In Schlosberg v Avonwick Holdings Ltd [2016] EWCA Civ 1138, the Court of Appeal of England and Wales unanimously dismissed an appeal against the decision of the High Court (covered in our previous update here) in which a firm of solicitors (Dechert) was ordered to cease acting for Avonwick on the grounds that Dechert had the benefit of a large amount of documents over which a bankrupt, Mr Schlosberg, maintained legal professional privilege.

The key issue was whether the High Court was correct in finding that the privilege attached to the information in the documents concerned did not vest in the bankrupt's Trustees upon their appointment.

The Court of Appeal, relying heavily on the fundamental nature of solicitor-client privilege, held that the privilege attached to the information in the documents could not form part of the bankrupt's property as a result of which it could not vest in the bankrupt's Trustees upon their appointment. The Court also held that privilege could not be viewed as a 'power' that Trustees can exercise over the property in accordance with statute, based on the notion that privilege is an inherently personal right.

Although the relevant statute expressly permits the Trustees to take possession of privileged documents within the bankrupt's estate, the Court held that the documentation could only be used to the extent that such use would not amount to a waiver of the privilege concerned. Waiver of privilege was not necessary to fulfil the Trustees' functions, as the ability to view the documents was a sufficiently valuable tool in itself.

See the Court's decision here.