Three Rivers District Council and others (Respondents) v. Governor and Company of the Bank of England (Appellants) (2004)
30. The second sentence of the cited passage does, however, pose a question of great relevance to this appeal. It questions the justification for legal advice privilege where the legal advice has no connection with adversarial litigation. A number of cases in our own jurisdiction and in other common law jurisdictions have sought to answer the question. In R v Derby Magistrates' Court Ex parte B  1 AC 487 Lord Taylor of Gosforth CJ said this -
and at p.508, that
In R (Morgan Grenfell Ltd) v Special Commissioner of Income Tax  1 AC 563 Lord Hoffmann referred to legal professional privilege as "a necessary corollary of the right of any person to obtain skilled advice about the law" and continued (p.607) -
And in B v Auckland District Law Society  2 AC 736 at 757 Lord Millett justified legal professional privilege on the ground that
31. In the courts of foreign common law jurisdictions similar views have been expressed. In Upjohn Co. v United States (1981) 449 US 383, a decision of the US Supreme Court, Justice Rehnquist said, at p.389, that the purpose of legal professional privilege was
He went on -
In Jones v Smith  1 SCR 455, a decision of the Supreme Court of Canada, the privilege was justified on the ground that -
32. In leading cases in Australia and New Zealand the justification for a rule affording particular protection to confidential communications between lawyers and clients has been expressed on a broader policy basis than merely the need to ensure candour. In Baker v Campbell (1983) 153 CLR 52, a decision of the High Court of Australia, Murphy J commented that
and Wilson J, at p.95, said
See also Commissioner of Inland Revenue v West-Walker  NZLR 191, a decision of the Court of Appeal of New Zealand.
33. I would refer finally to the justification for legal professional privilege given by Advocate-General Slynn (as he then was) in A M & S Europe Ltd v European Commission  QB 878 at 913, a passage cited by Kirby J in Daniels Corp v ACCC  192 ALR 561. The Advocate-General said this -
34. None of these judicial dicta tie the justification for legal advice privilege to the conduct of litigation. They recognise that in the complex world in which we live there are a multitude of reasons why individuals, whether humble or powerful, or corporations, whether large or small, may need to seek the advice or assistance of lawyers in connection with their affairs; they recognise that the seeking and giving of this advice so that the clients may achieve an orderly arrangement of their affairs is strongly in the public interest; they recognise that in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it; and they recognise that unless the clients can be assured that what they tell their lawyers will not be disclosed by the lawyers without their (the clients') consent, there will be cases in which the requisite candour will be absent. It is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non-disclosure that the present law of privilege provides. But the dicta to which I have referred all have in common the idea that it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers' legal skills in the management of their (the clients') affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busy-bodies or anyone else (see also paras. 15.8 to 15.10 of Adrian Zuckerman's Civil Procedure where the author refers to the rationale underlying legal advice privilege as "the rule of law rationale"). I, for my part, subscribe to this idea. It justifies, in my opinion, the retention of legal advice privilege in our law, notwithstanding that as a result cases may sometimes have to be decided in ignorance of relevant probative material.The scope of legal advice privilege
35. Legal advice privilege should, in my opinion, be given a scope that reflects the policy reasons that justify its presence in our law. In my respectful opinion, the approach of the Court of Appeal in the Three Rivers (No. 6) judgment has failed to do so. The Court of Appeal has restricted the scope of legal advice privilege to material constituting or recording communications between clients and lawyers seeking or giving advice about the clients' legal rights and obligations. It has excluded legal advice sought or given for presentational purposes (see para. 13 above). The particular issue to be decided under the disclosure application of 1 August 2003 was whether advice that related to the presentation of material to the Inquiry qualified for legal advice privilege. In holding that it did not, the Court of Appeal distinguished between a lawyer-client relationship "formed for the purpose of obtaining advice or assistance in relation to rights and liabilities" and a lawyer-client relationship where "the dominant purpose is not the obtaining of advice and assistance in relation to legal rights and obligations". In relation to the former, "broad protection will be given to communications passing between solicitor and client in the course of that relationship"; in relation to the latter, a similar broad protection could not be claimed (see paragraph 26 of the judgment).
36. The authorities on which the Court of Appeal founded their approach were all concerned with private law rights and obligations (ie. Greenough v Gaskell (1833) 1 My & K 98, Wheeler v Le Marchant (1881) 17 ChD 675, Minter v Priest  AC 558 and Great Atlantic Insurance Co v Home Insurance Co  1 WLR 529). It is clear, however, that whatever view may be taken of the presentational advice point, legal advice privilege must cover also advice and assistance in relation to public law rights, liabilities and obligations. I understood Mr Pollock in his submissions to your Lordships to accept that that was so.
37. In my opinion, the impossibility of a principled exclusion from legal advice privilege of communications between lawyer and client relating to the client's public law rights, liabilities and obligations is conclusive of the narrow issue in this appeal. One of the main purposes of the Inquiry was to examine whether in relation to BCCI the Bank had properly discharged its public law duties of supervision imposed by the Banking Acts. The Bank was naturally anxious that the Inquiry's conclusions should be as favourable as possible or, to put the point in reverse, that the Inquiry's criticisms of the Bank should be as limited as possible. Every public inquiry conducts its proceedings and expresses its conclusions under the shadow of potential judicial review. The inquiry's procedures may be judicially reviewed if they are perceived to be unfair. The inquiry's conclusions may be judicially reviewed if they are thought to be unsustainable in the light of the evidence the inquiry has received. Presentational advice or assistance given by lawyers to parties whose conduct may be the subject of criticism by the inquiry is advice or assistance that may serve to avoid the need to invoke public law remedies. It would be - or should be - readily accepted that, once an inquiry's conclusions have been reached and communicated to the sponsors of the inquiry, advice from lawyers to someone criticised as to whether a public law remedy might be available to quash the critical conclusions would be advice that qualified for legal advice privilege. It makes no sense at all, in my opinion, to withhold the protection of that privilege from presentational advice given by the lawyers for the purpose of preventing that criticism from being made in the first place.
38. In Balabel v Air India  1 Ch 317 Taylor LJ (as he then was) said that for the purposes of attracting legal advice privilege -
I would venture to draw attention to Taylor LJ's reference to "the relevant legal context". That there must be a "relevant legal context" in order for the advice to attract legal professional privilege should not be in doubt. Taylor LJ said at p 331 that -
This remark is, in my respectful opinion, plainly correct. If a solicitor becomes the client's "man of business", and some solicitors do, responsible for advising the client on all matters of business, including investment policy, finance policy and other business matters, the advice may lack a relevant legal context. There is, in my opinion, no way of avoiding difficulty in deciding in marginal cases whether the seeking of advice from or the giving of advice by lawyers does or does not take place in a relevant legal context so as to attract legal advice privilege. In cases of doubt the judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law. If it does not, then, in my opinion, legal advice privilege would not apply. If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law. Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply? The criterion must, in my opinion, be an objective one.
39. In the discussion of the issue before your Lordships, and in the very helpful written submissions that the parties and the interveners have placed before your Lordships, a number of examples have been given of advice from lawyers in areas where it was suggested to be questionable whether legal advice privilege would be attracted. Planning inquiries were mentioned. Mr Pollock, as I understand it, contended that advice given by lawyers to an objector at a planning inquiry would not qualify for the privilege. The objector's rights, liabilities and obligations would not be in issue - so, no privilege. That plainly could not be said of advice given to the developer seeking the planning permission. Advice to the developer would relate directly to the rights under planning law that the developer hoped to acquire and to any conditions accompanying the permission to develop with which the developer would be under an obligation to comply. But how could it be right to allow privilege to protect advice given to the developer but to deny it to comparable advice given to the objector? Every objector has the right under public law to present his case to the inquiry. So, in my opinion, advice given by lawyers to objectors for the purpose of enhancing the prospects of a successful outcome, from their point of view, to the inquiry would be advice given in a relevant legal context and would qualify for legal advice privilege. So to hold would not be to extend litigation privilege to inquiries. It would be to give legal advice privilege its due scope.
40. Advice given by lawyers to the promoters of private bills was mentioned. I would myself be in no doubt at all but that advice and assistance given by lawyers to promoters of private bills, although often, perhaps usually, presentational in character, would qualify for legal advice privilege. The relevant legal context seems to me clear. The same would apply to advice by lawyers given to opponents of the proposed bill.
41. Mr Jonathan Crow, in a written reply submission on behalf of the Attorney-General, has referred to advice given by Parliamentary counsel to the Government in relation to the drafting and preparation of public bills. This advice, too, Mr Crow submitted, should qualify for legal advice privilege. I agree that, here too, the relevant legal context is unmistakable and that legal advice privilege should apply.
42. Mr Pollock referred to advice sought from and given by a lawyer as to how to set about joining a private club. He put this forward as an obvious example of a case where legal advice privilege would not be attracted. The reason, Mr Pollock suggested, was that the advice being sought would not relate to the client's legal rights or obligations. I agree that legal advice privilege would not be attracted, not because the advice would necessarily not relate to the client's legal rights or obligations but because the bare bones of Mr Pollock's example had no legal context whatever. If his example were embellished with detail the answer might be different. Suppose the applicant for membership of the club had previously made an unsuccessful application to join the club, believed that his rejection had been inconsistent with the club's admission rules and wanted to make a fresh application with a view to testing the legality of his rejection if he were again to be blackballed. I think Mr Pollock would accept that in those circumstances the communications between the lawyer and the applicant would be protected by legal advice privilege. It would be protected because the communication would have a relevant legal context. It would relate to the legal remedies that might be available if the applicant's application were again unsuccessful.
43. There may, as I have said, be marginal cases where the answer is not easy. But, in my opinion, the present case is not in the least marginal. The preparation of the evidence to be submitted and the submissions to be made to the Inquiry on behalf of the Bank were for the purpose of enhancing the Bank's prospects of persuading the Inquiry that its discharge of its public law obligations under the Banking Acts in relation to BCCI was not deserving of criticism and had been reasonable in the circumstances. The presentational advice given by Freshfields and counsel for that purpose was advice "as to what should prudently and sensibly be done in the relevant legal context" (Balabel v Air India supra at p.330). The "relevant legal context" was the Bingham Inquiry and the question whether the Bank had properly discharged its public law duties under the Banking Acts. The presentational advice falls, in my opinion, squarely within the policy reasons underlying legal advice privilege.
44. I would be of the same opinion in relation to presentational advice sought from lawyers by any individual or company who believed himself, herself or itself to be at risk of criticism by an inquiry, whether a coroner's inquest, a statutory inquiry under the 1921 Act or an ad hoc inquiry such as the Bingham Inquiry. The defence of personal reputation and integrity is at least as important to many individuals and companies as the pursuit or defence of legal rights whether under private law or public law. The skills of professional lawyers when advising a client what evidence to place before an inquiry and how to present the client and his story to the inquiry in the most favourable light are, in my opinion, unquestionably legal skills being applied in a relevant legal context.
45. Accordingly, I would allow this appeal and set aside the order of 10 November 2003 made by Tomlinson J. In my opinion, all the communications between the BIU and Freshfields or counsel regarding the content and manner of presentation of the overarching statement made on the Bank's behalf to the Inquiry, and all internal notes and memoranda relating thereto, qualified for legal advice privilege. I have had the advantage of reading the opinions of my noble and learned friends Lord Carswell and Lord Rodger of Earlsferry and am in full agreement with the reasons they give for allowing the appeal. I agree also with the comments made by my noble and learned friend Lord Brown of Eaton-under-Heywood.
Communications between lawyers and their clients' employees
46. One of the matters debated at the Court of Appeal hearing that led to the Three Rivers (No.5) judgment was whether, or which, communications between Freshfields and the Bank employees or ex-employees, or officers or ex-officers, could qualify for legal advice privilege. It was accepted that communications between the lawyers and third parties could not qualify. The Court of Appeal held that only communications between Freshfields and the BIU could qualify. All other communications had to be disclosed. This is not an issue which arises for decision on this appeal but, for reasons which I have explained (see paras. 20 and 21), submissions have been made to your Lordships on the issue and your Lordships have been invited to express views on them. I think your Lordships should decline the invitation for a number of reasons.
47. First, the issue is a difficult one with different views, leading to diametrically opposed conclusions, being eminently arguable. Second, there is a dearth of domestic authority. Upjohn Co v United States (1981) 449 US 383 in the United States Supreme Court constitutes a valuable authority in a common law jurisdiction but whether (or to what extent) the principles there expressed should be accepted and applied in this jurisdiction is debatable. Third, whatever views your Lordships may express, and with whatever unanimity, the views will not constitute precedent binding on the lower courts. The guiding precedent on the issue will continue to be the Court of Appeal judgment in Three Rivers (No.5). Fourth, if and when the issue does come before the House (or a new Supreme Court) the panel of five who sit on the case may or may not share the views of your Lordships, or a majority of your Lordships, sitting on this appeal. Fifth, and finally, this House, represented by an Appeal Committee of three, refused leave to appeal against the Three Rivers (No.5) judgment.
48. For all these reasons I think your Lordships should refrain from expressing views on the issue. Nothing that I have said should be construed either as approval or disapproval of the Court of Appeal's ruling on the issue in Three Rivers (No.5). The issue simply does not arise on this appeal.
LORD RODGER OF EARLSFERRY
49. I have had the privilege of considering in draft the speeches of my noble and learned friends, Lord Scott of Foscote, Lord Carswell and Lord Brown of Eaton-under-Heywood. I agree with them that the appeal should be allowed for the reasons that they give. I also agree that the House should not deal with the second of the two points identified by Lord Scott. In adding some observations of my own I gratefully adopt the accounts of the facts and issues given by Lord Scott and Lord Carswell.
50. The Bank of England ("the Bank") resist a claim for disclosure of communications between the BIU and Freshfields on the ground that the communications are covered by legal advice privilege. In the formulation of Millett J in Price Waterhouse v BCCI Holdings  BCLC 583, 588d-e legal advice privilege attaches to all communications made in confidence between solicitors and their clients for the purpose of giving or obtaining legal advice even at a stage when litigation is not in contemplation. It does not matter whether the communication is directly between the client and his legal adviser or is made through an intermediate agent of either.
51. It is common ground between the parties that legal advice privilege has to be distinguished from litigation privilege. As Lord Edmund-Davies noted in Waugh v British Railways Board  AC 521, 541-542, in the past the need to make that distinction was sometimes overlooked:
52. Litigation privilege relates to communications at the stage when litigation is pending or in contemplation. It is based on the idea that legal proceedings take the form of a contest in which each of the opposing parties assembles his own body of evidence and uses it to try to defeat the other, with the judge or jury determining the winner. In such a system each party should be free to prepare his case as fully as possible without the risk that his opponent will be able to recover the material generated by his preparations. In the words of Justice Jackson in Hickman v Taylor (1947) 329 US 495, 516, "Discovery was hardly intended to enable a learned profession to perform its functions either without wits or on wits borrowed from the adversary."
53. In In re L (A Minor)(Police Investigation: Privilege)  AC 16 your Lordships' House held, Lord Mustill and Lord Nicholls of Birkenhead dissenting, that proceedings under Part IV of the Children Act 1989 were "investigative" rather than "adversarial" in nature and that litigation privilege was therefore excluded by necessary implication. In the present case the Bank accept that Bingham LJ's inquiry was not to be regarded as adversarial in nature and that, for this reason, they cannot claim litigation privilege for the communications between the BIU and Freshfields. In these circumstances it is unnecessary to analyse more fully the characteristics of those kinds of proceedings which do attract litigation privilege. In his dissenting speech in In re L Lord Nicholls of Birkenhead sounded a note of caution against basing any such analysis simply on the distinction between "adversarial" and "inquisitorial" proceedings:  AC 16, 31G-32D. In the meantime those cautionary words have gained force since, for the purposes of the Human Rights Act 1998, one of the characteristics of a fair trial under article 6 is that the proceedings should be "adversarial": e g Lobo Machado v Portugal (1996) 23 EHRR 79, para 31. The ethos of the new system of civil procedure in England and Wales, and of the more limited changes in civil procedure in Scotland, may also have a bearing on the question. Consideration of the issue must, however, await a case where the matter arises for decision.
54. The rationale of legal advice privilege has been identified in numerous cases, many of which are cited in the speeches of Lord Scott and Lord Carswell. I need not repeat them but venture to add a passage from Sir George Mackenzie's Observations upon the 18th Act of the 23rd Parliament of King James the Sixth against Dispositions made in Defraud of Creditors etc (1675), in Sir George Mackenzie's Works Vol 2 (1755), p 1. He said this, at p 44:
As this passage shows, the public interest justification for the privilege is the same today as it was 350 years ago: it does not change, or need to change, because it is rooted in an aspect of human nature which does not change either. If the advice given by lawyers is to be sound, their clients must make them aware of all the relevant circumstances of the problem. Clients will be reluctant to do so, however, unless they can be sure that what they say about any potentially damaging or embarrassing circumstances will not be revealed later. So it is settled that, in the absence of a waiver by the client, communications between clients and their lawyers for the purpose of obtaining legal advice must be kept confidential and cannot be made the subject of evidence. Of course, this means that, from time to time, a tribunal will be deprived of potentially useful evidence but the public interest in people being properly advised on matters of law is held to outweigh the competing public interest in making that evidence available. As Lord Reid succinctly remarked in Duke of Argyll v Duchess of Argyll 1962 SC (HL) 88, 93, "the effect, and indeed the purpose, of the law of confidentiality is to prevent the court from ascertaining the truth so far as regards those matters which the law holds to be confidential."