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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Three Rivers District Council & Ors v The Governor & Company of the Bank of England Rev 1  EWCA Civ 474 (03 April 2003)
Cite as:  CPLR 349,  QB 1556,  EWCA Civ 474,  3 WLR 667
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (Commercial)
MR JUSTICE TOMLINSON
London, WC2A 2LL
B e f o r e :
LORD JUSTICE SEDLEY
LORD JUSTICE LONGMORE
| THREE RIVERS DISTRICT COUNCIL & Ors
|- and -
|THE GOVERNOR & COMPANY OF
THE BANK OF ENGLAND
AS APPROVED BY THE COURT
CROWN COPYRIGHT ©
Crown Copyright ©
Lord Justice Longmore:
"To enquire into the supervision of BCCI under the Banking Acts; to consider whether the action taken by all the UK authorities was appropriate and timely; and to make recommendations".
The inquiry was set up on behalf of the Chancellor of the Exchequer and the Bank but was a private non-statutory inquiry. As the judge said:-
"It was an inquiry one outcome of which could be criticism of the conduct of the Bank from an informed and highly authoritative source, an outcome which would not only be of some importance in relation to the Bank's ongoing regulatory and supervisory role but would itself be likely either to lead to or to encourage the institution or attempted institution of proceedings against the Bank by depositors and others who had lost money in consequence of the collapse of BCCI."
Nevertheless the inquiry did not constitute adversarial litigation and litigation privilege cannot arise. To the extent that the Bank now wish to claim privilege in the current litigation, the Bank accept that they can only claim legal advice privilege.
(1) Does legal advice privilege extend to documents prepared by Bank employees, which were intended to be sent to and were in fact sent to Freshfields?
(2) Does it extend to documents prepared by Bank employees with the dominant purpose of the Bank's obtaining legal advice but not, in fact, sent to Freshfields (though, perhaps, their effect was incorporated into documents that were so sent)?
(3) Does it extend to documents prepared by Bank employees, without the dominant purpose of obtaining legal advice, but in fact sent to Freshfields?
(4) Are the answers to (1), (2) and (3) above any different if the documents were prepared by Bank employees who are now (viz. as at 11th March 2003) ex-employees of the Bank?
It is accepted that some, at any rate, of the material sought could be highly relevant to the litigation eg, the first memorandum or statement of an officer intimately concerned in the supervision of BCCI.
"an internal confidential document, not being a communication with a third party, which was produced or brought into existence with the dominant purpose that it or its contents be used to obtain legal advice is privileged from production".
It will be necessary to consider the nineteenth century authorities to see whether this is right.
Lawyer and client privilege is of great antiquity. In the early nineteenth century there was controversy whether the privilege only existed in relation to existing litigation. This debate was regarded as authoritatively settled by Lord Brougham LC, sitting on appeal, in Greenough v Gaskell (1833) 1 My. & K. 98 in which the question arose whether the defendant solicitor, sued for fraudulently concealing that his client was insolvent and thereby inducing the plaintiff to issue a promissory note on the client's behalf, could claim privilege in respect of communications which he had received from his client. The Lord Chancellor held that the defendant could claim privilege, that it made no difference whether it was the client or the solicitor who was the defendant and that it did not matter that, at the time, there were no existing or contemplated proceedings. Since this is the first time that legal advice privilege, in the absence of pending or contemplated litigation, was unequivocally upheld, it is necessary to quote a fairly lengthy passage from the judgment (pages 101-103):-
"Here the question relates to the solicitor, who is called upon to produce the entries he had made in accounts, and letters received by him, and those written (chiefly to his town agent) by him, or by his direction, in his character or situation of confidential solicitor to the party; and I am of opinion that he cannot be compelled to disclose papers delivered, or communications made to him, or letters, or entries made by him in that capacity. To compel a party himself to answer upon oath, even as to his belief or his thoughts, is one thing; nay, to compel him to disclose what he has written or spoken to others, not being his professional advisers, is competent to the party seeking the discovery; for such communications are not necessary to the conduct of judicial business, and the defence or prosecution of men's rights by the aid of skilful persons. To force from the party himself the production of communications made by him to professional men seems inconsistent with the possibility of an ignorant man safely resorting to professional advice, and can only be justified if the authority of decided cases warrants it. But no authority sanctions the much wider violation of professional confidence, and in circumstances wholly different, which would be involved in compelling counsel or attorneys or solicitors to disclose matters committed to them in their professional capacity, and which, but for their employment as professional men, they would not have become possessed of.
As regards them, it does not appear that the protection is qualified by any reference to proceedings pending or in contemplation. If touching matters that come within the ordinary scope of professional employment, they receive a communication in their professional capacity, either from a client, or on his account, and for his benefit in the transaction of his business, or, which amounts to the same thing, if they commit to paper, in the course of their employment on his behalf, matters which they know only through their professional relations to the client, they are not only justified in withholding such matters, but bound to withhold them, and will not be compelled to disclose the information or produce the papers in any Court of law or equity, either as party or as witness. If this protection were confined to cases where proceedings had commenced, the rule would exclude the most confidential, and it may be the most important of all communications – those made with a view of being prepared either for instituting or defending a suit, up to the instant that the process of the Court issued.
If it were confined to proceedings begun or in contemplation, then every communication would be unprotected which a party makes with a view to his general defence against attacks which he apprehends, although at the time no one may have resolved to assail him. But were it allowed to extend over such communications, the protection would be insufficient, if it only included communications more or less connected with judicial proceedings; for a person oftentimes requires the aid of professional advice upon the subject of his rights and his liabilities, with no references to any particular litigation, and without any other reference to litigation generally than all human affairs have, in so far as every transaction may, by possibility, become the subject of judicial inquiry. "It would be most mischievous," said the learned Judges in the Common Pleas, "if it could be doubted whether or not an attorney, consulted upon a man's title to an estate, was at liberty to divulge a flaw" (2 Brod. & Bingh. 6).
The foundation of this rule is not difficult to discover. It is not (as has sometimes been said) on account of any particular importance which the law attributes to the business of legal professors, or any particular disposition to afford them protection, though certainly it may not be very easy to discover why a like privilege has been refused to others, and especially to medical advisers.
But it is out of regard to the interests of justice, which cannot be upholden, and to the administration of justice, which cannot go on, without the aid of men skilled in jurisprudence, in the practice of the Courts, and in those matters affecting rights and obligations which form the subject of all judicial proceedings. If the privilege did not exist at all, every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skilful person, or would only dare to tell his counsellor half his case. If the privilege were confined to communications connected with suits begun, or intended, or expected, or apprehended, no one could safely adopt such precautions as might eventually render any proceedings successful, or all proceedings superfluous."
It is apparent from this lengthy extract that the privilege stemmed from the confidential relationship of client and solicitor and attached only to communications between the client and solicitor. It is also true to say that at this early stage in the law there was no distinction drawn between litigation privilege and legal advice privilege; the Lord Chancellor thought there was a single lawyer/client privilege which applied even if proceedings were not contemplated. However, the reference to the competence of the party seeking discovery to compel the other party
"to disclose what he has written or spoken to others, not being his professional advisers" (at the beginning of the quotation)
militates against the submission that the client's internal memoranda or materials preparatory to consulting his solicitor can be privileged.
". . . I must refuse so much of the motion [for production] as relates to the documents alleged to be privileged; I have anxiously examined the subject, and arrived at a conclusion, which to me has seemed right; but it has not been approved, and I have no doubt, that, if I were to order the production of these documents, the order would be reversed elsewhere.
The unrestricted communication between parties and their professional advisers, has been considered to be of such importance as to make it advisable to protect it even by the concealment of matter without the discovery of which the truth of the case cannot be ascertained." Reece v Trye (1846) 9 Beav. 316, 318-9.
We note again the use of the phrase "communication between parties and their professional advisers".
"The affidavit goes on to state this, that when he first saw the letter of the Plaintiff he observed - whatever "observed" may mean - "that litigation was imminent, and I felt it was essential that the bank should have the benefit of legal advice, and that for that purpose there should be obtained from the other side" - that is, from Oregon - "the full particulars of all the facts and circumstances of the case likely to be required by the solicitor of the bank. I determined, therefore, at once to telegraph to Mr. Russell" - that is, the agent - "instructions for full particulars, and at the same time to request the attendance of the solicitor of the bank at the next meeting of the court of directors;" and, accordingly, he sent a telegram, and the solicitor attended the court of directors. Now, there is not a syllable there which shews that any communication, direct or indirect, expressed or implied, was made to the agent to the effect that his communication was to be a confidential one for the purpose of being submitted to the professional man - that is, the solicitor - for advice. If it had been so, I apprehend that it would have been protected upon principles well understood. If you ask your agent to draw out a case for the opinion of your solicitor, or for the opinion of your counsel, that is a confidential communication made for that purpose. Here there is nothing of the sort. Nor is it suggested or alleged that, without being requested, the agent did make the communication with the object of its being laid before the solicitor for advice. He therefore did not make it as a confidential communication in any other sense than that in which every communication from an agent to his principal, or from a sub-agent to the chief agent of the principal, is confidential. Every such communication, no doubt, is in a sense confidential, but not in the sense in which we call a communication to a professional man confidential. This communication, then, as regards the sender, was not made or sent for the purpose of being laid before a professional adviser, nor was there any intimation of such purpose sent by the person who required the communication. All that you have got is a statement of the person who sent the telegram as to the state of his feelings at a particular time, which is not sufficient for the purpose of the point I have to determine. I therefore feel no difficulty whatever in saying that this clearly was not a confidential communication made within the rule which protects confidential communications from discovery as regards the other side."
This, said Mr Stadlen, showed that any communication made or sent for the purpose of being laid before a solicitor was privileged. The Master of the Rolls then, after referring to authority, including Greenough v Gaskell, set out the object of the rule (page 649):-
"The object and meaning of the rule is this: that as, by reason of the complexity and difficulty of our law, litigation can only be properly conducted by professional men, it is absolutely necessary that a man, in order to prosecute his rights or to defend himself from an improper claim, should have recourse to the assistance of professional lawyers, and it being so absolutely necessary, it is equally necessary, to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating his defence against the claim of others; that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him should be kept secret, unless with his consent (for it is his privilege, and not the privilege of the confidential agent), that he should be enabled properly to conduct his litigation. That is the meaning of the rule."
Next, the Master of the Rolls set out the extent of the rule (pages 649-650):-
"Now, as to the extent of the rule. It goes not merely to a communication made to the professional agent himself by the client directly, it goes to all communications made by the client to the solicitor through intermediate agents, and he is not bound to write letters through the post, or to go himself personally to see the solicitor; he may employ a third person to write the letter, or he may send the letters through a messenger, or he may give a verbal message to a messenger, and ask him to deliver it to the solicitor, with a view to his prosecuting his claim, or of substantiating his defence.
Again, the solicitor's acts must be protected for the use of the client. The solicitor requires further information, and says, I will obtain it from a third person. That is confidential. It is obtained by him as solicitor for the purpose of the litigation, and it must be protected upon the same ground, otherwise it would be dangerous, if not impossible, to employ a solicitor. You cannot ask him what the information he obtained was. It may be information simply for the purpose of knowing whether he ought to defend or prosecute the action, but it may be also obtained in the shape of collecting evidence for the purpose of such prosecution or defence. All that, therefore, is privileged.
Then the rule goes a step further. The solicitor is not bound any more than the client to do this work himself. He is not bound either to collect information or to collect testimony. He may employ his clerks or other agents to do it for him, and upon the same principle as the information acquired by himself directly is protected, so the information acquired by a clerk or agent employed by him is equally protected. But then the cases go still a step further. Suppose the information required is in a foreign country, where neither the solicitor nor his clerk nor an ordinary agent can obtain it, he may request the client to obtain it himself, and then the information so obtained by the client at the request or under the advice of the solicitor is in a sense obtained by the agent of the solicitor, although it is a very odd way of expressing it. It is turning the client, so to say, into the agent of the solicitor for the purpose of obtaining information; but it is clearly within the rule of privilege. So far as I understand, the cases in equity go no further."
While the first passage that has been quoted, and on which Mr Stadlen relies, is in general terms, the sentences that we have emphasised in the later passages make it plain that the foundation of his approach was the existence or imminence of litigation.
"We contend that this letter is privileged as being a confidential communication to enable the directors to obtain legal advice."
Mellish LJ intervened:-
"I apprehend that a letter written by an agent who was getting up evidence to be used at the trial would be privileged; but this is not like that."
He intervened again at the end of the argument to say:-
"The object here was, not to obtain evidence, but to learn what the facts were, in order to know whether the claim should be resisted. It seems to be an extension of the rule as to privileged communications to apply it to such a case."
"Looking at the dicta and the judgments cited, they might require to be fully considered, but I think they may possibly all be based upon this, which is an intelligible principle, that as you have no right to see your adversary's brief, you have no right to see that which comes into existence merely as the materials for the brief. But that seems to me to have no application whatever to a communication between a principal and his agent in the matter of the agency, giving information of the facts and circumstances of the very transaction which is the subject-matter of the litigation. Such a communication is, above all others, the very thing which ought to be produced."
There are two relevant passages from the judgment of Mellish LJ; first, at page 658:-
"I am clearly of opinion that such a communication is not privileged. To be privileged it must come within one of two classes of privilege, namely, that a man is not bound to disclose confidential communications made between him and his solicitor, directly, or through an agent who is to communicate them to the solicitor; or, secondly, that he is not bound to communicate evidence which he has obtained for the purpose of litigation."
This appears to be the first occasion on which a clear distinction is drawn between legal advice privilege and litigation privilege; although many claims to privilege can be decided on either basis, it is a distinction which appears hereafter in the decided cases.
". . . but I cannot think that that ought to be held to apply to information which a principal asks his agent to give respecting the matters which the agent has done for and on account of the principal. That is information respecting matters which in point of law are the acts of the principal himself, and it is information respecting matters as to which the knowledge of the agent is the knowledge of the principal. In point of law, the principal is to be deemed to have known the facts before he has actually got personal information about them. I cannot but think that, as you are entitled to ask the principal what he knows respecting those facts, you must necessarily be entitled to the information which his agent has sent respecting them."
Baggallay JA was of the same opinion and said (pages 661-2):-
"Now if the Defendant in this case, instead of being a banking company, had been an individual banker, and his business either in London or Oregon had been carried on under his own immediate direction, it could not have been for one moment contended that he would not be bound to give the fullest particulars as to the circumstances under which this transfer from one account to the other took place. It would be no answer for him to say: "I did not attend to this matter personally. I sat upstairs, and the business was managed by my clerks here or by my clerks in Oregon." He would be bound, for the purpose of making the discovery, to ascertain from his clerks or manager all the particulars of the case."
These two citations show that information given by an employee to an employer or fellow-employee, or information given by an agent to a principal, stands in the same condition as matters known to the client and does not, of itself, attract privilege in the first of Mellish LJ's two categories. This is so even though, on the facts, it is intended that it be shown to a solicitor. If, however, it is intended that the information will be shown to a solicitor in the context of existing or contemplated litigation, it will fall into the second category, whether it was obtained for use as evidence or for the purpose of obtaining advice. The Anderson case thus does not support the wide ambit of privilege for which Mr Stadlen contends.
"The relation between the client and his professional legal adviser is a confidential relation of such a nature that to my mind the maintenance of the privilege with regard to it is essential to the interests of justice and the well-being of society. Though it might occasionally happen that the removal of the privilege would assist in the elucidation of matters in dispute, I do not think that this occasional benefit justifies us in incurring the attendant risk. The question here is whether the documents of which inspection is sought are within the privilege. I think they are. It is clear that they were documents containing information which had been obtained by the plaintiffs with a view to consulting their professional adviser. Two out of the three sorts of documents were actually submitted to him; as to the other it is not clear whether it was actually submitted to him or not. It is admitted upon the decisions that where information has been obtained on the advice of the party's solicitor it is privileged. I can see no distinction between information obtained upon the suggestion of a solicitor, with the view of its being submitted to him for the purpose of his advising upon it, and that procured spontaneously by the client for the same purpose. Again, I see no distinction between the information so voluntarily procured for that purpose and actually submitted to the solicitor, and that so procured but not yet submitted to him."
In the Court of Appeal Brett LJ, after referring to what had been said by James and Mellish LJJ in Anderson, said this:-
". . . it is clear that if a party seeks to inspect a document which comes into existence merely as the materials for the brief, or that which is equivalent to the brief, then the document cannot be seen, for it is privileged. It has been urged that the materials, or the information obtained for the brief, should have been obtained "at the instance" or "at the request" of the solicitor; but I think it is enough if they come into existence merely as the materials for the brief, and I think that phrase may be enlarged into "merely for the purpose of being laid before the solicitor for his advice or for his consideration." If this is the correct rule, the only question is whether the affidavits in the present case bring the documents under discussion within that rule. I think all the classes of documents mentioned are brought within the rule. The only document about which there can be any doubt is the transcript of the shorthand writer's note of the conversation between the chimneysweep and the company's engineer; but I think that the Queen's Bench Division construed the language of the affidavit to mean that the transcript was made in order that it might be furnished to the solicitor for his advice, although before passing on to him, it was to be laid before the board of directors, or reported to the board, in order than they also might see it. The object for which the notes were taken, and the transcript made, was that they might be furnished to the solicitor for his advice. If that is so, then it stands on the same footing as the others, except that it was not sent to the solicitor; that cannot make any difference. If at the time the document is brought into existence its purpose is that it should be laid before the solicitor, if that purpose is true and clearly appears upon the affidavit, it is not taken out of the privilege merely because afterwards it was not laid before the solicitor. It might not have been laid before the solicitor, because the person making the statement had died or went away and could not be found. I think, therefore, that this document having been made bonâ fide merely for the purpose of being laid before the solicitor for his advice or his consideration, it is precisely like the other documents, and that all the documents are privileged. "
Mr Stadlen submitted that these passages from the judgments of Cockburn CJ and Brett LJ showed that, if documents were prepared the contents of which were to be made known to a solicitor for the purpose of his giving advice, it did not matter that they were not submitted to him. It followed that, even the documents in category (2) set out in paragraph 4 above were privileged. However that does not address the question whether memoranda or documents, produced to the Bingham Inquiry Unit by Bank employees, are, in general, privileged at all. That question is not settled by these citations; it is fair to say that the judgment of Cockburn CJ is in general terms which might arguably encompass legal advice privilege as well as litigation privilege but it is quite clear that the "rule" identified and addressed by Brett LJ is the rule relating to litigation privilege and that he is not talking of legal advice privilege in any way.
"Privilege only extends to communications with legal advisers, or in some way connected with legal advisers; communications with a most confidential agent are not protected if that confidential agent happens not to be a solicitor. And this proceeds on the principle that laymen (by which I mean persons not learned in the law) cannot be expected to conduct their defence or litigation without the assistance of professional advisers; and, for the purpose of having the litigation conducted properly, the law has said that communications between the client and the solicitor shall be privileged, and that no one shall be entitled to call for the production of a document which has been submitted to the solicitor for the purpose of obtaining his advice, or for the purpose of enabling him to institute or to defend proceedings. There must be the freest possible communication between solicitor and client, and it is on this ground that professional communications are entitled to privilege, which excepts them from the general rule. The most obvious form of claiming privilege is when any litigant sends either directly or indirectly to his solicitor a document for the purpose of obtaining his advice, or for the purpose of enabling him to institute or defend an action. That is not quite the question here . . ."
and (pages 322-3):-
"That, I think, is the true principle, that if a document comes into existence for the purpose of being communicated to the solicitor with the object of obtaining his advice, or of enabling him either to prosecute or defend an action, then it is privileged, because it is something done for the purpose of serving as a communication between the client and the solicitor."
He pointed to the disjunctive preposition "or" in both citations and submitted that Cotton LJ had the two quite separate categories of privilege in mind and that, for the purpose of each of them, it was sufficient that the document be prepared with the dominant purpose that it or its contents should be put before the solicitor for advice. This, however, reads too much into the word "or" when the context was solely that of litigation privilege. The "obtaining of the advice" is in contrast to "the purpose of the solicitor being enabled to institute or defend an action" and the advice contemplated by Cotton LJ is advice in relation to the intended action. That is made clear by the passage towards the end of his judgment (at page 323):-
"All these documents must be looked upon as having been prepared for the purpose of being laid before the solicitor, either for the purpose of enabling him to prosecute the action contemplated, or for the purpose of obtaining his advice on the question at issue in the action, and in my opinion are privileged"
It is clear from this final citation that Cotton LJ was only talking in terms of litigation privilege.
"Your proposition is that all communications by a solicitor with third parties, for the purpose of enabling him to give advice, are privileged. Has any case protected them except when made post litem motam?"
Counsel responded, after a little prevarication:-
"The question is whether the rule, though not distinctly carried to such a length by any of the cases, ought not to be extended to meet this case . . ."
"As regards the main question in dispute, this appears to be an attempt on the part of the present Respondents to extend the rule as to protection from discovery. It was fairly admitted by their counsel that no decided case carries the rule to the extent to which they wish it carried, but they urged that as a matter of principle it ought to be so extended. What they contended for was that documents communicated to the solicitors of the Defendants by third parties, though not communicated by such third parties as agents of the clients seeking advice, should be protected, because those documents contained information required or asked for by the solicitors, for the purpose of enabling them the better to advise the clients. The cases, no doubt, establish that such documents are protected where they have come into existence after litigation commenced or in contemplation, and when they have been made with a view to such litigation, either for the purpose of obtaining advice as to such litigation, or of obtaining evidence to be used in such litigation, or of obtaining information which might lead to the obtaining of such evidence, but it has never hitherto been decided that documents are protected merely because they are produced by a third person in answer to an inquiry made by the solicitor. It does not appear to me to be necessary, either as a result of the principle which regulates this privilege or for the convenience of mankind, so to extend the rule."
And (pages 681-2):-
". . . it must not be supposed that there is any principle which says that every confidential communication which it is necessary to make in order to carry on the ordinary business of life is protected. The protection is of a very limited character, and in this country is restricted to the obtaining the assistance of lawyers, as regards the conduct of litigation or the rights to property. It has never gone beyond the obtaining legal advice and assistance, and all things reasonably necessary in the shape of communication to the legal advisers are protected from production or discovery in order that that legal advice may be obtained safely and sufficiently."
And (pages 682-3):-
"But what we are asked to protect here is this. The solicitor, being consulted in a matter as to which no dispute has arisen, thinks he would like to know some further facts before giving his advice, and applies to a surveyor to tell him what the state of a given property is, and it is said that the information given ought to be protected because it is desired or required by the solicitor in order to enable him the better to give legal advice. It appears to me that to give such protection would not only extend the rule beyond what has been previously laid down, but beyond what necessity warrants. The idea that documents like these require protection has been started, if I may say so, for the first time to-day, and I think the best proof that the necessities of mankind have not been supposed to require this protection is that it has never heretofore been asked. It seems to me we ought not to carry the rule any further than it has been carried. It is a rule established and maintained solely for the purpose of enabling a man to obtain legal advice with safety. That rule does not, in my opinion, require to be carried further, and there fore I think this appeal ought to be allowed . . ."
Brett LJ said (page 683):-
"The proposition laid before us for approval is, that where one of the parties to an action has in his possession or control documents which passed between his solicitor and third parties, they are protected in his hands from inspection, on the ground that they were documents which passed between the solicitor and the third party for the purpose of enabling the solicitor to give legal advice to his client, although such information was obtained by the solicitor for that purpose at a time when there was no litigation pending between the parties, nor any litigation contemplated. It seems to me that that proposition cannot be acceded to. It is beyond any rule which has ever been laid down by the Court, and it seems to me that it is beyond the principles of the rules which have been laid down. The rule as to the non-production of communications between solicitor and client is a rule which has been established upon grounds of general or public policy. It is confined entirely to communications which take place for the purpose of obtaining legal advice from professional persons. It is so confined in terms, it seems to me it is so confined in principle, and it does not extend to the suggested case."
Cotton LJ said (pages 684-5):-
"It is said that as communications between a client and his legal advisers for the purpose of obtaining legal advice are privileged, therefore any communication between the representatives of the client and the solicitor must be also privileged. That is a fallacious use of the word "representatives." If the representative is a person employed as an agent on the part of the client to obtain the legal advice of the solicitor, of course he stands in exactly the same position as the client as regards protection, and his communications with the solicitor stand in the same position as the communications of his principal with the solicitor. But these persons were not representatives in that sense. They were representatives in this sense, that they were employed on behalf of the clients, the Defendants, to do certain work, but that work was not the communicating with the solicitor to obtain legal advice. So their communications cannot be protected on the ground that they are communications between the client by his representatives and the solicitor. In fact, the contention of the Respondents comes to this, that all communications between a solicitor and a third person in the course of his advising his client are to be protected. It was conceded there was no case that went that length, and the question is whether, in order fully to develop the principle with all its reasonable consequences, we ought to protect such documents. Hitherto such communications have only been protected when they have been in contemplation of some litigation, or for the purpose of giving advice or obtaining evidence with reference to it. And that is reasonable, because then the solicitor is preparing for the defence or for bringing the action, and all communications he makes for that purpose, and the communications made to him for the purpose of giving him the information, are, in fact, the brief in the action, and ought to be protected. But here we are asked to extend the principle to a very different class of cases, and it is not necessary, in order to enable persons freely to communicate with their solicitors and obtain their legal advice, that any privilege should be extended to communications such as these."
Here Cotton LJ, unlike in his judgment in Southwark v Quick, considers each of the two categories of legal professional privilege and decides in terms that the documents in question do not fall within the first category because they are not communications between solicitor and client and not within the second category because litigation is not contemplated. This case thus makes clear that legal advice privilege does not extend to documents obtained from third parties to be shown to a solicitor for advice. Mr Stadlen, of course, accepts this but says that communications from an employee are different. The reason he gives is that a corporation can only act through its employees; while that is true, it is not a consideration that can carry Mr Stadlen home. Indeed the passage cited from Anderson shows that information from an employee stands in the same position as information from an independent agent. It may, moreover, be a mere matter of chance whether a solicitor, in a legal advice privilege case, gets his information from an employee or an agent or other third party. It may also be problematical, in some cases, to decide whether any given individual is an employee or an agent and undesirable that the presence or absence of privilege should depend upon the answer.
(1) Sir George Jessel MR in Anderson v Bank of British Columbia as set out in the second citation of paragraph 11 above;
(2) Lord Langdale MR in Reece v Trye as set out in paragraph 9;
(3) Cockburn CJ in Southwark and Vauxhall Water Co v Quick as set out in paragraph 15;
(4) Sir George Jessel MR in Wheeler v Le Marchant as set out in paragraph 18;
(5) Turner VC in Russell v Jackson 9 Hare 391, itself citing from Greenough v Gaskell.
He then made his detailed exposition of the law by reference first to communication between client and adviser in sections I to IX of Part II of the relevant chapter and then, secondly, by reference to documents and oral communications having reference to (or connection with) existing or anticipated litigation in section X of the chapter
"not being communications directly between the client and the professional legal adviser, or communication or documents standing on the same footing."
"Reports made by agents or employees to employer. Reports made by employees to their employers or by agents to their principals are not privileged unless they satisfy, and are privileged if they do satisfy, the conditions already set out, that is to say they must be reports made for the purpose of being laid before the party's legal adviser for the purpose of obtaining his advice in connection with the anticipated or pending litigation."
Mr Stadlen submitted that, even if the law was as stated in the nineteenth century, it had been elaborated by developments in the law of discovery which occurred in the twentieth century. Thus there was a lengthy debate in the context of litigation privilege in relation to the right test to apply to a document intended to be submitted to a solicitor for his consideration. Was it sufficient that one of the purposes for which it had been prepared was to obtain legal advice or did it have to be the dominant purpose or even the sole purpose of the document coming into existence? In Grant v Downs (1976) 135 CLR 674 the majority of the High Court of Australia said it had to be the sole purpose; Barwick CJ's dissenting judgment in favour of the dominant purpose was ultimately preferred by the House of Lords in Waugh v British Railways Board  AC 521 and in Esso Australia v Federal Commissioner of Taxation (1999) HCA 67 the English test has now been adopted by the High Court of Australia in preference to its original view. Mr Stadlen placed particular reliance on the statements of principle in the judgment of Barwick CJ at page 677 which was ultimately adopted by the House of Lords in Waugh. It is in the following terms:-
"Having considered the decisions, the writings and the various aspects of the public interest which claim attention, I have come to the conclusion that the Court should state the relevant principle as follows: a document which was produced or brought into existence either with the dominant purpose of its author, or of the person or authority under whose direction, whether particular or general, it was produced or brought into existence, of using it or its contents in order to obtain legal advice or to conduct or aid in the conduct of litigation, at the time of its production in reasonable prospect, should be privileged and excluded from inspection."
"On its natural reading this passage would seem to be concerned both with the obtaining of legal advice and with the conduct of litigation reasonably in prospect. It is possible that Sir Garfield had in mind only the obtaining of advice in relation to litigation in reasonable prospect, as opposed to the obtaining of legal advice which was not similarly focussed, but I can see no rational basis on which the principles which protect the confidentiality of the process of obtaining legal advice should differ as between these two distinct situations, although the exigencies of litigation, actual or contemplated, require the net to be cast wider than it is in relation to the obtaining of legal advice simpliciter, so as to enable a party to carry out confidential preparations for trial."
The judge further pointed out in paragraph 26 of his judgment that the passage in the judgment of Barwick CJ was expressly approved by Lords Wilberforce, Simon and Edmund-Davies in Waugh at pages 532-3, 534 and 537 and 543-4 respectively. It was this approval that, together with two authorities in relation to litigation privilege and Balabel v Air India  Ch 317 which undoubtedly concerned legal advice privilege, persuaded the judge to accord the disputed documents the privilege claimed by the Bank.
"using it or its contents in order to obtain legal advice or to conduct or aid the conduct of litigation"
it is more natural to read the words "in order to obtain legal advice" not as referring to the obtaining of legal advice in a free-standing situation but as a contrast with the concept "in order to conduct, or aid in the conduct of, litigation". In other words, the use of the document envisaged by the Chief Justice is potentially a two-fold use viz. for obtaining advice in the pending litigation or for conducting (or helping to conduct) the pending litigation. So understood it is a complete statement of the relevant law. If it is to be more widely understood, the statement of the law is incomplete, unless it was intended to depart from Wheeler v Le Marchant and the law as understood at the end of the nineteenth century. There is no indication of that.
"Where a report is brought into existence for several reasons or purposes only one of which is to obtain professional legal advice in litigation that is pending or anticipated, is it protected by legal professional privilege from discovery?"
This is echoed at both the beginning and conclusion of Lord Wilberforce's speech at pages 531E and 533B respectively:-
". . . . the affidavit [of the defendant] makes it clear that the report was prepared for a dual purpose: for what may be called railway operation and safety purposes and for the purpose of obtaining legal advice in anticipation of litigation . . . . So the question arises whether this is enough to support a claim of privilege . . ."
"It appears to me that unless the purpose of submission to the legal adviser in view of litigation is at least the dominant purpose for which the relevant document was prepared, the reasons which require privilege to be extended to it cannot apply."
Lord Simon of Glaisdale's speech is to similar effect at pages 536A-B (where he cites Cotton LJ's judgment in Southwark v Quick as being a case of pending or anticipated litigation) and 538A. Lord Edmund-Davies at pages 541G-542C expressly draws attention to the distinction between the two categories of legal professional privilege and makes it clear that the case with which the House was dealing was privilege in aid of existing or contemplated litigation. He then cites Anderson v Bank of British Columbia, sets out the possible candidates for the appropriate test in relation to a document prepared for use in such litigation and states that the House of Lords was free to choose and declare the proper test. He continues (page 543C):-
". . . . in my judgment we should start from the basis that the public interest is, on balance, best served by rigidly confining within narrow limits the cases where material relevant to litigation may be lawfully withheld. Justice is better served by candour than by suppression. For, as it was put in the Grant v. Downs majority judgment, at p. 686: '... the privilege ... detracts from the fairness of the trial by denying a party access to relevant documents. . . .'"
He then comes down in favour of Barwick CJ's "dominant purpose" and quotes in full the passage set out in paragraph 22 above. But the context is all litigation privilege and it is clear that he was not considering legal advice privilege. If he had been considering legal advice privilege, it is unlikely, in the light of the considerations advanced in the above passage, that Lord Edmund-Davies would have wished to extend legal advice privilege in any way.
(1) the need for a client
"to be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating of his defence against the claim of others"
(to use the words of Sir George Jessel MR in Anderson) is paramount when litigation either exists or is contemplated. It is in the interests of the state which provides the court system and its judges at taxpayers' expense that legal advisers should be able to encourage strong cases and discourage weak cases, see Ventouris v Mountain  1 WLR 607, 611C per Bingham LJ. It is by no means so clear that, in the absence of contemplated litigation, there is any temptation for the client not to offer a clean breast to his legal adviser. He wants advice and the prospect of winning or losing a particular case will normally do nothing to cloud his judgment as to what facts he places before his legal adviser.
(2) one ought not to lose sight of the public interest that the courts, if possible, should come to correct judgments on the basis of all relevant material. Of course legal advice privilege must prevail over this consideration to the appropriate extent. It is a fundamental human right which can be overridden only by the express words of a statute or by necessary implication, see R (Morgan Grenfell & Co Ltd) v Special Commissioners for Income Tax  2 WLR 1299. But it is a privilege possessed by the client in relation to no other adviser. Lord Brougham was exercised by the difficulty of discovering why the privilege has been refused in respect of other advisers, especially medical advisers. But the law is clear that it is so refused in respect of every profession other than that of the law. In these circumstances it is important that it be confined to its proper limits. The judges of the nineteenth century thought that it should only apply to communications between client and adviser. That is the proper compass of the privilege. It is not, in our judgment, open to this court to extend the privilege, even if we thought we should.
"In legal advice privilege, I would suggest, the practical emphasis is upon the purpose of the retainer. If the dominant purpose of the retainer is the obtaining and giving of legal advice, then, although it is in theory possible that individual documents may fall outside that purpose, in practice it is unlikely."
This observation was not critical to his judgment and we would respectfully doubt whether the shift of focus from the dominant purpose for which a document or documents were prepared to the "dominant purpose of the retainer" can be justified by reference to authority or principle in relation to documents which are not communications between client and legal adviser.
(1) communications between Air India and their solicitors other than those seeking or giving legal advice;
(2) drafts, working papers and memoranda of the solicitors;
(3) internal communications of Air India other than those seeking legal advice.
Significantly Mr Lightman QC for the appellants, against whom an order for discovery had been made, abandoned any claim to privilege for category (3) which was the category equivalent to the category for which privilege is claimed in the present case, see page 319C of the report.
"Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly."
The judge drew attention to the words "or other document" but the context of that phrase was that privilege was being sought for (2) "draft, working papers and memoranda" which were not, of course, communications. No argument was addressed on class (3) which would be the only relevant class for the purpose of the argument in this case. Then the judge cited the passage at page 332:-
"As indicated, whether such documents are privileged or not must depend on whether they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate."
That is a perfectly appropriate test to apply to communications between the client and his solicitor but authority does not support its wider application to memoranda supplied by employees for the purpose of being sent to the client's solicitor and it is most unlikely that Taylor LJ intended to deal with that question. Indeed, shortly before the passage quoted, Taylor LJ pointed out that the range of assistance given by solicitors to their clients and of activities carried out on their behalf has been greatly broadened in recent times and is still developing. He added:-
"Hence the need to re-examine the scope of legal professional privilege and keep it within justifiable bounds."
Balabel is thus no authority for extending the privilege.
In the light of the conclusions so far, it is unnecessary to express a view on the question whether the internal documentation of the Bank, which came into existence after the setting up of the Bingham inquiry, was indeed prepared with the dominant purpose of obtaining advice. It would, no doubt, be right to say that the obtaining and giving of advice was an important purpose; but we would not say on the facts of the present case that it was the dominant purpose. On any natural view of the matter the dominant purpose of obtaining the information which employees and ex-employees could give to the Bingham inquiry was merely to present that evidence to the inquiry. No doubt the Bank would naturally have been anxious to present that evidence in the way least likely to attract criticism. One of Freshfields' many skills is, of course, to present their clients' cases in the most favourable light. That, after all, is in large part the art of the advocate. Is this assistance "legal advice" in the sense in which the phrase is used when one refers to privilege being claimed for legal advice?
"So as to ensure that the Bank's legal advisers were properly instructed and fully informed to advise and assist the Bank in preparing its evidence and more generally in relation to all its dealings with the Bingham Inquiry, there was a constant flow of factual information from the Bank to its legal advisers, usually channelled through the BIU. The BIU and the Bank's legal advisers effectively operated as a single team, with members of the BIU undertaking, or delegating to others within the Bank, tasks of research or fact-gathering for the purpose of review and/or advice by the Bank's legal advisers. Specific requests for factual matters to be investigated and reported (typically in the form of notes) to the legal team were sometimes made by the legal team itself to the BIU which then initiated work within the Bank. Sometimes such work was carried out by the BIU itself and sometimes by others elsewhere in the Bank commissioned to do so by the BIU. Fact finding and research based exercises were sometimes commissioned by the BIU itself of its own initiative in order to furnish information to the legal advisers. The purpose of carrying out all of this work was to provide information to the Bank's legal advisers to enable them to prepare submissions and/or advise on the nature, presentation and/or content of the Bank's submissions to, evidence for and responses to requests from, the Inquiry."
He later asserts that the documents passed to Freshfields were prepared with the dominant purpose of obtaining legal advice and that he has consulted with the writers of documents not passed to Freshfields to ascertain whether they were prepared with the same dominant purpose.
"Although originally confined to advice regarding litigation, the privilege was extended to non-litigious business. Nevertheless, despite that extension, the purpose and scope of the privilege is still to enable legal advice to be sought and given in confidence. In my judgment, therefore, the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required [as] appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client. The negotiations for a lease such as occurred in the present case are only one example. Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as "please advise me what I should do". But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context."
In applying this passage it seems to us that, on the facts of the present case, there may be a temporal distinction to be drawn between (1) original documentary material supplied by Bank employees to the BIU (or directly to Freshfields), whether obtained in response to a Freshfields inquiry or not, for the purpose of either the November 1991 submission or the April 1992 paper and (2) material supplied in "responses to requests from the Inquiry" to use Mr Croall's words at the end of his paragraph 17.
As stated, however, we do not, in any event, consider that privilege extends to any of the documentation or internal memoranda of the Bank's employees and, subject to any argument on the detailed wording, would be minded to grant the declaration for which the appellants asked in their application of 25th October 2002, on the assumption it is in the same form as recorded in paragraph 3.2 of Mr Grierson's 8th witness statement of 28th October 2002, and to order that the Bank serve a further and better list of documents in accordance with the terms of such declaration.
Order: Appeal allowed as per counsel's agreed order. Leave to appeal to the House of Lords refused. Order suspended pending result of Petition to appeal to their Lordships' House.
Thursday, 3rd April 2003
" ... the liquidator's belated attempt to substitute the word 'control' for the word 'possession' in the order."
"Control ... "
"It is declared that the only documents or parts of documents created or coming into the Bank's possession ..."
"Disclosure is not sought of any of Freshfields' internal memoranda or drafts."
"This court decided that –"
"This court decided that the former was the law. The appellant's position in this case is in no way inconsistent with the decision, since they accept that all documents passing between the BIU and Freshfields are privileged, as indeed are Freshfields' own drafts and memoranda."
"It is declared that the only documents or parts of documents coming into the Bank's possession between the ... "
" ... which the Bank is entitled to withhold from inspection are ... "
that means that the declaration of law we are making focuses only on documents in your client's possession. It leaves open the question what about documents that Freshfields --
"Well, this is all very well but it is academic in our case because of what your Lordships have held about the predominant purpose test in this case."
"We have been told that we may be subject to inquiry. We want you to hold our hand. We want advice every step of the way. We are not currently contemplating litigation but we want you to give us advice."
"Well, you had better tell us what the facts are."