Privilege for legal advice given by in-house legal adviser is upheld

United Kingdom

Given the uncertainty about the scope of legal advice privilege in an in-house context forecasted by many commentators in the wake of the Court of Appeal’s decision in Three Rivers DC v Governor and Company of the Bank of England (No 5) [2003] EWCA Civ 474, [2003] QB 1556, [2003] 3 WLR 667, the recent decision of University of Southampton v Kelly [2005] UKEAT 0574.05.1411 (14 November 2005) provides a welcome example of lower court Judges experiencing no such difficulty, applying well-established legal principles to uphold a claim of legal advice privilege in respect of advice provided by an in-house legal adviser to members of an organisation’s personnel department.

In brief, the facts are as follows. The Appellant University employed the Respondent, a US citizen as a lecturer on a fixed term contract, that term being based on the duration of the Respondent’s work permit. Afterwards, an issue arose as to whether the duration of that work permit was sufficient to cover the period of employment. The employee contended that, due to an administrative error, her passport had been stamped with a visa expressed to expire one year before the true expiry date. Upon the apparent expiry of the employee’s work permit, the University suspended her without pay and gave her a grace period of approximately one month in which to resolve the matter with the immigration authorities. Shortly thereafter, the University informed the employee that, following legal advice received from its in-house lawyer, it believed that her employment actually terminated upon the apparent expiry of her visa, when she ceased to have the right to work in the UK. The University’s in-house lawyer also disclosed the substance of that advice in pre-action correspondence with the employee’s union representative.

In the event, the employee successfully resolved the matter within the grace period, but the University declined to reinstate her. The lecturer filed a claim in the Employment Tribunal alleging breach of contract and unfair dismissal. In its response, the University submitted that (1) she had not been dismissed, but rather that her employment contract had terminated by operation of law; and (2), alternatively, if the University had dismissed her, that it had done so fairly. Subsequently, the Employment Tribunal granted an application made by the employee for disclosure of the legal advice referred to by the University. The University appealed.

The employee argued that the University’s in-house legal advice was incapable of attracting legal advice privilege since it wasn’t provided in the ‘normal legal advice context’ of advice being sought by the University from its in-house lawyer and being given by its in-house lawyer qua lawyer. Rather, it was submitted, the University was seeking ‘backing’ for a course of action already decided upon. It was further argued that if the advice was privileged, such privilege had nonetheless been waived because the University’s response to her claim necessarily relied on the advice.

Judge Richardson, sitting in the Employment Appeal Tribunal held that the advice provided by the University’s in-house lawyer fell “fairly and squarely” within the scope of legal advice privilege because the relevant communications were confidential, and were conducted between the University and its in-house lawyer in her professional capacity as a legal adviser for the purpose of obtaining legal advice. Importantly, the Judge rejected the submission that the advice could not attract privilege because it was sought in respect of a course of action that had apparently been decided upon already, and also rejected the employee’s submission that legal advice privilege was more restricted in an Employment Tribunal context.

As to whether the University waived privilege in its legal advice by its response to the employee’s claim, the Judge referred to the established authorities on waiver of privilege and pointed out that a waiver only occurs in the case of actual, not potential or even intended deployment of /or reliance upon the privileged material in Court. His Honour held that while the University may later set out, deploy or rely upon its legal advice in aid of its case, it had not yet done so and, accordingly, there had been no waiver at this stage. Indeed, the University’s response did not refer to any specific communication to which the putative waiver might attach.

Judge Richardson did, however, warn the University that the issue of waiver could well arise later if it decided to press its alternative case that it genuinely believed that the employee’s contract terminated by operation of law upon expiry of her visa (since it would be an offence to continue to employ her from that date). At that time, the University would not be permitted to ‘sit on the fence’: it would have to decide to either abandon that case and preserve privilege in the advice or to pursue that case and disclose the advice, without ‘cherry-picking’ its contents.