‘Once privileged, always privileged’: English Court of Appeal confirms that legal advice privilege survives corporate dissolution

5 November 2019 Reed Smith Client Alerts

Page d'accueil Perspectives ‘Once privileged, always privileged’: English Court of Appeal confirms that legal advice privilege survives corporate dissolution

In Addlesee v. Dentons Europe LLP [2019] EWCA Civ 1600 (2 October 2019) the Court of Appeal held that, once established, legal advice privilege remains in existence forever unless and until it is waived.
Privilege over documents is not lost because there is no person entitled to assert it when a disclosure request is made; privilege attaches to communications and is therefore more than a personal right.
Accordingly, the defendant solicitors had a duty to uphold the privilege of a former client even though the former client was a company which had been dissolved.
The judgment is notable for its strong assertion of the public policy reasons for legal advice privilege. When a client seeks legal advice from a lawyer it should be on the basis that “there are no circumstances under which the privileged communications will be disclosed without his consent.”

Auteurs: Emma Shafton

The Court of Appeal has provided a ringing endorsement of the rule ‘once privileged, always privileged’.

A group of investors invested in a scheme marketed by a Cypriot company (the company). The defendant solicitors acted for the company. During the course of their instruction, documents came into existence regarding the scheme which attracted legal advice privilege. When the company was eventually dissolved, the investors claimed the investment scheme was fraudulent and issued proceedings against the defendant solicitors claiming damages for deceit or negligence. The investors sought access to the documents that had passed between the defendant solicitors and the company, their former client. The question on appeal was whether legal advice privilege in those documents subsisted notwithstanding the dissolution of the company.

Upholding the decision of Master Clark in the High Court and reaffirming the principle that legal advice privilege is absolute until waived, it was held that:

Privilege arises where a communication between client and lawyer is created for the purpose of giving and receiving legal advice (unless for an iniquitous purpose).
Privilege attaches to a communication itself at the time when it is made and belongs to the person who was the client at the time.
The privileged status of the document is not dependent upon the client pro-actively exercising its ‘right’ to claim privilege. A document is either privileged or it is not. The client has the right to waive privilege, but if it chooses not to do so then the document will remain privileged.
Once the client ceases to exist, the only remaining question is whether there is anyone who has the right to waive privilege and whether they have done so.
Only voluntary production destroys the privilege.
Following corporate dissolution the Crown is entitled to disclaim an interest in bona vacantia, and such a disclaimer should not be treated as if it were a waiver or as destructive of legal advice privilege.
Lawyers are duty-bound to seek to uphold their clients’ and former clients’ privilege, and accordingly the defendant firm had been right to resist disclosure and the first instance judge right to award the firm its costs of doing so.

The decision unambiguously re-asserts the absolute nature of legal advice privilege once established. However, in order for a document to be protected, it must first fall within the boundaries of privilege. The question of who the client is, arising from Three Rivers (No 5), is still problematic for larger businesses and organisations and awaits resolution by the Supreme Court (see previous update at reedsmith.com). It remains to be seen whether the public policy-centred approach to privilege adopted by the Court of Appeal in this decision (and the earlier case of SFO v. ENRC [2018] EWCA Civ 2006) will translate into a more commercially viable view of the boundaries of legal advice privilege.

Client Alert 2019-257

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