Summary

Documents in client files held by the defendant solicitors in respect of a dissolved Cypriot company were protected by legal professional privilege where many years remained in which an application to restore the company to the register could be made. The policy considerations underlying the principle "once privileged, always privileged" compelled the court to maintain the privilege unless and until there was no prospect of the privilege being enforced by the person entitled to it.

Facts

he claimants applied for a declaration that documents in client files held by the defendant solicitors in respect of a dissolved Cypriot company were not protected by legal professional privilege, and an order for disclosure of those documents.

The claimants were investors in an investment scheme operated by the company. The scheme closed in 2010 leaving the majority of investors unpaid. The claimants asserted that the scheme was fraudulent and that they had lost over EUR 6.5 million. The defendant was an English LLP which had previously operated a solicitors' firm which had acted for the company during the life of the scheme. The claim was that the defendant had recklessly and/or negligently enabled the scheme, and induced many of the claimants to invest, by affording the scheme respectability by endorsing it as the company's legal adviser. The company was dissolved in 2016 under the provisions of the Companies Law 2012 of Cyprus which stated that all property would be deemed bona vacantia. The Crown's position was that the assets of a foreign dissolved company vested in the Crown as bona vacantia at common law, that those assets included the client files of their solicitors and that it disclaimed any interest in them. The parties were agreed that the documents were relevant and likely to be of importance in the claim and, if the company had not been dissolved, any documents subject to legal professional privilege would not have been disclosable unless the privilege was waived. The primary issue was the effect of the company's dissolution on its legal professional privilege.

The claimants submitted that the principles from Garvin Trustees Ltd v Pensions Regulator [2014] 11 WLUK 469 applied to the instant case and the company's client files were no longer protected by privilege.

Held

Did the principles in Garvin apply to solicitors? Yes. The reasoning in Garvin was not confined to persons other than solicitors, Garvin applied. The judge's reasoning was focused on the distinctions between the position where the client remained in existence but did not seek to assert privilege, and the position where the client no longer existed, irrespective of by whom the documents were held. In addition, the policy considerations on which the privilege was based, namely that a client had to feel free to consult solicitors without fear of those communications being revealed, prevented any principled distinction from being drawn between solicitors and others in possession of privileged material, Nationwide Anglia Building Society v Various Solicitors (No.1) [1998] 1 WLUK 248 considered (see paras 12, 28, 36 of judgment).

Did Garvin apply if the company could be restored to the register? No. A key element of the judge's decision in Garvin was that restoration to the register could not be undertaken due to the expiry of the time limit. The critical issue was whether and to what extent the court should have regard to the possibility that the company might be restored to the register. No application to restore had been made in the instant case and there would be no bar to it being made until 2036. Not enforcing the privilege meant contemplating the position where, having been restored to the register and otherwise placed in the position it was before dissolution, the privilege to which the company should then be entitled would be irretrievably lost. The policy considerations underlying the principle "once privileged, always privileged" compelled the court to maintain the privilege, unless and until there was no prospect of the privilege being enforced by the person entitled to it (paras 40-41, 48-49).

Did Garvin only apply where the party entitled to the privilege declined to be involved? (Obiter) No. The decision in Garvin did not depend on the fact that the Crown had declined to be involved (paras 52-57).

Application refused