The law of privilege and its ambit

April 24, 2020

By Damian Nolan

Who is entitled to claim privilege?

Only a client may claim privilege. A client can include an individual, partnership or a company through the directors.

Legal advisers are duty bound to uphold and protect their client’s claim. They cannot assert privilege once the client has waived it.

What are the forms of legal professional privilege?

There are two forms of legal professional privilege:

  • Litigation privilege applies to confidential communications between lawyers and clients (or between either of them and third parties) where that communication is created for the dominant purpose of ongoing or reasonably contemplated civil or criminal litigation.
  • Legal advice privilege applies to confidential communications between lawyers and their clients for the purpose of giving or receiving legal advice.

Who are legal advisers in the context of a claim of privilege?

Legal advisers are confined to counsel, solicitors, attorneys and foreign lawyers, who are professionally qualified and members of professional bodies (Re Duchess of Kingston’s Case [1776] 20 St Tr 619).

The category includes in-house lawyers who do not act in an executive or compliance capacity.

What is the protection provided by privilege?

LPP prevents disclosure of confidential legal communications in whatever form. This is the case whether this is requested by any third party, including an opponent in legal proceedings, a court, law enforcement agency or regulatory body.

In what circumstances can privilege be claimed?

Advice privilege can be claimed over any communication between a client and lawyer where the client seeks, and the lawyer gives, legal advice.

Litigation privilege can be claimed over any communication between a client, lawyer and third party where the dominant purpose of the communication is for use in actual, pending or contemplated litigation.

What is the rationale behind privilege?

LPP encourages full and frank discourse between a client and their lawyer in the knowledge and confidence that the lawyer cannot disclose the contents of the communication without the client’s consent. This rationale has caused some concerns when sought to be applied to prosecution agencies carrying out statutory duties.

Privilege is absolute

Privilege cannot be overridden by any other higher public interest. The public interest is in maintaining the operation of privilege at the potential cost of knowledge of (or gaining access to) otherwise relevant and probative material (R v Derby Magistrates’ Court, ex p B [1995] UKHL 18).

LPP can only be overridden by express words or by necessary implication.

Privilege endures until it is waived by the client, or by their legal adviser with the client’s consent. The fact that the client has no recognisable interest in continuing to assert the privilege is irrelevant. Important points to note about a lawyer’s role and duty in respect of privilege are as follows:

  • A lawyer is under a continuing duty to protect and assert a client’s privilege, even after termination of the relationship.
  • A lawyer has no locus standi, without support from a client, to seek the return of the client’s material when it has been inadvertently disclosed.
  • Privilege survives the death of the client and vests in his heirs and assignees, personal representative and successor.
  • A liquidator can assert or waive the company’s privilege regarding communications before liquidation. A trustee in bankruptcy asserts the bankrupt’s privilege.

Jurisdiction

The rule of privilege is applied in courts in E & W even if:

Hallmarks of advice privilege

Advice privilege is demonstrated by confidential communications between a client and their legal adviser for the purposes of seeking or giving legal advice. This is broadly interpreted to include all material within the continuum of communication, focusing on the purpose of the advice and utilisation of legal skills used in the relevant legal context.

To qualify for privilege, the following must exist:

  • Communication in any form between a lawyer and client.

The communication must be made in confidential circumstances. This may be deemed confidential by virtue of the transmission of legal advice.

  • The lawyer must be acting in the course of a professional relationship.
  • The communication must be to enable the client to seek, and the lawyer to give, legal advice and assistance in a relevant legal context.

Legal advice privilege extends to communications made and documents created in the course of providing that legal advice, including memoranda updating a client on the status of an investigation and notes of discussions between a client and his legal advisers (see Property Alliance Group Ltd v Royal Bank of Scotland plc [2015] EWHC 3187 (Ch)). It will also include presentational, commercial and strategic advice, if it relates to the client’s legal rights and obligations. Furthermore it will include documents referenced in such privileged communications where those documents were created for the purpose of the giving or receiving of legal advice.

In R (on the application of) v Jukes [2018] EWCA Crim 176 the Court of Appeal dismissed an appellant’s appeal against conviction for an offence contrary to the Health and Safety at Work etc. Act 1974, finding that a statement he had given to company solicitors prior to being charged was not privileged and was therefore admissible against him.

The principal authority on legal advice privilege is Three Rivers DC v Bank of England [2004] UKHL 48 (Three Rivers No.6), where the House of Lords held that the privilege attached to advice given by solicitors about the preparation and presentation of evidence to be submitted to an inquiry, since legal advice for the purposes of the privilege included advice as to what should prudently and sensibly be done in the relevant legal context (as well as to telling the client what the legal position was). The privilege would extend to cover advice and assistance in relation to public law rights, liabilities and obligations as well as private law rights.

In Three Rivers No. 5 the Court of Appeal held that the following classes of documents were not covered by the privilege:

  • Documents prepared by employees of the company seeking legal advice, which were intended to be sent and were sent to their lawyers for the purpose of obtaining that legal advice.
  • Documents prepared by employees of the company seeking legal advice with the dominant purpose of obtaining legal advice but which were not, in fact, sent to the lawyers.
  • Documents prepared by employees of the company seeking legal advice, without the dominant purpose of obtaining legal advice, but in fact sent to the lawyers.
  • Any documents prepared by ex-employees in any of the above three categories.

One critical issue for the application of legal advice privilege is to determine whether the communication was between the client and its lawyer. The current position is that legal advice privilege attaches only to communications between the lawyer and those individuals who are authorised to obtain legal advice on that entity’s behalf. It follows that communications between the solicitors and employees or officers of the client, however senior in the hierarchy of the company, who do not fall within that description will not be covered by legal advice privilege (see Three Rivers No.5 and Re RBS Rights Issue Litigation [2016] EWHC 3161 (Ch)).

The question, who is the client, received attention in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2018] EWCA Civ 2006. Without deciding the point, the Court of Appeal expressed the view that Three Rivers No.5 was wrongly decided on the issue of the limits of the relationship between the client and the legal adviser. The Court of Appeal made it plain that large corporations need, as much as small corporations and individuals, to seek and obtain legal advice without fear of intrusion. In the court’s opinion:-

If legal advice privilege is confined to communications passing between the lawyer and the “client” (in the sense of the instructing individual or those employees of a company authorised to seek and receive legal advice on its behalf), this presents no problem for individuals and many small businesses, since the information about the case will normally be obtained by the lawyer from the individual or board members of the small corporation. That was the position in most of the 19th century cases. In the modern world, however, we have to cater for legal advice sought by large national corporations and indeed multinational ones. In such cases, the information upon which legal advice is sought is unlikely to be in the hands of the main board or those it appoints to seek and receive legal advice. If a multi-national corporation cannot ask its lawyers to obtain the information it needs to advise that corporation from the corporation’s employees with relevant first-hand knowledge under the protection of legal advice privilege, that corporation will be in a less advantageous position than a smaller entity seeking such advice. In our view, at least, whatever the rule is, it should be equally applicable to all clients, whatever their size or reach. Moreover, it is not always an answer to say that the relevant subsidiary can seek the necessary legal advice and, therefore, ask its own lawyers to secure the necessary information with the protection of legal advice privilege. In a case such as the present, there may be issues between group companies that make it desirable for the parent company to be able to procure the information necessary to obtain its own legal advice.

It follows that the scope of legal advice privilege on the issue of who is the client is certainly not clearly defined at this time.

What is the test for a claim of litigation privilege?

Litigation privilege applies to confidential communications between lawyers and clients (or between either of them and third parties), where that communication is created for the dominant purpose of ongoing or reasonably contemplated civil or criminal litigation.

The following elements must therefore be established when a claim of litigation privilege is asserted:

  • Were civil or criminal proceedings ongoing or in reasonable contemplation at the time of the creation of the document? This is a question of fact, and where a prosecution authority or regulatory body has contact with a party which then engages legal advisers to deal with that enquiry, there will be a clear basis for contending that litigation is in reasonable contemplation. There must be a real likelihood of litigation rather than the mere possibility of it occurring (United States v Philip Morris Inc and others [2004] EWCA Civ 330).
  • Was the dominant purpose behind the creation of the document to resist or avoid such legal proceedings? This is a question of fact and covers documents created for the purpose of heading off, settling or avoiding civil or criminal litigation in the same way as it covered documents created for the purpose of resisting or defending proceedings.
  • Documents in which such information or advice cannot be disentangled or which would otherwise reveal such information or advice are covered by the privilege (WH Holding and another v E20 Stadium LLP [2018] EWCA Civ 2652).

In Director of the SFO v Eurasian Natural Resources Corporation Ltd [2018] EWCA Civ 2006, the Court of Appeal overturned the High Court decision in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] 1 WLR 4205, concerning the extent to which litigation privilege could be applied in internal investigations. The defendant successfully argued that documents prepared during the internal investigation, both by its lawyers and a firm of forensic accountants, were protected by litigation privilege.

The availability of litigation privilege for investigations under the Competition Act 1998 was addressed by the Competition Appeal Tribunal in Tesco Stores Ltd and others v Office of Fair Trading [2012] CAT 6. It held that notes of third party witness interviews conducted by Tesco’s lawyers were subject to litigation privilege, as by the time the interviews took place, the Office of Fair Trading’s investigation could be regarded as “sufficiently adversarial” to amount to litigation.

Litigation privilege will clearly not apply to purely commercial decisions within a business about settling a dispute before such litigation has actually been commenced. As the Court of Appeal noted in WH Holding and another v E20 Stadium LLP [2018] EWCA Civ 2652, there was no good reason for “covering all internal corporate communications with a blanket of litigation privilege”. In this dispute the question was whether litigation privilege extended to documents which were concerned with the settlement or avoidance of litigation where the documents neither sought advice or information for the purpose of conducting litigation nor did they disclose the nature of the advice sought or information. The defendant, E20, asserted that the emails the subject of the dispute were composed with the dominant purposes of discussing a commercial proposal to settle the dispute at a time when litigation was in reasonable contemplation. They therefore argued that litigation privilege applied and should be upheld but this argument was, for the reasons given, rejected by the Court of Appeal.

Prosecuting authorities and a claim of LPP or public interest immunity

The Director of Public Prosecutions (DPP) and Crown Prosecution Service (CPS) can claim privilege or public interest immunity (PII). Examples of prosecution authorities’ privilege claims include:

  • A subpoena was served on a member of staff at the DPP asking for counsel’s instructions for trial for use in wrongful arrest proceedings. A claim for PII was upheld and the privileged nature of the documents was recognised, despite the conceptual difficulty in identifying the client (R v Ward [1993] 1 WLR 619).
  • In Evans v Chief Constable of Surrey [1988] QB 588, officers submitted statements and a report requesting advice to the DPP in respect of a murder charge. The defendant was never charged, sued for false imprisonment and sought the reports. The Chief Constable waived privilege, but claimed PII. Wood J found no difficulty in the notion that the DPP was used as a legal adviser and observed that there should be freedom to communicate.
  • In Corbett v DPP [1999] IEHC 51, the court recognised the argument that the DPP was both lawyer and client, but decided that public policy protected communications between the DPP and officers, solicitors and counsel. Garda files compiled in an investigation disclosed in the public interest in the administration of justice outweighed the desirability of preserving confidentiality.
  • In Goodridge v Chief Constable of Hampshire [1999] 1 WLR 1558, a request for disclosure of correspondence between the Serious Fraud Office, police and CPS was made by an appellant in a directions hearing at the Court of Appeal. Collins J found the documents were subject to LPP. Whether or not that is technically correct, it must always be recognised that if there is anything that could indicate that a defendant is not guilty of the matters with which he is charged, LPP should not be used as a cloak.
  • The CPS can be subject to privilege in extradition proceedings where they are characterised as solicitors to a requesting state (Germany v Kleinschmidt [2005] EWHC 1373 (Admin)).

Pre-existing documents and privilege

In general, pre-existing documents will not be privileged:

  • A pre-existing original document from a third party will not be privileged.
  • A copy of an unprivileged document from a third party to replace a lost original will not be privileged.
  • An unprivileged document received by a client from a third party for the purposes of litigation that is later copied will not be privileged.
  • Copies of documents prepared by a client for a solicitor for use in litigation are not privileged as against an opponent who has a copy of the document but is prevented from using it by an order made in a foreign jurisdiction.
  • An original or copy obtained by a solicitor from a client will not be privileged.
  • Copy documents from a third party to a solicitor that betray advice given to a client may be privileged.

Proportionality arguments in respect of privilege

Proportionality arguments may be raised in respect of privilege in the following circumstances:

  • Article 6, ECHR:right to a fair trial through legal assistance of a person’s own choosing. This mirrors litigation privilege, in that rights arise in the context of actual or contemplated litigation. For example, where supervised legal visits lack privacy, this constitutes a breach.
  • Article 8, ECHR:right to respect for private and family life, home and correspondence without interference by a public authority. This mirrors the wider advice privilege. Examples of where an Article 8 breach may arise include:
    • searching a lawyer’s office for information about a suspect;
    • redirecting a bankrupt’s mail to search for assets, including privileged correspondence; and
    • opening a prisoner’s letters.

However, a breach of Article 8 did not arise in the following circumstance:

Extending privilege

All attempts have failed to extend the ambit or nature of privilege, including to communications made in “confidence” or “foreign state privilege”.

Solicitors continue to maintain a competitive advantage over accountants in relation to imparting the same specialist tax advice, as the court has ruled that privilege does not extend to accountants (R (Prudential plc) and another v Special Commissioner of Income Tax and another [2013] UKSC 1). It also does not apply to claims consultants (Walter Lilly & Company Ltd v Mackay and another [2012] EWHC 649

Waiver of Privilege

Waiver is conduct inconsistent with the underlying confidentiality that is the hallmark of privilege. The result of waiver is loss of confidentiality. This can be waived expressly or intentionally, whether in the course of litigation or otherwise, by a voluntary act of disclosure. Waiver can be effected by the client and by the solicitor and counsel, even if the client does not authorise the latter to do so (Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529).

In Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd and another [2020] EWCA Civ 11the Court of Appeal held that a statement by a solicitor to a third party about the instructions the solicitor received from his client did not automatically give rise to a loss of confidentiality in the documents that contained or evidenced those instructions. The court rejected an application for disclosure of documents containing a client’s instructions to its law firm where the firm had confirmed the nature of those instructions (relating to the funding of a transaction) to the applicant seller. Differentiating between disclosure of the information contained in the underlying communications and disclosure of the underlying communications themselves, the court did not agree that the instructions were no longer confidential or that privilege in them had been waived, just because the client had authorised the law firm to state what instructions it had been given. It would have been different if the client had authorised the disclosure of the underlying communications.

Limited disclosure

Privilege can be waived for a specific limited purpose to a third party without losing privilege (Berezovsky v Hine and others [2011] EWCA Civ 1089). Limited disclosure must be made or received on clear and agreed written terms as to use by the party receiving and by the wider world.

Disclosure to a limited number of people does not prevent the claim of privilege against the rest of the world (Gotha City v Sotheby’s (No 1) [1998] 1 WLR 114).

In the case of inadvertent loss of confidential material, it is for the client alone to seek injunctive relief. A solicitor is not entitled to do so for their own benefit.

Inter-party correspondence that includes expressing an opinion on the merits of the case based on research will not be waiver. However, quoting from counsel’s advice will risk waiving privilege.

Where reference is made to privileged documents or advice, whether waiver has occurred will depend on the extent of the reference made. Mere mention of a document in a witness statement, affidavit, case statement or the fact of advice having been given will not waive privilege. Reference to the substance of the document or the advice may result in waiver. Disclosure to an agent of a third party can amount to disclosure to the third party.

In a business crime context, dissemination of privileged advice to employees does not waive privilege against third parties. Privilege may not be available between an employee, former board member or executive who receive the advice and a company as there is no confidentiality.

In Fisher v Revenue & Customs [2012] UKFTT 335, a party that had disclosed documents relating to legal advice had not thereby also waived privilege relating to later legal advice because the later privileged documents were not relevant to the same issue as the earlier document.

Conduct that is inconsistent with the maintenance of privilege, even if not intentionally waived, can amount to implied or imputed waiver.

Where disclosure is inadvertent, the principles to determine the effect of such disclosure are set out in Al Fayed v Commissioner of Police for the Metropolis [2002] EWCA Civ 780, where the court rejected the idea that fairness or a balancing exercise are the guiding arbiters to resolve waiver disputes or to justify an extended approach to waiver.

Crime-fraud exception

This is a common law principle that is now encapsulated in statute (section 10, Police and Criminal Evidence Act 1984).

This exception can be invoked even where the client and legal adviser act in good faith, but are used as innocent tools of a third party (R v Central Criminal Court, ex p Francis & Francis (A Firm) [1989] AC 346). However, it only applies to the extent of the third party’s communications to the client and solicitor. It can be invoked at any stage in the investigation or litigation once the communication has been delivered between the solicitor and client.

Invoking the crime-fraud exception is not limited to steps preparatory to (or part of) the commission of a criminal offence. For example, money laundering that takes place after the offence can also give rise to an invocation of the crime-fraud exception (Francis & Francis).

 

Damian Nolan specialises in serious crime anfraud work. He undertakes defence work mainly, but is also a Category 4 Prosecutor. He has been appointed to the CPS Specialist Rape and Child Sexual Abuse List and is a member of both the Serious Crime Panel and the Fraud Panel. In the 2019 and 2020 editions of Chambers and Partners, Damian was one of only 3 junior counsel ranked in Tier 1 on Circuit.