Addlesee and others v Dentons Europe LLP

The Court of Appeal held that legal advice privilege (LAP) which attached to communications between a company and its lawyers at the time they were made survives the subsequent dissolution of the company unless and until it is waived by a person entitled to waive it or overridden by statute or excluded by the iniquity exception. The court emphasised that LAP arises from the nature and purpose of the communication and is absolute once established. The Crown’s disclaimer of interest in the dissolved company’s property as bona vacantia does not amount to a waiver of privilege and does not destroy the privileged status of documents. The Court therefore found the Master was correct to refuse an order for disclosure and dismissed the investors’ appeal, overruling the Upper Tribunal decision in Garvin Trustees Ltd v The Pensions Regulator to the extent that it held privilege did not survive dissolution.

The investors (appellants) sought disclosure from Dentons Europe LLP (formerly Salans LLP) of documents created when Salans acted for a Cypriot company, Anabus Holdings Ltd, in relation to an investment scheme. Those documents were accepted for the purposes of the appeal to have attracted legal advice privilege when created. Anabus was dissolved in Cyprus and any rights in its assets that might have vested in the Crown as bona vacantia were disclaimed by the Crown which expressly neither asserted nor waived legal professional privilege. The investors sued Dentons in May 2016 alleging deceit or negligence and sought disclosure of privileged documents which they regarded as highly relevant.

Procedural history: The Master in the Business and Property Court (Master Clark) rejected the investors’ application for disclosure, holding that LAP survived dissolution; she distinguished the Upper Tribunal decision in Garvin on factual grounds. The investors appealed. The Court of Appeal first heard the appeal on 22 May 2019 where the court invited argument on whether Garvin was correctly decided; permission was given for a respondent’s notice challenging Garvin and the appeal was resumed and determined on 2 October 2019.

Issues:

• Does legal advice privilege attaching to communications between a company and its lawyers survive the dissolution of the company? If so, who can waive it?
• If the Crown acquires property as bona vacantia following dissolution, does privilege pass to the Crown and can the Crown’s disclaimer extinguish privilege?
• What is the duty of the lawyer in asserting privilege and the consequences for costs?

Court’s reasoning: The court reviewed the authorities on the rationale and scope of LAP and concluded that privilege attaches by reference to the nature and purpose of the communication at the time it was made and remains absolute unless waived by the client (or a person entitled to waive it), overridden by statute, or was never privileged because of an iniquitous purpose. The court rejected the argument that LAP cannot subsist where there is no extant legal person able to assert it; that position would retrospectively change the boundaries of the privilege and undermine the policy of certainty underpinning LAP. The court held that whether any successor (including the Crown as bona vacantia) could waive privilege did not affect the continuing privileged status of the documents. The Crown’s disclaimer of interest in the company’s books and records, expressly stating that privilege was neither asserted nor waived, did not amount to waiver or destruction of privilege. The Court therefore concluded that Garvin was wrongly decided on principle and should be overruled. The Master’s costs exercise in favour of Dentons was also upheld, the court reiterating the duty of a lawyer to assert privilege and that a lawyer defending its client’s privilege may properly incur costs even if no indemnity is available from the (former) client.

Appeal dismissed. The Court held that legal advice privilege, once attached to a communication made for the purpose of seeking or giving legal advice and not for an iniquitous purpose, survives the dissolution of the client company and remains absolute unless waived by someone entitled to waive it or overridden by statute. The Crown’s disclaimer of bona vacantia did not amount to waiver or extinguish privilege. The Master’s refusal to order disclosure and her costs order in favour of Dentons were upheld. The court overruled Garvin Trustees Ltd v The Pensions Regulator to the extent it held otherwise.

Appeal from the decision of Master Clark in the High Court, Business and Property Courts (Chancery Division) (Master Clark, HC-2016-001537). The appeal was first heard on 22 May 2019 when the Court granted permission for Dentons to serve a respondent’s notice challenging the Upper Tribunal decision in Garvin; the substantive resumed hearing took place and judgment was handed down on 2 October 2019 (this Court of Appeal decision) confirming the Master’s refusal to order disclosure.