Armstrong v Berrymans Lace Mawer LLB (t/a BLM) & Anor

Company property held by solicitors must ordinarily be delivered to an office-holder under Insolvency Act 1986, section 234, without the office-holder having to justify each proposed use. Where the company has assigned a cause of action, the assignee stands in the company’s position and takes the benefits and burdens attaching to the assigned rights. Joint privilege cannot ordinarily be waived unilaterally, but it does not prevent the company, its administrators, or an assignee from using the documents for advice and litigation concerning the assigned claim. Solicitors instructed by the assignee are agents rather than third parties. Appropriate undertakings, confidentiality arrangements and information barriers may adequately protect the other joint privilege-holder.

The applicants were the joint administrators of Transform Medical Group (CS) Ltd. They sought delivery of files held by Berrymans Lace Mawer LLP under section 234 and section 236 of the Insolvency Act 1986. The disputed material comprised files created under a joint retainer by Transform and Travelers Insurance Company Ltd in connection with PIP breast-implant litigation.

The administrators had assigned Transform’s potential claims against BLM and counsel to Hugh James Involegal LLP, which intended to instruct Hugh James LLP. Travelers objected to access by the assignee and its solicitors, relying on joint privilege, conflicts of interest and risks of disclosure in related litigation. The central issue was whether the Joint Retainer files could be disclosed to HJI and reviewed by Hugh James.

1. The Issue was determined in favour of the administrators. The Joint Retainer files were Transform’s property. Applying Re Corporate Jet Realisations Ltd [2015] EWHC 221 (Ch), an order for delivery under section 234 of the Insolvency Act 1986 was ordinarily available for company books and records. The administrators were not required to explain in detail every intended use of files they had not yet examined.
2. Section 234 and section 236 did not abrogate legal professional privilege. Privilege would not be overridden by implication unless the statute did so by express words or necessary implication. The court therefore did not rely on either provision to override Travelers’ privilege against a genuine third party.
3. The assignment of Transform’s causes of action engaged the successor principle. Under Winterthur Swiss Insurance Company v AG (Manchester) Ltd [2006] EWHC 839 (Comm), an assignee stands in the assignor’s position. The assignee takes the assigned rights with their benefits and burdens, and cannot be placed in a better position than the assignor. However, the assignee has the same entitlement as the assignor to use privileged material for advice and litigation concerning the assigned claims.
4. Joint privilege could be waived only jointly, but that rule did not prevent Transform or HJI from instructing solicitors to review the documents for the assigned claims. A solicitor acting for the client was an agent, not an independent third party. The court applied the reasoning in Hilton v Barker Booth & Eastwood [2003] PNLR 610 and Stiedl v Enyo Law LLP [2012] PNLR 4.
5. Travelers’ concerns about conflicts and onward disclosure did not justify refusing access. Appropriate undertakings and information barriers could protect confidentiality. HJI and Hugh James were required to limit access to the team handling the assigned claims, exclude personnel involved in the PIP or Allergan litigation, restrict use of the documents, avoid new PIP instructions, and cease acting in specified live or stayed PIP claims.
6. The court declined to assess the merits of the proposed professional-negligence claim in the absence of its pleadings, evidence and parties. Access was therefore permitted subject to satisfactory undertakings reflecting paragraph 126.

The judgment was a first-instance determination of an issue arising within the administrators’ application under sections 234 and 236 of the Insolvency Act 1986. The earlier procedural orders were made by ICCJ Jones, ICCJ Mullen and Deputy ICCJ Shaffer. No appeal from the present judgment is stated.