Legal advice privilege “survives” company’s dissolution

Court of Appeal: Consent to disclosure must be established

Legal advice privilege (LAP) attaching to communications between a company and its lawyers survives the dissolution of the company, even if the Crown has disclaimed all interest in its former property, the Court of Appeal has ruled.

Lord Justice Lewison said LAP remained in existence unless and until it was waived.

He said: “It is established as a result of the purpose for which, and the circumstances in which, the communication was made.

“Whether there is no one who can now waive it, or whether the Crown could have waived it but has not done so, does not matter.”

The court was ruling in Addlesee & Ors v Dentons Europe LLP [2019] EWCA Civ 1600, a claim by a group of investors over what they allege was a fraudulent scheme marketed by a Cypriot company, Anabus Holdings Ltd.

Salans – since bought by Dentons – acted for Anabus, which was dissolved in 2016.

The investors are suing Dentons claiming damages for deceit or negligence and wanted to see documents passing between Salans and Anabus.

In so far as any rights relating to the documents have passed to the Crown as bona vacantia, the Crown has disclaimed all interest in them “without either asserting or waiving any legal professional privilege”.

At first instance, Master Clark held that LAP subsisted notwithstanding the dissolution of Anabus, distinguishing the decision of the Upper Tribunal in Garvin Trustees Ltd v The Pensions Regulator [2015] Pens LR 1, in which Judge Herrington held that LAP did not survive the dissolution of a Northern Irish company which had been the client.

She said that, whereas in Garvin it was no longer possible to restore the dissolved company to the register, here it was still a legal possibility.

Giving the unanimous ruling of the court on what he said was a novel point, Lewison LJ thoroughly reviewed the rationale and underpinning of LAP, finding that to attract it, the communication in question must be between lawyer and client, made in connection with giving or receiving legal advice, and otherwise than for an iniquitous purpose.

If so, the privilege is absolute unless waived – “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” (Lewison LJ’s emphasis).

He added: “It is not the immunity which must be asserted. On the contrary, it is the consent to disclosure which must be established.”

The investors argued that a right must belong to someone, and if there was no one to whom it could be said to belong, the right could not exist.

Lewison LJ rejected this. “Once created, the immune status attaches to the communication. Once the client ceases to exist, the only remaining question is whether there is anyone who has the right to waive it.”

To hold that privilege was lost if there was no person entitled to assert it would “undermine the essential rationale for the very existence of legal advice privilege”.

The judge stressed the principle that the lawyer must be able to assure his client that the communications covered by legal advice privilege will never be revealed unless he consents.

“If an exception were to be made in the case of a dissolved corporation, one would have to consider what other exceptions might have to be made,” Lewison LJ said.

“For example, a members’ club that ceases to exist for lack of membership, a society registered under the Friendly Societies Act 1974 or non-charitable donations to a fund held by trustees might all be said to fall within the same principle.

“The recognition of exceptions would, in my judgment, undermine the policy of certainty that underpins legal advice privilege.”

Further, he ruled that the disclaimer by the Crown could not be treated as if it were a waiver or as destroying LAP.

The investors argued that the result would be a unique form of LAP which was incapable of waiver and contradict the policy of the law that disputes should be decided on the basis of all relevant evidence.

Lewison LJ said: “But the strong expressions of the policy underlying legal advice privilege all contemplate that the client’s communications will never be revealed. If that is the consequence of the dissolution of a corporation, I do not consider that it conflicts with the underlying policy…

“I would therefore overrule Garvin; and hold that the master was right in her refusal to order disclosure; but for different reasons.”

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