Three Rivers District Council and Others v Governor and Company of the Bank of England (No. 9)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,The Master of the Rolls,Lord Phillips, MR |
| Judgment Date | 01 March 2004 |
| Neutral Citation | [2003] EWCA Civ 474,[2004] EWCA Civ 218 |
| Docket Number | Case No: 2003 0103,Case No: A3/2003/2480 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 March 2004 |
[2003] EWCA Civ 474
The Master of the Rolls
Lord Justice Sedley and
Lord Justice Longmore
Case No: 2003 0103
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE TOMLINSON
QUEEN'S BENCH DIVISION (Commercial)
GORDON POLLOCK Esq QC, BARRY ISAACS Esq and NATHAN PILLOW Esq (instructed by Messrs Lovells, London, EC1A 2FG) for the Appellants
NICHOLAS STADLEN Esq QC and BANKIM THANKI Esq (instructed by Messrs Freshfields Bruckhaus Deringer, London EC4Y 1HS) for the Respondent
This is the judgment of the court in an interlocutory appeal from Tomlinson J in relation to disclosure of documents in the current litigation in which the appellants, liquidators and creditors of BCCI, are suing The Bank of England ("the Bank") for misfeasance in public office. The Bank have claimed legal professional privilege for numerous documents which came into existence between the time when BCCI collapsed and the time when they made their final submissions to the Bingham Inquiry conducted by Lord Justice Bingham as he then was. The Bank does not claim that the documents were prepared in contemplation of litigation and are thus protected by that category of legal professional privilege which can be described as "litigation privilege"; rather the Bank claims that the documents are protected from disclosure by reason of that category of legal professional privilege known as "legal advice privilege", viz. privilege in relation to legal advice that is not founded on the existence or the contemplation of litigation. It is clear on the authorities that documents emanating from or prepared by third parties or employees of a party are covered by the principle of "litigation privilege" if prepared with the dominant purpose of use in existing or contemplated litigation. The scope of "legal advice privilege" is less clear. It is agreed that documents emanating from or prepared by independent third parties and then passed to the Bank's solicitors ("Freshfields") for the purpose of advice being given to the Bank are not privileged under the legal advice head but beyond this the scope of legal advice privilege is controversial.
The reason why the Bank accepts that it cannot rely on litigation privilege as opposed to legal advice privilege is that in Re L [1997] 1 AC 16 the House of Lords decided that litigation privilege is essentially a creature of adversarial proceedings and thus cannot exist in the context of non-adversarial proceedings. The Bank further accepts that the Bingham inquiry was not adversarial; the terms of reference were:-
"To enquire into the supervision of BCCI under the Banking Acts; to consider whether the action taken by all the UK authorities was appropriate and timely; and to make recommendations".
The inquiry was set up on behalf of the Chancellor of the Exchequer and the Bank but was a private non-statutory inquiry. As the judge said:-
"It was an inquiry one outcome of which could be criticism of the conduct of the Bank from an informed and highly authoritative source, an outcome which would not only be of some importance in relation to the Bank's ongoing regulatory and supervisory role but would itself be likely either to lead to or to encourage the institution or attempted institution of proceedings against the Bank by depositors and others who had lost money in consequence of the collapse of BCCI."
Nevertheless the inquiry did not constitute adversarial litigation and litigation privilege cannot arise. To the extent that the Bank now wish to claim privilege in the current litigation, the Bank accept that they can only claim legal advice privilege.
The judge has set out the background to the dispute by referring to his earlier judgments and reciting at length from the evidence before him and reference can be made to his judgments for any matter of detail. For present purposes it is sufficient to record that, shortly after the Bingham inquiry was established, the Governor of the Bank of England appointed 3 Bank officials, Mr Paul Tucker, Mr John Trundle and Mr John Rippon to deal with all communications between the Bank and the inquiry. They became known as the Bingham Inquiry Unit ("BIU"). On the day on which they were appointed they met the Bank's solicitors, Freshfields. All the BIU's communications with the inquiry were therefore the subject of extensive legal advice from Freshfields and counsel instructed by them. This advice covered all aspects of the preparation and presentation of the Bank's evidence and submissions to the Bingham inquiry. The Bank and its solicitors prepared a substantial 258 page document which constituted its "Statement to the Inquiry"; they also prepared a paper entitled "Supervisory Issues". Lord Justice Bingham was not provided with witness statements but witnesses gave evidence to him and that evidence was transcribed. The Bank has disclosed both of its submissions in the form in which they were finally sent to Lord Justice Bingham and the transcripts of the evidence of its witnesses.
Mr Pollock QC, for the appellants, has made clear in his submissions that disclosure is not sought of documents passing between the BIU and Freshfields or vice versa, nor is disclosure sought of any of Freshfields' internal memoranda or drafts. He accepts that the BIU was, for the purpose of the inquiry, the client of Freshfields and that communications passing between them are covered by legal advice privilege. But he submits that documents prepared by the Bank's employees or ex-employees, whether prepared for submission to or at the direction of Freshfields or not, should be disclosed as being no more than raw material on which the BIU would, thereafter, seek advice. The evidence isolated and the judge dealt with 4 separate categories of such documents; he asked himself the following questions:-
(1) Does legal advice privilege extend to documents prepared by Bank employees, which were intended to be sent to and were in fact sent to Freshfields?
(2) Does it extend to documents prepared by Bank employees with the dominant purpose of the Bank's obtaining legal advice but not, in fact, sent to Freshfields (though, perhaps, their effect was incorporated into documents that were so sent)?
(3) Does it extend to documents prepared by Bank employees, without the dominant purpose of obtaining legal advice, but in fact sent to Freshfields?
(4) Are the answers to (1), (2) and (3) above any different if the documents were prepared by Bank employees who are now (viz. as at 11th March 2003) ex-employees of the Bank?
It is accepted that some, at any rate, of the material sought could be highly relevant to the litigation eg, the first memorandum or statement of an officer intimately concerned in the supervision of BCCI.
In the course of argument, a surprisingly wide divergence about the extent of legal advice privilege opened up. The judge observed that the law on this topic is not as clear as one might have expected. Mr Pollock submitted that it was only communications between solicitor and client, and evidence of the content of such communications, that were privileged. Preparatory materials obtained before such communications, even if prepared for the dominant purpose of being shown to a client's solicitor, even if prepared at the solicitor's request and even if subsequently sent to the solicitor, did not come within the privilege.
Mr Stadlen QC, for the respondent, submitted that, as a matter of general principle, any document prepared with the dominant purpose of obtaining the solicitor's advice upon it came within the ambit of the privilege, whether or not it was actually communicated to the solicitor; he said that the authorities confined the class of documents that attracted legal advice privilege no further than that; in particular, there was no authority to support the proposition that it was only communications between solicitor and client that were privileged. This general principle was subject to the exception that documents sent to or by an independent third party (even if created with the dominant purpose of obtaining a solicitor's advice) would not be covered by legal advice privilege. Both counsel maintained that the law was well-settled in favour of their submissions by the end of the nineteenth century and that we were bound by the law as so settled which had not changed in substance for over a hundred years.
The judge's conclusion in favour of the Bank was :-
"an internal confidential document, not being a communication with a third party, which was produced or brought into existence with the dominant purpose that it or its contents be used to obtain legal advice is privileged from production".
It will be necessary to consider the nineteenth century authorities to see whether this is right.
The law
Lawyer and client privilege is of great antiquity. In the early nineteenth century there was controversy whether the privilege only existed in relation to existing litigation. This debate was regarded as authoritatively settled by Lord Brougham LC, sitting on appeal, in Greenough v Gaskell (1833) 1 My. & K. 98 in which the question arose whether the defendant solicitor, sued for fraudulently concealing that his client was insolvent and thereby inducing the plaintiff to issue a promissory note on the client's behalf, could claim privilege in respect of communications which he had received from his client. The Lord Chancellor held that the defendant could claim privilege, that it made no difference whether it was the client or the solicitor who was the defendant and that it did not matter that, at the time, there were no existing or contemplated...
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