Court of Appeal finds legal advice privilege is subject to a "dominant purpose" test

In a decision handed down earlier this week, the Court of Appeal has found that legal advice privilege (LAP) is subject to a "dominant purpose" test, ie that in order to benefit from LAP it is necessary to show that the dominant purpose of a communication was to give or obtain legal advice: The Civil Aviation Authority v The Queen on the application of Jet2.com Ltd [2020] EWCA Civ 35.

That has long been the case for litigation privilege, where it is essential to show that a communication or document was prepared for the dominant purpose of contemplated litigation, but the question of whether LAP is subject to a dominant purpose test has been far more controversial. Whilst the judge at first instance had found that there was such a test, leading textbooks and obiter comments by the Court of Appeal in SFO v ENRC [2018] EWCA Civ 2006 (considered here) suggested there was no such test. The application of a dominant purpose test in connection with LAP has often been viewed as inconsistent with the broad protection afforded under the LAP head, which covers the whole continuum of communications between lawyer and client which take place in a relevant legal context, as confirmed by the House of Lords in Three Rivers No 6 [2004] UKHL 48 (and applied for example in the RBS v Property Alliance Group decision considered here).

There is however good news from the perspective of those seeking to obtain the protection of LAP for lawyer/client communications to seek or obtain legal advice. Despite finding in favour of a dominant purpose test for LAP, the Court of Appeal's decision in this case does not significantly narrow down the protection of LAP as it was previously understood. The decision is clear that, where a lawyer is instructed in a relevant legal context, most communications between lawyer and client will be privileged. That is because, once there is a relevant legal context: (i) legal advice is widely defined, in that it is not limited to what the law is, but includes what should prudently and sensibly be done in the relevant legal context; and (ii) the protection includes communications aimed at keeping both lawyer and client informed so that advice may be sought and given as required. A particular document will not be privileged if it falls outside that legal context (and equally, part of a document will not be privileged if that part falls outside the legal context, assuming the parts can be separated out), but in general terms the protection of LAP should remain broad. Against that background, the dominant purpose test arguably does not add very much to the previous understanding of when LAP applies.

The decision also discusses the application of LAP in the context of emails sent to multiple addressees, including both lawyers and non-lawyers, particularly in an in-house setting. Unfortunately, the Court of Appeal's discussion of this important area is not easy to follow.

• The decision says that if the dominant purpose of the multi-addressee email is to settle the instructions to the lawyers, then (subject to the principle set out in Three Rivers No 5 – as to which see below) it will be privileged, whereas if the dominant purpose is to seek commercial views from the non-lawyer addressees, then it will not be privileged, even if a subsidiary purpose is simultaneously to obtain advice from the lawyer addressee(s).
• That may be taken to suggest that, in the Court of Appeal's view, the multi-addressee communication must be viewed as a whole and its overall purpose determined. However, shortly afterward, the decision states that the court's "preferred view" is that each communication between the sender and each recipient should be considered separately, since LAP essentially attaches to communications and "it is difficult to see why the form of the request (in a single, multi-addressee email on the one hand, or in separate emails on the other) in itself should be relevant as to whether the communications to the non-lawyers should be privileged".
• Similarly, in the context of a meeting attended by lawyers and non-lawyers (where, the court said, the same principles should apply): "Legal advice requested and given at such a meeting would, of course, be privileged; but the mere presence of a lawyer, perhaps only on the off-chance that his or her legal input might be required, is insufficient to render the whole meeting the subject of LAP so that none of its contents (including any notes, minutes or record of the meeting) are disclosable."

Overall, therefore, the analysis would appear to be that combining a privileged communication to a lawyer with a non-privileged communication to a non-lawyer (in a single email or in the same meeting) will not give the protection of privilege to the otherwise non-privileged communication.

The decision does contain some helpful discussion of the very narrow approach to who is the "client" for the purpose of LAP under English law, following the Court of Appeal decisions in Three Rivers No 5 and SFO v ENRC. Like the Court of Appeal in ENRC, the court said that if it had been free to do so it would have been "disinclined" to follow that approach. This adds to the weight of criticism of the Three Rivers No 5 approach at Court of Appeal level. However, any change to the law on that point will have to await a Supreme Court decision.

Intriguingly, there is some suggestion in the CAA v Jet2.com decision (including the discussion of multi-addressee emails referred to above) that the Court of Appeal was inclined to consider internal communications between non-lawyers to be privileged where they are for the dominant purpose of instructing the lawyer. It is not, however, clear precisely what scenario the court had in mind. In general, communications between non-lawyers will not be privileged under the LAP head (given that only lawyer/client communications are protected) save to the extent that they evidence the content of a privileged communication (or as the court put it in this case, if they "might realistically disclose" legal advice). Presumably the Court of Appeal's comments need to be understood in that context.

Background

The issues arose in the context of judicial review proceedings against the appellant in relation to its public criticism of the respondent's refusal to participate in an alternative dispute resolution scheme which the appellant had promoted for the resolution of consumer complaints.

The respondent sought disclosure of various documents from the appellant, including drafts of a letter from the appellant to the respondent dated 1 February 2018. One draft of the 1 February letter had been disclosed, as well as the covering email under which that draft was distributed internally both to non-lawyers and to one of the appellant's in-house lawyers. The appellant claimed LAP for subsequent drafts circulated for discussion, including to its in-house lawyers.

Before the judge, the appellant contended that, once an in-house lawyer became involved, discussions of drafts with others remained covered by LAP because they were part of the continuum of communications with the in-house lawyer. It submitted that an email sent to both in-house lawyers and to non-lawyers, and an attached draft, were all covered by LAP.

The High Court (Morris J) summarised a number of principles which he derived from the authorities. While recognising that academic commentaries suggested the point was not free from doubt, he found that claims for LAP were subject to a dominant purpose test, namely whether the communication or document was brought into existence with the dominant purpose of it or its contents being used to obtain legal advice. He added that this issue was unlikely to arise in normal cases of an email sent to an external lawyer, but may be more acute where in-house lawyers have a dual role in the company:

"Where the in-house lawyer is clearly being asked for legal advice, privilege is likely to attach. However, where the in-house lawyer is being consulted also as an executive about a largely commercial issue, then the dominant purpose test will fall to be applied."

As regards the position of a communication (such as an email) sent to multiple addressees, some of whom are lawyers and others are not, he said the position was not established by authority but, in his judgment, if the dominant purpose of the email was to seek advice from the lawyer and others were copied in for information only, then the email was covered by LAP. If the dominant purpose was to seek commercial views, and the lawyer was copied in, whether for information or even for the purpose of legal advice, then the email, in so far as it is sent to the non-lawyer, was not covered by LAP. Further, if sent to the non-lawyer for a commercial comment, but sent to the lawyer for legal advice, then the email was not protected by LAP, unless it or the non-lawyer's response disclosed or might disclose the nature of the legal advice sought and given.

Applying those principles, he found that:

• Drafts of the 1 February letter were not covered by privilege unless specifically drafted by the lawyers or for the dominant purpose of obtaining legal advice. On the basis that the in-house lawyers were instructed for the purposes of obtaining legal advice, any communication with those lawyers, including comments and advice on the draft letter, were covered by LAP, as were communications between non-lawyer executives which disclosed or might disclose that advice.
• Where an email was sent both to in-house lawyers and to non-lawyers then, even assuming that in so far as it was sent to the in-house lawyer it was privileged, in so far as it was also sent to a non-lawyer, neither the email nor the response of the non-lawyer was protected by LAP, unless they disclosed or were likely to disclose the nature and content of the legal advice sought and obtained.

Morris J directed the appellant to reconsider the materials in respect of which it had asserted LAP in the light of his conclusions of principle. The appellant accepted that, for most of the documents in question, it could not be said that the dominant purpose was to seek legal advice or that the email/attachment disclosed or might disclose the nature of the legal advice sought or given. However, while seeking permission to appeal, the appellant continued to claim privilege on the basis that the emails formed part of the continuum of communications between lawyer and client for the purposes of seeking or receiving legal advice.

In response to the appellant's application for permission to appeal, the respondent submitted that an appeal would have no real prospect of success because, among other things, by disclosing an earlier draft of the 1 February letter (together with its covering letter), the appellant had waived privilege in all communications concerning the draft letter. In a further judgment, Morris J accepted that submission.

The appellant was given permission to appeal against the judgments on four grounds:

Ground 1: The judge erred in holding that claims for LAP are in principle subject to a dominant purpose test.

Ground 2: Particularly as the result of the dominant purpose test which he applied, the judge erred with respect to the proper approach to be adopted when considering emails to both lawyers and non-lawyers.

Ground 3: The judge erred in holding that an assessment of whether an email and any attachment was covered by LAP must be carried out discretely and without reference to any attachment or covering email respectively.

Ground 4: In his second judgment, the judge erred in his approach to collateral waiver, in particular in identifying the relevant "transaction" for the purposes of collateral waiver.

Decision

The Court of Appeal dismissed the appeal. Hickinbottom LJ gave the lead judgment, with which Patten and Peter Jackson LJJ agreed.

Before considering the specific grounds of appeal, Hickinbottom LJ set out a number of propositions which he said arise from the authorities. The first three, he noted, are uncontroversial but the other two require some greater consideration.

Proposition 1: LAP applies to communications with in-house lawyers as well as those in private practice.

Proposition 2: LAP covers not only a document from a lawyer containing advice but also any communication passing on, considering or applying that advice internally and, in some circumstances, to third parties.

Proposition 3: LAP applies to communications only for the purpose of obtaining or giving legal advice, and not (eg) other professional or commercial advice.

Proposition 4: Material collected by a client (or by a lawyer on his behalf) from third parties or independent agents for the purposes of instructing lawyers to give advice is not covered by LAP. Further, where the client is a corporation, documents or other materials between an employee of that corporation and a co-employee or the corporation's lawyers, even if required or designed to equip those lawyers to give legal advice to the corporation, do not attract LAP unless the employee was tasked with seeking and receiving such advice on behalf of the company. This is the effect of the Court of Appeal's decisions in Three Rivers No 5 [2003] QB 1556 and in SFO v ENRC [2018] EWCA Civ 2006 (considered here).

Hickinbottom LJ commented that, like the court in ENRC, if it had been open to him to do so he would have been "disinclined" to follow Three Rivers No 5 on this issue. He agreed with the reasons given in ENRC, in particular that it meant the English law of privilege was out of step with other common law jurisdictions, and that large corporations were likely to be at a disadvantage compared to small corporations and individuals (since with a large corporation the information on which legal advice is sought is less likely to be in the hands of the main board or those it appoints to seek and receive legal advice).  In addition, he commented:

"i) Three Rivers (No 5) does not appear to allow for any caveats to the proposition that material sent by a third party/agent/employee to a lawyer (and vice versa) is not covered by LAP. However, where lawyers are instructed, the individual within a corporation instructing them must be able to ensure that the instructions are in accordance with the wishes of the senior executives in the company, which may involve input from more junior employees who are knowledgeable about the relevant issues. Internal communications settling instructions must be covered by LAP. It is unclear to me how the proposition in Three Rivers (No 5) quite allows for that.

ii) For no obvious reason, the law in relation to LAP as set out in Three Rivers (No 5) in respect of collection of information for the instruction of lawyers appears to be out of line with the law in respect of the dissemination of advice from lawyers, once received [ie Proposition 2 above]."

Hickinbottom LJ noted, however, that in the present case the relevant non-lawyers were "all relatively senior executives" and there appeared to be no evidence suggesting that any of them did not have the ability to seek legal advice from the relevant in-house lawyers, or that, for these purposes, they were not "an emanation of the client". He concluded, therefore, that each of the non-lawyers involved fell within the scope of "client" and so, leaving aside the question of whether the purpose must be "dominant", LAP would attach to any confidential communication between a lawyer and a non-lawyer in this case, made for the purpose of giving or obtaining legal advice.

Proposition 5: For LAP to apply, the communication must be made "in a legal context" (the first limb), but otherwise "legal advice" is widely defined (the second limb), as confirmed by the Court of Appeal in Balabel v Air India [1988] Ch 317 and the House of Lords in Three Rivers No 6 [2004] UKHL 48. He summarised the position from the authorities as follows (again leaving aside the issue of whether the relevant purpose has to be "dominant"):

"i) Consideration of LAP has to be undertaken on the basis of particular documents, and not simply the brief or role of the relevant lawyer.

ii) However, where that brief or role is qua lawyer, because "legal advice" includes advice on the application of the law and the consideration of particular circumstances from a legal point of view, and a broad approach is also taken to "continuum of communications", most communications to and from the client are likely to be sent in a legal context and are likely to be privileged. Nevertheless, a particular communication may not be so – it may step outside the usual brief or role.

iii) Similarly, where the usual brief or role is not qua lawyer but (e.g.) as a commercial person, a particular document may still fall within the scope of LAP if it is specifically in a legal context and therefore, again, falls outside the usual brief or role.

iv) In considering whether a document is covered by LAP, the breadth of the concepts of legal advice and continuum of communications must be taken into account.

v) Although of course the context will be important, the court is unlikely to be persuaded by fine arguments as to whether a particular document or communication does fall outside legal advice, particularly as the legal and non-legal might be so intermingled that distinguishing the two and severance are for practical purposes impossible and it can be properly said that the dominant purpose of the document as a whole is giving or seeking legal advice.

vi) Where there is no such intermingling, and the legal and non-legal can be identified, then the document or communication can be severed: the parts covered by LAP will be non-disclosable (and redactable), and the rest will be disclosable....

vii) A communication to a lawyer may be covered by the privilege even if express legal advice is not sought: it is open to a client to keep his lawyer acquainted with the circumstances of a matter on the basis that the lawyer will provide legal advice as and when he considers it appropriate."

Hickinbottom LJ then went on to consider the specific grounds of appeal.

Ground 1: Dominant purpose test for LAP

Hickinbottom LJ reviewed various authorities, including the classic House of Lords decision in Waugh v British Railways Board [1980] AC 521 which established that the dominant purpose test applies in cases of litigation privilege, ie the relevant communication must have been created for the dominant purpose of contemplated litigation. The question was whether the same principle applies to LAP, ie whether the relevant communication must have been created for the dominant purpose of giving or obtaining legal advice.

Whilst accepting that there is no authority directly on point, Hickinbottom LJ agreed with the respondent that the balance of authority is in favour of the dominant purpose test. Further, he considered that there are good grounds for including such a criterion, namely:

• Although they have some different characteristics, litigation privilege and LAP are limbs of the same privilege, legal professional privilege and it is uncontroversial that the dominant purpose test applies to litigation privilege. In Hickinbottom LJ's view there is "no compelling rationale for differentiating between limbs of the privilege in this context".
• Generally the common law in other jurisdictions (including Australia, Singapore and Hong Kong) has incorporated a dominant purpose test in both limbs of legal professional privilege. This, he said, not only suggests that such a test is able to work in practice, but it is an area in which there is advantage in the common law adopting similar principles.

Accordingly, and accepting that the jurisprudence is far from straightforward and the authorities do not speak with a single, clear voice, Hickinbottom LJ concluded that Morris J was correct to proceed on the basis that a dominant purpose test applies to LAP.

Ground 2: Emails to both lawyers and non-lawyers

Hickinbottom said he generally agreed with the approach applied by Morris J in relation to multi-addressee emails, as summarised above, and dismissed ground 2 of the appeal. He set out what he considered to be the appropriate approach, as follows.

"i) As I have indicated, the dominant purpose test applies to LAP. ..., although the general role of the relevant lawyer may be a useful starting point (and may, in many cases, in practice be determinative), the test focuses on documents and other communications and has to be applied to each such.

ii) In respect of a single, multi-addressee email sent simultaneously to various individuals for their advice/comments, including a lawyer for his input, the purpose(s) of the communication need to be identified. In this exercise, the wide scope of "legal advice" (including the giving of advice in a commercial context through a lawyer's eyes) and the concept of "continuum of communications" must be taken fully into account. If the dominant purpose of the communication is, in substance, to settle the instructions to the lawyer then, subject to the principle set out in Three Rivers (No 5)..., that communication will be covered by LAP. That will be so even if that communication is sent to the lawyer himself or herself, by way of information; or if it is part of a rolling series of communications with the dominant purpose of instructing the lawyer. However, if the dominant purpose is to obtain the commercial views of the non-lawyer addressees, then it will not be privileged, even if a subsidiary purpose is simultaneously to obtain legal advice from the lawyer addressee(s).

iii) The response from the lawyer, if it contains legal advice, will almost certainly be privileged, even if it is copied to more than one addressee. Again, whilst the dominant purpose test applies, given the wide scope of "legal advice" and "continuum of communications", the court will be extremely reluctant to engage in the exercise of determining whether, in respect of a specific document or communication, the dominant purpose was the provision of legal (rather than non-legal) advice. It is difficult to conceive of many circumstances in which such an exercise could be other than arid and unnecessary.

iv) There was some debate before us... as to whether multi-addressee communications should be considered as separate bilateral communications between the sender and each recipient, or whether they should be considered as a whole. My preferred view is that they should be considered as separate communications between the sender and each recipient. LAP essentially attaches to communications. Where the purpose of the sender is simultaneously to obtain from various individuals both legal advice and non-legal advice/input, it is difficult to see why the form of the request (in a single, multi-addressee email on the one hand, or in separate emails on the other) in itself should be relevant as to whether the communications to the non-lawyers should be privileged. That is not to say, of course, that the form may not in some cases reveal the true purpose of the communication, e.g. it may appear from the form of the email that the dominant purpose of the email is to settle the instructions to the lawyer who has merely been copied in by way of information, or to the contrary that the dominant purpose of sending the email to the non-lawyers is to obtain their substantive (non-lawyer) input in any event.

v) In my view, there is some benefit in taking the approach advocated by Hollander (at paragraph 17-17), namely to consider whether, if the email were sent to the lawyer alone, it would have been privileged. If no, then the question of whether any of the other emails are privileged hardly arises. If yes, then the question arises as to whether any of the emails to the non-lawyers are privileged, because (e.g.) its dominant purpose is to obtain instructions or disseminate legal advice.

vi) However, whether considered as a single communication or separate communications to each recipient, and whilst there may perhaps be "hard cases", I doubt whether in many cases there will be any difference in consequence, if the correct approach to LAP is maintained. Where there is a multi-addressee email seeking both legal advice and non-legal (e.g. commercial) advice or input, if regarded as separate communications, those to and from the lawyer will be privileged: otherwise, they will not be privileged, unless the real (dominant) purpose of a specific email to/from non-lawyers is that of instructing the lawyer. If it is not for that purpose, in most cases, the email as a whole will clearly not have the dominant purpose of obtaining legal advice.

vii) I agree with Morris J, that, where a communication might realistically disclose legal advice (in the sense of there being a realistic possibility of it disclosing such advice), then that communication will in any event be privileged....

viii) [The appellant's counsel] suggested that this approach would cause difficulties in terms of meetings (including records of meetings), attended by non-lawyers and lawyers, at which commercial matters were discussed with the lawyer adding legal advice and input if and when required. The whole of what transpires at such a meeting, he submitted, should be the subject of LAP. However, I disagree; and consider the same principles set out above as applying to documents and other communications are applicable. Legal advice requested and given at such a meeting would, of course, be privileged; but the mere presence of a lawyer, perhaps only on the off-chance that his or her legal input might be required, is insufficient to render the whole meeting the subject of LAP so that none of its contents (including any notes, minutes or record of the meeting) are disclosable. If the dominant purpose of the meeting is to obtain legal advice (or, subject to the principle set out in Three Rivers (No 5)..., to settle instructions to a lawyer), unless anything is said outside that legal context, the contents of the meeting will be privileged. If the dominant purpose of the discussions is commercial or otherwise non-legal, then the meeting and its contents will not generally be privileged; although any legal advice sought or given within the meeting may be. It is likely that, where not inextricably intermingled, the non-privileged part will be severable (and, on disclosure, redactable)...."

Hickinbottom LJ went on to clarify two specific issues which the appellant had said were unclear from Morris J's judgment. He confirmed that, in determining whether a document disclosed (or might disclose) the nature of legal advice sought or given: (i) it is not necessary for legal advice to have been specifically requested: as has been clear since Balabel, it is sufficient for a legal adviser to have been sent material upon which to advise if he or she considered advice necessary or appropriate; and (ii) the particular document must be considered in the context of communications which preceded and followed it.

Ground 3: Separate consideration of emails and attachments

The appellant submitted that the judge was wrong to require an assessment of whether each email and each attachment, considered separately, was privileged. It submitted that LAP protects communications (or records of communications) and an attachment to an email cannot be regarded as a separate communication from the email itself.

Hickinbottom LJ dismissed this ground of appeal in brief terms, commenting that it is well-established that a document which is not privileged does not become so simply because it is sent to lawyers, even as part of a request for legal advice. Accordingly, some separate consideration of substantive documents and attachments must be undertaken.

Ground 4: Waiver

As noted above, Morris J found that, if the relevant documents were privileged when created, the appellant had waived privilege by disclosing the early draft and covering email. The appellant submitted the judge was wrong to do so, because (i) he wrongly identified the relevant "transaction" in respect of which privilege had been waived, and (ii) in any event, he was wrong to conclude that fairness required the disclosure of all the drafts of the 1 February letter and internal correspondence about those drafts.

Hickinbottom LJ commented that the relevant principles are uncontroversial. Voluntary disclosure of a privileged document does not necessarily result in a waiver of privilege in all documents of the same category or all documents relating to all issues which the disclosed document touches. However, voluntary disclosure cannot be made in such a partial or selective manner that unfairness or misunderstanding may result. This is the principle of collateral waiver, but the courts have imposed certain constraints.

Waiver is limited to the transaction or issue in relation to which the disclosed material has been deployed, subject to the overriding requirement for fairness. The "transaction" is not the same as the subject matter of the document, and waiver does not apply to all documents which could be described as relevant to the issue. The purpose of the voluntary disclosure is an important consideration in the assessment of what constitutes the relevant "transaction".

In this case, the purpose of disclosing the early draft was to show that the language used by in a previous (non-privileged) email did not reflect the appellant's approach. Morris J accepted that that was the purpose of disclosure, but concluded that the relevant "transaction" extended to all emails and internal discussions.

Hickinbottom LJ found the the judge had erred in that regard. The purpose and nature of the voluntary disclosure was crucial. The relevant transaction was restricted to the disclosed email itself and fairness did not require more. Accordingly, if the documents had been privileged, the appellant would not have been found to waive privilege as a result of the disclosure.