Ch 64: Legal Professional Privilege (June 1998)

June 1998

64.1 What is LPP

There are different types of privilege, such as privilege against self-incrimination, privilege that attaches to "without prejudice" negotiations and legal professional privilege, which is considered in this chapter and is hereinafter referred to as LPP. There have been attempts to extend privilege beyond the legal professions but they have failed, since communications with other professional persons do not automatically attract legal professional privilege. Such communications may attract privilege where the communications are carried out in anticipation of litigation and with the dominant purpose of preparing for that litigation (Waugh v British Railways Board [1980] AC 521). The basis of LPP is that litigation can only be conducted properly by professional lawyers and that it is therefore necessary for a litigant to be able to communicate with his lawyers in unrestricted confidence.

The decision of the House of Lords in R v Derby Magistrates’ Court ex parte B [1995] 4 All ER 526 is that LPP is absolute and a court is not to attempt a balancing exercise between the public interest in maintaining lawyer - client confidence and other public interests. LPP attaches to communications and nothing but communications; therefore a lawyer can be forced to disclose the identity of a client.

64.2 Comparison of LPP and confidentiality

Communications between a lawyer and his client for the purpose of giving and obtaining legal advice attract privilege. The existence of privilege becomes relevant when litigation is anticipated. Essentially privilege is to do with litigation and confidentiality has (generally) nothing to do with litigation. If a secret was told to a lawyer by a client, it would be protected outside the courtroom by the law of contract (it being an implied term of the contract between a lawyer and his client that the lawyer will not disclose what passes between them). The same secret will be protected in the courtroom by the law of legal professional privilege (LPP). Privilege attaches to certain classes of potential disclosures, in practice exchanges between professional persons and their clients, which were carried out in anticipation of litigation and with the dominant purpose of preparing for that litigation (Waugh v British Railways Board [1980] AC 521). The law of confidentiality attaches to the information itself. The law of public interest immunity (often referred to as PII) is not properly described as privilege; it is much more closely akin to confidentiality. PII is not covered in this chapter.

64.3 Communications covered by LPP

Letters and other communications passing between a party and his solicitors are privileged from production provided they are confidential, written to or by the lawyer in his professional capacity and for the purpose of getting legal advice or assistance. In the case of Balabel v Air India [1998] Ch 317 the Court of Appeal held that the continuum of communications made between a lawyer and his client for the purpose of keeping each other informed so that legal advice may be sought and given as required also attracted privilege. In the case of Nederlanse Reassurantie Groep Holding NV v Bacon & Woodrow (a firm) [1995] 1 All ER 976 it was held that advice from a solicitor on matters not directly related to the law, such as the commercial wisdom of a transaction in relation to which legal advice is also sought, attracts privilege provided that the giving of that advice is directly related to the performance of his professional duty as a legal adviser. A client need not in either civil or criminal proceedings give in evidence communications between him and his legal adviser which fall into the classes detailed below. The legal adviser cannot, without his client's consent, give in evidence, in either civil or criminal proceedings, such communications, since privilege belongs to the client (see paragraph 64.6). Not all communications between the lawyer and his client are protected; those which attract privilege are communications made either:

    1. between the client or his agents and the client's professional legal advisers,
    2. in order that the client can obtain, or the lawyer can give, legal advice (see the points made above relating to the decisions in Balabel v Air India and Nederlandse Reassurantie Groep Holding NV),
    3. with reference to current, pending or contemplated litigation, communications between the client and third parties or the lawyer and third parties with reference to such litigation (see Waugh v British Railways Board [1980] AC 521), or
    4. between the client or his agent and third parties, if such communications are made for the purpose of obtaining information to be submitted to the client's professional legal advisers for the purpose of current, pending or contemplated litigation.

The rule applies not only to domestic litigation but also to current, pending or contemplated foreign litigation. Therefore, if privilege attaches to a communication in a foreign court, the communication is privileged in subsequent English proceedings.

Section 10 of the Police and Criminal Evidence Act 1984 sets out items subject to legal professional privilege; and section 10(2) states that items held with the intention of furthering a criminal purpose are not items subject to legal privilege.

Communications with opposing parties (who are not third parties) cannot be privileged.

64.4 Who does LPP apply to?

The rule relating to LPP as set out above applies to the following persons :

    1.  solicitors,
    2.  barristers,
    3.  legal executives,
    4.  foreign legal advisers,
    5.  in house legal advisers,
    6.  patent agents, in respect of civil proceedings (s280 of the Design and Patents Act 1988),
    7.  trademark agents, in respect of civil proceedings (s284 of the Design and Patents Act 1988),
    8.  licensed conveyancers (s33 of the Administration of Justice Act 1985), and
    9.  representatives of employees at industrial tribunals, for the purpose of the tribunal hearing.

If a non-legally qualified person, not falling into one of the exceptional groups above, performs the function of a legal adviser, communications between him and the client will be privileged.

In R v Umoh (1986) 84 Cr App. R 138, it was held that communications to and from a legal aid officer were not to be legally privileged. The Director of Public Prosecutions is not regarded by the English courts as a lawyer and so communications sent to him by police forces asking for legal advice were held not to be legally professionally privileged although they did attract public interest immunity from disclosure (see Evans v Chief Constable of Surrey [1988] QB 588).

64.5 Effect of LPP

The effect of a valid claim to privilege is that a witness cannot be compelled to answer any question to which the answer is information to which privilege attaches.

64.6 Situations when LPP cannot arise or where there is an implied waiver Criminal or fraudulent intentions

There are two established situations in which legal professional privilege cannot arise:

1) Fraud - if a client asks a legal adviser for advice which the client intends to use to facilitate a crime or a fraud and the legal adviser does not know that this is the purpose of the client seeking advice, the communications between the client and the lawyer are, on the grounds of public policy, deemed not privileged (see R v Cox & Railton [1884] 14 QBD 153). If a lawyer knows of the dishonest purpose and still gives advice, he does not act as a lawyer and the communications between him and his client are accordingly not legally privileged. Previous decisions had been that communications in connection with devices designed to defeat creditors, or inducements to breach contracts, would still attract legal professional privilege (see Konigsberg (a bankrupt) [1989] 3 All ER 289). However, the decision of the Court of Appeal in Barclays Bank plc v Eustice [1995] 4 All ER 511 was that "legal advice sought or given for the purpose of effecting iniquity was not privileged "(see also paragraph 31.4.64). If a solicitor acts for both the lender and borrower in relation to a mortgage transaction, legal professional privilege asserted over confidential communications between the solicitor and the borrower may be overridden on the lender’s application for discovery where the borrower has made a deliberate misrepresentation to the lender in order to secure an advance, provided that bad faith or impropriety has been pleaded and there is a sufficient foundation of fact to support that allegation (Nationwide Building Society v Various Solicitors).

2) Expert reports prepared in proceedings under the Children Act 1989 - the established principle is that in proceedings under the Children Act 1989 or in ward-ship, disclosure of legally privileged documents will be ordered if it is in the interests of the child concerned for that disclosure to take place, and

In addition, where civil proceedings are brought against a solicitor by his client, the client impliedly waives legal professional privilege in relation to all relevant documents to the extent necessary to enable the court to adjudicate on the matter fully and fairly.

64.7 Duration of LPP

Once a communication is privileged, it is always privileged (Calcraft v Guest [1898] 1 QB 759). This means that once client A's privilege has attached to a particular communication or document, that privilege persists for the benefit of client A and his successors in title while the interest which the privilege protects continues to exist. Care is needed in identifying the interest protected by the privilege. The privilege attracted by a report may subsist only in respect of the litigation for which it was created (Schneider v Leigh [1955] 2QB 195). There is a privilege which may be called a "common interest" privilege which is a privilege in aid of anticipated litigation in which several persons have a common interest (Buttes Oil v Hammer (No3) [1981] 1QB 223). A common interest is generally easy to identify. The common interest may come to an end and when it does, the privilege will not follow the separate parties. Where statute grants privilege, it will often decree for what purposes that privilege subsists.

64.8 Who does LPP belong to?

LPP belongs to the client not to the lawyer. LPP can be waived by the client but not by the lawyer, although there are a number of circumstances in which the lawyer will be found to have the client's actual or ostensible authority to waive the client's privilege. LPP passes to personal representatives and to trustees in bankruptcy. Privilege passes to successors in title and survives the death of the client (Bullivant v A-G for Victoria [1901] AC 196). If a party to an action assigns or otherwise transfers his interest in that action to another, his (relevant) LPP passes to the other (see Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 533). Where a document is privileged because an insurer caused it to be created for the purpose of pending or contemplated litigation on behalf of an insured, the insured as well as the insurer can claim that the document is privileged (Guinness Peat Properties Ltd v Fitzroy Robinson partnership [1987] 1 WLR 1027; [1987] 2 All ER 716).

Privilege cannot be asserted against a party who has a proprietary interest in the documents sought. The burden of proving the existence of the proprietary interest rests upon the party seeking production of the document. Trustees cannot claim privilege against beneficiaries; this principle also prevents persons in positions analogous to that of a trustee from claiming privilege as against persons analogous to that of a beneficiary. Where two persons jointly engage the same solicitor to act for them in the same transaction, neither party can assert legal professional privilege as against the other to prevent that other seeing any communication passing to or from the solicitor in his "joint" capacity, although communications between the solicitor and one of his clients on a separate matter will attract privilege that can be asserted against the other joint client in the original matter.

64.9 Waiver of privilege

Privilege can be expressly or impliedly waived by the client or his agent. The normal rules of agency apply and so the client, as principal, can be bound by waiver made by someone acting with actual or ostensible authority. If a document is read or is put in evidence, privilege is waived in respect of it. A deceased client's personal representative or a bankrupt client's trustee in bankruptcy can waive privilege.

64.10 Express waiver

In relation to express waiver, the general rule is that one can give away as much or as little of one's own privileged information as one wants. The important caveat to this rule is that one must not by giving partial disclosure of privileged information mislead another party or the court. If partial voluntary disclosure of privileged information has been given and there is reason to believe that this does mislead, the court is likely to order disclosure of a sufficient amount of further information for the picture to be made clear. Parties who voluntarily waive privilege in respect of a particular document will not be forced to disclose other privileged documents which deal with issues which are simply mentioned in the voluntarily disclosed document. The main principle is that a party is not entitled to edit his evidence, relying on the favourable parts of privileged communications, but refusing to reveal the rest. Where a party waives privilege in respect of part of a privileged document, he will generally be taken to have waived privilege in respect of the whole document unless the other part relates to an entirely distinct and unconnected matter such that severance of the document is possible. Where privilege is waived in respect of a principal document that waiver is confined to documents relevant to the transaction with which the principal document is concerned and does not extend to those documents which are relevant to the matters with which the transaction was itself concerned (General Accident Fire and Life Assurance Corp. v Tanter (The Zephyr) [1984] 1 WLR 100).

A party can waive a particular type of privilege without waiving privilege in respect of other information (privileged for another legal reason) relating to the same subject matter (George Doland Ltd v Blackburn Robson Coates & Co Ltd [1972] 1 WLR 1338).

Reference to a document or to its contents in a pleading does not waive any LPP attached to it. However, when communications pass between potential joint defendants when litigation is contemplated which might involve one or both of them, one party cannot waive privilege in respect of those communications without the authority of the other (Lee v South West Thames RHA [1985] 2 All ER 385).

64.11 Duration of waiver

A particular waiver either express or implied will apply only to the proceedings in which it occurred. If, in accordance with his duty to assist a criminal investigation, a plaintiff hands over to the police privileged documents prepared for a civil action against a person and copies of those documents are disclosed to that person by the prosecution, this cannot be construed as either an express or implied waiver of the privilege attaching to those documents because to hold otherwise would be contrary to public policy (British Coal Corporation v Dennis Rye Limited (no 2) [1998] 3 All ER 816. A waiver at an interlocutory stage will continue throughout the entire proceedings.

64.12 Statutory interference with LPP

Although there is no right to discovery of privileged documents on taxation, a taxing officer can order that a privileged document be produced to the court on taxation. The temporary suspension of privilege which this entails must be kept to the minimum necessary to ensure that the other party to the taxation has a fair hearing. Sometimes the taxing officer will have to disclose privileged documents to the other side so that taxation points can be properly argued. Where documents have been disclosed during the course of a taxation, privilege attaches to them again on the conclusion of the taxation.

Section 33 of the Limitation Act 1980 allows the court to disapply the primary limitation period in personal injury cases. Where a plaintiff wants the court to invoke the court’s discretion to disapply, he can be required to answer questions about the legal advice he received when the court will preserve LPP as far as it is consistent with fairness to both parties.

64.13 Effect of bankruptcy order

The trustee in bankruptcy is regarded for all purposes as legally identical to the bankrupt. When a bankruptcy order is made, the bankrupt is under a duty to deliver to the official receiver all books, papers and records in his possession, including any which would be privileged from disclosure in any proceedings. Where two parties engage the same solicitor to act for them and one such party is made bankrupt, the non bankrupt party cannot prevent disclosure to the trustee in bankruptcy of all relevant communications (see Konigsberg (a bankrupt), ex p The Trustee v Konigsberg [1989] 3 All ER 289).

The rights of confidentiality and privilege vested in the client in relation to papers and documents relating to property of the bankrupt client transfer to the trustee in bankruptcy and the trustee is entitled to assert the privilege formerly vested in the bankrupt.

Notes: [s291(1)]

64.14 Dealing with solicitors (bankruptcy)

If a solicitor has acted for an individual who is made bankrupt, all papers and documents in the possession of the solicitor which belong to the client should be handed over to the trustee. This will included any privileged material (see paragraph 23.22). The rights of confidentiality and privilege vested in the client in relation to those papers and documents belonging to the solicitor and retained by him transfer by operation of law to the trustee so far as they relate to the property of the bankrupt client. Therefore, in relation to such matters, the trustee can be provided with copies of relevant material on payment of the solicitor's proper charges.

Further, the trustee can be provided with information as well as copies of documents from the solicitor insofar as the information relates to the property of the bankrupt. The trustee is not entitled to copies or information relating to the bankrupt's personal affairs, as distinct from his property, unless the bankrupt consents or the solicitor is ordered by the court to provide information or the trustee is able to convince the solicitor that the bankrupt has used him to further a criminal or fraudulent purpose but this must be the case since any privileged documents obtained by deception or otherwise improperly cannot be used by the party obtaining them. Any papers and documents which belong to the solicitor (e.g. original letters from the client and copies of letters to the client and papers and documents relating to the defence of any bankruptcy proceedings) need not be handed over or disclosed.

If a solicitor is requested by the trustee to hand over papers and documents belonging to the bankrupt, they must be handed over even if there is a lien. There is one exception, a lien on title documents is good if they are held as such eg an equitable charge by way of deposit of title deeds .

Papers and documents which belong to the solicitor and which came into existence in connection with the client's affairs do not have to be handed over but can be subject to a court order under section 366. In the case of papers and documents which relate to the bankrupt's personal affairs as distinct from his financial affairs, it may be possible, on the instructions of the bankrupt, to set up a claim of privilege.

As the solicitor is entitled to treat the trustee as the person to whom the obligations of privilege and confidentiality are owed, it is open to the solicitor to make oral statements or give written statements to him. If a solicitor is approached to disclose matters relating to the property of a bankrupt, the person from whom to seek consent to disclose is the trustee in bankruptcy. If a solicitor declines to assist the trustee, an application can be made for a private examination under section 366.

Notes: [s311(1)] [s349]

64.15 Applying for private examination

If the official receiver requires information from persons (e.g. the bankrupt’s spouse or solicitors) who appear to have information about the bankrupt’s affairs and they have failed to assist the official receiver, he may consider applying for a private examination. In such circumstances, solicitors will be unable to claim that information and documents confided to them are subject to professional privilege and will be obliged to make a disclosure under an order pursuant to section 366 (see Murjani (a bankrupt) [1996] 1 All ER 65). Privilege against self incrimination does not apply to a bankrupt who is examined under section 366. A bankrupt cannot rely upon his own LPP since the trustee stands in the place of the bankrupt and is able to waive LPP, subject to the proviso that a distinction is to be drawn between privilege relating to the bankrupt’s property divisible amongst his creditors and privilege relating to property not so divisible or to matters personal to the bankrupt (see Konigsberg (a bankrupt) [1989] 1 WLR 1257). It is likely that third parties who do not have a duty to assist the trustee may be able to rely upon privilege against self incrimination. A third party may be able to assert LPP as a ground for refusing to deliver up documents to the trustee (see Ouvaroff [1997] BPIR 712). See paragraph 64.19 below regarding the use of information obtained under a private examination.

Notes: [s366]

64.16 Effect of winding up order

When a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator has a duty to take into his possession or control all property of the company. This would include those papers held by solicitors which belong to the company including privileged material (see paragraph 23.22). The liquidator is not entitled to those papers which did not belong to the company (e.g. the originals of letters from the company to the solicitor and copies of letters which the solicitor had written to the company). This material the solicitor is entitled to retain.

Notes: [s235]

64.17 Dealing with solicitors (company)

A solicitor's duty of confidentiality is owed to the client and the client can waive it or consent to the provision of documents and information to third parties. If the solicitor received his instructions from the company, which is a separate legal entity, then the company is the client. Even if the instructions were given by the individuals within the company (eg the directors), they would have been instructing the solicitor as officers of the company, not in their personal capacity, and so, as the client, it is to the company that the duty of confidentiality is owed. Where there is no court order under section 236 and the client was a company, the solicitors cannot claim privilege or confidentiality against a liquidator except where it can fairly be said that the documents or information relate to another client's affairs and not those of the company. The person who can waive confidentiality and privilege is the liquidator. Where the solicitor is entitled to treat a liquidator as the person to whom the obligations of privilege and confidentiality are owed, it is open to the solicitor to make oral statements or give written statements to him. If investigations are commenced by any authority and a solicitor is requested to provide information, the liquidator is the person to whom privilege and confidentiality are owed and is the person able to consent to the disclosure of such information.

If the solicitor acted for the directors or shareholders in their personal capacity, then any information received as part of that retainer will be confidential to the individual who alone can waive confidentiality (subject to the comment made above about bankruptcies). Confidentiality can be overridden where the solicitor has been used to further a criminal or fraudulent purpose.(see paragraph 64.23)

64.18 Effect of a private examination

Section 236 gives the court the power to require any person thought to be capable of giving information concerning the affairs of a company in liquidation, administration or administrative receivership to submit an affidavit containing an account of his or her dealings with the company and to produce documents and records. If the application is made by a person who has power to waive confidentiality, a solicitor would probably have no answer to such an application except to the extent that he might be able to claim privilege on behalf of a client other than the company.

64.19 Disclosure of information to other authorities

Any statement made under section 236 may be used in evidence in any proceedings (whether or not brought under the Insolvency Act 1986) brought against any person making or concurring in making the statement. Information obtained during a private examination is to be treated, prima facie, as confidential. The written record of an examination under section 236, any answers to interrogatories and any affidavit submitted in compliance with an order shall not be filed in court and shall not be open to inspection by anyone other than the applicant or any person who could have applied for such an order in respect of the affairs of the same insolvent, unless the court orders otherwise. The transcripts from a private examination fall within the provisions of section 24 of the Criminal Justice Act 1988. Except where information is sought from an office holder by, for example, the Serious Fraud Office (SFO) acting under statutory powers, the guiding principle as to whether the court ought to require disclosure to third parties of information obtained under a private examination is that it should only be required where the purpose of the disclosure is to assist in the beneficial winding up of the company or it is otherwise justified for the attainment of justice in a particular case (see Barlow Clowes Gilt Managers Ltd [1992] Ch 208 and Marcel v Commissioner of Police [1992] Ch 225). A disclosure may be allowed when the information, if disclosed to a creditor of the company, may enable that creditor to pursue claims against other persons which may lead to the company being relieved of liability (see A company (No 005374 of 1993) [1993] BCC 734).

However, if information (provided to an office holder during a private examination) is sought by a person to whom the office holder is either required or authorised to provide it, then the guiding principle is displaced. The House of Lords in Arrows (No4) [1994] 3 WLR 656 held that where information has been obtained under statutory powers the duty of confidence owed on the Marcel principle cannot operate so as to prevent the person obtaining the information from disclosing it to those persons to whom the statutory provisions either require or authorise him to make disclosure. An office holder has a wide range of duties imposed on him by the Insolvency Act 1986, the Company Directors Disqualification Act 1986 and the Criminal Justice Act 1987 to report to the Department of Trade and Industry or to the prosecuting authorities cases of suspected dishonest or criminal conduct. A liquidator cannot be under any duty of confidence which will prevent the performance of his statutory duties. Documents can be obtained by the Director of the SFO under his statutory powers from an office holder even after charges have been brought. These can include documents obtained from an examinee under section 236 (see Trachtenberg [1993] BCC 492). The decision of the House of Lords in R v Director of SFO ex p Smith [1993] AC1 suggests that even the record of an examination which took place after charges were laid could be obtained by the SFO.

However, there is now considerable doubt regarding the extent to which documents and information produced under a private examination and then obtained by prosecution authorities can be used in subsequent criminal proceedings against the respondent (European Court of Human Rights decision in Saunders v UK [1996]). Although this has far reaching consequences upon the conduct of criminal proceedings it is not thought that it will affect the principle that respondents under a duty to co-operate cannot rely upon the privilege against self incrimination when being examined under section 236.

A liquidator is only obliged to assist criminal defendants to the extent that he can produce material evidence in response to properly issued witness summons. In cases of doubt, the liquidator may apply to the Companies Court for directions.

Reference should also be made to Chapter 47 - Disclosure of Information, and Chapter 201 Disclosure and Exchange of Information with others in criminal proceedings.

Notes: [s433 and r9.4(7)] [r9.5(1)(2)]

64.20 Discovery and inspection of documents

LPP is most commonly invoked in the discovery process. In most court actions in England and Wales a large amount of evidence is placed before the court in the form of a bundle of documents agreed between the solicitors for the parties. The general rule is that documentation from each party is made available to all other parties by means of a process known as discovery of documents in which all documents relevant to the issues between the parties are listed in schedules which are then served on the other parties, with the right for each side to inspect and take copies of those documents they require. The rules relating to discovery and inspection of documents in the High Court can be found in Order 24 of the Rules of the Supreme Court. However, discovery and inspection are entirely at the discretion of the court; discovery will not be ordered unless it is necessary either for disposing fairly of the case or for saving costs. The court will not allow oppressive discovery. If a document is read or is put in evidence, any privilege in respect of it is waived.

64.21 Privileged documents disclosed by mistake

During the process of discovery, copies of privileged documents sometimes are passed to the opposing party; this is usually a simple mistake. The general principle is that in such circumstances waiver of privilege will readily be assumed. However, this rule is often mitigated in practice by the effect of the decision in Derby & Co. Ltd v Weldon (No 8) [1990] 3 All ER 762 which held that where privileged documents are inadvertently disclosed to the other side in circumstances such that the inspecting party must have realised that a mistake had occurred but sought to take advantage of the inadvertent disclosure, the court had power, under its equitable jurisdiction, to order the inspecting party to return all the copies of the privileged documents obtained as a result of the mistake and also to grant an injunction restraining that party from using the information contained in the documents.

64.22 Privileged documents obtained improperly

Privileged documents obtained by deception or otherwise improperly cannot be used by the party obtaining them (ITC Film Distributors Ltd v Video Exchange Ltd [1982] Ch 431).

64.23 Partly privileged documents

Some documents relevant to the issues in the litigation may contain sections for which a party wishes to claim privilege and other sections which, if viewed in isolation, are not privileged and thus are willing to produce for inspection. The law on this point is complex. A document which contains sections which are privileged and sections which are not and can be divided into separate and distinct documents is referred to as a "severable document" (see Great Atlantic Insurance v Home Insurance [1981] 1 WLR 529, 536). A document which contains sections which are privileged and sections which are not and which is not a severable document is referred to as a "composite document". A solicitor preparing his client's list for discovery may wish to give his opponent access to the unprivileged sections of a "composite document" but must exercise care to ensure that in doing so he is not treated as having waived his client's privilege, thus giving the other party access to the sections of the composite document which the client objects to produce. See also paragraph 64.10 regarding express waiver.

64.24 Disqualification

In the case of Barings plc [1997] All ER (D) 1, the Vice Chancellor ruled that D reports are not protected by LPP since the D report was brought into existence as a result of a statutory obligation under section 7(3) of the Company Directors Disqualification Act 1986.

The Vice Chancellor noted that even if the D report was subject to LPP, in his view it should be waived. Disqualification Unit are presently running a test case to determine whether the Unit is obliged to disclose to respondents the D reports and supporting documents.