Three Rivers District Council and others (Respondents) v. Governor and Company of the Bank of England (Appellants) (2004)

Legal advice privilege protects confidential lawyer–client communications made for the purpose of obtaining or giving legal advice. It is not confined to advice about the client’s legal rights and obligations or to anticipated litigation.

Legal advice includes guidance on what should prudently and sensibly be done in a relevant legal context. The inquiry is objective and turns on whether the lawyer is engaged as a lawyer and applies legal knowledge and skills. Advice on assembling and presenting a client’s case to a formal inquiry therefore attracts privilege, whether the inquiry is adversarial or inquisitorial and whether it directly determines legal rights.

Once attached, the privilege is absolute, subject to waiver or statutory override. The unresolved question of which employees comprise a corporate client was left open.

The respondents were creditors and liquidators of BCCI who claimed that the Bank of England had acted in bad faith when exercising its statutory supervisory functions. Section 1(4) of the Banking Act 1987 excluded liability unless bad faith was shown. The respondents sought disclosure of documents generated when the Bank and its lawyers prepared evidence and submissions for the Bingham Inquiry into the supervision of BCCI.

In Three Rivers District Council v Governor and Company of the Bank of England (No 5) [2003] QB 1556, the Court of Appeal restricted the documents protected as communications between lawyer and client. The Bank complied with that ruling. A later application concerned communications between the Bank’s Bingham Inquiry Unit, Freshfields and counsel about the content and presentation of the Bank’s overarching statement.

Tomlinson J held that only advice concerning the Bank’s rights and obligations was privileged. The Court of Appeal dismissed the Bank’s appeal in Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] QB 916. The central issue before the House was whether advice and assistance concerning the presentation of the Bank’s case to the non-adversarial inquiry constituted legal advice for privilege purposes.

1. Disposition. The House unanimously allowed the appeal. It set aside Tomlinson J’s declaration and order for disclosure and inspection. The communications between the Bingham Inquiry Unit and Freshfields or counsel about the content and presentation of the overarching statement, together with related internal notes and memoranda, attracted legal advice privilege.

2. Nature and rationale of the privilege. Lord Scott and Lord Carswell delivered principal speeches, with Lord Rodger, Baroness Hale and Lord Brown agreeing that the Court of Appeal had defined legal advice too narrowly. Legal advice privilege is not an outgrowth confined by litigation privilege. It protects confidential communications through which clients obtain the legal knowledge and skills needed to conduct their affairs. The protection encourages full and candid instructions and promotes the rule of law. Once attracted, it is absolute unless waived by the client or overridden by statute; it is not subject to a competing-public-interest balance.

3. Relevant legal context. Per Lord Scott, the privilege extends beyond statements of law and advice about legal rights and obligations in their narrow sense. Adopting Balabel v Air India [1988] Ch 317, legal advice includes guidance about what should prudently and sensibly be done in the relevant legal context. The boundary is objective. The court should consider whether the communication concerns legal rights, liabilities, obligations or remedies and whether its occasion and purpose make it reasonable to expect privilege. Advice given by a solicitor merely as a general business adviser may fall outside the privilege.

4. Application to formal inquiries. Per Lord Rodger, the Bank instructed Freshfields as lawyers and expected them to apply legal expertise to the performance of its supervisory duties under the Banking Acts. Per Lord Carswell, assembling relevant evidence, omitting irrelevant material and presenting a client’s case effectively are classic legal skills. Lord Brown stated more broadly that a client’s confidential process of seeking legal assistance to present its case to a formal inquiry attracts legal advice privilege, whether the inquiry is public or private, adversarial or inquisitorial, and whether or not it directly affects rights or liabilities. The Bank’s presentational communications therefore fell within the privilege.

5. Corporate clients. The House declined to determine which employees of a large organisation should be treated as the client. That issue arose from the earlier ruling in Three Rivers (No 5), was moot in the present appeal and remained governed by that decision. The House neither approved nor disapproved it.

1. House of Lords: The Bank’s appeal was allowed unanimously. The declaration and disclosure order were set aside: Three Rivers District Council and others v Governor and Company of the Bank of England [2004] UKHL 48.
2. Court of Appeal: In Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] QB 916, the court dismissed the Bank’s appeal and held that legal advice privilege was confined to advice about legal rights and obligations.
3. High Court: Tomlinson J declared on 10 November 2003 that only communications seeking or obtaining advice concerning the Bank’s rights and obligations could be withheld. He ordered further disclosure and inspection.
4. Earlier disclosure appeal: In Three Rivers District Council v Governor and Company of the Bank of England (No 5) [2003] QB 1556, the Court of Appeal reversed Tomlinson J’s decision, [2002] EWHC 2730, and confined privilege to qualifying communications between the Bank’s Bingham Inquiry Unit and its lawyers. Leave to appeal was refused.