Prof Jane Jarman, NLS https://www.ntu.ac.uk/staff-profiles/law/jane-jarman
The iniquity exception to legal professional privilege has always been something of a trial to apply (pun almost intended). Firstly, it is an exception which, as discussed below, is not really an exception. Secondly, even if it is an exception, it is fiendish to apply on a practical basis, especially for some lone solicitor or trainee, trudging through a disclosure exercise with nothing more to sustain them than a Deliveroo pizza and a copy of the White Book.
However, help is now at hand since the decision of the Court of Appeal in Karam Salah Al Din Awni Al Sadeq v Dechert LLP [2024] EWCA Civ 28, which now provides a useful summary of the case law and more than a nod to the practical difficulties associated with the disclosure exercise, especially as it relates to the vexed question of “the iniquity exception.”
What is the Iniquity Exception?
The Iniquity Exception is not a film from the 1970s (that was the Andromeda Strain). However, a link to a form of infection or contagion is not without some merit.
Let’s start with the first principles of legal professional privilege, a very special type of confidentiality.
The doctrine of legal professional privilege is, according to the celebrated jurist Lord Bingham “rooted in the public interest” and its protection is entirely consistent with the proper engagement of a lawyer. As every law student is told, it has two main branches from the same tree. The first, legal advice privilege, applies to communications passing between a lawyer and client for the sole and dominant purpose of the giving or receiving of legal advice. This “continuum of communication” also extends to any documents which would reveal the contents, or even the general tenor of the advice. The second branch, its close cousin litigation privilege, applies to communications between a lawyer and client or with third parties which are for the sole or dominant purpose of litigation, whether presently underway or contemplated.
Privilege has the status of a fundamental human right and is one protected by Article 8 of the European Convention of Human Rights. Every individual should have the right to speak to their lawyer in confidence and in privileged circumstances, whatever they have done, to obtain advice as to their legal position
So far, so laudable.
However, the iniquity exception is the potential Andromeda Strain at the heart of the solicitor and client engagement because privilege does not apply if a document or exchange comes into being because of a fraud, a crime or other “iniquity”. It is not really an exception to the rule; it is more a case that, like rain to a waterproof coat, privilege cannot adhere. In the game of “alive, dead or never alive” iniquity is very much in the “never alive” camp.
The term “iniquity” in itself can seem quaint, but the root of the Latin word iniquitas meaning unfair or uneven points to the essence of its operation. Latin still has its place. It is conduct which leads as to an abuse of the lawyer and client relationship. Wider in ambit than that of fraud or crime, it extends, as outlined in Al Sadeq v Dechert, “to fraud or other equivalent underhand conduct which is in breach of a duty of good faith or
contrary to public policy or the interests of justice.”
One of the most difficult aspects of the iniquity exception is that although a lawyer could be involved in or have knowledge of the iniquity on some occasions, often they may well be oblivious to it. Only the client has knowledge of the nefarious purpose. Just as privilege is the right of the client, the iniquitous behaviour of the client is an abuse of the lawyer and client relationship even though the lawyer has no knowledge of it, and so repels the protection of legal professional privilege.
Equally, advice from a lawyer created for the purpose of, or furthering an iniquity would engage the exception. In the case of X v Y Limited [2018] UKEAT/0261/17 the issue was whether a potential “retrofit” of selection criteria for a redundancy package to enable the removal of a troublesome employee engaged the iniquity exception. This advice, that a route could be taken that was unlawful, bring the communication outside the normal ambit of solicitor and client engagement. The advice fell into the category of iniquity because it was contrary to public policy; it concerned tactics as to how do something unlawful which could also, potentially, have resulted in a subsequent Employment Tribunal being misled. In such circumstances privilege simply cannot “stick”. It is repelled as a contagion, a virus, and rightly so.
However, problem is that iniquity, by its very nature, is hidden. Apart from the Deliveroo pizza, is there any help for the team undertaking the disclosure exercise short of a PCR test for the Iniquity Exception?
Firstly, the judiciary has been aware, for some time, that the iniquity principle is very difficult to apply in practice. It is very easy to get it “wrong”, simply because of a lack of information. The position in X v Y Limited would have remained hidden but for an email. It is hard to see the position in three dimensions. In Al Sadeq v Dechert the Court commented in paragraph 71 that
“The party, or legal adviser or court is therefore usually required to decide the issue on a provisional basis which may turn out to be wrong. If the iniquity is treated as sufficiently established to require disclosure, the communication will be made available; if it should subsequently be held, or appear, that the iniquity did not take place, the privilege will have been wrongly invaded in a way which cannot be reversed. If, on the other hand, the iniquity is not treated as sufficiently established but does in fact exist, the party to whom disclosure ought to have been made will have been deprived of relevant evidence to which it was entitled in advancing its case, with the consequent adverse impact on its prospects of success.”
If the lawyer gets the exercise wrong, privacy is invaded, or in the alternative, evidence is excluded which would otherwise be relevant. Lots of tests have been suggested in the past to grapple with the iniquity exception (as summarised in the judgment) but Popplewell LJ settled for a balance of probabilities test.
“…The test should therefore be whether the iniquity exists on the balance of probabilities on the material available to the decision maker, whether party, legal adviser or court, at the time the decision is made, save in exceptional circumstances. That may require a reconsideration, and a different decision, should further material become available, which may occur after the initial decision is taken when conducting standard disclosure or a decision by the court.”
There is a level of “conditionality” in any assessment of iniquity. When Hamlet says, “There is nothing good or bad, but thinking makes it so” he could equally have had in mind the disclosure exercise and those pizza boxes. So, what is the legal test to be applied in whether the iniquity does exist in the first place? In the Court’s view,
“Where there is a prima face case of iniquity which engages the exception, there is no privilege in documents or communications brought into existence as part of or in furtherance of the iniquity. These are two categories, either of which is sufficient.”
Is this the “test which is as simple and practicable as possible for parties and their legal advisers conducting the disclosure exercise in litigation”? I suppose the answer has to be yes, at least in part. It is an area beset with potholes and challenge to any claim to privilege is a bit of a sport, even now. However, it does provide a useful anchor point for those engaged in the disclosure process and some comfort that they do not have to resort to extreme measures when deciding to disclose or not to disclose.
I have one small piece of advice of my own. It is practical, but also a little broad brush (perhaps a little too broad), but it might help the beleaguered solicitor and trainee.
Iniquity is not technically an exception, but it should be exceptional. It is rare, so do not see shadows everywhere. Look at the Terms of Engagement between the lawyer and client. If the advice is not would look odd within the terms of the retainer and looks like an abuse of the lawyer and client relationship, iniquity is probably in play. A liberal slice of “can you hear yourself right now” as a reality check of any “tricksy” advice also helpful.
At least there is a test now in Al Sadeq. Its practical application in a niche area remains to be seen. I suspect that the lawyers musing on such issues will still need ample supplies of pizza.
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