UK: Court Of Appeal Upholds Dominant Purpose Test For Legal Advice Privilege, And Considers Its Application To Multi-Addressee Communications

What has happened?

In The Civil Aviation Authority v R (on the application of Jet2.com Limited)¹, the Court of Appeal, upholding the High Court decision², has affirmed that legal advice privilege (LAP) is subject to a dominant purpose test. This is a significant decision giving clarity to an issue on which case law has, to date, not spoken with one clear voice.

In coming to its conclusion, the court had to consider the application of LAP to multi-addressee communications, an issue which is overdue for consideration, given that a majority of communications between lawyers and their client contacts are now sent via email, and are often copied to numerous parties at the same time. 

The decision also reminds us that, in a world where lawyers are consulted as much for their commercial opinion as well as their legal advice, privilege will only attach when lawyers are acting in a legal context.  It is of particular relevance to in-house lawyers, whose role often involves a mixture of the two.

The Court of Appeal in this case repeated obiter comments made by the same court in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited ("SFO v ENRC")³ – the judges would, if precedent allowed, decline to follow the narrow definition of "client" set out in Three Rivers Council v The Governor and Company of the Bank of England (No. 5) ("Three Rivers (No. 5)")⁴ .  This would bring the law into line with other common law jurisdictions such as Hong Kong, where the dominant purpose test applies to LAP, and where the narrow definition of "client" has been rejected. 

The Law Society intervened in the case, with their counsel making submissions against the need for a dominant purpose test in an attempt to prevent any further curtailing of the LAP principle.  In November 2019, The Law Society published guidance on privilege, with the caveat that it would be revisiting that guidance once this litigation had concluded.  At the time of writing, that guidance is awaited.

The Background

The Civil Aviation Authority ("CAA") was a strong proponent of a new alternative dispute resolution scheme that had been introduced for airline passenger complaints.  In seeking to encourage full participation of all airlines in the new scheme, the CAA published a press release in December 2017 criticising those that had opted not to participate in the scheme, with a particular focus on Jet2.com Limited's ("Jet2") decision.

In January 2018, Jet2 wrote to the CAA alleging that the comments in the press release were false and misleading, and explaining Jet2's decision not to participate in the new scheme.  The CAA responded by letter in February 2018 criticising Jet2 further.  The CAA then provided the correspondence to the press, and quotations appeared in two newspaper articles, which repeated criticisms of Jet2.

Jet2 began judicial review proceedings against the CAA challenging the decision to publish the press release and the subsequent correspondence.

Within those proceedings, Jet2 sought specific disclosure of various categories of documents, including all drafts of the February 2018 letter and all records of any internal CAA discussions concerning those drafts. That brought into focus a number of internal CAA emails regarding the drafts, in which in-house CAA lawyers and other CAA executives had been involved. The CAA claimed LAP over these emails.

At first instance, Mr Justice Morris held that LAP did not apply. The CAA appealed, but the Court of Appeal dismissed the appeal. The Court of Appeal's decision focuses on the correct way in which to determine whether those emails were properly subject to LAP.    

The issues before the court

The court was tasked with considering two main issues:

What is LAP?

The original formulation of LAP dates back to the 1800s.  In short, LAP attaches to all communications made in confidence between lawyers and their clients for the purpose of giving or obtaining legal advice, even at a stage when litigation is not in contemplation.

Leaving aside the question of dominant purpose for now, the judgment of Lord Justice Hickinbottom in the present case provides helpful explanations and reminders about the other key components of LAP:

• Who is the lawyer? LAP applies to communications not only with lawyers in private practice, but also with in-house lawyers.

• Who is the client? Where the relevant client is a corporation, the "client" for LAP purposes is restricted only to those employees who are tasked with seeking and receiving legal advice on behalf of the company.  This controversial principle derives from the Court of Appeal decision in Three Rivers (No. 5), but it has attracted significant criticism in recent years. In SFO v ENRC, a case in which this firm successfully represented ENRC, the Court of Appeal judges indicated on an obiter basis, that if it had been open for them to depart from Three Rivers (No. 5) on this issue, they would have done so.  In the present case, Hickinbottom LJ agreed with his colleagues in SFO v ENRC, confirming that if it had been in his power, he too would have been disinclined to follow Three Rivers (No. 5).  Like the rest of the legal community, the Court of Appeal clearly has appetite to have this issue resolved by the Supreme Court.  Until that opportunity arises, this limb of the test for LAP remains out of step with general opinion and many other common law jurisdictions, including Hong Kong⁵.

• What constitutes a communication?   The law takes a flexible and realistic approach to the passing on of legal advice; LAP extends beyond the strict interpretation of the term "communication".  In particular LAP can apply to:

• What constitutes legal advice?   The communication must be made in a legal context, but otherwise "legal advice" is widely defined.

Issue one - the dominant purpose of seeking or giving legal advice

The Court of Appeal has confirmed that for LAP to apply, the relevant document or communication must have come into existence for the dominant purpose of seeking or giving legal advice.

In coming to that conclusion, the Court of Appeal analysed historic and foreign case law.  In summary:

• Hickinbottom LJ began with the case of Waugh v British Railways Board⁸.  Although this case was decided on the basis that litigation privilege applied, none of their Lordships suggested that there was a distinction between litigation privilege and LAP in respect of the dominant purpose test. 

• Although the judgment in Three Rivers (No. 5) was "not as clear as it might have been", Hickinbottom LJ concluded that the judgment simply assumed that the relevant test is one of dominant purpose, since there are references throughout to "dominant purpose" without adverse comment.

• Similarly, in Three Rivers Council v The Governor and Company of the Bank of England (No 6)⁹("Three Rivers (No 6)"), the House of Lords appeared to assume that the dominant purpose test applied to LAP and, again, there are numerous references to the test without adverse comment.  Hickinbottom LJ found it inconceivable that the House of Lords would make such references without adverse comment unless it considered them correct.

• In United States of America v Philip Morris Inc¹⁰ the High Court seems to have considered that Three Rivers (No. 5) found that it was a condition of LAP that the relevant communications "must be for the dominant purpose of obtaining or giving legal advice" - which the Court of Appeal confirmed without adverse comment¹¹.

• Hickinbottom LJ also took note of the position in Australia, Hong Kong and Singapore, in which the dominant purpose test applies to LAP, and suggested that this is a legal area in which there is advantage in the common law adopting similar principles across jurisdictions.

In its submissions, the CAA relied on the recent case of SFO v ENRC, in which the Court of Appeal said that "it is hard to see why the suggested additional qualification [of dominant purpose] is necessary, when the privilege can, by definition, only be claimed when legal advice is being sought or given."  The court considered such an argument to be "tautologous".  Hickinbottom LJ rejected this argument on the following bases:

• The observations made by the court in SFO v ENRC were clearly obiter and the court expressly indicated that it was inappropriate to reach a conclusion on that particular issue in that case.

• The court in SFO v ENRC did not consider any of the authorities on the issue, which detracts from the persuasive weight of its observations.

• The argument that the dominant purpose test in LAP would be tautologous could apply equally to litigation privilege, and there is no relevant difference between the two limbs of legal professional privilege to justify a different approach in each. 

• Finally, the court in SFO v ENRC did not appear to have considered "mixed" documents created partly for legal advice, and partly for some other reason.

Issue two - multi-addressee communications

Most of the documents in issue in this case were emails sent to a number of addressees, who were a mix of lawyers and non-lawyers.  Hickinbottom LJ laid out his approach to ascertaining the application of LAP to such multi-addressee communications, bearing in mind all the component parts of LAP set out above.  His analysis can be distilled as follows:

• His preferred approach is that multi-addressee emails should be considered as separate bilateral communications between the sender and each recipient (although he did add that, whether considered as a whole or as separate communications to each recipient, he doubted whether in many cases there would be any difference in outcome). 

• Once separated, he suggested considering whether, if the email were sent to the lawyer alone, it would attract LAP.  If the email contains legal advice, or forms part of the continuum of communications in a relevant legal context, LAP will likely apply.  If not, then the question of whether any of the communications to non-lawyers attracts LAP falls away.

• If LAP applies to the lawyer's email, the question arises as to whether the emails to the non-lawyers attract LAP – this requires analysis of the dominant purpose of the communication:

• Hickinbottom LJ noted that, where there are multiple identifiable purposes to a communication "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".  If, however, the legal and non-legal purposes can be identified and separated, then the document or communication can be redacted prior to disclosure.

• The same principles set out above apply to notes of meetings. Legal advice requested and/or given at a meeting would, of course, be privileged; but the mere presence of a lawyer, perhaps only on the off-chance that legal input might be required, is insufficient to render the whole meeting privileged. If the dominant purpose of the meeting is to obtain legal advice, 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 (and any notes appropriately redacted).

• The judge gave the issue of emails and attachments brief consideration.  It is well established that a document which is not privileged does not become privileged simply because it is sent to a lawyer, even if it is sent as part of a request for legal advice¹².  Therefore, while an email and attachment can be regarded as a single communication, separate and discrete consideration will need to be given to each.

A word on voluntary disclosure

Although Hickinbottom LJ judge found the documents in issue were not privileged, like Morris J at first instance, he went on to consider the academic point of whether, if they had been privileged, LAP had been waived by the CAA because of its disclosure of an internal email.

Although voluntary disclosure of a privileged document may result in the waiver of privilege in other material, it does not necessarily have the result that privilege is waived in all documents of the same category or relating to the issues on which the disclosed document touches.  That said, voluntary disclosure cannot be made in such a partial or selective manner that unfairness or misunderstanding may result.  Collateral waiver of privilege allows for documents and other material that would otherwise be non-disclosable on public interest grounds. 

Hickinbottom LJ explained that the starting point is to ascertain the issue in relation to which the voluntarily disclosed material has been disclosed – this is known as the "transaction test". Waiver is limited to documents relating to that "transaction" subject to an overriding requirement for fairness.  The "transaction" is not the same as the subject matter of the disclosed document, and waiver does not apply to all documents which could be described as "relevant" to the issue (in the usual disclosure sense).  Ultimately, it is the purpose of voluntary disclosure which is an important consideration in the assessment of what constitutes the relevant "transaction", and hence the extent of any collateral waiver.

In the present case, the CAA explained that it had disclosed the particular email to demonstrate a discrete point about the language used by its CEO.  At first instance, Morris J concluded that the relevant "transaction" extended to all emails and internal discussions that were relevant to the issues in the content of that email – namely the drafting of the February 2018 letter. 

However, Hickinbottom LJ found that Morris J was wrong to find that such a modest voluntary disclosure should result in the collateral waiver (and forced disclosure by the CAA) of all internal communications relating to the drafting of the 1 February 2018 letter, including those that reveal legal advice from the CAA's lawyers – nor was that what fairness required. 

Practical points

What can be learnt from this decision?

• The confirmation that LAP is subject to a dominant purpose test does, on one view, impose a further restriction on the scope of LAP.  However, such concern might be somewhat alleviated by the numerous comments in the judgment that reaffirm the broad scope of other elements of the test, and the additional support from Hickinbottom LJ for the reversal of the narrow definition of "client" in Three Rivers (No 5).  In view of this, it's possible that the real and practical impact of this case for litigants will be restricted to the context of multi-addressee communications.

• The judgment is a useful reminder that merely copying a lawyer into a communication, or having a lawyer present at a meeting, is not sufficient to attract LAP.  Nor will a document created before lawyers are involved become privileged simply because it is subsequently sent to a lawyer for legal advice. 

• Often, distinguishing the legal context and dominant purpose of a communication will be hardest for in-house lawyers whose role is even more likely to include dealing with commercial, as well as legal, issues.  It's therefore important for lawyers and those instructing them to consider why a lawyer is copied into a communication and the reason for sending that communication.

• Particular care should be taken with emails, where there is always a tendency to copy more and more people. In the case of multi-addressee emails involving legal and non-legal individuals, care should be taken to restrict circulation – at least for now – to those in the (narrow) client team, and the content of the communications should be confined to legal advice (in its broad sense) – and marked privileged. Separate email communications should be used for the discussion of anything else and those emails should be drafted carefully, with a mind to possible future disclosure. 

• Think carefully before voluntarily disclosing privileged material. Make it clear for what purpose it is being disclosed. The narrower and more self-contained the purpose, the less likely it is to be challenged as giving rise to collateral waiver.

• In larger-scale projects, we have found it helpful to draw up "rules of the road" for email communications, to which lawyers and non-lawyers must adhere.   If in doubt, clients are advised to pick up the phone to lawyers, and to discuss matters before committing thoughts to writing.

Footnotes

1 [2020] EWCA Civ 35

2 [2018] EWHC 3364 (Admin)

3 [2018] EWCA Civ 2006

4 [2003] EWCA Civ 474

5 Citic Pacific Ltd v Secretary for Justice [2016] 1 HKC 157

6 Raiffeisen Bank International AG v Asia Coal Energy  Ventures Limited and Ashurst LLP [2020] EWCA Civ 11

7 Balabel v Air India [1988] Ch 317

8 [1980] AC 52

9 [2004] UKHL 48

10 [2003] EWHC 3028 (Comm)

11 United States of America v Philip Morris Inc [2003] EWCA Civ 33

12 Ventouris v Mountain [1991] 1 WLR 607

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.