The Erosion of Legal Advice Privilege by Three Rivers

Czech Republic

Three Rivers District Council & Ors v The Governor & Company of the Bank of England [2004] EWCA Civ 218

In November 2003 we reported an important High Court decision relating to the scope of legal advice privilege: Advice from lawyers on presentation is not privileged!

The Court of Appeal has this week upheld the High Court's decision.  Legal advice privilege cannot be claimed in relation to communications between the client and his solicitor over the client's participation in an inquiry, unless the dominant purpose of those communications is the obtaining of advice and assistance in relation to legal rights and obligations.

The decision arises from the long-running dispute between the Bank of England (the Bank) and creditors of the Bank of Credit and Commerce International (BCCI) over the Bank's supervision of BCCI.  In upholding the High Court's Judgment, the Court of Appeal accepted that the advice the Bank sought was primarily in relation to the preparation and presentation of evidence to the Bingham Inquiry in order to protect the Bank's reputation and limit any blame or criticism on the Bank, which did not in itself amount to advice in relation to the Bank's rights and obligations.

The Court of Appeal went on to suggest (obiter) that it was questionable why, in the absence of litigation, communications with a solicitor should be privileged.  It also suggested that it may be time for the Law Reform Committee to review this area.

It is understood that the Bank will apply for leave to appeal the judgment to the House of Lords.

What are the implications of this judgment?

1.       Communications between a client and his solicitor in relation to participation in an inquiry will not be protected by legal advice privilege.  Legal advice privilege will only apply where the advice relates to the party's rights and obligations (which go beyond reputational matters).  Inquiries are a popular method of imposing judicial scrutiny over many issues of public importance.  However, there is a risk that parties will be reluctant to participate in such inquiries if a party cannot communicate with his solicitor with the confidence that those communications will remain privileged.

2.       It is likely that claims for legal advice privilege will be subject to greater scrutiny in all cases (unless litigation privilege applies).

3.       The obiter comments of the Court suggest that the scope of legal advice privilege may be under further attack.

For further information on the High Court's judgment of November 2003 click here.

For further information on this matter please contact either Stephen Hallam on +44 (0)20 7367 2714 or at stephen.hallam@cms-cmck.com or Guy Pendell on +44 (0)20 7367 2404 or at guy.pendell@cms-cmck.com of our Commercial Litigation Department or Liam O'Connell on +44 (0)20 7367 2640 in our Insurance/Reinsurance Group or Amanda Stoner on +44 (0)20 7367 3036 or at amanda.stoner@cms-cmck.com in our Insurance/Reinsurance Group.