Practice and procedure – Legal advice privilege – Dissolution – Appellant investors claiming damages for deceit or negligence against respondent solicitors acting for company before dissolution – Respondent being in possession of documents covered by legal advice privilege – Master holding privilege subsisting notwithstanding dissolution of company – Appellants appealing – Whether privilege still attaching to communications between company and respondent after company dissolved – Appeal dismissed
The appellants were investors in a scheme run by a foreign company which was subsequently dissolved. The lawyers acting for the company were an English LLP, which had since been renamed Dentons Europe LLP (the respondent). In the course of acting for the company, documents came into existence on the respondent’s files which it was assumed, for purposes of the current proceedings, would have attracted legal advice privilege. The appellants claimed that the scheme was fraudulent and issued proceedings against the respondent claiming damages for deceit or negligence.
The appellants wished to see documents passing between the company and the respondent which were likely to be highly relevant evidence. It was accepted, for the purposes of the proceedings, that the documents in question attracted legal advice privilege at the time when they came into existence. In so far as any rights relating to the documents passed to the Crown as bona vacantia, the Crown disclaimed all interest in them without either asserting or waiving any legal professional privilege.
An issue arose whether the privilege subsisted notwithstanding the dissolution of the company. Master Clark held that it did. In so holding, she distinguished the decision of the Upper Tribunal in Garvin Trustees Ltd v The Pensions Regulator [2015] Pens LR 1, in which it was held that legal advice privilege did not survive the dissolution of a Northern Irish company which had been the client. The ground of distinction was that, whereas in Garvin it was no longer possible to restore the dissolved company to the register, in the present case, that was still a legal possibility: [2018] EWHC 3010 (Ch).
The appellants appealed. It was common ground that the Master was bound by Garvin; but the Court of Appeal was not.
Held: The appeal was dismissed.
(1) The identification of the underlying policy was of critical importance; legal advice privilege had to be given a scope that reflected the policy reasons that justified its presence in the law. Legal advice privilege was not confined to the question of disclosure in legal proceedings; but was a fundamental human right. The establishment of legal advice privilege (and therefore its boundaries) depended on the nature and purpose of the communication; and the circumstances under which it was made. The inherent characteristics of the documents created for that purpose and in those circumstances endured. A communication thus qualified for legal advice privilege as a result of the purpose for which and the circumstances in which it was made. Privilege attached to a communication because of the nature of the communication and the circumstances under which it was made; and the privilege thus established remained absolute unless it was waived. Therefore, the boundaries of legal advice privilege were that the communication in question had to be a communication between lawyer and client, made in connection with giving or receiving legal advice, otherwise than for an iniquitous purpose: Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48, [2005] 1 AC 610 and R (Morgan Grenfell & Co Ltd) v Special Commissioners of Income Tax [2002] UKHL 21, [2003] 1 AC 563 applied.
(2) The rationale for the privilege meant that it came into existence when the person in question consulted his lawyer. The client had to be sure at the time when he consulted his lawyer that, without his consent, there were no circumstances under which the privileged communications would be disclosed. It was not the immunity which had to be asserted, it was the consent to disclosure which had to be established. Legal advice privilege was not merely a private right. It was a fundamental condition on which the administration of justice as a whole rested.
The immunity from production thus created belonged to the person who was the client at the time. Once created, the immune status attached to the communication. Once the client ceased to exist, the only remaining question was whether there was anyone who had the right to waive it. Legal advice privilege attached at the moment when the protected communication was made. As far as the proposition that privilege ceased to exist on dissolution of a company was concerned, no exception to the principle “once privileged, always privileged” should be created.
(3) Since this case was concerned with a dissolved foreign company, the domestic statutory provisions in section 1012 of the Companies Act 2006 (which applied to companies registered in this jurisdiction) did not apply. Because the domestic legislation did not apply, whether anything passed to the Crown as bona vacantia depended on the common law. The Crown’s right to bona vacantia was a prerogative right which entitled the Crown (at least) to all personal property that had no other owner. Whatever might be the status of the Crown’s title in relation to solving problems of inheritance under the principles of private international law, the policy underlying legal advice privilege meant that the Crown was to be treated as a successor in title (even if technically it might not be). On that basis, the company’s legal advice privilege passed to the Crown along with the records and papers to which it attached. Although the Crown had disclaimed any interest in the underlying personal property, it had not waived privilege. The privilege therefore remained and the disclaimer by the Crown could not be treated as if it were a waiver; or as destructive of legal advice privilege.
(4) Accordingly, legal advice privilege, once established, remained in existence unless and until it was waived. It was established as a result of the purpose for which, and the circumstances in which, the communication was made. Whether there was no one who could now waive it, or whether the Crown could have waived it but had not done so, did not matter. Therefore, the Master was right in her refusal to order disclosure; but for different reasons: Garvin Trustees Ltd v The Pensions Regulator [2015] Pens LR 1 overruled.
Thomas Grant QC and Thomas Munby (instructed by Forsters LLP) appeared for the appellants; William Flenley QC and Adam Kramer (instructed by Clyde & Co LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Addlesee and others v Dentons Europe LLP
