The Court of Appeal has given its judgment1in the appeal by Prudential Plc ("Prudential")
seeking judicial review in respect of the application of legal
professional privilege ("LPP") to advice on legal matters
relating to tax which had been obtained from their
Prudential's application arose in the context of notices
served by HMRC under section 20 of the Taxes Management Act 1970
requiring the production of documents. In an earlier briefing note
last October, we reviewed the High Court judgment which rejected
Prudential's application. The Law Society and the Institute of
Chartered Accountants in England and Wales ("ICAEW")
intervened in the proceedings.
Before the Court of Appeal, Prudential argued that it was really
the function of the adviser that mattered, rather than its status.
Giving the leading judgment in the Court of Appeal, Lloyd LJ
rejected that argument and found that status as well as function
was necessary to LPP. He agreed with Charles J in the court below
that the courts are bound by precedent which has established that
the legal advice covered by LPP is restricted to advice received
from lawyers and does not extend to advice on legal matters that is
received from others. Lloyd LJ noted that without the requirement
that the advice is given by a qualified lawyer, there would be
considerable uncertainty as to the scope of the rule at common law
given that there were numerous other types of adviser that may give
professional advice on matters of law (such as pensions
Prudential also argued that the protection provided by the Human
Rights Act 1998 against interference with the privacy of a
person's communications with his lawyer extends to
communications with others who give legal advice. Lloyd LJ
dismissed that argument, finding that the relevant article of the
European Convention on Human Rights (article 8) confers a qualified
right which need not be extended to other communications, and that
a rule limiting the scope of LPP was not only in accordance with
law but can properly be regarded as necessary in a democratic
society, taking into account the rights and freedoms of persons
other than the individual in question.
Significantly, Lloyd LJ made clear that, if there is to be any
extension to LPP so that it would apply to advice given by
non-lawyers, then this is "not a proper task for the courts to
undertake" and could only be undertaken by Parliament. Lloyd
LJ found nothing in the legislation so far enacted that would
permit the courts to extend the privilege as Prudential wished.
In the High Court, Charles J had expressed sympathy with the
idea that a "level playing field on the disclosure of legal
advice to clients of lawyers and accountants .... should be
created"2. Lloyd LJ stated that he did not share
this view, reiterating that the issue was not a matter for the
courts. Accordingly, the Court of Appeal left LPP intact and did
not take up the possibility suggested by Charles J of a reduction
in the scope of LPP in order to achieve parity between legal advice
given by lawyers and accountants.
Lloyd LJ's ruling will disappoint non-lawyer advisers who
may have hoped that the Court of Appeal would prepare the ground
for the Supreme Court to provide the level playing field referred
to by Charles J.
The implication of Lloyd LJ's ruling is that the accountancy
sector will need to focus its attention on obtaining an extension
to LPP by petitioning Parliament for legislative reform. The ICAEW
has already indicated that it intends to pursue its cause at
Parliament. It seems likely that this will necessarily be a
long-term project. In the current economic climate, it will not be
easy to persuade politicians to legislate for an extension of LPP
which will protect a wider range of communications from production
to HMRC and other government bodies.
There must therefore be a prospect that Prudential will appeal
to the Supreme Court, in the hope of finding a more receptive
hearing of issues which raise matters of public policy.
1 Prudential Plc v Special Commissioners of Income Tax
and another  EWCA Civ 1094
2 Paragraph 73  EWHC 2494
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