On the 23rd of January 2013, the Supreme Court handed down judgement in R (on the application of Prudential plc and another) (Appellants) v Special Commissioner of Income Tax and another (Respondents) which addressed the scope of legal advice privilege.
In Three Rivers (No 6)  1 AC 610, the House of Lords stated that legal advice privilege and litigation privilege are two distinct ‘sub-heads’ of Legal Professional Privilege or ‘LPP’. LPP provides protection for parties to litigation against having to disclose certain material. Litigation privilege protects any document which has been created principally for use in litigation. Legal advice privilege protects any material offering legal advice, whether it had been created principally for litigation or not.
HMRC sought disclosure of documents containing the details of transactions made by Prudential in accordance with a tax avoidance scheme, which had been devised by Price Waterhouse Coopers in 2004. The scheme itself had been disclosed by PWC to HMRC, in accordance with part 7 of the Finance Act 2004. Prudential disclosed many of the documents requested by HMRC but refused to disclose a set of documents which, they said, attracted legal advice privilege. HMRC obtained authorisation from the Special Commissioner to issue notices requiring disclosure of these documents. These notices were issued to Prudential who then applied for Judicial Review to challenge the validity of the notices. The High Court refused the application and a subsequent appeal to the Court of Appeal failed.
Before the Supreme Court, Counsel for Prudential argued that legal advice privilege was a common law right, created by Judges, which could be applied and extended in order to accord with the principles underlying that right. The rule of law required that the right should apply to legal advice obtained from any professional, irrespective of whether or not they were a lawyer.
Counsel for the Special Commissioner argued that parliament had legislated on the assumption that legal advice privilege was restricted to communications with members of the legal profession, and extending it beyond that remit would involve a sensitive policy decision which was best left to parliament.
The majority of the Supreme Court agreed with the arguments advanced on behalf of the Special Commissioner. Extending legal advice privilege to non-lawyers would expand it beyond its current limits, which have remained in place throughout coherent Judicial statement, legislation, and throughout the course of parliament’s own deliberations on the issue. It would involve difficult questions of policy, which are more properly decided by parliament. Such an expansion by the Court would also give rise to uncertainty as to which advice would be covered, and the possibility of inconsistency in application by the lower Courts.
Lord Sumpton, dissenting, stated that legal advice privilege ‘is a substantive right of the client, whose availability depends on the character of the advice which he is seeking and the circumstances in which it is given. It does not depend on the adviser’s status, provided that the advice is given in a professional context’.
The judgement means those seeking to protect documents drafted by non-lawyers will have to rely on litigation privilege. This was not open to Prudential, who could not argue that the documents containing the details of the transactions had been created for the purposes of litigation.