Privilege series part 3: The iniquity exception: “let the truth be told”

Our blog series on privilege considers issues encountered by practitioners across a range of dispute resolution specialities. This blog explores the scope of the iniquity exception.

Legal professional privilege (LPP) is a fundamental principle of justice and exists to protect certain categories of communication between lawyers, their clients or a third party from being disclosed to the opposing party and the court. The case of R v Derby Magistrates Court ex parte B demonstrates the significance of LPP:

“The principle which runs through all these cases …. is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent.  Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the fact of a particular case.  It is a fundamental condition in which the administration of justice as a whole rests.”

There are two categories of LPP: (1) legal advice privilege – which as the name suggests – applies to confidential communications between a lawyer and their client provided that the communications are for the purpose of giving or receiving legal advice in a relevant legal context; and (2) litigation privilege, which protects confidential communications between a lawyer and their client, or one of them and a third party, provided that communication has been created in contemplation of existing or potential litigation.

However, there are exceptions to this principle, one being what has become known as the “iniquity exception”. Based on the maxim that there can be “no confidence in iniquity”, the iniquity exception prevents a party asserting privilege over documents that exist to further a crime or fraud. A rationale behind the iniquity exception can be seen in Clark v United States:

“There is a privilege protecting communications between attorney and client. The privilege takes flight if the relation is abused. A client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the law. He must let the truth be told.”

Case law suggests the deception of lawyers, and therefore the abuse of the normal lawyer/client relationship, will often be the hallmark of iniquity as seen in JSC BTA Bank v Ablyazov. However, the iniquity exception can apply even when the solicitor or the client is unaware of the iniquitous purpose. This can occur in instances where a client is being used to further a third party’s criminal or fraudulent act. Under these circumstances, the iniquity exception applies to the third party’s intention, and prevents any documents, communications, or information obtained in furtherance of any crime from being protected from disclosure by LPP.

Scope of the exception

It has not always been clear how far the iniquity exception extends.  This is unsurprising, as there are two competing policy considerations: on the one hand there is a public interest in the protection of confidential and sensitive material from disclosure, and on the other, there is a public interest in the uncovering of iniquity.

The Court of Appeal clarified the legal test earlier this year in the case of Al Sadeq v Dechert & Ors. In this case, the Court of Appeal was required to consider the evidential threshold for the exception to apply. Previous cases have required the party seeking disclosure to demonstrate that there is a “strong prima facie case” of iniquity. In Al Sadeq, the Court of Appeal held that the threshold is in fact a "prima facie case" of iniquity, and that the question of whether the iniquity took place must be satisfied on the balance of probabilities. In practical terms, the test for the decision maker considering disclosure should therefore be whether, on the balance of probabilities on the material available, the iniquity is more likely than not to exist.

The Court of Appeal was also asked to consider whether it was only documents brought into existence for the purpose of “furthering” the iniquity that would be disclosable.  The Court held that documents that were “part of” the iniquities should also be disclosed. A document is "part of" an iniquity in circumstances where it "reports on or reveals" the iniquitous conduct, or where it was brought into existence in preparation for the iniquity, and even after the conduct of the iniquity is complete.

Therefore, the appropriate formulation of the iniquity exception is now as stated by LJ Popplewell: “where there is a prima facie case of iniquity which engages the exception, there is no privilege in documents and communications brought into existence as part of or in furtherance of the iniquity.”

However, the Court of Appeal emphasised that for the exception to be engaged at all, there must be an “abuse of the lawyer/client relationship”. This means that before one even gets to an analysis of whether the communication was created as part of or in furtherance of iniquity, one must first establish, on a document-by-document basis, whether the exception even applies in the first place.

As demonstrated above, the iniquity exception is never going to be straightforward and is likely to continue to be an area of much debate (including on what constitutes “abuse” of the lawyer/client relationship). The Court of Appeal’s formulation should, in practice, help navigate the tricky terrain of the iniquity exception (to some extent) but it should be noted that LPP will not be an unbreakable blanket protection.

Further information

If you have any questions regarding this blog, please contact Leyla Maestri in our Dispute Resolution team.

About the author

Leyla Maestri is an Associate in the Dispute Resolution team at Kingsley Napley. Leyla has experience acting on a broad range of disputes, including complex cross-border litigation, civil fraud matters, contract disputes, contentious trust and probate claims and arbitration proceedings.