Exceptions to Legal Advice Privilege

A. Furthering a Criminal Purpose

Neither form of privilege protects information generated with a view to furthering a criminal purpose.⁴⁶ In Three Rivers, Lord Nicholls was clearly concerned about the scope of this exception and its potential abuse by the state.

⁴³ Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 3 All ER 177.

⁴⁴ R v Egdell The Times 14 December 1988.

⁴⁵ JV McHale, ‘Confidentiality, an Absolute Obligation’ (1989) 52 Modern Law Review 715.

⁴⁶ Kuwait Airways Corporation v Iraqi Airways Company [2005] EWCA Civ 286

⁴⁷ Regulation of Investigatory Powers Act 2000.

⁴⁸ ibid, sch 1.

⁴⁹ ibid, s 5(3).

The concern with RIPA is not that information will be used in legal proceedings. In fact, public authorities are generally much too concerned about disclosing the extent of their surveillance capability to want to disclose evidence collected by covert meth­ods in court. The concern is that the state generally respects the principle that lawyer and client communications are truly private.

In Re McE,^[1582] the House of Lords held, Lord Phillips dissenting, that RIPA allows covert surveillance of defendants and their lawyers. Under subsequent statutory instruments, the use of this authorisation was restricted to circumstances deemed ‘exceptional and compelling’, such as threats to national security or to life or limb.^[1583] These limitations are arguably much too broad, giving rise to the possibility of routine invasion of lawyer and client communications by authorities ‘fishing’ for information.^[1584]

Lawyers drew some comfort from the thought that such intrusions would be regarded as contrary to the European Convention of Human Rights, Articles 6 (right to fair trial) and 8 (right to privacy).^[1585] The European Court of Human Rights has, however, been inconsistent in its approach.

In the instant case, the European Court of Human Rights condoned the Turkish authorities secretly recording conversations between O and his lawyer on the grounds that this was ‘strictly necessary to protect society against violence’.^[1587] The chair of The Law Society Human Rights Committee argued that ‘[t]his stance is open to misuse by governments and, while the protection of society from violence must be paramount, respect for privileged communications between lawyers and their clients is essential except in the most extreme circumstances’.^[1588] It remains to be seen how far the state respects the principle that information passing between lawyer and client remains secret.

B. Items Held with the Intention of Furthering a Criminal Purpose

Both the common law and statute deny legal advice privilege and litigation privilege to items held with the intention of furthering a criminal purpose.^[1589] The wording of the statute, PACE, is, however, curious. It states that ‘[i]tems held with the intention of furthering a criminal purpose are not items subject to legal privilege’.^[1590] The issue of whether a lawyer’s intent to further a criminal purpose was actually necessary in order to compromise legal advice privilege was considered by the House of Lords in Francis & Francis v Central Criminal Court.^[1591]

In the case, G retained a solicitor to assist her in purchasing a house. Unknown to both G and the solicitor, the money for this purchase allegedly came from drug trafficking by a member of G’s family.

There must be prima facie, and probably strong, evidence of a criminal purpose. Such a purpose can include civil fraud or ‘iniquity’ which might not constitute a crime. In Barclays Bank v Eustice^[1593] the relevant documents were created by solici­tors for the ‘dominant’ purpose of prejudicing the interests of their client’s bank, which was the client’s creditor. There was strong evidence that the purpose of seek­ing legal advice was not to explain what had been done or to prepare a criminal defence. Rather, the purpose was to deceive others about the value of the relevant transactions.^[1594]

Lord Justice Schiemann regarded the deceitful purpose as being ‘sufficiently iniq­uitous for public policy to require that communications between [the client] and his solicitor in relation to the setting up of these transactions be discoverable’.^[1595] The documents were not privileged in civil proceedings by the bank under the Insolvency Act 1986. How far this decision is consistent with the Derby Magistrates case is debat­able. The cases were decided at about the same time and neither discussed the other. Any distinction is not, presumably, based on whether the case is civil or criminal, since their Lordships in the Derby Magistrates case clearly thought that the principle applied to both. The same view was taken in the Court of Appeal decision on money laundering, Bowman v Fels.^[1596]

In Barclays Bank v Eustice, Lord Justice Schiemann was more than happy to carry out what Lord Nicholls in the Derby case considered to be the ‘impossible task’ of evaluating the balance of public interest.

I do not consider that the result of... the order in the present case will be to discourage straightforward citizens from consulting their lawyers. Those lawyers should tell them that what is proposed is liable to be set aside and the straightforward citizen will then not do it and so the advice will never see the light of day. In so far as those wishing to engage in sharp practice are concerned, the effect of the present decision may well be to discourage them from going to their lawyers. This has the arguable public disadvantage that the lawyers might have dissuaded them from the sharp practice. However, it has the undoubted public advantage that the absence of lawyers will make it more difficult for them to carry out their sharp practice.^[1597]

The case was followed in Nationwide Building Society v Various Solicitors,^[1598] which held that procuring a loan by deception fell within the exception to professional privilege. It was sufficient that the solicitor’s advice furthered the offence, even though the solicitor was unaware of the deception.

Restriction on the extent of privilege must extend to confidential information unlawfully acquired by the client. A case illustrating this involved the solicitors who advised Andrew Regan in his attempt to take over the Cooperative Wholesale Society in April 1997. Stolen documents, which were privileged, were allegedly used by the solicitors in preparing the predatory takeover. This was not only unethical but probably unlawful.^{[1599] [1600]}

In the light of notorious city frauds and sharp financial practices, such as those perpetrated by Robert Maxwell and BCCI in the UK and Enron in the USA, the restriction of privilege is a timely warning for city financiers and their solicitors. The public mood is unsympathetic to the use of legal advice privilege to cover up wrongdo­ing.

An example of the approach of the courts to balancing privilege with the public interest in disclosure occurred in JSC BTA Bank v Solodchenko⁶ⁱ The defendant (S) had been sentenced to 18 months for contempt of court for failing to comply with disclosure requirements relating to an alleged international fraud. The applicant bank sought an order against S’s solicitors (C) for disclosure of (i) S’s contact details, (ii) details of S’s assets, required in order to obtain a freezing order; and (iii) the source of funding to pay C’s fees.

The court distinguished a client’s right to claim legal professional privilege, which was absolute, and the right to protection of confidential information, which was capable of being overridden by other considerations. In the instant case, the balance fell in favour of ordering disclosure of S’s contact details. This was because these were necessary if effect was to be given to a court order, that is, a committal order.^[1601] The court held that, although it had jurisdiction to order C to disclose information about S’s assets, it was not appropriate to make such an order. In the circumstances it was overwhelmingly likely that any such information supplied by S to C would have been given for the purpose of obtaining legal advice and was, therefore, privileged.

C. Statutory Exceptions

Parliament can create legislative exceptions to the principle of privilege. The courts have held that, in order to create such exceptions, Parliament’s intention must be clear. This was explained by Lord Hoffmann in R v Secretary of State for the Home Department, exp Szmms,^[1602] as follows:

Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fun­damental principles of human rights.

Such exceptions, for example, those relating to money laundering, are covered below.^[1604]

D. Items Required by the Relevant Regulator

In Parry-Jones v Law Society,^[1605] the Law Society tested rules it had made to enforce compliance with the Solicitors’ Accounts Rules and Solicitors’ Trust Accounts Rules. The rules provided that the Law Society could require a solicitor to produce docu­ments relating to his practice to an appointed investigator. Mr Parry-Jones objected to such a request on the ground that production would breach client confidentiality. He was refused an injunction to restrain the Law Society. In R v Special Commissioner and Another, ex P Morgan Grenfell & Co Ltd,^[1606] Lord Hoffmann said that the true justification for the decision was not that Mr Parry-Jones’s clients had no legal privi­lege, nor that it had been overridden by the Law Society’s rules, but that it would not be infringed.

Lord Hoffmann said that The Law Society was not entitled to use information disclosed by the solicitor for any purpose other than the investigation. Otherwise the confidentiality of the clients had to be maintained. In his Lordship’s opinion

this limited disclosure did not breach the clients’ Legal Professional Privilege or, to the extent that it technically did, was authorised by the Law Society’s statutory powers. It does not seem to me to fall within the same principle as a case in which disclosure is sought for a use which involves the information being made public or used against the person entitled to the privilege.⁷⁵

The current Bar Code of Conduct cites R v Special Commissioner and Another, ex P Morgan Grenfell & Co Ltd in support of Rule C64, under which barristers may be required to disclose documents for which clients could claim privilege.⁷⁶ This is a dubious claim. What Lord Hoffmann said about Parry-Jones v Law Society was partially based on the Law Society’s statutory position, which is different from that of the Bar now. It was also obiter dicta. The guidance is probably right to suggest, however, that the requirement to report serious misconduct by others can be overridden by privilege.

E. ‘Severable’ Documents

A set of documents containing privileged and non-privileged sections that can be separated into distinct documents are ‘severable documents’.⁷⁷ Where this separation is not possible the document is known as a ‘composite document’. Solicitors prepar­ing to give disclosure of documents in litigation must be careful to claim privilege for the sections of composite documents that they do not intend to disclose. Otherwise, they may waive the client’s privilege and give the other party access to sections of the document that the client objects to producing. This is particularly the case with expert reports prepared for use in litigation.⁷⁸

V.