Civil practice and procedure – Delivery up of documents – Solicitor’s file – Mortgage lender seeking delivery up of files relating to mortgage transactions on which solicitor acting for both lender and borrower – Whether documents relating to work carried out for borrower protected by right of privilege or confidentiality – Whether such right waived by declaration in form signed by borrowers – Claim allowed
The claimant mortgage lender applied to the court, under section 68 of the Solicitors Act 1974, for an order that the defendant solicitor deliver up files that related to mortgage transactions in which his predecessor firm had acted for the claimant and the borrower. The defendant had been a salaried partner of that firm, which had since become defunct. He accepted that the claimant was entitled to the documents created in the course of the claimant’s own retainer of his predecessor but resisted the application so far as it concerned documents created in the course of work carried out for the borrowers. He argued that the latter were protected by the borrowers’ rights of privilege and/or confidentiality and it was not within the court’s jurisdiction to order delivery up in the circumstances.
In support of its application, the claimant relied on a declaration contained in a form that each of the borrowers had signed when applying for a loan. This stated: “I/We irrevocably authorise my/our conveyancer to send their entire file relating to the whole transaction (not just the loan) to you at your request.” The claimant contended that the borrowers, having signed that declaration, did not retain any right of privilege or confidence as against it. It also contended that solicitors owed a duty to report any information that would put it on notice of any features of the transaction that might suggest mortgage fraud, including, in four of the transactions, a purchase funded by a different lender and a subsequent remortgage of the same property to the claimant on the same day.
The defendant argued that, on its proper construction, the declaration might not be aimed at privileged material but might be intended to refer only to non-privileged documentation relating to the borrower’s purchase of the property. He further submitted that the declaration could not, as a matter of the law of agency, amount to the actual and irrevocable authorisation that it purported to be since, inter alia, the borrower, as principal, and the defendant’s predecessor, as agent, had not communicated with each other.
Held: The claim was allowed.
Where a lender and a borrower retain the same solicitor in a mortgage transaction, two separate retainers were created and there was no implied waiver of confidentiality or legal professional privilege by the borrower in favour of the lender. However, the declaration that the borrowers signed in the instant case amounted to an express waiver, which was not unduly onerous or unfair. The declaration was unambiguous, irrevocable and binding on both the borrower and the lender. It had to be read in the context of a mortgage transaction throughout which the solicitor was acting for both parties and during which there was a need for frank disclosure. Unless such a declaration were construed so as to authorise the solicitor to provide documents that would otherwise be covered by the borrower’s legal professional privilege, it would be impossible for borrowers and lenders to retain the same solicitor. Lenders would be unable to police the transaction or to obtain the documents that they needed to consider to enable them to determine, where the borrower defaulted and the lender suffered a loss, whether the solicitor or valuer was in breach of duty. As a matter of commercial common sense, and against the background that it was essential to make the transaction work, the declaration had to be objectively construed as meaning what it said: that is, that the borrower expressly authorised his conveyancer to provide the entire file to the lender for the purposes of entering into the transaction notwithstanding the implied default position to the contrary at law. Such a result was not contrary to the law of agency. Authority could be given in such circumstances and often was where, for example, a client changed solicitors. When that occurred, the authority was not given to the old firm but came via a third party, namely the new firm, but authority was none the less given. In all the circumstances of the case, the court’s inherent jurisdiction to supervise the conduct of its officers extended to ordering the defendant summarily to deliver up the entire file relating to the mortgage transaction in each case that the defendant had in his possession or control.
John de Waal (instructed by Wright Hassall LLP) appeared for the claimant; Charles Phipps (instructed by Kennedys Law LLP) appeared for the defendant.
Sally Dobson, barrister
