The Court of Appeal has confirmed that the documents of a dissolved company remain privileged, regardless of whether there is anyone who can assert the company’s privilege: Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600.

The decision establishes that, once a privileged communication comes into existence, that privilege is absolute and remains intact unless and until it is waived by a person entitled to do so. This illustrates the strength of the principle “once privileged, always privileged”, which is based on the public policy underlying privilege – that is, the need for a client to be confident, when consulting a lawyer, that the privileged communications will never be disclosed without the client’s consent.

Although the point was not in issue in the present case, the decision may be said to bolster the protection given to documents in a litigating party’s possession which are subject to a third party’s privilege – so for example where the litigating party has received the documents under a limited waiver of privilege. The reasoning in this case would appear to suggest that the court must respect the privilege unless and until the privilege holder has waived it, regardless of whether it has come forward to assert it.

It is worth noting that the Court of Appeal states in its judgment that it is concerned only with legal advice privilege, rather than litigation privilege. The decision may therefore leave open an argument that the position is different for documents subject to litigation privilege – although the court does note that the two forms of privilege have a common purpose, though their scope is different.

Background

The background is summarised in our blog post on the first instance decision. Briefly, the claimant investors invested in an allegedly fraudulent scheme marketed by a Cypriot company (the “Company”) which was represented by the defendant solicitors. The Company was dissolved in January 2016 and, in May 2016, the claimants issued the present proceedings against the defendant solicitors claiming damages for deceit or negligence in relation to their involvement in the scheme.

The claimants sought access to documents in the defendant’s client files which the defendant said were subject to the Company’s legal advice privilege. To the extent that 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”. The question for the court was whether the documents remained subject to privilege despite the Company’s dissolution.

At first instance, Master Clark held that they did. She considered Garvin Trustees Ltd v The Pensions Regulator [2015] Pens LR 1, in which the Upper Tribunal held that legal advice privilege did not survive the dissolution of a Northern Irish company which had been the client. The Master distinguished Garvin on the basis that, in that case, the company could no longer be restored to the register, whereas in the present case that was still a possibility, as a matter of Cypriot law, although the prospect was remote. 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”.

The claimants appealed.

Decision

The Court of Appeal dismissed the appeal, though on different grounds from the Master. Lewison LJ gave the leading judgment, with which Floyd and Hamblen LJJ agreed.

The question on appeal, as formulated by the court, was whether a communication remains privileged unless and until privilege is waived; or whether the privilege is lost if there is no person entitled to assert it at the time when a request for disclosure is made. Lewison LJ described this as a novel question, which had not arisen for decision before Garvin. He also noted that the court in this case was concerned only with legal advice privilege, not litigation privilege.

Lewison LJ said that identification of the underlying policy for legal advice privilege was of critical importance, and was the key to resolution of the appeal. He reviewed a number of leading authorities on the policy underlying legal advice privilege, namely that a person should be able to consult his or her lawyer in confidence, knowing that their communications will never be revealed without the client’s consent. For that reason, once privilege attaches to a communication it is absolute, and remains in place unless waived by the client. Lewison LJ stated:

“The rationale for the privilege means that privilege comes into existence at the time when the person in question consults his lawyer. The client must be sure at the time when he consults his lawyer, that, without his consent, there are no circumstances under which the privileged communications will be disclosed without his consent. As Lord Taylor explained, the lawyer’s mouth ‘is shut forever.’ It is not the immunity which must be asserted. On the contrary, it is the consent to disclosure which must be established.” (emphasis in the original)

Further, legal advice privilege is not merely a private right. It is not like a private right to confidentiality, but has been described as “a fundamental condition on which the administration of justice as a whole rests”. Privilege attaches to a document or communication. It is more than just a personal right to assert a refusal to produce the documents in question for inspection.

Against that background, Lewison LJ rejected the argument that privilege is a right that must belong to someone, and cannot exist if there is no one capable of asserting it. In Lewison LJ’s judgment, there must be some person entitled to the privilege when it is created, ie at the time that the communication is made – but once created, the immune status attaches to the communication. As he put it: “Once the client ceases to exist, the only remaining question is whether there is anyone who has the right to waive it.”

In the present case, the parties disagreed as to whether privilege passed to the Crown as bona vacantia at common law (in the same way that the Company’s assets in this jurisdiction had passed to the Crown). This dispute did not, however, affect the outcome of the appeal. If the right to waive privilege had never passed to the Crown (or if its settled policy was neither to assert nor waive privilege) then there was no one who could or would waive privilege. If, however, the right to waive privilege did pass to the Crown, it was clear that the Crown had not waived it.

The Court of Appeal overruled Garvin, finding that the principle applied in that case was wrong. As Lewison LJ said: “It is not a question of who can assert privilege. It is a question of who can waive it; and if there is a person entitled to waive privilege, whether they have done so.”

Anna Pertoldi
Anna Pertoldi
Partner
+44 20 7466 2399
Maura McIntosh
Maura McIntosh
Professional support consultant
+44 20 7466 2608
Jan O'Neill
Jan O'Neill
Professional support lawyer
+44 20 7466 2202