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IFA confidential

Legal professional privilege is the name given to a rule of law that has its origins in the 16th century. The rule relates to the protection the law gives to communications between a lawyer and his client.

The rule is that such communications are absolutely protected from disclosure. The protection is owed to the client – it is for his benefit and it belongs to him.

The purpose of the rule is to make it possible for a citizen to obtain legal advice in complete confidence. The client can be totally frank with the lawyer, who can be totally frank in return and in the advice given.

Both client and lawyer can be sure no one can compel them to disclose what has passed between them. But because the privilege belongs to the client, he can, if he deems it appropriate, disclose the advice. However, he cannot be compelled to do so.

This right to legal advice in complete confidence is one of the pillars of the liberty of citizens and of the administration of justice. In 1995, the Lord Chief Justice, Lord Taylor, said that the principle “is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth.
The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is a fundamental condition on which the administration of justice as a whole rests”.

Indeed, Lord Hoffmann in the House of Lords’ decision in the case of R (Morgan Grenfell & Co) v Special Commissioner of Income Tax in 2002 described this as a “fundamental human right long established in the common law. It is the necessary corollary of the right of any person to obtain skilled advice about the law. Such advice cannot be effectively obtained unless the client is able to put all the facts before the adviser without fear that they may afterwards be disclosed and used to his prejudice”. He went on to point out that the European Court of Human Rights has held that that right is a fundamental human right and is part of the right to privacy guaranteed by Article 8 of the Convention on Human Rights.

A man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. Legal professional privilege is a fundamental condition on which the administration of justice as a whole rests

In another House of Lords’ case in 2005, Three Rivers District Council v Bank of England, Lord Scott said: “If a communication or document qualifies for legal professional privilege, the privilege is absolute. It cannot be overridden by some supposedly greater public interest.”

What are the limits of this absolute privilege? First, the rule applies only to comm-unications between a client and his or her lawyer, not to communications between people in other situations, even if they are confidential.

For example, comm-unications between a patient and his or her doctor are confidential. So a doctor will not reveal what has passed between him and the patient, or disclose his notes to a third person without the patient’s consent. That is why life insurance companies always get the consent of the life to be assured to obtaining a medical report for the purposes of underwriting the risk.

But if it is relevant to the issue in a legal action, disclosure can be compelled of the doctor’s notes and reports.

Second, the right must not be abused. It cannot be used as a cloak to hide what passes between a lawyer and the client if they are engaged in a criminal enterprise or for the furtherance of crime – it is no part of a lawyer’s job to take part in, or to assist a client to commit, a crime.

Third, the right can be overridden by statute. That follows from the fact that Parliament is the supreme law maker. But the courts will be vigilant to ensure that any statutory limitation will be strictly construed to keep it as narrow as possible.

In the Morgan Grenfell case referred to above, Morgan Grenfell (MG) had developed and marketed a tax-avoidance scheme. MG was open about it and how it worked. But it was challenged by the Revenue.

The tax inspector asked to see the documents relating to the advice MG had obtained from leading counsel and solicitors about the efficacy of the scheme. MG objected.

One of the grounds for the objection was that those documents were protected from disclosure by legal professional privilege. The tax inspector claimed that he had power under the Taxes Management Act 1970 to compel disclosure because that act gave him power to require a person “to deliver to him such documents as are in the person’s possession or power and as (in the inspector’s reasonable opinion) contain, or may contain, information relevant to any tax liability”.

The case was fought all the way to the House of Lords, where it was decided that the words in the act on which the Revenue relied were not wide enough or clear enough to override the absolute privilege claimed by MG.

Lord Hoffmann said: “The courts will ordinarily construe general words in a statute, although literally capable of having some startling or unreasonable consequence, such as overriding fundamental legal rights, as not having been intended to do so. An intention to override such rights must be expressly stated or appear by necessary implication”. The result was that the inspector’s notice requiring the production of the legal advice was quashed by the House of Lords.

It follows from the decision in the Morgan Grenfell case that the statutory power of public officials to require production of information or documents would not extend to communications between a citizen and his lawyer in the absence of express words or necessary implication. But, fortunately, the question does not arise in relation to the FSA’s powers under the Financial Services and Markets Act 2000 because section 413 of that act expressly preserves the right to refuse to disclose communications of that sort.

Section 413 says “a person may not be required to produce, disclose or permit the inspection of protected items”. And “protected items” include “communications between a professional legal adviser and his client” in connection with the giving of legal advice.

It is interesting that the section expressly says that a communication is not protected “if it is held with the intention of furthering a criminal purpose”, echoing the limitation referred to above.

The FSA has wide powers to compel production of information, as extensive as those relied on by the tax inspector in the Morgan Grenfell case referred to above.
It is of great comfort to those subject to the authority of the FSA that it is under a statutory duty to accept it is not entitled to see communications subject to legal professional privilege.

In any event, the general law is clear, as illustrated by the Morgan Grenfell case, communications between citizens and lawyers are absolutely protected from disclosure, unless the citizen in question agrees.

Peter Hamilton is a barrister specialising in financial services at 4 Pump Court


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