CANDEY LIMITED v BASEM BOSHEH

Legal professional privilege is not displaced merely because a client accused of fraud may have lied to the solicitor or advanced a false case. The question is whether the communications were made in the ordinary course of the solicitor’s professional engagement, or instead to abuse that relationship and perpetrate a substantial fraud.

A solicitor acting under a contingency fee arrangement receives the same protection for the client’s legal advice as a solicitor acting for hourly fees. Confidential documents obtained after termination of the retainer must not be retained or used without lawful justification. Implied terms requiring a client to act in good faith, prefer the solicitor’s interests, or avoid misleading the solicitor will not be implied where they are unnecessary, uncertain or unsupported by authority.

The claimant, a London litigation firm, sued a former client and another defendant for more than £3 million. It alleged fraud, breach of the retainer, inducing breach of contract, conspiracy and unjust enrichment after the underlying Chancery proceedings were settled on a drop-hands basis.

The claimant sought permission to amend, a freezing order and permission to use privileged or confidential material from the earlier proceedings. The defendants sought orders restraining use of that material, summary judgment and strike-out. The central issues were whether privilege was lost through alleged fraud, whether implied contractual duties arose, whether the claims had a realistic prospect of success, and whether freezing relief was justified.

1. Privilege. The iniquity exception applies only where communications are made outside the ordinary course of a solicitor’s professional engagement, or where the solicitor-client relationship is abused to perpetrate a substantial fraud. A client’s dishonest denial of fraud, exaggerated view of the merits, or misleading account of motives and settlement intentions remains within the ordinary run of litigation. The same approach applies where the solicitor alleges that the fraud was perpetrated against the solicitor. The client’s privilege is not subject to a balancing exercise involving fairness, relevance or the solicitor’s contingency-fee risk. The disputed privileged material was therefore inadmissible and struck out.
2. Confidential and disclosed material. Bank statements received after termination of the retainer were improperly retained and could not be used at that stage. Other documents from the earlier proceedings could be held and used as though disclosed in the present proceedings, subject to the court’s permission. Use of witness statements and documents from the earlier proceedings without permission breached the procedural rules.
3. Merits. The alleged implied duties were not necessary, obvious, sufficiently certain or supported by authority. A solicitor-client retainer does not generally impose a duty of good faith on the client, and a contingency-fee arrangement does not alter that conclusion. The claim for breach of the express Costs Term had a real prospect of success, but only for approximately £21,000. The remaining claims and proposed amendments had no real prospect of success or depended on privileged material.
4. Freezing order. The claimant had not shown a good arguable case beyond the limited Costs Term claim, nor a sufficient risk of dissipation against each defendant. The application was refused.