Case: Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48 ; [2005] 1 AC 610
Outcome: considered
In Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48 ; [2005] 1 AC 610 (' Three Rivers' ), the privilege claim arose in the context of an inquiry by Bingham LJ that followed the collapse of the Bank of Credit and Commerce International SA ('BCCI') in July 1991. The focus of the inquiry was the supervision of BCCI by the Bank of England. Freshfields were retained by the Bank to advise generally on all dealings of the Bank, its officials and employees with the inquiry. Freshfields retained counsel to assist in the process. Both Freshfields and counsel gave advice as to the preparation and presentation of the Bank's evidence to the inquiry and as to the submissions that should be made to the inquiry on the Bank's behalf. The Bank claimed legal advice privilege over documents which the trial judge summarised as having been 'generated for the purpose of providing information to the Bank's legal advisers to enable them to prepare submissions and/or to advise on the nature, presentation, timing and/or content of the Bank's submissions to, evidence for and responses to requests from the inquiry': see Three Rivers District Council v Governor and Company of the Bank of England (No 5) [2003] EWHC 2730 (Comm). It appears that insofar as these documents were at issue in the House of Lords in Three Rivers , they all related to the content of the Bank's 'overarching statement' (the statement of its case) to the inquiry: see at 641 [6] and 683 [120]. The Bank did not rely upon the litigation limb of legal professional privilege because the inquiry was not an adversarial proceeding: see the House of Lords' decision in In re L (a minor) (Police Investigation: Privilege) [1997] 1 AC 16 (' Re L ') which I discuss later in these reasons. 90 The Court of Appeal (see Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] QB 916) held that legal advice privilege was restricted to material constituting or recording communications between clients and lawyers seeking or giving advice about the clients' legal rights and obligations. It accepted a contention that advice as to how the Bank should present its case to the inquiry, so as to lead to a conclusion as favourable to the Bank as possible, did not qualify for privilege. 100 Having regard to the forgoing authorities, I accept that legal advice is not confined to telling the client the law but includes professional legal advice as to what should prudently and sensibly be done in the relevant legal context. Furthermore, in view of the House of Lords' decision in Three Rivers , I also accept that legal advice includes professional advice given by lawyers to a client as to what evidence and submissions should be placed before a commission of inquiry. 101 There are, however, two additional points to be made. First, to qualify as privileged, the lawyer's advice must satisfy the description of professional advice given by a lawyer in his or her capacity as such: see NRG at 982 [g]-[j]; Three Rivers at 651 [38] and 658 [59]-[60]. The same requirement exists in the United States: see JH Wigmore, Evidence in Trials at Common Law , vol 8, rev J McNaughton, Little Brown &amp; Company, 1961 (1981) at s 2292; and Evans v City of Chicago 231 FRD 302 (ND Ill 2005). Secondly, communications for the purpose of obtaining and giving legal advice in the sense discussed in Balabel and the other cases mentioned above must satisfy the dominant purpose test if they are to attract legal professional privilege. 124 As to the ultimate purpose of Exhibit 665, AWB submitted that it was created for the purposes of the Inquiry and its ultimate purpose was to enhance AWB's prospects in the Inquiry. This does not establish a dominant purpose of obtaining legal advice. Three Rivers is distinguishable: it proceeded on the footing that all of the documents at issue were brought into existence for the dominant purpose of seeking Freshfields' advice about the Bank's 'overarching statement' of its case to the inquiry: see 642-643, 644, 662-664 and 667. The documents were not privileged merely because they related to the preparation of the Bank's overarching statement. 125 If and to the extent that the ultimate purpose of the statement of contrition is relevant, it would tell against the application of privilege. On the evidence before me, I consider that the incorporation of a statement of contrition into Mr Lindberg's evidence to the Inquiry was intended to be a public relations exercise addressing the reputational damage that AWB had suffered, and was likely to continue to suffer, as a result of the Inquiry. But the view I take is that these references to 'ultimate purpose' tend to confuse the purpose of possible future evidence to the Inquiry with the purpose and intended use of the draft statement that constituted Exhibit 665. 126 Lastly, AWB submitted that the immediate purpose, the intermediate purpose and the ultimate purpose could be conflated into the single purpose of 'the preparation of a document in consultation with legal advisers for the purpose of use in this legal context', that is to say in the context of the Inquiry. In my opinion, the same deficiencies attend this formulation and it does not advance the claim for legal advice privilege. 132 The principles that emerge from these cases operate to protect privileged communications against the risk that they will be disclosed by secondary evidence: see Tomlinson J in Three Rivers [2002] EWHC 2730 (Comm) at [3]. The question whether privileged communications will be disclosed by virtue of the disclosure of another document, such as a draft pleading, draft agreement or draft witness statement, raises a question of objective fact that depends on what the other document actually states or conveys, either explicitly or as a matter of reasonable inference. To adapt the language used by Gummow J in Propend and Anderson J in Dalleagles , the question is whether the disclosure of the document in question will directly reveal, or allow its reader to infer, the actual content or substance of a privileged communication. 150 In Three Rivers , the Bank of England's conduct was the principal subject to be investigated by the Bingham Inquiry. The Bank did not contend that the documents in issue attracted litigation privilege, presumably because of the decision in Re L . 156 In Carter at 160-161, McHugh J said that explanations of the rationale that have been put forward in terms of the proper functioning of the legal system or the perfect administration of justice take too little account of the fact that the privilege protects communications that seek or give legal advice in cases where no litigation is pending or contemplated. His Honour therefore expressed the rationale for the privilege more broadly: 'Now that this Court has held that legal professional privilege is not a rule of evidence but a substantive rule of law, the best explanation of the doctrine is that it is 'a practical guarantee of fundamental, constitutional or human rights'. By protecting the confidentiality of communications between lawyer and client, the doctrine protects the rights and privacy of persons including corporations by ensuring unreserved freedom of communication with professional lawyers who can advise them of their rights under the law and, where necessary, take action on their behalf to defend or enforce those rights. The doctrine is a natural, if not necessary, corollary of the rule of law and a potent force for ensuring that the equal protection of the law is a reality.' See also Brennan J in Carter at 127; Baker at 94-95, 118 and 130; Waterford v Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 (' Waterford' ) at 64; Maurice at 487; and Three Rivers at 677 [C] per Lord Carswell. 158 Legal professional privilege must be applied in a manner which is consistent with the policy reasons that justify its existence: see Pratt Holdings at 362 [18] and 367-368 [41]-[42] per Finn J, and 386 [105] per Stone J; and Three Rivers at 650 [35]. But this does not mean that the origins, and the distinctive scope and operation of the second limb of the privilege, are to be ignored. In my view, the authorities establish that the reason why litigation privilege has been recognised as a substantive rule of law and as a fundamental right, is that it operates to secure a fair civil or criminal trial within our adversarial system of justice. The rationale for litigation privilege does not support its extension to a commission of inquiry. 164 The extension of litigation privilege to a commission of inquiry is a very large step. It is not a step which I feel able to take, as a single judge, in the absence of supporting authority and in the face of the recent decision by the House of Lords in Three Rivers . 165 I also reject AWB's alternative submission that Exhibit 665 was brought into existence for the dominant purpose of being used in connection with litigation which might follow from the report of the Commissioner. It is unnecessary to debate whether potential future litigation of this kind, whether civil or criminal, is sufficiently in prospect or anticipated that it falls within the scope of the second limb of the privilege. Let that be assumed. The insurmountable difficulty I see is that, on the evidence, Exhibit 665 was not prepared so that it might be used in connection with future litigation of that kind. Rather it was prepared for possible use as part of Mr Lindberg's evidence to the Inquiry. This use falls outside the scope of the second limb of the privilege so long as a commission of inquiry is not relevantly regarded as litigation. 166 The conclusions I have reached on legal professional privilege are founded on this Court's jurisdiction under s 39B of the Judiciary Act and are based on the evidence adduced in this Court. In those circumstances, even assuming the jurisdiction to do so exists under the ADJR Act, it would be unnecessary and inappropriate for me to embark upon any review of the Commissioner's ruling on privilege.