TMO Renewables Ltd v Reeves & Anor

Factual and Procedural Background

The appeal concerns whether one of the liquidators of the appellant company ("Company A") waived litigation privilege over a valuation report obtained from an accounting firm ("Company B") in May 2016. The report related to alleged losses caused by breaches of contract or fiduciary/statutory duties by five defendants, four of whom were former directors of Company A. These breaches allegedly led to Company A entering administration and liquidation, with its assets subsequently sold to another company ("Company C"). The losses claimed amount to £19.5 million.

Initial pre-action correspondence commenced in 2015, with draft particulars of claim sent in 2017. The defendants queried the basis of the £19.5 million figure, suggesting potential exaggeration. Company A's solicitors responded in early 2018, indicating that expert evidence would establish the quantum and that the valuation report was obtained for preparing the claim particulars, expressly stating no waiver of privilege.

During subsequent security for costs applications made by the defendants, witness statements challenged the credibility of the £19.5 million valuation, citing the sale of Company A's assets for a significantly lower amount. In response, a liquidator of Company A referred to the valuation report in a witness statement, describing the valuation methodology and asserting confidence in the claimed quantum, while disclaiming waiver of privilege.

The defendants then requested production of the valuation report, which was initially refused. The matter came before a Deputy Master who, after hearing submissions and considering the context, concluded that the liquidator had deployed the report and waived privilege, ordering its production. Company A appeals this order.

Legal Issues Presented

1. Whether the liquidator's reference to the valuation report in evidence amounted to waiver of litigation privilege by deployment of the report.
2. If waiver occurred, whether it was limited to a narrow purpose or extended to the broader merits of the case.
3. Whether the Deputy Master erred in exercising discretion under the relevant Civil Procedure Rules Practice Direction regarding production of the report.

Arguments of the Parties

Appellant's Arguments

• The liquidator's reference to the valuation report was solely to rebut an allegation that the liquidators could not believe the claimed quantum; it was not a wider deployment relating to the merits of the claim.
• The liquidator expressly stated no waiver of privilege was intended, consistent with prior communications.
• The security for costs application was not contested on principle and the liquidator was not deploying the report in court at that stage.
• The valuation report was obtained for pleading purposes only and was not intended to be used at trial; expert evidence was to be obtained in due course.
• The Deputy Master failed to sufficiently consider that none of the report’s contents were quoted and that the phrase "derived from" did not mean the report’s contents were disclosed, only its effect.
• On proper analysis, the references amounted to setting out the effect of the report, not its contents, falling within established authority that mere reference does not waive privilege.

Respondents' Arguments

• The liquidator did more than make a bare reference; he identified the report’s author, methodology, and conclusions, thereby relying on the report’s contents.
• The reference was made in the context of a substantive argument on security for costs going to the heart of the claim’s merits (damages and quantum).
• The liquidator was deploying the report to bolster the case, not merely referring to its effect.
• The Deputy Master’s decision was entitled to deference unless it was shown he had no legitimate or proper grounds for his conclusion.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed whether the liquidator's reference to the valuation report constituted "deployment" of privileged material, thereby waiving litigation privilege. The court acknowledged established principles distinguishing mere reference to a privileged document from reliance on its contents. It emphasized that waiver requires reliance on the contents rather than merely on the document's existence or effect.

The Deputy Master had concluded that the liquidator’s reference went beyond mere mention by summarising key elements of the report and thus waived privilege. However, the appellate court found that the Deputy Master failed adequately to consider that the reference was narrowly aimed at rebutting an allegation questioning the liquidators’ belief in the quantum, and that the report was obtained solely for pleading purposes with no intention to rely on it at trial.

The court found that the liquidator’s statements set out the effect of the report on his state of mind rather than quoting or summarising its contents. The references to valuation methodology and scenarios were broad and insufficient to amount to deployment. The court also noted that security for costs applications generally do not engage the merits of the claim to a degree that would justify waiver of privilege.

Accordingly, the court held that there was no proper basis for concluding that privilege had been waived. The Deputy Master's order for production of the report was therefore set aside.

Holding and Implications

The appeal is allowed and the order for production of the valuation report is set aside.

The direct effect is that the privileged valuation report obtained by Company A’s liquidators remains protected from disclosure. No new precedent was established, and the decision reinforces the principle that mere reference to privileged documents, particularly for limited interlocutory purposes and without reliance on contents, does not constitute waiver of litigation privilege. The decision underscores the necessity of careful contextual and textual analysis when assessing waiver claims.