Three Rivers District Council & Ors v The Governor & Company of the Bank of England Rev 1

The Court of Appeal allowed an interlocutory appeal concerning claims of legal professional privilege over documents prepared after the collapse of BCCI and before the Bank's submissions to the Bingham Inquiry. The court confirmed the established distinction between litigation privilege (which depends on adversarial or reasonably contemplated litigation and, following Re L, does not arise in non-adversarial inquiries) and legal advice privilege. Legal advice privilege is confined to communications between client and legal adviser (including communications via agents) and to documents that record or embody those communications; it does not extend to raw material or reports produced by employees or independent third parties merely because they were prepared for the purpose of obtaining legal advice.

Applying those principles the court held that internal Bank memoranda and documents prepared by employees or ex-employees for the dominant purpose of presenting factual material to the inquiry did not attract legal advice privilege. The court therefore allowed the appeal and ordered further disclosure in accordance with its declaration, with the usual procedural adjustments recorded in the interlocutory order.

This is an interlocutory appeal from Tomlinson J in litigation brought by liquidators and creditors of BCCI against the Bank of England for misfeasance in public office. The Bank claimed legal professional privilege over numerous internal documents created between BCCI's collapse and the Bank's final submissions to the Bingham Inquiry. The Bank accepted it could not invoke litigation privilege (Re L) because the Bingham Inquiry was non‑adversarial; it therefore sought protection under legal advice privilege.

The court described the factual background: the Governor appointed a Bingham Inquiry Unit ("BIU") of Bank officials to co‑ordinate communications with the inquiry. The BIU worked closely with the Bank's solicitors, Freshfields, and the Bank produced a substantial written statement and other papers for the inquiry. The appellants sought disclosure of internal memoranda and other documents prepared by Bank employees and ex‑employees that had been used in preparing the Bank's submissions.

The principal issues framed were:

• whether legal advice privilege extends to documents prepared by Bank employees intended to be sent to and actually sent to the Bank's solicitors;
• whether privilege covers documents prepared with the dominant purpose of obtaining legal advice but not in fact sent to solicitors;
• whether documents prepared without the dominant purpose of obtaining legal advice but nevertheless sent to solicitors are privileged; and
• whether documents prepared by persons who are no longer employees are treated differently.

The court reviewed the nineteenth century authorities (including Greenough v Gaskell, Anderson v Bank of British Columbia, Southwark & Vauxhall Water Co v Quick and Wheeler v Le Marchant), twentieth century developments and later authorities (Balabel, Waugh and the discussion of the "dominant purpose" test). It concluded that those authorities established legal advice privilege as attaching to communications between client and legal adviser (and evidence of their contents), but not to documents produced by third parties or employees merely for the purpose of being shown to solicitors, except insofar as such material falls into litigation privilege when litigation is in reasonable prospect.

The court held that on the evidence the internal documents at issue were prepared predominantly to present factual material to the inquiry rather than for the dominant purpose of obtaining legal advice. Even if that factual finding were close, the court in any event considered the law restricted legal advice privilege to client/solicitor communications and documents evidencing them. The court allowed the appeal, granted the declaration sought by the appellants (subject to wording refinements discussed in court), ordered a further and better list of documents and refused leave to appeal to the House of Lords (the order was suspended pending any petition).

Appeal allowed. The court held that legal advice privilege is confined to communications between client and legal adviser (including communications via agents) and documents evidencing such communications; it does not extend to raw material, internal memoranda or reports produced by employees or independent third parties merely because they were prepared for the purpose of obtaining legal advice. Litigation privilege remains confined to adversarial or reasonably contemplated litigation (Re L). Applying those principles the Bank could not claim legal advice privilege over the categories of Bank employee documents in dispute and the appeal was therefore allowed and disclosure ordered.

Interlocutory appeal from Tomlinson J, High Court of Justice, Queen's Bench Division (Commercial) (no prior neutral citation given in the judgment).