Regina v Special Commissioner and Another, Ex P Morgan Grenfell & Co Ltd
37. On the other hand, I respectfully think that the decision of Millett J on a similar point in Price Waterhouse v BCCI Holdings (Luxembourg) SA  BCLC 583 was wrong. The question was whether LPP could be overridden by a notice given by the Bank of England under section 39 of the Banking Act 1987 requiring production of documents which it "may reasonably require for the performance of its functions under this Act" (section 39(3)). The Act contained no express language excluding LPP but section 39(13) provided that the section should not "compel the production by a barrister, advocate or solicitor of a document containing a privileged communication made by him or to him in that capacity." Millett J said, at p 593, that subsection (13) must be taken "not only as making an exception to documents which may be required to be produced but also as marking the limits of that exception". The judge remarked that it might seem strange that "the Bank of England should be unable to compel the production of documents from the lawyer when it can compel their production from his client". I agree. But I do not think that the judge's answer, namely that "Parliament was not concerned to protect the interests of the client but those of the lawyer" is at all adequate. What are the interests of the lawyer? He has no interest in whether LPP is maintained or not. If the client chooses to divulge the information, there is nothing the lawyer can do about it. LPP is entirely in the interests of the client. For the reasons I have already given in connection with section 20(1) of the 1970 Act, I do not think that the existence of subsection (13) was a sufficient ground for finding a necessary implication that LPP had been excluded.
38. The revenue say that it is important for them to have access to the taxpayer's legal advice in those cases in which liability may turn upon the purpose with which he entered into a transaction or series of transactions. This is particularly true of some of the anti-avoidance provisions. But there are many situations in both civil and criminal law in which liability depends upon the state of mind with which something was done. Apart from the exceptional case in which it appears that the client obtained legal advice for the purpose of enabling himself better to commit a crime (R v Cox and Railton (1884) 14 QBD 153) this is not thought a sufficient reason for overriding LPP. The court must infer the purpose from the facts.
39. It is of course open to Parliament, if it considers that the revenue require such powers, to enact them in unambiguous terms. But there is also the Human Rights Act 1998 to be borne in mind. The appellants put forward an alternative submission that, if your Lordships agreed with the construction given to section 20(1) by the Court of Appeal, you should make a declaration that it was incompatible with the right to privacy under article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd 8969). In the circumstances it is unnecessary for your Lordships to pronounce upon the point. It is however the case, as I have mentioned, that the European Court of Human Rights has said that LPP is a fundamental human right which can be invaded only in exceptional circumstances: see Foxley v United Kingdom (2001) 31 EHRR 25 p 647, para 44. Mr Brennan said that the public interest in the collection of the revenue could provide the necessary justification but I very much doubt whether this is right. Nor is it sufficient to say simply that the power is not used very often. That is no consolation to the person against whom it is used. If new legislation is passed, it will have to be seen whether it is limited to cases in which the interference with LPP can be shown to have a legitimate aim which is necessary in a democratic society.
40. I would allow the appeal and quash the notice.
LORD HOPE OF CRAIGHEAD
41. I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hoffmann and Lord Hobhouse of Woodborough. I agree with them and for the reasons which they have given I too would allow the appeal.
LORD HOBHOUSE OF WOODBOROUGH
42. I agree that this appeal should be allowed. The question to be decided falls within a very narrow compass and since this House is differing from unanimous decisions of the courts below I will shortly state in my own words my reasons for agreeing with the Opinion of my noble and learned friend Lord Hoffmann.
43. The question is one of statutory construction. It is now accepted for the purposes of this litigation that the documents in respect of which the right to demand production remains in dispute contain or may contain information relevant to a tax liability to which Morgan Grenfell may be liable or its amount and that they are documents which are subject to legal professional privilege (advice privilege) which has not been waived. It is likewise accepted that the character of the privilege is that described in the speech of Lord Taylor of Gosforth in your Lordships' House in Reg v Derby Magistrates' Court, ex parte 'B'  AC 487: its character is absolute and -
.... if a balancing exercise was ever required in the case of legal professional privilege, it was performed once and for all in the 16th century, and since then has applied across the board in every case, irrespective of the client's individual merits." (p.508)
At the least, some and, more probably, all of these premises would benefit from further examination but they have not been the subject of argument on the present appeal. The question of construction is therefore whether the statute empowers the Revenue to require the delivery up to them of documents notwithstanding that they are covered by legal professional privilege.
44. The next step in the legal analysis is also not disputed and was expressly adopted by the Court of Appeal. The principle of statutory construction is succinctly stated in a quotation from the speech of Lord Hoffmann in ex parte Simms  2 AC 115, at p.131:
The context in which Lord Hoffmann was speaking was human rights but the principle of statutory construction is not new and has long been applied in relation to the question whether a statute is to be read as having overridden some basic tenet of the common law. (Viscountess Rhondda's Claim  2 AC 339; B v DPP  2 AC 428) The protection given by the common law to those entitled to claim legal professional privilege is a basic tenet of the common law as has been reaffirmed by the case of 'B' (sup).
45. It is accepted that the statute does not contain any express words that abrogate the taxpayer's common law right to rely upon legal professional privilege. The question therefore becomes whether there is a necessary implication to that effect. A necessary implication is not the same as a reasonable implication as was pointed out by Lord Hutton in B v DPP  2 AC at 481. A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included and what it is clear that the express language of the statute shows that the statute must have included. A necessary implication is a matter of express language and logic not interpretation.
46. In the present case the statutory language falls a long way short of meeting this criterion. The arguments advanced by the Revenue are fully discussed in the Opinion of my noble and learned friend. I agree with his conclusion. At best from the point of view of the Revenue the legislation is equivocal. Left to myself I would incline to the view that the implication, if any, is that the Legislature was intending to preserve the legal professional privilege of the taxpayer rather than abrogate it; otherwise, why preserve it in respect of documents in the hands of the adviser when the client has not consented to waive the privilege? Further, the argument that a general public interest in collecting revenue for the Executive suffices (in peace-time) implicitly to override the basic right and public interest represented by legal professional privilege is contrary to the authorities and the principles which the Revenue accept that those authorities lay down.
47. The present appeal thus falls to be decided applying the well-established principles of statutory construction to be found in English law. The appellants do not need the assistance of the Human Rights Act or the Convention. The judgments of the European Court of Human Rights in Foxley v UK (33274/96), 31 EHRR 25, and the European Court of Justice in A M & S Europe v The Commission (Case 155/79),  QB 878, show a general recognition of the importance of legal professional privilege.
48. There were cited to your Lordships decisions of the courts of other common law jurisdictions which have also arrived at conclusions very similar to those of your Lordships in this case. I do not wish to add anything to what my noble and learned friend has said in this connection nor to what he has said about the English authorities which will now have to be read with the judgment of this House. Attention has rightly been drawn by my noble and learned friend to what was said by Glidewell LJ in R v Commissioners of Inland Revenue ex parte Taylor (No.2) 62 TC 578 at p.588 concerning the implicit restriction upon the use which may be made of documents which are obtained under a statutory power and its possible interaction with the question whether a client's privilege will be infringed by requiring the disclosure of documents by the professional adviser. It is a general principle that where a power is given for a particular purpose it is not permissible to use that power for a collateral purpose.
LORD SCOTT OF FOSCOTE
49. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. I agree with it, and for the reasons which he has given I, too, would allow the appeal.
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