In a privileged position
The purpose of this article is to look at a recent development in what is meant by legal professional privilege. However, it may be useful to have a quick recap on the Court rules regarding disclosure, to put the law of privilege into context. Readers of this Bulletin, and those who have been involved in litigation, will recall that as part of the preparations leading up to trial, the Court usually orders the parties to give standard disclosure and inspection of the documents that are or have been within his control. "Control" means that the document is or was in a party's physical possession, or he has or had a right of possession of it and has or had a right to inspect or take copies of it.
The usual order is that parties give "standard disclosure". Standard disclosure means:
- documents on which a party relies;
- documents which adversely affect the particular party's case;
- documents which adversely affect another party's case;
- documents which support another party's case; and
- documents which a party is obliged to disclose by a practice direction.
Having made a search for documents that fall within the definition of standard disclosure, it is usual for a list to be made of the relevant documents. The list should include reference to "privileged" documents, albeit a general reference to "correspondence between the party and its solicitors and legal advisors" will suffice, and documents that the party no longer has, such as documents that have been lost. Other parties have a right to inspect the documents on the list that are in the party's control, with the exception of those documents said to be privileged.
So what is privilege?
There are different types of privilege, but the most often used is known as "legal professional privilege". This itself divides into two types:
- legal advice privilege, which protects the confidentiality of communication between solicitor and client for the purpose of obtaining legal advice, irrespective of whether the advice concerns pending or contemplated litigation; and
- litigation privilege, which protects communications not just between solicitor and client but also communications between the solicitor or client and a third party. However, litigation privilege may only be claimed if the dominant purpose of bringing the document into existence was its use in the conduct of pending or contemplated litigation.
A couple of examples might assist. If an employer writes to his solicitor during the negotiation of the terms of a building contract to ask about the meaning of an amendment the contractor has proposed, that letter and the solicitor's reply will be protected by legal advice privilege. If there is litigation in the future between the two, the employer will not have to disclose that correspondence. If, however, the employer wrote to his architect to seek that advice, his letter to the architect and the architect's response would not be protected by privilege. Legal advice privilege only protects correspondence with a solicitor or legal advisor. There was no litigation contemplated when the employer wrote to his architect, so litigation privilege cannot apply. If however, the contractor had threatened to issue legal proceedings, would not be protected by privilege.
If however, the contractor had threatened to issue legal proceedings, and the client sought information from his architect so that he could take advice on his legal position, that correspondence might be covered by privilege, provided the dominant purpose of the employer when generating the correspondence was to assist in his conduct of the contemplated legal proceedings.
The "dominant purpose" test
Until recently, it was unclear whether the "dominant purpose" test applied only to litigation privilege or whether it also applied to legal advice privilege. Mr Justice Tomlinson recently had to examine this question in Three Rivers District Council & Others v The Bank of England (December 2002). The Judge summarised the issue before him as follows:
"The question which has arisen on this application is whether the subject matter of legal advice privilege is restricted to communications between solicitor and client, including secondary evidence of such communications or whether it embraces also material brought into existence for the dominant purpose of obtaining legal advice, even though that material is not in itself a communication between solicitor and client. The Claimants contend for a narrow ambit restricted to communications properly so called, and assert that decisions of high authority support them. The Defendant contends for a wider ambit, protecting documents or information the dominant purpose of the creation or compilation of which was the seeking of legal advice, and it equally asserts that decisions of high authority support its approach."
The case arose out of the collapse of the Bank of Credit and Commerce International (BCCI). The Council lost money as a result of the collapse and brought proceedings against the Bank of England for misfeasance. Following BCCI's collapse, the Government set up an inquiry under Lord Bingham to investigate. One of the matters for investigation was the Bank of England's role in supervising BCCI. During disclosure, what the Council was interested in seeing were the documents generated by the unit the Bank had set up to deal with all communications between the Bank and the Inquiry. The Bank claimed privilege in a considerable number of documents generated by the unit for the purpose of providing information to the Bank's legal advisers. Litigation privilege did not apply to the documents, since the Inquiry was not "legal proceedings." The Council claimed that legal advice privilege did not protect the documents, since only communications between solicitor and client could be protected.
The Judge first noted that, in the context of legal privilege, he viewed the term "communication" as referring to the process of communication between solicitor and client, rather than the individual communications themselves. In other words, what is protected by privilege is the confidential process by which legal advice is sought and obtained. The Judge then examined various legal authorities on the question of privilege. Many of these related to litigation privilege. However, after considering the matter, the Judge decided that the "dominant purpose" test, for deciding whether or not a document was protected, applied to legal professional privilege generally, i.e., to both legal advice privilege and litigation privilege.
Therefore, if the Bank had created or compiled documents for the dominant purpose of obtaining legal advice from its solicitors, those documents were protected by legal advice privilege. The Judge concluded:
"I have come to the view that emphasis upon communications as such tends to obscure the true nature of the protection from production. If the principle is that a person should not be in any way fettered in communicating with his solicitor, and must not be fettered in preparing documents to be communicated to his solicitor, it must be axiomatic that it is the confidentiality of the whole process of communication which requires protection, not just those documents which can be recognised as comprising the actual or final communication. This becomes particularly obvious when one considers the case of a corporation which can only act through individuals, perhaps needing to act through many. It would be to my mind wholly artificial … to confine protection to documents which are actually intended to be handed to the legal advisor or to serve as an aide memoire whilst imparting information to him and seeking his advice thereon."
There are some exceptions
There are some important caveats to bear in mind. First, although legal advice privilege may now protect documents generated for the purpose of obtaining legal advice, the Judge made it clear that this does not protect communications by a party direct with third parties. These types of communications can only be protected where legal proceedings are contemplated or pending.
Second, if a document is to be protected by legal advice privilege, it must have been created for the dominant purpose of obtaining legal advice. The purpose has to be that of the author who produced the document or the person who directed someone to produce the document. The Australian case of Grant v Downs (1976) summarises the test "Does the purpose of supplying the material to the legal advisor account for the existence of the material?" It is important to note that the document has to be privileged when it was created. It will not become privileged simply because it is sent to a solicitor at a later date.
So what should a party do about privileged documents when carrying out its search for documents during disclosure? In an ideal world, a party should go through each file and ask whether each document falls within the definition of standard disclosure set out above. In practice, especially in document heavy construction cases, parties will disclose files of documents that fall within the definition of standard disclosure, rather than asking the question in respect of each and every document. However, it will still be necessary to go through each file to check that no privileged documents are contained within that file. (For this reason, it is always useful to keep a different file, separate from other project documents, containing letters to or from legal advisers.)
If a document falls within the definition of standard disclosure, the party should then ask whether it is privileged. If it is, it will still have to be disclosed, but it will be listed separately and other parties will not be entitled to inspect it. It may be obvious from looking at the document whether or not it is privileged. If it is a letter to or from a solicitor, seeking or giving legal advice or keeping each other informed as part of an ongoing request for legal advice, the document will probably be protected by privilege.
Communications between the solicitor and a third party or the client and a third party will only be protected if legal proceedings were contemplated or pending and the document was created for the dominant purpose of assisting in the conduct of those proceedings. That may be obvious from looking at the document.
Finally, what about those documents that were not sent to a solicitor but are your own internal notes and memoranda put together to enable you to seek legal advice? These will be protected if they were for the dominant purpose of seeking legal advice or for conduct of litigation. If that is not obvious from reading the document, the party should ask the person who produced the document why they did so. It may be that they did so, or were asked to do so, in order to seek legal advice. If that is the case, the document will be protected by privilege. If the purpose of creating the document was for some other reason, the document will not be protected by privilege, even if it was later sent to a solicitor.
This article might well lead you to ask other questions about privileged documents. What about "without prejudice" documents? What if I inadvertently allow the other side to inspect my privileged documents? What if I want to challenge the other side's claim to privilege? What if I want to allow inspection of some, but not all, of my privileged documents? These are all knotty problems that would make this article far too long. We shall address some of these issues in later Bulletins.
For further information please contact Clare Collier at [email protected] or on +44 (0)20 7367 2354.
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