In Shlosberg v Avonwick Holdings Ltd [2016] EWHC 1001 (Ch), Mr Shloesberg applied for an order restraining Dechert (a firm of solicitors) from acting for Avonwick (the first respondent) and Mr Shloesberg's Trustees in bankruptcy (the third respondents). 

Mr Shloesberg applied on the basis that Dechert had received some documents comprising over 44,000 pages over which Mr Shloesberg maintained privilege.  Dechert had received those documents on behalf of, and through the powers of the Trustees for whom they acted.  Avonwick, through Dechert and with the consent of the Trustees, sought to use some of those documents in an unlawful conspiracy claim against Mr Shloesberg (and others). 

The critical issue was whether or not Mr Shloesberg's privilege in the documents now held by Dechert had transferred to his Trustees as a result of the bankruptcy.

Arnold J held that Mr Shloesberg's privilege was, by and large, not transferred to his Trustees.  The key points were that:

  • There was a distinction between the ownership of documents and the right to claim privilege
  • The legislation empowered the Trustees to use Mr Shloesberg's documents in discharge of their statutory functions, but it did not follow that the Trustees could therefore use those documents for the purposes of litigation
  • Privilege was not within the definition of "property", "power over property" or "interests" that vested in the Trustees.

Avonwick succeeded on one narrow class of documents; Mr Shloesberg received a judgment debt regarding an attack on his cat.  As that judgment sum itself was not personal property, the Trustees were therefore successors in title, and so entitled to privilege in respect of the documents related to that judgment debt.

While not binding on a New Zealand court, the Shloesberg decision accords with well-established principles of New Zealand law: the existence of a right to legal privilege does not depend upon the possession of the documents over which it is asserted (B v Auckland District Law Society [2004] 1 NZLR 326 (PC)).  A New Zealand court would therefore likely derive assistance from Shloesberg when determining if, and to what extent, privileged information of a bankrupt has passed to the Official Assignee.

See Court decision here.