Dadourian Group International Inc & Ors v Simms & Ors

Legal professional privilege protects confidential communications made in a relevant legal context by a qualified legal adviser, subject to waiver and the fraud exception. Litigation privilege requires the dominant purpose of obtaining information, advice or evidence for litigation. Discussions with third-party lenders about funding are not ordinarily privileged for that purpose.

Privilege may be waived where a party deploys related privileged material and fairness requires disclosure of the wider communication. The fraud exception can apply to fraud or perjury in the conduct of litigation, but interlocutory disclosure requires a strong prima facie case. Disclosure should be confined to documents relevant to the fraud alleged.

The claimants sought to use documents unlawfully removed from Citilegal Consultants Limited by a former director and supplied to their solicitors. The documents concerned the structure and by-laws of Brinton, the ownership of assets held by corporate defendants, litigation funding and alleged breaches of freezing orders.

The corporate defendants and the Dadourians applied for injunctions restraining use of the documents, relying principally on legal advice privilege and litigation privilege. The claimants sought permission to use them, variation of an earlier order, further disclosure and information about the corporate defendants’ funding. The central issues were whether privilege applied, whether it had been waived or defeated by the fraud exception, and whether the requested funding disclosure was justified.

1. The applications by the corporate defendants and the Dadourians for injunctions restraining use of the Eagle documents were dismissed. The order of McKinnon J was varied to permit the claimants to adduce the documents. Questions of relevance were left to the judge hearing the Part 24 proceedings.

2. Legal advice privilege is confined to confidential communications between lawyer and client made for the purpose of legal advice in a relevant legal context. Litigation privilege applies where the dominant purpose of the communication is obtaining information, advice or evidence for litigation. Communications with third-party lenders about raising litigation funding did not satisfy that test.

3. Common interest privilege is not a separate category. It protects shared material which was privileged in the hands of the primary party and was disclosed to another party sharing the relevant interest.

4. Privilege in the Brinton material had been waived by disclosure of related by-laws and correspondence. Fairness required disclosure of the wider sequence of communications bearing on that issue. The waiver did not extend to unrelated material concerning the corporate defendants’ assets.

5. The five letters written by Mr Simms containing legal advice were not protected by legal advice privilege. The defendants knew that he had been struck off before the documents were created, so the principle protecting a client who innocently consults someone believed to be qualified did not apply.

6. The fraud exception can apply to documents created for the purpose of fraud or perjury in litigation. On the Brinton issue, the claimants established a strong prima facie case that Mrs Dadourian knew of attempts to alter the by-laws and that earlier evidence was misleading. Disclosure was therefore justified for documents relevant to that issue. The evidence did not establish a sufficiently strong prima facie case concerning beneficial ownership of the corporate defendants’ assets.

7. The court declined to determine whether the defendants’ conduct required striking out their defences or removal from the proceedings. That question was for Warren J, the judge dealing with the remaining Part 24 issue.

8. The application for disclosure of the source of the corporate defendants’ funding was dismissed. The freezing-order disclosure requirement applied only where the funds were assets within the order, and there was no sufficient evidential basis for concluding that this was so.