When is talking to your lawyer not a privilege? CAA v Jet2 and RBI v ACE & Ashurst

The answer (in 1881) was: “This subject is always a difficult one”¹ Quoting from that judgment in 2020, the Court of Appeal observed: “the subject has not become any more straightforward²”. To non-lawyers, the concept of legal advice being privileged is straightforward: what you tell your lawyer (and vice versa) is protected from disclosure. So why is this subject so difficult? In this article, we look at the current position on legal advice privilege following the recent decisions of the Court of Appeal in The Civil Aviation Authority v Jet2.Com Ltd [2020] EWCA Civ 35 (the CAA and Jet2) and Raiffeisen Bank International AG (RBI) v Asia Coal Energy Ventures Ltd (ACE) and Ashurst [2020] EWCA Civ 11.

The CAA v Jet2

Background

Jet2 applied for Judicial Review of the CAA’s decision to publish certain correspondence in the Daily Mail. In the course of those proceedings, Jet2 applied for specific disclosure. In particular, it sought documents relating to the CAA’s letter to Jet2 defending its decision to publish. The CAA argued that earlier drafts of the letter and related internal discussions were privileged from disclosure on the grounds of legal advice privilege because in-house legal advisers at the CAA were involved in the discussions and advised on the drafts. The three central questions on appeal were:

1. Must a communication have the dominant purpose of seeking or giving legal advice for legal advice privilege (LAP) to apply?
2. How do you determine LAP where lawyers and non-lawyers are copied into the same email?
3. How do you determine the extent to which LAP has been waived in documents by the voluntary disclosure of related privileged documents?

The dominant purpose test

The Court of Appeal identified five principles from existing authority:

• LAP applies to external and in-house lawyers.
• LAP applies to any communication in which legal advice is contained, for example, a client passing on legal advice internally, or even externally in some circumstances.
• LAP only applies to communications for the purpose of obtaining or giving legal advice and not, for example, other professional or commercial advice.
• Material collected (by a client or lawyer on a client’s behalf) for the purposes of instructing lawyers to give advice is not covered by LAP. Further, following Three Rivers (No 5), LAP does not apply to communications between an employee of a corporation and the corporation’s lawyers unless that particular employee is tasked with seeking and receiving advice on behalf of the client.
• LAP will only apply if the communication is made in a legal context. Legal advice is widely defined and incorporates the concept of a “continuum of communications”³

While acknowledging that “the jurisprudence is far from straightforward and the authorities do not speak with a single, clear voice”, the Court of Appeal concluded that a sixth principle exists: LAP will only apply where the dominant purpose of the communication is to obtain or give legal advice.

In reaching its decision, the question of how otherwise to determine LAP where emails are sent to lawyers and non-lawyers featured highly. Most of the documents Jet2 wanted to see fell into this category (described in the case as “multi-addressee emails”).  The CAA acknowledged that the dominant purpose of most of those emails was not to seek legal advice and neither did the emails/attachments disclose the nature of legal advice being sought or given. Ultimately, the court concluded that the documents did not attract LAP but it is the guidance in relation to the analysis, particularly of multi-addressee emails, which is particularly interesting.

How do you categorise multi-addressee emails?

• The starting point is to focus on the document itself and its dominant purpose. Where a multi-addressee email is sent and one of the purposes is to seek advice/comments from a lawyer but another purpose is to seek commercial views, an analysis must be undertaken as to which was the dominant purpose.
• The extent to which a lawyer, in particular an in-house lawyer, is fulfilling a legal role in relation to the communication (as opposed to a strategic or commercial one) is relevant to the analysis but not determinative.
• The dominant purpose test will still apply if the lawyer replies to the multi-addressee email. However, because “legal advice” is widely defined and includes the concept of a “continuum of communications”, the court will be extremely reluctant to engage in a document-by-document analysis of a lawyer’s correspondence. The Court of Appeal suggested it would be: “difficult to conceive of many circumstances in which such an exercise could be other than arid and unnecessary”.
• In applying the dominant purpose test to multi-addressee emails, emails should be considered as separate, bilateral communications between each sender and recipient. However, it should make no difference whether the email is considered in its original multi-addressee form, or broken down into separate emails.
• Finally, in conducting the dominant purpose analysis, unless the legal and non-legal are so intermingled that severance is impossible, then a document or communication can be severed. The parts covered by LAP will be non-disclosable (and redactable) and the rest will be disclosable. The same analysis will apply to meetings and notes thereof.

Waiver

The only ground on which the Court of Appeal disagreed with Morris J, the judge at first instance, was in relation to waiver. While the documents were not found to be privileged in any event, the court ruled that the scope of the collateral waiver determined at first instance was too wide.

The starting point on the test for waiver is the “transaction test”. The court must ascertain the “transaction” (perhaps better described as the “issue”) in relation to which the voluntarily disclosed material has been deployed. The transaction or issue is not the same as the subject of the document. Any collateral waiver is then limited to documents related to that transaction or issue. The test is also subject to an overriding requirement for fairness, which takes into account the purpose and nature of the waiver. In this case, the court concluded the purpose of the disclosure was “modest” and there was no risk of unfairness by a partial or selective presentation of evidence. It would have limited the transaction/issue to the one document in which privilege was voluntarily waived and no further.

RBI v ACE and Ashurst

Just one week before the Jet2 decision, in the case of Raiffeisen Bank International AG (RBI) v Asia Coal Energy Ventures Ltd (ACE) & Ashurst [2020] EWCA Civ 11, the Court of Appeal made another ruling on LAP and waiver.

RBI sought disclosure of documents containing “irrevocable instructions” given to Ashurst by its client relating to the transfer of funds for a transaction between RBI and ACE. Express reference was made to these “irrevocable instructions” in a “confirmation” given by Ashurst to RBI upon which RBI relied when entering into the transaction with ACE. The Court of Appeal held that these instructions were subject to LAP. Before reaching its conclusion, the Court highlighted only two propositions relating to LAP from existing authority:

• The communication between lawyer and client must be confidential – it was held that a statement by a solicitor to a third party as to the instructions it has from its client does not automatically and without more give rise to a waiver of confidentiality in the documents which evidence or contain those instructions.
• The communication must be for the purpose of legal advice or must occur in a relevant legal context – it was held that as legal advisors of the funders to the transaction, Ashurst would have advised its client on the significance of the statement that its instructions were irrevocable and it was almost inevitable that Ashurst received its funds in this legal context.Those instructions formed part of a continuum of communications in a relevant legal context which was therefore privileged.

The court concluded that if those two conditions were satisfied, “communications between solicitor and client will be privileged notwithstanding that some of them may not themselves be concerned either to seek or to provide legal advice.”

As in Jet2, this ruling highlighted that the definition of LAP is broad and encompasses the “continuum of communications” principle.  In both decisions, the court also imposed a narrow interpretation on the extent of any collateral waiver of privilege. However, whilst in RBI the court applied LAP broadly, only a week later in Jet2, it imposed a further condition (namely the dominant purpose test) to be satisfied before a document will be deemed to attract LAP. 

How do these decisions affect disclosure?

Although in Jet2 the court suggested it would be an “arid and unnecessary” exercise to review a lawyer’s emails individually to ascertain their dominant purpose, it is easy to foresee arguments on disclosure resulting in just such an exercise.

It is also important to bear in mind that these decisions affect not only how privilege will be analysed in future, but also how existing disclosure has been characterised. In particular, in-house lawyers whose role includes providing legal and non-legal advice need to consider whether communications ostensibly privileged from disclosure by LAP can still retain that status in light of the Court of Appeal’s judgments.

Finally, it is worth remembering that many privilege issues can arise in the context of a voluntary waiver of privilege. While sometimes such a waiver is unavoidable, it is important for parties to be aware of the potential consequences of their decisions

¹ Wheeler v Le Marchant (1881) 17 Ch D 675

² The Civil Aviation Authority v Jet2.Com Ltd [2020] EWCA Civ 35

3 Balabel v Air India [1988] 1 Ch 317