Legal advice privilege protects advice given by lawyers to their clients. However, where there is a prima facie case that such advice was given to perpetrate or further iniquity, privilege will fall away.  In this case, the EAT confirmed that advising a client how to disguise unlawful discrimination could be iniquitous, however, merely warning of the potential for a discrimination claim to be brought would not be enough (X v Y Ltd (EAT))

Background law

Privilege protects certain documents by allowing parties to comply with their disclosure obligations without revealing such documents' contents to their adversary in litigation. Legal advice privilege arises in respect of communications between lawyers and their clients on the basis of the confidential nature of their relationship. To claim legal advice privilege, the document in question must be a confidential communication between a client or internal agent and a professional legal adviser or in-house lawyer for the sole purpose of giving or obtaining legal advice or assistance on the client's rights and liabilities, and what should sensibly be done in the relevant legal context.

If the above criteria are satisfied, legal advice privilege will arise in respect of the document and its contents will not be subject to disclosure. Under the so-called "iniquity principle", however, privilege will be lost in respect of material which came into existence to conceal or further a crime, fraud or equivalent conduct. In such cases, the content of the material will be subject to disclosure as if privilege did not apply. 

Under Employment Tribunal Rule 37(1), an Employment Tribunal has the power to strike out all or part of a claim where one of a number of grounds can be established. These grounds include where all or part of the claim is scandalous, vexatious or has no reasonable prospect of success. This may be found where a claim or part of a claim refers to material which is privileged, without prejudice or part of pre-termination negotiations.

Facts 

The Claimant, who is disabled, was employed by the Respondent as a lawyer for 27 years. In August 2015, the Claimant brought an Employment Tribunal claim of disability discrimination and/or failure to make reasonable adjustments. In January 2016, he raised a grievance citing disability discrimination. The Respondent began a redundancy exercise in April 2016 and the Claimant was told he was at risk of redundancy. The Respondent subsequently terminated the Claimant's employment by reason of redundancy.

The Claimant brought a further claim of disability discrimination, victimisation and unfair dismissal to the Employment Tribunal in March 2017. Included within in this claim was the following evidence:

1. That on or around 19 May 2016, the Claimant overheard a conversation in a Fleet Street pub between professionally dressed people, during which a woman mentioned dealing with a senior lawyer at the Respondent company who had brought a disability discrimination complaint. During this conversation, the woman said that there was an opportunity to manage the lawyer out as there was a big reorganisation underway.
2. In late October 2016, the Claimant had anonymously received an email marked "Legally Privileged and Confidential", which had been sent between a senior lawyer from the Respondent's legal department and a lawyer who was seconded to the Respondent.  The email contained advice on how to commit unlawful victimisation by using the planned restructuring and redundancies as a cloak to dismiss the Claimant.

EAT decision

The Employment Tribunal granted the Respondent's application to strike out the paragraphs of the Claimant's claim relating to the email and the pub conversation on the grounds that both were covered by legal advice privilege.  The Claimant appealed the decision on the basis that there was a strong prima facie case that the iniquity principle applied to the email which would cause legal advice privilege to fall away. 

This required the EAT to address the following points: 

• Whether the Tribunal had erred in their interpretation of the email and should have ruled that there was a strong prima facie interpretation of the email recording advice for the purpose of victimising or discrimination against the Claimant. 
• If so, whether the advice contained in the email was sufficiently seriously to be deemed to be an iniquity. 

In respect of the interpretation of the email, the EAT found that the Tribunal's interpretation was erroneous.  The email recorded advice that the genuine redundancy exercise could be used as a cloak to dismiss the Claimant in order to avoid his continuing complaints and the difficulties with his employment, which related to his disability.  In reaching this decision, the EAT noted that it was correct not to consider the conversation overheard in the pub when interpreting the email, as the speaker was neither identified nor known to be authorised by the Respondent, the conversation occurred approximately three weeks after the email, and no contemporaneous note was taken of the same. 

In respect of whether the legal advice recorded in the email was given for the purpose of facilitating an iniquity, the EAT noted that the burden of proof fell on the party seeking to establish the iniquity (in this case, the Claimant) and the standard of proof was a strong prima facie case.

The meaning of iniquity was considered.  The EAT noted that iniquity included not just criminal and unlawful behaviour, but all forms of fraud and dishonesty (words which ought to be relatively broadly construed). At the same time, the EAT stressed that legal professional privilege is necessary and not to be lightly overthrown; courts are wary of extending the concept of iniquity too far and must be satisfied that the behaviour in question is not merely disreputable or a failure to maintain good ethical standards. The conduct in question must have gone beyond that which amounts to a civil wrong to the extent of being something of an underhand nature which is entirely contrary to public policy. 

In this case, the EAT found that the email contained advice to commit discrimination which reached the threshold of being entirely contrary to public policy, as it related exclusively to how to use genuine redundancies as a means of getting rid of the Claimant.  In reality, the reasons for wanting to terminate the Claimant's employment were his underperformance (which was connected to his disability) and his previous complaints of discrimination and failure to make reasonable adjustments. 

It was noted that the finding of iniquity would be highly fact-specific: in this case, the advice related to both discrimination and how to hide such discrimination and was, therefore, deemed to be so unconscionable as to constitute an iniquity. It was, however, noted that iniquity would not have been found had the advice merely warned of the risk of a claim arising from making a disabled employee redundant.

Comment 

Although the threshold for iniquity is high, this decision is a warning for legal professionals to give careful thought to both the substance and form of their advice.  Advice framed in the wrong way may be viewed as advice on how to hide discrimination and this may be sufficient to dislodge privilege.  If that happens, the claimant can have that advice admitted before the Employment Tribunal which may well help strengthen their position.

X v Y Ltd

This article was drafted by Carmen Harland, Trainee Solicitor.