Out-Law News | 18 Mar 2019 | 11:31 am | 6 min. read
Significantly, Mr Justice Morris' decisions in the case also suggest that the 'dominant purpose' test which applies to documents covered by litigation privilege should also apply to documents covered by legal advice privilege. The taking of legal advice must therefore be not just one of the purposes but the dominant purpose of the creation of a document in order for legal advice privilege to apply.
While this is unlikely to be relevant in the case of communications with external lawyers, the point may be relevant where in-house legal teams play a commercial or operational role in the business, as well as a legal one.
Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com, said: "There has been debate about whether there is a 'dominant purpose' test in the context of legal advice privilege, as well as in litigation privilege. This is not just an academic point, particularly for in-house lawyers, who may perform both legal and executive roles."
"Where an in-house lawyer is consulted on an issue which has both legal and commercial angles, the question will arise whether the purpose of them being consulted is principally to obtain their legal advice or principally for commercial input. If the latter is true, legal advice privilege will not apply. Businesses looking to their in-house lawyers for legal advice should make this absolutely clear, and in-house lawyers should clarify the nature of their instructions if in any doubt. In some circumstances, it may be so important that advice about sensitive matters is clothed with privilege that the uncertainty which can arise due to in-house lawyers' dual role is not worth the risk, and external lawyers should be appointed."
"It will be interesting to see if the Court of Appeal revisits this point. In last year's ENRC decision, the Court of Appeal did not consider that a 'dominant purpose' test was necessary in the context of legal advice privilege, although it did not have to finally determine the issue. For now, however, businesses should assume that such a test applies, and take care," he said.
The case arose in connection with the CAA's new alternative dispute resolution (ADR) scheme for passenger complaints. Ahead of a review of the scheme, it wrote to a number of airlines which had chosen not to participate, including Jet2. The CAA published a press release alongside the review of the ADR scheme criticising those airlines, and Jet2 in particular. Jet2 complained, and the CAA responded with further criticism (the 1 February letter). Details of the correspondence between Jet2 and the CAA later appeared in two articles in the Daily Mail.
Jet2 began judicial review proceedings against the CAA, claiming that it had been treated differently from the other airlines and that the CAA had acted for an unlawful purpose by publishing the press release and sharing the correspondence with the Daily Mail. As the CAA is a public body, it disclosed certain documents as part of the proceedings, including a draft of the 1 February letter. Jet2 then sought disclosure of further drafts and email discussions about the drafts. The CAA claimed that it did not have to disclose these as they were protected by legal advice privilege, which applies to confidential communications between a client and its lawyer for the purposes of obtaining legal advice. The CAA's in-house lawyers said they had been involved in internal discussions and had given advice on drafts of the letter.
In his first ruling in the case, published in December, Mr Justice Morris ruled that all drafts of the 1 February letter and internal discussion of those drafts should in principle be disclosed, subject to the issue of privilege. Drafts created after the CAA's in-house lawyers were consulted on the terms might be protected by legal advice privilege, but only if drafted by the lawyers or for the dominant purpose of obtaining legal advice. The judge considered that the in-house lawyers had been instructed to give legal, not just commercial, advice and therefore the communications with them would be privileged, as would any communications between non-lawyer executives which might disclose the legal advice. However, drafts of the 1 February letter created before the in-house lawyers got involved were not protected by privilege, and would therefore have to be disclosed.
The judge also considered the position of emails sent to multiple addressees, some of whom are lawyers and some of whom are not. He said: "if the dominant purpose of the email is to seek advice from the lawyer and others are copied in for information only, then the email is privileged, regardless of who it is sent to. If on the other hand, the dominant purpose of the email is to seek commercial views, and the lawyer is 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, is not privileged. Further, if sent to the non-lawyer for a commercial comment, but sent to the lawyer for legal advice, then, in my judgment, the email is not protected by privilege, unless it or the non-lawyer’s response discloses or might disclose the nature of the legal advice sought and given."
Mr Justice Morris has now delivered a further ruling in the case, dealing with some outstanding matters and considering the CAA's application for permission to appeal. In particular, his second ruling considers, and rejects, the CAA's contention that there is no 'dominant purpose' test for legal advice privilege; and the CAA's criticism of his analysis of how privilege works in the context of multi-addressee communications.
The judge said that he was "unpersuaded that it is arguable that there is no dominant purpose test for legal advice privilege". Comments made to the contrary by the Court of Appeal in the ENRC case, which did not form part of the ultimate decision in that case, did not "undermine" his conclusions here, as the Court of Appeal was not considering a scenario in which the documents over which privilege was being claimed had also been sent to additional, non-legal recipients.
Alan Sheeley said that the decisions highlighted "how important it is to pause before sending an email to a long list of recipients".
"Wide circulation risks losing confidentiality in the material being circulated, which means privilege is lost," he said. "These decisions also draw out the additional point that if an email is sent to both lawyers and non-lawyers, a question will arise about its dominant purpose. If the dominant purpose of an email is to seek advice from a lawyer, with others copied in for information only, legal advice privilege is likely to apply. If, however, the dominant purpose of the email is to seek commercial views, then copying a lawyer in will not protect the email from disclosure, even if the reason for copying the lawyer is to obtain his legal advice."
"The potential for dispute about the dominant purpose of an email emphasises how important it is always to consider the purpose of any communication and document this. It may well be simplest to keep legal and genuinely commercial exchanges separate," he said.
The case also reiterated the point that 'raw materials', such as draft letters, which are not created for the purpose of obtaining legal advice, will not be privileged unless litigation privilege applies, Sheeley said.
"Subsequently sending them to lawyers to advise does not make them privileged," he said.
"Indeed, even if it is known at the time of creation that in due course legal advice will be sought on them, privilege will not apply to the documents. In this case, this led the judge to conclude that any drafts of the 1 February letter created before the CAA’s in-house lawyers were involved were not privileged. This illustrates starkly how important it is to involve lawyers at an early stage," he said.
Mr Justice Morris also considered in his second ruling a point which he had raised in his first judgment, namely whether CAA had waived any privilege in internal discussions relating to the 1 February letter by disclosing one email in that chain of communications. The judge found that although a party could choose to disclose some but not all of the documents falling within a privileged category, it was not permitted to do so "in such a partial or selective manner that unfairness or misunderstanding may result". In this case, fairness required disclosure of "the entire chain of discussion, which goes to show 'the approach taken by the CAA'," he said.
"To the extent that chain comprises documents which might otherwise be covered by legal advice privilege, because of the waiver, fairness requires further disclosure. I think it would be misleading not to require disclosure of further material which goes to that purpose: namely to show the CAA's approach overall," he said.