Vol 2 (2005) - Issue 2

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Legal Professional Privilege after the Decision of the House of Lords in Three Rivers (No 6)

Legal professional privilege is the name given to the right to refuse to disclose documents or answer questions. The privilege is commonly divided into two categories: ‘litigation privilege’, which applies to documents produced for the dominant purpose of litigation, whether pending or contemplated; and ‘legal advice privilege’, which applies to communications between client and solicitor for the purposes of seeking or obtaining legal advice.

The scope of legal advice privilege was recently considered by the House of Lords in Three Rivers (No 6), which arose in the context of the on-going proceedings brought by the liquidators of BCCI SA (‘the Liquidators’) against the Bank of England (‘the Bank’). The decision has major implications for the conduct of any sort of business in which lawyers are involved - such as the drafting of contracts or wills, or the conduct of inquiries, inquests and tribunals.

Firstly, the background. In 1980 BCCI SA was licensed as a deposit-taker in England by the Bank, which had a duty thereafter to supervise it. Shortly after it collapsed in 1991, Lord Justice Bingham was appointed to lead an Inquiry into its supervision. The Bank appointed three Bank employees to deal with communications between the Bank and the Inquiry.These officials were known as the Bank’s Bingham Inquiry Unit (‘BIU’). The Bank also retained Fresh- fields to advise it in relation to preparing its evidence for the Inquiry. The Bingham Inquiry Report was published in 1992.
In 1993 several thousand depositors of the UK branches of BCCI SA, and the Liquidators, brought proceedings against the Bank for misfeasance in public office. The proceedings were initially struck out, but were in 2001 reinstated by the House of Lords. In 2002 the Liquidators sought disclosure by the Bank of a large number of documents brought into existence by the Bank in preparation for the Inquiry.

The Bank claimed the right to withhold these documents on the ground of legal advice privilege, but the Court rejected this claim. The Bank subsequently disclosed a number of internal documents, but it refused to disclose any of the communications between the BIU and Freshfields. The Bank claimed that these documents were created for the purpose of seeking or obtaining legal advice, and were therefore privileged; ‘legal advice’, the Bank argued, should be interpreted so as to cover all advice and assistance from Freshfields or counsel relating to the Bank’s evidence and submissions to the Inquiry. So the Liquidators made a further application. The Court of Appeal again ordered disclosure.It held that the only documents which the Bank was entitled to withhold on the ground of legal advice privilege were communications passing between the BIU and its lawyers for the purpose of seeking or obtaining advice concerning the Bank’s rights and obligations. The House of Lords allowed the Bank’s appeal.

The effect of the House of Lords’ judgment, and the two Court of Appeal judgments which preceded it, is that the communications between the Bank and its lawyers were privileged, but internal Bank documents prepared in relation to the Bingham Inquiry were not.

Communications between lawyer and client

The Bank’s lawyers had given advice on a range of subjects. They had given advice on black-letter law, such as the Bank’s obligations under the Banking Acts. They had advised on how the Bank’s case and the evidence of Bank officials should be presented to the Bingham Inquiry.