Financial Services Compensation Scheme Ltd v Abbey National Treasury Services plc

The court decided an application concerning redactions in FSCS claim eligibility checklists on the basis of legal professional privilege. The claim relied on legal advice privilege (not litigation privilege) and the judge applied established authorities including Alfred Crompton, Three Rivers (No.5), Three Rivers (No.6) and The Good Luck. The judge accepted that privilege extends to communications with in-house lawyers and to internal records that reproduce, summarise or paraphrase legal advice. He inspected the redacted material and held that the passages comprising questions 6 and 7 with their answers, and the redacted narrative passages, recorded the substance of legal advice and were therefore privileged. Question 5, taken alone, did not plainly meet the test, but read with questions 6 and 7 the three questions as a whole were privileged. The application by ANTS for disclosure of the redacted material was dismissed.

This is a first instance application for disclosure of parts of documents redacted on grounds of legal professional privilege and irrelevance. FSCS, a body established under Part XV of the Financial Services and Markets Act 2000 to administer compensation for investors, had provided voluntary disclosure of documents including standard internal claim eligibility checklists. FSCS redacted three questions (5, 6 and 7) and parts of narrative entries as being subject to legal advice privilege. ANTS challenged those redactions and asked the court to inspect the unredacted documents.

The issues before the court were (i) whether legal advice privilege protects communications with in-house lawyers and internal records reflecting legal advice, (ii) whether the specific redacted items on the checklists "evidenced" or otherwise revealed the substance of privileged legal advice, and (iii) whether a document from which advice could only be inferred can attract privilege.

The judge reviewed the authorities and principles: privilege applies to advice sought from in-house lawyers (Alfred Crompton), extends to records reproducing the substance of such communications (The Good Luck), and must be read in the light of the House of Lords’ decision in Three Rivers (No.6). On inspection of the unredacted material the judge was satisfied that questions 6 and 7 (and their yes/no answers) recorded the narrow legal questions and, when read with their answers, stated the substance of the legal advice. The redacted narrative passages unambiguously stated the advice received and were privileged. The judge expressed scepticism about claiming privilege for documents from which advice could only be inferred unless the inference was obvious and inevitable; he concluded question 5 alone did not plainly justify privilege but, read with questions 6 and 7, the three questions taken together were privileged. The upshot was that FSCS's redactions were upheld and ANTS's challenge dismissed. The judge encouraged clearer, less general formulations of privilege claims in future.

This was a first instance decision. The court upheld the FSCS claims to legal advice privilege in respect of the redacted passages and dismissed ANTS's application for disclosure. The judge inspected the material and concluded that questions 6 and 7 (with answers) and the redacted narrative passages recorded the substance of privileged legal advice; question 5 alone did not plainly do so but was privileged when read together with questions 6 and 7.