Documents of dissolved company remained privileged unless no prospect of company being restored to the register

A High Court Master has found that the court must maintain privilege in the documents of a dissolved company unless and until there is no prospect of the company being restored to the register: Addlesee v Dentons Europe LLP: [2018] EWHC 3010 (Ch).

The decision contrasts with Garvin Trustees Ltd v The Pensions Regulator [2014] UKUT B8 (TCC), in which the Upper Tribunal held that documents of a dissolved company incorporated in Northern Ireland, which had been passed by its liquidators to a director, did not remain subject to privilege and so were disclosable. In the Master’s view, it was key to the judge’s reasoning in Garvin that (as the judge believed) the company could no longer be restored to the register as the applicable time limit had expired.

This is a decision of a Master and therefore not binding on a future court. However, if the same approach is taken in other cases, it suggests that the documents of a dissolved company will continue to be subject to privilege unless and until the company can no longer be restored to the register. In the case of a UK company, that could mean indefinitely, since under section 1030(1) of the Companies Act 2006 an application for restoration can be made at any time for the purpose of bringing proceedings against the company for damages for personal injury.

Background

The claimant investors brought claims for over €6.5 million which they had lost as a result of an allegedly fraudulent investment scheme operated by Anabus Holdings Limited, a Cypriot company which has since been dissolved (“the Company”). The defendant, which previously operated as Salans LLP, acted for the Company during the life of the scheme. The claim in summary is that the defendant recklessly and/or negligently enabled the scheme and induced the claimants to invest by endorsing it as the Company’s legal adviser.

The claimants applied for a declaration that the documents in the defendant’s client files for the Company are not protected by legal professional privilege.

The defendant’s solicitors sought to contact the former directors of the Company, to ask if they were willing to waive privilege and confidentiality, but received no response. The Crown disclaimed its interest in the Company’s documents, which vested in the Crown as bona vacantia at common law, expressly noting that it did not either assert or waive any legal professional privilege that may attach.

Both sides agreed that Garvin was binding on the court in the present case. However, the defendant sought to distinguish the decision, including on the basis that it did not apply if the company could be restored to the register, as in the present case (since under the relevant provisions of Cypriot law, an interested party has twenty years to apply to restore a company to the register).

Decision

The High Court (Master Clark) dismissed the application, finding that the privilege must be maintained.

The Master referred to the defendant’s submission that, in Garvin, the judge had in mind that the time for restoring the company to the register had expired (in contrast to the present case) and therefore disregarded the rights of those who might restore it to the register.

The Master agreed that this was a key element in the judge’s reasoning in Garvin even though, strictly, it was incorrect since an application to restore could still have been made in certain circumstances (in particular under section 1030(1), referred to above).

The critical issue, the Master said, was whether and to what extent the court should have regard to the fact that the Company could, as a matter of law, be restored to the register, even though the possibly of that happening was remote.

That could be tested by considering the position if an application for restoration had been made but was not to be determined until after the hearing of the present application. In those circumstances, the Master said, the court would be bound to protect the privilege which was about to be revested in the Company. However, it was difficult to distinguish in principle between that situation and the present one. Not enforcing the privilege meant the Company might be restored to the register, but the privilege to which it should then be entitled would be irretrievably lost.

On that basis, the Master concluded that the court was compelled to maintain the privilege “unless and until there is no prospect of the privilege being enforced by the person entitled to it”.

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