven by litigation – namely a dispute between two shareholders. The court’s decision underscores the intricacies associated with determining the dominant purpose of a document for the purposes of a claim to litigation privilege, and advocates for an approach which considers the wider context in which a document has been created.
Background
The dispute between Krishna Holdco Limited (Krishna) and Gowrie Holdings Limited (GHL) centers around unfair prejudice proceedings, with Krishna having previously secured a judgment requiring GHL to purchase Krishna’s shares in their jointly owned company, LBNS. The case involves multiple parties, including individual respondents and several corporate entities, with the litigation primarily focusing on the valuation of Krishna’s shares and the associated disclosure of documents.
The conflict goes back to early 2019, when tensions arose between Krishna and GHL over the management and financial stability of LBNS. A critical issue emerged regarding the potential withdrawal of banking facilities by HSBC, allegedly due to Krishna’s refusal to provide certain “Know Your Client” information. In response, GHL considered purchasing LBNS’s trading subsidiaries, GLL and LL, to mitigate the risk posed by the banking issues. This led to the creation of valuation reports concerning GLL and LL by PwC, over which a claim to litigation privilege was subsequently made.[1]
Court Decision
In determining whether the PwC valuation reports were subject to litigation privilege, emphasis was placed on the dominant purpose behind the creation of these documents.
In determining the purpose, the Court considered the context in which the documents were created, including the ongoing litigation and the strategic response to the potential withdrawal of banking facilities. The Court found that the valuation work was not merely a commercial transaction but a subset of a defense strategy in the broader dispute. This approach aligns with recent authority, such as the Director of the Serious Fraud Office v Eurasian Resources Corporation [2017, EWHC 1017 (QB)], where the court emphasized the importance of understanding the factual and commercial context when determining the dominant purpose of document creation.
Accordingly, the court concluded that the reports were produced for privileged purposes, as they were created as part of a broader strategy to address the ongoing dispute between Krishna and GHL.
Implications
In comparison to other recent cases, such as the Eurasian Resources case, the Krishna decision underscores a consistent judicial approach to evaluating the dominant purpose of documents for the purposes of litigation privilege. Both cases illustrate the willingness of the Courts to look beyond the surface of transactions and consider the underlying motivations and strategic considerations behind them.
Accordingly, this decision supports an approach of taking a broader view as to the purpose of a document by taking into account the wider context in which the document was created. As a result, what on the face might appear to be a separate purpose for creating a document may in fact be part of a broader and overall litigation purpose, in which case the “dominant purpose” test for litigation privilege may well be satisfied.
In this respect, the decision also serves as a reminder of the importance of maintaining clear and comprehensive records of the intentions behind document creation, as these records can be pivotal in asserting privilege.
[1] A claim was also made that the reports were subject to “without prejudice” privilege.