Shearman And Sterling

London, Brexit

Jan 31, 2020

Court of Appeal Gives Important New Guidance on Legal Advice Privilege

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In a judgment handed down this week, The Civil Aviation Authority v Jet2.Com Ltd [2020] EWCA Civ 35, the Court of Appeal has given important new guidance on a number of issues that arise as to the scope of Legal Advice Privilege. The guidance is highly relevant both for those assessing the application of privilege to existing documents and for organisations thinking about how they communicate internally in relation to sensitive matters.

Facts

The dispute arose in connection with judicial review proceedings brought by Jet2.com Limited (“Jet2”) against the Civil Aviation Authority (the “CAA”). Those proceedings concerned the CAA’s role in the publication of various documents critical of the decision by Jet2 not to participate in an industry-wide ADR scheme for consumers.

In October 2018, Jet2 made an application for specific disclosure of various documents relating to a particular letter sent by the CAA to Jet2. An initial draft of the letter had been circulated by a non-lawyer at the CAA to a number of colleagues for their comments. One of the recipients was an in-house lawyer. The other recipients were various non-lawyer officers of the CAA. The CAA claimed Legal Advice Privilege in all the subsequent communications in the chain.

Legal Advice Privilege and Litigation Privilege

Legal Advice Privilege attaches to confidential communications (whether written or oral) between a client and a lawyer for the purpose of giving or obtaining legal advice.

It is distinguished from Litigation Privilege, which attaches to confidential communications made between a lawyer and his client, or a lawyer or client and a third party, which came into existence for the dominant purpose of litigation that is pending, reasonably contemplated or already existing.

Key Points from the Court of Appeal’s Judgment

The ‘Dominant Purpose’ Test Applies to Legal Advice Privilege

The Court undertook a detailed review of English and other common law authorities addressing the application of the dominant purpose test to both Legal Advice Privilege and Litigation Privilege, including the (obiter) comments in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited [2018] EWCA Civ 2006, suggesting that the test did not apply in the case of Legal Advice Privilege. The Court concluded that both on the balance of authority and as a matter of practical sense, the test does apply. For Legal Advice Privilege to attach to a particular communication or document, the party claiming privilege must show that the dominant purpose of that communication or document was to obtain or give legal advice.

Legal Advice Privilege and Communications Made to Both Lawyers and Non-Lawyers

The Court clarified the approach to assessing the application of Legal Advice Privilege to emails sent to both lawyers and non-lawyers. The key points made were:

  • The dominant purpose test must be applied. If the dominant purpose of an email was to seek commercial views, it will not be privileged even though the email was also sent to a lawyer for the purpose of giving legal advice; conversely, an email the dominant purpose of which was to obtain legal advice will be privileged even if it was also seeking commercial views from others. This analysis is subject to the principle set out in Three Rivers (No.5) (see below).
  • In identifying the purpose of a communication, the concept of “contiuum of communications” must be taken into account, i.e. consideration given to whether an individual communication may be part of a series of communications which had the dominant purpose of instructing a lawyer.
  • Multi-addressee emails should be considered as a series of separate communications, although this approach is unlikely to result in conclusions that are different from those if such emails are considered as a whole.
  • A communication that is not for the dominant purpose of giving or receiving legal advice but might realistically disclose legal advice (“in the sense of there being a realistic possibility of it disclosing such advice”) is privileged.
  • A word of caution in relation to meetings at which commercial matters are discussed with lawyers providing legal advice if and when required: “Legal advice requested and given at such a meeting would, of course, be privileged; but the mere presence of a lawyer, perhaps only on the off-chance that his or her legal input might be required, is insufficient to render the whole meeting the subject of LAP [Legal Advice Privilege]…It is likely that, where not inextricably intermingled, the non-privileged part will be severable.”

Emails and Attachments Must Be Separately Assessed

The Court confirmed that an email and any attachment(s) must be separately assessed for privilege.

Comments on Voluntary Disclosure and Collateral Waiver (Obiter)

Although the Court had found that the relevant documents were not privileged in any event, it commented that, had they been privileged, the judge at first instance had erred with regard to the scope of collateral waiver arising from the CAA’s limited voluntary disclosures.

The Court noted that the starting point is to establish the issue in relation to which the voluntarily disclosed material had been deployed, otherwise known as the “transaction test.” “Transaction” is not the same as “subject matter,” and waiver would not extend to materials simply because they might be described as relevant to an issue in the ordinary sense used in disclosure. The Court confirmed that the “transaction” would be determined objectively by the Court.

However, the scope of the collateral waiver may be extended if wider disclosure is necessary in order to fulfil the overriding requirement of fairness and to avoid the creation of a misleading picture. Crucial to the assessment is the purpose and nature of the voluntary disclosure.

In this case, the “transaction” was identified by the Court as restricted to the one email that had been disclosed, not the related emails and discussions over a period of several weeks. Disclosure having been made for a limited purpose and not in respect of any legal advice, the Court concluded that fairness did not require wider disclosure.

Other Points to Note

Before addressing the specific issues arising on the facts, the Court gave a lengthy analysis of various aspects of Legal Advice Privilege, addressing in particular:

(i) The proposition that material collected by a client (or its lawyer) from third parties for the purposes of instructing lawyers is not privileged, and, in addition, where the client is a corporation, communications between an employee and a co-employee or the client’s lawyers, even if required to equip the lawyer with the information needed in order to provide legal advice, are not privileged unless the employee was tasked with seeking and receiving legal advice on behalf of the client (the principle establish in Three Rivers District Council v Governor and Company of the Bank of England (No. 5) [2003] EWCA Civ 474.).

(ii) The proposition that for Legal Advice Privilege to apply, a communication must be made in a “legal context,” but that otherwise the concept of “legal advice” is drawn widely.

As to (i), the Court again (as in Eurasian) expressed significant doubts as to the conclusion in Three Rivers (No.5), both as a matter of principle and of practicality. However, that decision remains binding.

As to (ii), the Court summarised that communications between a client and a legal advisor, retained as such, will arise in a “legal context,” and it will then fall to be determined whether the dominant purpose of the communication was the giving and receiving of legal advice. If the lawyer is not retained in a legal capacity (i.e., serves a commercial role), the document may still fall within the scope of Legal Advice Privilege if a specific legal context, outside their normal brief, can otherwise be identified. The Court recognised that in practice, “the legal and non-legal” might be so intermingled that severance would be impractical and a document could properly be said, as a whole, to have the dominant purpose of giving or receiving legal advice.

Raiffeisen Bank v Ashurst and Another

The Court of Appeal last week also gave another judgment concerning issues of Legal Advice Privilege: Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd & Anor [2020] EWCA Civ 11. The case was concerned with an application by Raiffeisen Bank for disclosure of, among other things, instructions given by Asia Coal Energy Ventures Ltd to its lawyer, Ashurst LLP, in circumstances where Ashurst had referenced those instructions in a confirmation given to Raiffeisen Bank as part of an escrow arrangement.

In this decision, the Court rejected argument put forward by Raiffeisen Bank that where a client authorises its lawyer to disclose information contained within its instructions to that lawyer, any privilege over those instructions is necessarily waived. Reviewing the relevant authorities, the Court found that that privilege over instructions from a client would only be waived in these circumstances where the client itself put those instructions in issue (e.g., where a client argues that a settlement agreement is not binding, because their lawyer agreed to the terms without their authorisation).

Comment

These decisions provide practical guidance in relation to situations and issues that will frequently arise in practice and contain helpful summaries of the law on Legal Advice Privilege. The further criticism of the Court of Appeal decision in Three Rivers (No.5) is an indication that the narrowly drawn concept of “client” established in that case may soon be reconsidered.

Authors and Contributors

Susanna Charlwood

Partner

Litigation

+44 20 7655 5907

+44 20 7655 5907

London

Chris Collins

Associate

Litigation

+44 20 7655 5688

+44 20 7655 5688

London

Practices

Regional Experience