In this case, the Court of Appeal had to consider what happened to legal advice privilege attaching to communications between a company and its lawyers, once that company had been dissolved and the Crown had disclaimed all interest in the company’s former property.
The appellants, a large group of investors, invested in a scheme marketed by a Cypriot company. The lawyers acting for the company were an English law firm, which later merged with the respondent. In the course of acting for the company, documents came into existence on the law firm’s files, which were now in the respondent’s possession. The company was dissolved in Cyprus in 2016. As far as any rights relating to the documents had passed to the Crown as bona vacantia, the Crown had disclaimed all interest in them ‘without either asserting or waiving any legal professional privilege’. The investors claimed that the scheme was fraudulent and in May 2016 issued proceedings against the respondent claiming damages for deceit or negligence, asking to see the documents passing between the law firm and the company.
The question on this appeal was whether legal advice privilege subsisted notwithstanding the dissolution of the company. Master Clark at first instance held that it did. In so holding, she distinguished the decision of the Upper Tribunal in Garvin Trustees Ltd -v- The Pensions Regulator  Pens LR 1 (Garvin), in which it was held that legal advice privilege did not survive the dissolution of a Northern Irish company which had been the client. The ground of distinction was that, whereas in Garvin it was no longer possible to restore the dissolved company to the register, in the current case there was still a legal possibility.
The investors appealed and argued that legal advice privilege was a right solely for the benefit of an identifiable client and the client's successors in title. No third party was entitled to assert it. If there was no legal person entitled to assert the right, then it ceased to exist.
Further, on the dissolution of a foreign company the provisions of the Companies Act 2006 did not apply and legal advice privilege did not pass to the Crown as bona vacantia at common law. Even if it did, the Crown had no interest in enforcing the privilege and had disclaimed all interest in it, the effect of which was to extinguish it.
There was no real prospect of the company being restored to the register. But even so, the mere prospect of restoration did not require the company's former lawyers or the court to maintain privilege on the off-chance that such a restoration might one day take place.
The appeal was dismissed. Lewison LJ giving the leading judgment considered a series of authorities on legal privilege and held:
The rationale for legal advice privilege: The identification of the underlying policy was of critical importance. Legal advice privilege should be given a scope that reflected the policy reasons justifying its presence in English law. Clients had to be sure that what they told their lawyers in confidence would never be revealed without their consent. That certainty had to be at the time that the communication was made. It was the documents themselves that were privileged because of their nature and only voluntary production would destroy that privilege.
The ambit of legal advice privilege: The establishment of legal advice privilege (and therefore its boundaries) depended on the nature and purpose of the communication and the circumstances under which it was made. Privilege established that way remained absolute unless it was waived.
However, no privilege attached to documents or communications between client and lawyer, where the purpose of the client was the furtherance of crime, fraud or other iniquity (the iniquity exception). The concept of ‘iniquity’ in this context was a broad one. This exception did not conflict with the principle that once privilege attached it remained unless waived by the client. The client would know when consulting lawyers, whether the purpose of the consultation was the furtherance of crime, fraud etc. Therefore, there was no retrospective stripping away of legal advice privilege. The communication in question never attracted it in the first place.
Therefore, the boundaries of legal advice privilege, within which it was absolute unless and until waived, were that the communication in question had to be a communication between lawyer and client, made in connection with giving or receiving legal advice, otherwise than for an iniquitous purpose.
Right belonging to someone?: The right to privilege was created at the time the communication was made. If there was no extant person at that time, there could be no right. But since privilege attached to a communication made by a client to a lawyer (or vice versa), it was impossible to conceive a factual scenario in which that might be the case. The immunity from production belonged to the client and the immune status attached to the communication. Once the client ceased to exist, the only remaining question was whether there was anyone who had the right to waive it.
Dissolution of a corporation: The principal question posed by the appeal was a novel one. The investors argued that where the court had to consider whether privilege applied to a novel situation, there was a policy choice to be made (i.e. whether privilege had been established at all) and asked the court to refuse to extend privilege to a defunct corporation: the dissolution was under the corporation’s control and by the time it was dissolved in the usual case its affairs should have been fully wound up.
However, this was not a question of extending the scope of privilege, but of extending the circumstances in which privilege, once attached to a communication, ceased to apply. The firm position that the law had taken, was that once privilege had attached to a communication, it would only cease if waived by the client (or someone otherwise entitled to waive it) or was overridden by statute. If an exception were to be made in the case of a dissolved corporation, one would have to consider what other exceptions might have to be made. The recognition of exceptions would undermine the policy of certainty that underpinned legal advice privilege.
Statutory override/anyone to waive: Privilege might be overridden by statute; but this had to be done so expressly or by necessary implication. This was not applicable in the present case.
Since the case was about a dissolved foreign company the provisions of the Companies Act 2006 did not apply. Therefore, whether anything passed to the Crown as bona vacantia (prerogative right which entitled the Crown to all personal property that had no other owner) depended on the common law.
However, if the right to waive privilege never passed to the Crown (or if, as appeared, its settled policy was neither to assert nor waive privilege) then there was no one who could or would waive privilege. If, on the other hand, the right to waive privilege passed to the Crown, it was clear that the Crown had not waived it. The Crown’s disclaimer disclaimed its interest in the books and records of the company, but it was scrupulous to say that privilege was neither asserted nor waived. It would be perverse to interpret the disclaimer in any other way. The disclaimer by the Crown could not be treated as if it were a waiver or as destructive of legal advice privilege.
Garvin: In Garvin the Upper Tribunal (equivalent to the High Court) considered the question whether legal professional privilege survived the dissolution of a Northern Irish corporation and held that the privilege did not survive. It was common ground that in the present case the master was bound by the decision in Garvin, but the Court of Appeal was not.
The Upper Tribunal took as its starting point the proposition that the company itself could not assert privilege because following its dissolution it ceased to exist. If it were to be entitled to assert any rights it would have to be restored to the register; and that could not be done because the relevant time limit had expired. The principle applied in Garvin was wrong. It was not a question of who could assert privilege but who could waive it; and if there was a person entitled to waive privilege, whether they had done so. The Court of Appeal overruled Garvin and held that the master was right in her refusal to order disclosure, but for different reasons.
Costs: The master held that the respondent had been the successful party overall and ordered the investors to pay 80% of the respondent’s costs. The investors argued that even if the respondent were to be regarded as the successful party, the investors should not have to pay costs as the respondent did not need to appear on the application: having purported to assert privilege on behalf of their non-existent client, they should simply have left it to the court to decide what to do.
The Court of Appeal rejected that submission. It was the lawyers’ duty to assert privilege. If, in order to fulfil that duty, they incurred costs (including costs in resisting an application for disclosure) they were doing no more than fulfilling that duty. Further, the respondent was the only named party to the application notice (as well as the only defendant in the main action) and the relief sought included a mandatory order against it. It would have been extraordinary if a person served with an application notice claiming mandatory orders against it was not entitled to appear before the court to contest the orders sought. The respondent was entitled to its costs.
It is important to note that the Court of Appeal in considering the previous case law in this matter re-iterated the absolute nature of legal advice privilege and that a privileged communication would not be disclosed except in very specific circumstances: privilege would only cease to exist if waived by the client (or someone otherwise entitled to waive it) or was overridden by statute or by virtue of the iniquity exception.
The Court of Appeal also took a very cautious approach with regard to any exception, recognising that further exceptions would undermine the policy of certainty that underpinned legal advice privilege and erode its absolute character.