Mortgage Express v Sawali

Where a solicitor acts for both a mortgage lender and borrower, separate retainers normally preserve the borrower’s confidentiality and legal professional privilege. That default position may be displaced by an express contractual authorisation. A clause authorising disclosure of the conveyancer’s entire file should be construed objectively in its commercial context. Where disclosure is necessary to make the mortgage transaction work and to enable the lender to monitor the solicitor’s duties, clear wording may amount to an irrevocable waiver of privilege. The court may then order delivery of the relevant files under its supervisory jurisdiction, as extended by the Solicitors Act 1974.

The claimant mortgage lender sought delivery of eight conveyancing files held by the defendant solicitor, who had been a salaried partner in the predecessor firm that acted for both the lender and the borrowers. The defendant accepted that documents created for the lender’s retainer should be produced, but contended that the borrowers’ documents remained protected by confidentiality and legal professional privilege.

Each borrower had signed a declaration authorising the conveyancer to send the lender the entire file relating to the whole transaction. The central issues were whether that declaration was binding and extended to privileged material, and whether the court had jurisdiction to order delivery despite the borrowers not being parties to the application.

1. Disposition. Judgment was given for the claimant on the Part 8 claim. The claimant was entitled to the entire files relating to its mortgage transactions that were in the defendant’s possession or control. No order was made concerning the lost file, subject to the stated undertaking if it was later found.

2. Where a solicitor acts for both lender and borrower, two separate retainers arise. The ordinary position is that there is no implied waiver of the borrower’s confidentiality or legal professional privilege. That position is subject to an express agreement by the borrower.

3. The declaration authorising transmission of the entire file was unambiguous, irrevocable and binding. It had to be construed against the background of a mortgage transaction in which the solicitor acted for both parties and was required to make frank disclosure to the lender.

4. Applying the commercial approach to construction discussed in Life & Pensions v Linpac Mouldings Limited [2009] EWHC 1602 (Ch), the clause was construed as meaning what it said. Its purpose included enabling the lender to receive information relevant to the lending decision and to investigate possible breaches of duty by the solicitor or other professionals. The reporting obligations described in the CML Handbook and the Mortgage Express Ltd v Bowerman & partners duty supported that construction.

5. The declaration operated as a clear waiver of privilege. Arguments based on agency, unusual contractual terms and unfairness did not alter that conclusion. Authority to disclose could validly be given in the circumstances, even though it was not communicated directly to the solicitor by the borrower.

6. The supervisory jurisdiction over solicitors, extended by section 68 of the Solicitors Act 1974, was sufficient to support the order. The authorities concerning delivery of documents held for a client did not prevent an order where the client had expressly authorised disclosure.