Addlesee & Ors v Dentons Europe LLP

The claimants sought a declaration that client documents held by the defendant in respect of a dissolved Cypriot company (Anabus Holdings Limited) were no longer protected by legal professional privilege and an order for disclosure. The primary legal issue was the effect of the company’s dissolution on legal professional privilege, having regard to the Cypriot Companies Law (notably s.328 and s.327(7)), the Crown’s role as bona vacantia custodian and the decision in Garvin Trustees Ltd v The Pensions Regulator. The court concluded that a dissolved company ceases to exist and that, while rights including privilege may vest as bona vacantia in the Crown, the Crown does not assert or waive such privilege as a matter of policy. Because the possibility of restoring the company to the register remained, the court declined to deprive the company (upon potential restoration) of its privilege: the claimants’ application was dismissed.

Background and parties:

• The claimants were some 240 investors who alleged they lost over €6.5 million in an investment scheme run by Anabus Holdings Limited. The defendant solicitors acted for the Company during the life of the scheme.
• The Company was dissolved on 20 June 2016 under the Companies Law 2012 of Cyprus. The claimants applied for a declaration that the Company’s client files held by the defendant were not privileged and for an order requiring disclosure without withholding on grounds of privilege.

Procedural posture and issues:

• This judgment deals only with the effect of dissolution on legal professional privilege; the alleged iniquity exception remained in issue.
• The central issue was whether dissolution extinguished or otherwise rendered unenforceable the Company’s legal professional privilege, so that documents in the defendant’s files should be disclosable.

Submissions and authorities:

• The claimants relied on the effect of dissolution and on authorities that foreign dissolved companies’ English assets vest in the Crown as bona vacantia. They relied on Garvin Trustees Ltd v The Pensions Regulator as binding authority holding that privilege did not survive where the company could not be restored.
• The defendant relied on the fundamental nature of privilege (Shlosberg v Avonwick), the duty of solicitors to assert privilege (Nationwide BS v Various Solicitors) and argued that Garvin was distinguishable where restoration remained possible or where the Republic of Cyprus might assert the rights vested by its domestic law.
• The Crown, contacted in the proceedings, indicated it would disclaim any title to the documents and that disclaimer would not amount to waiver of privilege; the Crown formally disclaimed on 22 October 2018.

Court’s reasoning:

• The court accepted that a dissolved company ceases to exist and that rights may vest as bona vacantia in the Crown. It also accepted Garvin as binding but considered whether it was distinguishable on the facts.
• The court rejected the defendant’s submission that a special rule should apply to solicitors and held there is no principled distinction between solicitors and others in possession of privileged material.
• The judge considered whether the possibility of restoring the company meant privilege should be preserved. He rejected a novel concept of an inchoate, ownerless right which could be preserved indefinitely, and held that policy underlying the principle that privilege survives requires the court to preserve privilege unless there is no prospect of the person entitled to it enforcing it.
• Because restoration to the register remained legally possible (until 20 June 2036) and the Crown had indicated it would not assert or waive privilege, the court concluded that the privilege should be maintained and declined to order disclosure.

Result: The part of the claimants’ application seeking a declaration that the documents were not privileged and an order for disclosure without withholding on privileged grounds was dismissed.

This part of the claimants’ application is dismissed. The court held that dissolution means the company ceases to exist and rights may vest as bona vacantia in the Crown, but because the Crown would not assert or waive privilege and because restoration of the company remained possible, the court would not deprive the (potentially restorable) company of its legal professional privilege. Garvin Trustees Ltd v The Pensions Regulator was treated as binding but distinguishable on the facts.