Three Rivers District Council & Ors v. Governor and Company of the Bank of England

The House of Lords allowed the Bank of England's appeal and held that communications between the Bank's Bingham Inquiry Unit, the Bank's lawyers (Freshfields) and counsel relating to the preparation and presentation of the Bank's overarching statement to the Bingham Inquiry were protected by legal professional privilege. The court analysed the two branches of privilege (legal advice privilege and litigation privilege) and concluded that legal advice privilege is not confined to advice about private law rights and liabilities or to communications strictly in anticipation of adversarial litigation. Advice given by lawyers in a "relevant legal context" — including advice on how best to present a client's case to a public inquiry where the client's public law duties and potential legal consequences are in issue — attracts legal advice privilege.

The House emphasised the policy foundations of legal advice privilege: the public interest in enabling clients to obtain candid legal advice and the need for lawyers to be given full facts. The court rejected the Court of Appeal's narrower approach in Three Rivers (No. 6) that presentational advice to an inquiry could be excluded from legal advice privilege, and set aside the disclosure order which had required production of such communications.

Background and parties

The Bingham Inquiry examined the Bank of England's supervision of BCCI after its collapse in July 1991. The Bank appointed an internal Bingham Inquiry Unit (the BIU) and retained Freshfields and counsel to advise on preparation and presentation of the Bank's evidence and submissions to the Inquiry. Numerous documents were generated by Bank employees for the purpose of informing Freshfields and obtaining legal advice.

Procedural history

• At first instance Tomlinson J ([2002] EWHC 2730) held that internal documents prepared for the dominant purpose of obtaining legal advice were privileged and refused a discovery application.
• The Court of Appeal in Three Rivers (No. 5) ([2003] QB 1556) took a narrower view and ordered disclosure of documents prepared by Bank employees except communications passing between the BIU and the Bank's legal advisers.
• Further proceedings led Tomlinson J to declare that only communications concerning the Bank's legal rights and obligations could be withheld; the Court of Appeal in Three Rivers (No. 6) ([2004] QB 916) dismissed the Bank's appeal and adopted that restriction.
• The Bank appealed to the House of Lords ([2004] UKHL 48).

Nature of the application

The claimants (depositors and BCCI liquidators) sought wide disclosure of documents which the Bank resisted on the ground of legal professional privilege. The narrow issue for the House was whether communications between the BIU and Freshfields or counsel relating to the content and presentation of the Bank's overarching statement to the Bingham Inquiry were protected by legal advice privilege.

Issues framed by the court

1. What is the proper scope and justification of legal advice privilege?
2. Does legal advice privilege extend to legal advice given for "presentational" purposes to inquiries and other non-adversarial tribunals?
3. When does material prepared by employees of a corporate client qualify as privileged communications between client and lawyer?

Reasoning and conclusions

The House undertook a policy-based and doctrinal review. It reiterated that legal advice privilege is rooted in the need for clients to obtain full and candid legal advice and that, where it applies, the privilege is absolute (absent waiver or statute). The Lords rejected the Court of Appeal's view that legal advice privilege is essentially an extension of litigation privilege or that it is confined to advice about private law rights and liabilities or to matters in contemplation of adversarial litigation. Citing authorities such as Greenough v Gaskell and Balabel v Air India and comparative jurisprudence, the House concluded that legal advice privilege covers communications in a "relevant legal context" — including advice about presentation to an inquiry where public law duties, reputation and possible legal consequences are engaged.

Accordingly, the House allowed the appeal and held that all communications between the BIU and Freshfields or counsel about the Bank's overarching statement and related internal memoranda qualified for legal advice privilege. The Lords declined to express a definitive view on the separate question of which communications between lawyers and other employees of a corporate client (outside the BIU) should be treated as communications with the client because that issue did not arise for decision on the appeal.

Appeal allowed. The House held that legal advice privilege extends to communications between the Bank's Bingham Inquiry Unit and the Bank's legal advisers concerning the content and presentation of the Bank's overarching statement to the Bingham Inquiry because such communications involved legal advice in a "relevant legal context" (public law duties under the Banking Acts and possible legal consequences). The Court of Appeal's narrower rule excluding presentational advice was set aside. The House declined to decide, in this appeal, the wider question of which communications between a company's employees and its lawyers should count as communications with the client.

First instance: Tomlinson J, Three Rivers District Council v Governor and Company of the Bank of England (No.5) [2002] EWHC 2730 (Tomlinson J) — held documents privileged. Court of Appeal (Three Rivers (No.5)) [2003] QB 1556 — allowed claimants' appeal on a narrower basis. Further proceedings led to Tomlinson J order (10 November 2003) restricting privilege to communications about legal rights/obligations; Court of Appeal (Three Rivers (No.6)) [2004] QB 916 — dismissed Bank's appeal. House of Lords: Three Rivers District Council & Ors v Bank of England [2004] UKHL 48 — appeal allowed.