12 January 2004
3 February 2004
13 April 2004
17 October 2005
26 January 2004
9 August 2004
Johnny Cash once observed that “there are more questions than answers”. Cash’s insight leapt to mind following the recent ruling on the scope of legal advice privilege. The decision of Judge Tomlinson in Three Rivers District Council v The Governor and Company of the Bank of England (No 10) (2003) restricts the commonly regarded ambit of legal advice privilege significantly. It also raises difficult practical questions, particularly when businesses are forced to deal with inquiries, regulators or investigators.
The Three Rivers case arose from the collapse of the Bank of Credit and Commerce International (BCCI) in 1991. Shortly thereafter, a private, non-statutory inquiry was conducted by Lord Justice Bingham to consider its supervision. The Bank of England (BoE) formed a unit comprising three BoE officials to coordinate its response to the inquiry known as the Bingham Inquiry Unit (BIU). The BIU obtained advice from external legal advisers.
The claimants were depositors of BCCI claiming damages against the BoE for misfeasance in relation to its supervision of BCCI. They sought disclosure of certain papers from the BoE. Both the claimants and the BoE accepted that the proceedings before the Bingham inquiry were not adversarial so no litigation privilege could apply to communications relating to the BoE’s submissions. The question was whether legal advice privilege could extend to communications between the BIU and the external legal advisers on the presentation of factual material. The court held that only advice on the BoE’s legal rights and obligations, or what should prudently be done in light of those obligations, could be privileged. On the evidence, it held that advice on how to present evidence in the way least likely to attract criticism was not privileged.
That seems uncontroversial, but the difficulties come in applying it in a prescriptive way. So how far does this principle extend?
The decision will affect the way in which advice is given to businesses dealing with public and private inquiries, regulators or investigators. Such a transparent approach may have public policy advantages: on its face, it opens up any legal advice the Government may receive on how to present its information to a public inquiry the next time there is a Hutton or a Matrix Churchill inquiry.
But how is pure presentational advice to be identified, particularly when it is actually being given? Is advice ever purely presentational? Or do the lawyer and client normally have in mind other problems when considering how facts should be presented (such as exposure to other litigants or the obligation to present that material at all)? Is that advice privileged as it really relates to the client’s legal rights and obligations? The Three Rivers decision suggests it may be, but provides no definitive guidance. Presumably, the BoE had in mind possible exposure to the depositors when considering how to present its evidence to the Bingham Inquiry. If that is the case, it is not clear whether the ruling will actually result in much documentation being produced to the claimants at all.
The decision appears limited to legal advice privilege – litigation privilege may continue to offer wide protection when a dispute is in existence or reasonable contemplation. But what happens with witness statements made by the client in a dispute? There is an argument that communications with the client, whether in the context of litigation or otherwise, are covered by legal advice privilege, whereas litigation privilege only covers communications with third parties. So, if the witness in a dispute is also the client, can that person be advised on the presentation of factual material in a witness statement? The Three Rivers decision raises some doubts.
The BoE is appealing. Hopefully, the Court of Appeal will consider the difficult practical issues that will arise from the distinction. If it stands, the judgment is likely to encourage applications for disclosure and business will have to be careful as to how it obtains advice on the presentation of factual material. This may result in such evidence being presented in its most raw form. Were this to happen, the Three Rivers decision may paradoxically result in lesser, rather than greater, transparency.