Chicago Holdings Ltd v Cooper & Anor

The iniquity exception to legal professional privilege requires a definite allegation of fraud or illegality supported by prima facie evidence. A mere allegation is insufficient. The exception is engaged where legal advice is sought or given for the purpose of effecting an iniquity, but the court must identify evidence meeting the required threshold. A document containing an ambiguous reference to bluffing does not, without more, establish fraud or illegality. Where the substance of the dispute concerns the validity of a liquidation rather than alleged iniquity, disclosure of privileged material will be refused unless the requisite prima facie case is shown.

Chicago Holdings Ltd sought specific disclosure of privileged documents held by liquidators who faced an application for removal. The underlying dispute concerned whether Chicago Group Limited had been placed into creditors’ voluntary liquidation on the authority of Mr Njie, who was alleged not to have been a director or shareholder.

The applicant relied particularly on a handwritten note referring to sorting matters out or bluffing them out. It contended that the note supported the iniquity exception to privilege and sought production of the wider file. The central issue was whether the material disclosed a prima facie case of fraud or illegality sufficient to disapply privilege.

1. Application dismissed. The application for specific disclosure of the privileged documents was refused.
2. The court applied the established rule stated in O’Rourke v Derbyshire [1920] AC 581 at 604: the iniquity exception requires a definite charge of fraud or illegality supported by prima facie evidence, rather than a mere allegation.
3. The authorities recognise that advice sought or given for the purpose of effecting an iniquity is not privileged. The relevant concept of fraud may be understood broadly, including dishonest or unlawful conduct. That principle did not resolve the application in the applicant’s favour.
4. The proceedings were essentially concerned with whether the liquidation process was valid, which turned on Mr Njie’s authority. Although the evidence contained allegations which, if established, might amount to iniquity, the court was not satisfied that the essence of the claim was fraud or iniquity. Nor was the required prima facie case established.
5. The expression “bluff it out”, viewed in isolation, did not advance the application. A document expressly recording an intention to commit fraud might have been different, but the document relied upon did not itself establish the necessary evidential foundation.
6. Permission to appeal was refused. Costs of £3,000 were awarded, and any separate expert-evidence issues were left to be addressed, if necessary, through case management directions.