Legal Advice Privilege subsisting beyond Corporate Client Dissolution?

Author: Simon Hill
In: Article Published: Thursday 10 October 2019

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What happens to legal advice privilege attaching to communications between a company and its lawyers, once that company has been dissolved; and the Crown has disclaimed all interest in its former property? This was the question the Court of Appeal considered in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600 (‘Addlesee’).

Facts

A Cypriot company called Anabus Holdings Ltd (‘Anabus’) had marketed a scheme into which a large group of investors has invested (the ‘Investors’). Anabus had had lawyers acting for it, Salans LLP, an English LLP (later renamed Dentons Europe LLP (‘Dentons’)). In the course of Dentons acting for Anabus, documents came into existence in Dentons’ files, which (it was assumed) initially attracted legal advice privilege. Dentons kept possession of these documents (the ‘Anabus/Dentons documents’).

Later, Anabus dissolved in Cyprus, and subsequently, the Crown in England disclaimed any and all interest in the Anabus/Dentons documents ‘without either asserting or waiving any legal professional privilege’, should any have vested in the English Crown bona vacantia

The Investors: (a) claimed the scheme was fraudulent; (b) issued proceedings against Dentons claiming damages for deceit or negligence; (c) wished to see the documents passing between Dentons and Anabus; and so (d) applied to the English Court for an order that Dentons do disclose the Anabus/Dentons documents[1].

The application came before Master Clark, who dismissed the application, holding that legal advice privilege subsisted notwithstanding the dissolution of Anabus. The Investors appealed.

For the appeal only, it was accepted by the Investors that the Anabus/Dentons documents ‘…did attract legal advice privilege at the time when they came into existence (and were not, for example, within the so-called ‘iniquity exception’)’(paragraph 2).

The Question posed

The question set down in paragraph 1 to this article appeared in paragraph 1 to Lewison LJ’s judgment in Addlesee, the only reasoned judgment (Floyd LJ and Hamblen LJ simply agree with Lewison LJ). While this is a pithy encapsulation of the question posed, in paragraph 2, Lewison LJ said:

‘The question on this appeal is whether legal advice privilege subsists notwithstanding the dissolution of Anabus’

Which in turn was refined, in paragraph 3, to:

‘whether, legal professional or legal advice privilege having attached to a communication by reason of the circumstances in which the communication was made, the communication remains privileged unless and until privilege is waived; or whether the privilege is lost if there is no person entitled to assert it at the time when a request for disclosure is made.’

Identification of the underlying Policy

With the question refined, Lewison LJ began his analysis by identifying how he might discern the answer. Lewison LJ said that ‘…of critical importance…’ to answering this question was ‘…identification of the underlying policy…’ because, as Lord Scott explained in Three Rivers DC v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 (‘Three Rivers’) at paragraph 35, legal advice privilege 'should be given a scope that reflects the policy reasons that justify its presence in our law.' For Lewison LJ, that was ‘…the key to the resolution of this appeal’(paragraph 6). 

It is right to note that there was an authority on point before the Court of Appeal in Addlesee, that of Garvin Trustees Ltd v The Pensions Regulator [2015] Pens LR 1 (‘Garvin Trustees’), a decision of the Upper Tribunal (so not binding on the Court of Appeal), however Lewison LJ choose to turn to that authority at the end of his judgment. Prior to Gavin Trustee, the question posed had been a novel one. 

The rationale for Legal Advice Privilege 

Before embarking on a review of the caselaw, Lewison LJ reminded himself that Addlesee concerned only legal advice privilege. While legal professional privilege was a term that covered legal advice privilege, the other category under legal professional privilege was litigation privilege, which, while sharing a common purpose, is different in scope[2].

Lewison LJ then considered a number of statements defining the (enduring) nature of legal advice privilege[3], and the strong resistance to undermining client confidence in its absolute nature through recognition of exceptions. By way of summary only[4], the key statements[5] were:

(a) in R v Derby Magistrates’ Court ex p B [1996] 1 AC 487; [1996] 1 FLR 513 (‘Derby Magistrates’), where Lord Taylor said, at [FLR] 527: 

‘The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent.’

(b) in Anderson v Bank of British Columbia (1876) 2 Ch D 644, where at 649, Sir George Jessel MR said of a client consulting a professional lawyer:

‘…he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him, should be kept secret, unless with his consent...’

(c) in Pearce v Foster (1885) 15 QBD 114, Sir Balliol Brett MR said, at 119-120:

‘The reason of the privilege is that there may be that free and confidential communication between solicitor and client which lies at the foundation of the use and service of the solicitor to the client; but, if at any time or under any circumstances such communications are subject to discovery, it is obvious that this freedom of communication will be impaired.’

(d) in Calcraft v Guest [1898] 1 QB 759 (‘Calcraft’), Sir Nathaniel Lindley MR said:

‘I take it that, as a general rule, one may say once privileged always privileged. I do not mean to say that privilege cannot be waived…’

(e) in Hobbs v Hobbs [1960] P 112, Stevenson J said, at 761:

‘privilege attaches for all time and in all circumstances’

(f) Returning to Derby Magistrates, against introducing exceptions and qualifications to a simple rule giving absolute assurance to a client about to confide in his lawyers (for instance, qualifying privilege so that it lasts only so long as the client has ‘a recognizable interest’ in preserving it), Lord Taylor said, at [FLR] 527 and 528:

‘… once any exception to the general rule is allowed, the client's confidence is necessarily lost. The solicitor, instead of being able to tell his client that anything which the client might say would never in any circumstances be revealed without his consent, would have to qualify his assurance…One can see at once that the purpose of the privilege would thereby be undermined.

…no exception should be allowed to the absolute nature of legal professional privilege, once established.'

(g) Lord Lloyd in Derby Magistrates, said, at [FLR] 529:

‘If the client had to be told that his communications were only confidential so long as he had ‘a recognisable interest’ in preserving the confidentiality, and that some court on some future occasion might decide that he no longer had any such recognisable interest, the basis of the confidence would be destroyed or at least undermined. There may be cases where the principle will work hardship on a third party seeking to assert his innocence. But in the overall interests of justice it is better that the principle should be preserved intact.’

(h) in Ventouris v Mountain [1991] 1 WLR 607, Bingham LJ said, at 611:

‘Without the consent of the client, and in the absence of iniquity or dispute between client and solicitor, no inquiry may be made into or disclosure made of any instructions which the client gave the solicitor or any advice the solicitor gave the client, whether in writing or orally.’

(i) in B v Auckland District Law Society [2003] UKPC 38, [2003] 2 AC 736, Lord Millet said, at paragraph 39 and 42 that communications should not be revealed ‘at any time or under any circumstances’, and at paragraph 47, said that legal advice privilege:

‘… requires that a lawyer must be able to give his client an absolute and unqualified assurance that whatever the client tells him in confidence will never be disclosed without his consent.’

(j) in Three Rivers, Lord Scott said, at paragraph 24:

‘if a communication or document qualifies for legal professional privilege, the privilege is absolute. It cannot be overridden by some supposedly greater public interest. It can be waived by the person, the client, entitled to it and it can be overridden by statute… but it is otherwise absolute.’

(k) With Lord Roger in Three Rivers, stating, at paragraph 54:

‘So it is settled that, in the absence of a waiver by the client, communications between clients and their lawyers for the purpose of obtaining legal advice must be kept confidential and cannot be made the subject of evidence.’

(l) in R (Prudential plc) v Special Commissioner of Income Tax [2013] 2 AC 185, Lord Neuberger said, at paragraph 17:

‘Where legal professional privilege (“LPP”) attaches to a communication between a legal adviser and a client, the client is entitled to object to any third party seeing the communication for any purpose, unless (i) the client has agreed or waived its right, (ii) a statute provides that the privilege can be overridden, (iii) the document concerned was prepared for, or in connection with, a nefarious purpose, or (iv) one of a few miscellaneous exceptions applies (eg in a probate case where the validity of a will is contested).’[6]

Later in his judgment, Lewison LJ stated whether ‘…some clients would not be deterred from being candid with their lawyers does not restrict the ambit of legal advice privilege.’ (paragraph 52)[7]

Tension between competing public interests

Although touched on by Lewison LJ later in his judgment, it is convenient here to note there is a tension underlying the privilege policy/principle; it arises out of a contest between 2 competing public interests. As Lord Millet said in B v Auckland District Law Society [2003] 2 AC 736, at paragraph 47, there is a tension: 

‘…between two competing public interests of high importance: the public interest in the maintenance of the integrity of the legal profession and the public interest in the administration of justice. The former interest may be said to require that all relevant information be made available to those charged with the investigation and determination of complaints against legal practitioners. The latter requires that a lawyer must be able to give his client an absolute and unqualified assurance that whatever the client tells him in confidence will never be disclosed without his consent.’[8]

However, the tension has been balanced/resolved very clearly in one direction. In Derby Magistrates[9], Lord Lloyd stated, at [FLR] 529:

‘…the courts have for very many years regarded legal professional privilege as the predominant public interest. A balancing exercise is not required in individual cases, because the balance must always come down in favour of upholding the privilege, unless, of course, the privilege is waived.’

Lord Taylor in Derby Magistrates stated, at [FLR] 528:

‘…if a balancing exercise was ever required in the case of legal professional privilege, it was performed once and for all in the sixteenth century, and since then has applied across the board in every case, irrespective of the client’s individual merits.’

Delineating the boundaries of Legal Advice Privilege?

The Investors accepted this absolute nature to privilege, but only where legal advice privilege existed. While it was assumed on the facts that the Anabus/Dentons documents were initially subject to legal advice privilege, the Investors variously argued the Anabus/Dentons documents had ceased to be so subject. Determining the merits of this argument raised a logically anterior question: What are the boundaries of legal advice privilege? Lewison LJ addressed this (much wider) question, at paragraphs 23 to 25:

‘[counsel for the Investors] has accepted that the boundaries are, in essence, to be determined in accordance with the underlying policy…

In my judgment…the establishment of legal advice privilege (and therefore its boundaries) depends on the nature and purpose of the communication; and the circumstances under which it is made. I have already quoted Lord Millett’s statement that “The documents are privileged because they were created for the purpose of giving or receiving legal advice. The inherent characteristics of the documents created for that purpose and in those circumstances endure.’[10]

'A communication thus “qualifies” for legal advice privilege as a result of the purpose for which and the circumstances in which it was made.’[11]

‘Iniquity Exception’ outside boundary of Legal Advice Privilege

An aspect to the law of privilege is the so-called ‘iniquity exception’ – that ‘No privilege attaches to documents or communications between client and lawyer, where the purpose of the client was the furtherance of crime, fraud or other iniquity.’ (paragraph 27)[12].

Lewison LJ found that the existence of the so-called ‘iniquity exception’ in no way undermines or conflicts with statements that ‘…once privilege attaches it remains in being unless waived by the client’ (paragraph 27). The iniquity exception is not, properly understood, so much an exception[13], since it is not a process whereby existing privilege is subsequently stripped away because of its iniquitous nature. Lewison LJ said, at paragraph 27 ‘…there is no retrospective stripping away of privilege. The communication in question never attracted legal advice privilege in the first place…’[14]. So, it marks the outer boundary of what qualifies for/gains privilege in the first place. Iniquitous communications do not qualify for, and so do not initially attract privilege. So there is no privilege to be subsequently lost. It is not akin to waiver as an exception to privilege being absolute.  

Legal Advice Privilege shield against disclosure not dependent on assertion

In Derby Magistrates, a Magistrates Court issued a summons against a solicitor, requiring the solicitor to produce to the Magistrates Court, privileged documents (the solicitor’s client having expressly refused to waive privilege). When the matter came before the House of Lords, it held that the summons should be quashed, without any requirement to wait to see whether the summoned solicitor would actually assert privilege. Lewison LJ said, at paragraph 43:

‘…the magistrates’ court had no power to issue the witness summons. It was not a question of issuing the summons and then waiting to see whether the recipient asserted legal professional privilege.’

Privilege is not dependent on assertion for it to be engaged and to be effective. It exists independently of assertion[15], and so any absence of assertion[16].

The position

Summarizing the position, Lewison LJ said, at paragraph 29:

‘All the statements I have quoted suggest that privilege attaches to communications at the time when they were made; and that the privilege remains unless and until the client consents to its waiver. The rationale for the privilege means that privilege comes into existence at the time when the person in question consults his lawyer. The client must be sure at the time when he consults his lawyer, that, without his consent, there are no circumstances under which the privileged communications will be disclosed without his consent. As Lord Taylor explained, the lawyer’s mouth “is shut forever.” It is not the immunity which must be asserted. On the contrary, it is the consent to disclosure which must be established.’ [emphasis in original in italics rather than bold]

Company dissolution and English Crown disclaimer

Returning to the facts of Addlesee, the two main additional factors were that: (a) Anabus had dissolved; and (b) the English Crown had disclaimed, without either asserting for waiving any legal professional privilege. Had this somehow resulted in existing privilege subsequently ceasing, despite the clear absence of recognized exceptions to the absolute nature of privilege?

Succession on privilege/waiver and the legal character of waiver

Firstly, Lewison LJ noted at paragraph 33, that ‘Privilege does not cease on the death of a living person’Bullivant v Attorney General for Victoria [1901] AC 196 ('Bullivant') had established this, with Lord Lindley stating, at 206:

‘The mere fact that a testator is dead does not destroy the privilege. The privilege is founded upon the views which are taken in this country of public policy, and that privilege has to be waived, and unless the people concerned in the case of an ordinary controversy like this waive it, the privilege is not gone - it remains.’ [emphasis in original in italics rather than bold]

From Bullivant, Lewison LJ extracted a further point, at paragraph 34, that Bullivant:

‘…establishes that the privilege remains unless waived; but that it may be competent for the personal representatives to waive it.’

No new exceptions to absolute nature of privilege

Secondly, Lewison LJ returned to the principle of privilege that ‘…the lawyer must be able to assure his client that the communications covered by legal advice privilege will never be revealed unless he consents.’ (paragraph 57); or as Lord Taylor in Derby Magistrates adopted from Calcraft‘once privileged, always privileged’[17]. To this principle, Lord Taylor was insistent that no exceptions be created to this, for otherwise, the principle would be undermined (paragraphs 52 and 57). Logically Lewison LJ reasoned, this would apply to the creation of a new exception where a company dissolves, as contended for by the Investors[18]

Moreover, Lewison LJ considered that recognizing such an exception, would come close to recognizing that privilege comes to an end when the client whose privilege it is, no longer has ‘a recognisable interest’ in it. Such a fashioning of the law was rejected in both Derby Magistrates and Nationwide Building Society v Various Solicitors [1999] PNLR 52 (‘Nationwide’; where it was a contended that privilege could cease in circumstances where the risk of proceedings against the clients whose privilege it was, was remote), precisely because it would undermine a lawyers ability to assure a client that client/lawyer information/documents will never be revealed, unless he consents. 

These elements therefore explained why Lewison LJ rejected an Investors’ argument that privilege can only exist if there is a legal person who is capable of asserting legal advice privilege, Lewison LJ at paragraph 45 said:

'The right or immunity (i.e. the privilege) is created at the time that the communication is made. I would accept that if there is no extant person at that time, there can be no right. But since privilege attaches to a communication made by a client to a lawyer (or vice versa), I find it impossible to conceive of a factual scenario in which that might be the case. The immunity from production thus created belongs to the person who was the client at the time. Once created, the immune status attaches to the communication. Once the client ceases to exist, the only remaining question is whether there is anyone who has the right to waive it.’

To hold otherwise, Lewison LJ said, at paragraph 47, would ‘…subvert the policy that the boundaries must be clear and immutable at the time when the communication is made.’

The English Crown disclaimed – right to waiver

Various arguments were put forward by the Investors about the effects of Anabus’ dissolution being under foreign law and the English Crown’s disclaimer. These had led Lewison LJ to reflected upon the legal character of waiver, described in terms of competence to waive (paragraph 34), a power to waive (paragraph 34), and as a right (paragraph 45, 71 and 72), rather than as a property right that can vest. After referring to Bullivant, Lewison LJ said, at paragraph 34:

'It is … noteworthy that Lord Lindley did not articulate the principle in terms of property, successors in title, or devolution of rights; but by reference to the underlying public policy. Nor did he say that the right to assert privilege had “vested” in the personal representatives. What they had was the power to waive it. Absent a waiver the privilege “remains”. Whether privilege had to be “claimed” by the dead man’s executors was not the legal point in the case, although in practical terms that will usually be the case on the facts.’

This formed the basis for some criticism of Roch LJ’s language in R v Molloy (Deceased) [1997] 2 CR App 238 (‘Molloy’). In Molloy, Roch LJ had been posed the question: ‘does the right to waive legal professional privilege die with the person’ (paragraph 36). Roch LJ found that legal professional privilege does not cease on the death of the client 'but vests in his or her personal representatives'. Lewison LJ, seemingly critical of the use of the word ‘vests’, stated at paragraph 36 ‘This is the language of property rights, which may now need qualification’, given that Molloy involved ‘…no underlying property in issue…it was not a case of legal advice privilege (or more accurately the right to waive it) passing with a particular item of property.’ In other words, the right to waiver is not a property right, and it did not vest – such language should be avoided therefore, particularly where the right to waive is not related to a (vesting) property right.

Fortifying that the right to waive privilege (as well as legal professional privilege) is not a property right (nor a power over property), but is a personal right, Lewison LJ noted from Shlosberg v Avonwick Holdings Ltd [2017] Ch 210 ('Shlosberg'), at paragraph 39, that:

‘Despite the wide definition of “property” in section 436 (1) of the Insolvency Act 1986, this court held in that case that legal professional privilege did not pass to the trustee in bankruptcy of a person to whom it belonged before his bankruptcy. The court rejected the argument that legal professional privilege was “property”. It was a personal right of the bankrupt. Nor was it a power over property which the trustee could deploy by waiving privilege…[19]

Location of the right to waiver

Identifying the location of the personal right to waiver presented some complex issues, given: (a) Anabus had dissolved under foreign law; (b) it was common ground that (i) any assets belonging to Anabus, then situated in this jurisdiction, were governed by English law; and (ii) ‘…legal advice privilege is, for this purpose only, to be treated as territorially limited to England and Wales.’ (paragraph 65) – something Lewison LJ assumed, without deciding, was correct; (c) Section 1012 of the Companies Act 2006, headed ‘Property of dissolved company to be bona vacantia’ did not apply as it applied only to companies in this jurisdiction; (d) the rule[20] of English common law is all property must belong to someone, and where there is no other owner, it is the property of the English Crown, as holder of paramount title, by prerogative right, but the extent of prerogative right beyond personal property and chattels real is uncertain (paragraph 67).  

Cutting through this knotty ‘conundrum’ (paragraph 72), Lewison LJ reasoned that its resolution would not, in fact, affect the outcome of the appeal. At paragraphs 72 and 73, Lewison LJ said:

‘If the right to waive privilege never passed to the Crown (or if, as appears to be the case, its settled policy is neither to assert nor waive privilege) then, on the face of it there is no one who can or will waive privilege.

If, on the other hand, the right to waive privilege did pass to the Crown, it is clear that the Crown has not waived it. The disclaimer disclaimed the Crown’s 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.’

Aside from an argument discussed below, it therefore mattered not where the right to waive resided – since it had not been exercised in any event. The possibility that nobody held the right to waiver, seemingly, has no adverse impact/affect on privilege’s continuing subsistence (logically, forever). 

Disclaimer is not equivalent to waiver 

The argument Lewison LJ remained to address, and it is an argument he rejected, at paragraphs 73 and 74, was the contention that the Crown’s disclaimer was equivalent to waiver, and destroyed or extinguished the privilege. Notably, this argument could only operate, if the right to waiver had transferred, bona vacantia, to the Crown in the first place. 

Lewison LJ held that a disclaimer does not necessarily destroy or extinguish that which has been disclaimed, as opposed to the rights and liabilities of the person who has disclaimed. Lewison LJ said, at paragraphs 76 and 77:

‘…what is disclaimed is the bundle of rights and liabilities to which the disclaimer would otherwise have been entitled or to which he would have been subject. It is not necessarily destructive of the underlying property…Moreover, the cases show, and the policy requires, that privilege is only lost by voluntary disclosure (i.e. waiver).

I do not, therefore consider that the disclaimer by the Crown can be treated as if it were a waiver; or as destructive of legal advice privilege.’

With respect, it seems that it is the second element to this reasoning that is the most persuasive – and such reasoning is consistent with Lewison LJ earlier in his judgment, where he stated, at paragraph 18 it is ‘…only voluntary production that destroys the privilege.’

Refusal to waive unchallengeable

Although not expressly referred to by Lewison LJ, it might be helpful here to note Lord Taylor’s statement in Derby Magistrates, at [FLR] 523, as to the rule that: ‘…the refusal of the client to waive his privilege, for whatever reason, or for no reason, cannot be questioned or investigated by the court.’

Australian/USA Authorities and Garvin Trustees Ltd

Two Australian cases were referred to. In both, the respective courts had held, correctly in Lewison LJ’s opinion,[21] that privilege continues to attach to such communications made by a corporate client, even after the corporation has been dissolved[22]. In the Federal Court case Lake Cumbeline Pty Ltd [1994] FCA 1479, [1994] 136 ALR 58, and in the Court of New South Wales case Swaab v Commissioner of the NSW Police Service [2005] NSWSC 901. The Investors reliance upon two countervailing decisions from USA proved to be unpersuasive[23].

Garvin Trustees Ltd

Lewison LJ left consideration of the one English authority on point until last. In Garvin Trustees Ltd v The Pensions Regulator [2015] Pens LR 1 (‘Garvin Trustees’), Judge Herrington in the Upper Tribunal held that legal advice privilege did not survive the dissolution of a Northern Irish company which had been the client. Lewison LJ held that that was wrong and, at paragraph 90, that Garvin Trustee should be overruled. Garvin Trustee is therefore not good law. 

Lawyer’s Role

Where a lawyer faces an application for disclosure of potentially privileged information/document, the lawyer should consider what Blackburne J said in Nationwide, at 69:

‘…whether or not the client has any recognisable interest in continuing to assert privilege in the confidential communications, the privilege is absolute in nature and the lawyer's mouth is “shut for ever”….it follows from this that it is the lawyer's duty to claim the privilege on behalf of the client, or former client, whose privilege it is, at any rate where it is at least arguable that the privilege exists.’

Conclusion

Privilege attaches to a communication because of the nature of the communication and the circumstances under which it is made. Legal advice privilege attaches at the moment when the protected communication is made. It attaches in order that the client should thereby be secure in the knowledge, at the time of communicating, that what is conveyed is protected information/documents and will not be disclosed at all. Privilege, once it attaches, is an inherent characteristic, a lasting, enduring characteristic of the information/documents. Privilege exists and persists, and has effect, even without being asserted by the client or the client’s successor-in-title. To put it another way, the existence (and continuing existence) of legal advice privilege is not dependent on it being actually asserted by the client or the client’s successor-in-title. 

As will be clear, privilege is not simply a personal right to assert a refusal to produce the documents in question for inspection. It is therefore not necessary to ask who holds the ‘right to assert privilege’ and then ask, have they exercised it/asserted it. The lawyer or client might ‘claim’ privilege, indeed the lawyer might be under a duty to do so, but that is different. Privilege remains attached to the information/documents, unless and until the client consents to its waiver[24] (or a statute[25] provides that the privilege can be overridden or it falls into a miscellaneous exception[26]). Privilege does not cease merely because the risk of proceedings against the client who’s privilege it is becomes remote, or the client is viewed as not having a recognizable interest in continuing to have privilege over the information/documents. The privilege is absolute in nature and the lawyer’s mouth is ‘shut for ever’.

The right to waive the privilege is a personal right. Absent the exercise of that waiver right, the privilege remains. This will remain true even if, at a later point, there is nobody who holds the right to waive privilege, or the Crown holds it, but is unwilling to exercise it. 

This might pithily be summarized as ‘…privilege attaches to a communication because of the nature of the communication and the circumstances under which it is made; and that the privilege thus established remains absolute unless it is waived.’ (paragraph 26), and this is so, even if the client company dissolves and any right to waive is disclaimed/left unexercised by the Crown.

On the facts in Addlesee, the Investors’ appeal against Master Clark refusal to order Dentons to give disclosure of the Anabus/Dentons documents, was dismissed. While Master Clark had been correct to hold that legal advice privilege subsisted notwithstanding the dissolution of Anabus, the Court of Appeal differed as to the reasons for this[27].

SIMON HILL © 2019

BARRISTER

33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.

 

[1] See Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, paragraphs 2 and 90.

[2] On this, Lewison LJ noted Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, at paragraph 5, that:

‘…legal professional privilege is commonly categorised under two different heads: legal advice privilege and litigation privilege. Although they have a common purpose, the scope of each is different. We are concerned only with legal advice privilege.’

[3] On the acquisition of legal advice privilege in the first place (something that was assumed in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600), see Lord Millet in B v Auckland District Law Society [2003] UKPC 38, [2003] 2 AC 736, a privy council case, where he said, at paragraph 69:

‘The documents are privileged because they were created for the purpose of giving or receiving legal advice.’

[4] The most salient passages are set out in the body of the article. The full initial part Lewison LJ’s review of the case law in this area, is set out below. It is from paragraphs 7 to 17 of Lewison LJ’s judgment. Note that Lewison LJ added emphasis to some words/phrases within some of the quotation by placing the words/phrases in italics. However, as the quotes in this article are in italics already, the emphasis added by Lewison LJ is displayed as bold text:

‘In R v Derby Magistrates’ Court ex p B [1996] 1 AC 487 Lord Taylor of Gosforth CJ comprehensively reviewed the authorities. I will pick out some extracts from them shortly. Unless otherwise stated, the emphasis in quoted passages is mine. Having considered the authorities, Lord Taylor concluded:

“The principle which runs through all these cases, and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests.”

On the way to his conclusion Lord Taylor quoted from a number of cases which express the same thought.

“it is equally necessary, to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating of his defence against the claim of others; that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him, should be kept secret, unless with his consent.” (Sir George Jessel MR in Anderson v Bank of British Columbia (1876) 2 Ch D 644, 649)

“The reason of the privilege is that there may be that free and confidential communication between solicitor and client which lies at the foundation of the use and service of the solicitor to the client; but, if at any time or under any circumstances such communications are subject to discovery, it is obvious that this freedom of communication will be impaired.” (Sir Balliol Brett

MR in Pearce v Foster (1885) 15 QBD 114, 119-120)

“I take it that, as a general rule, one may say once privileged always privileged. I do not mean to say that privilege cannot be waived…” (Sir Nathaniel Lindley MR in Calcraft v Guest [1898] 1 QB 759, 761)

“privilege attaches for all time and in all circumstances” (Stevenson J in Hobbs v Hobbs [1960] P 112 , 116-117)

As Lord Taylor put it later in his speech:

“… once any exception to the general rule is allowed, the client's confidence is necessarily lost. The solicitor, instead of being able to tell his client that anything which the client might say would never in any circumstances be revealed without his consent, would have to qualify his assurance. He would have to tell the client that his confidence might be broken if in some future case the court were to hold that he no longer had "any recognisable interest" in asserting his privilege. One can see at once that the purpose of the privilege would thereby be undermined.”

Thus, he concluded:

“For this reason I am of the opinion that no exception should be allowed to the absolute nature of legal professional privilege, once established.”

11.Agreeing with Lord Taylor, Lord Lloyd said:

“If the client had to be told that his communications were only confidential so long as he had ‘a recognisable interest’ in preserving the confidentiality, and that some court on some future occasion might decide that he no longer had any such recognisable interest, the basis of the confidence would be destroyed or at least undermined. There may be cases where the principle will work hardship on a third party seeking to assert his innocence. But in the overall interests of justice it is better that the principle should be preserved intact.”

In the course of his speech Lord Lloyd commended Bingham LJ’s statement of the principle in Ventouris v Mountain [1991] 1 WLR 607, 611. That statement is:

“Without the consent of the client, and in the absence of iniquity or dispute between client and solicitor, no inquirymay be made into or disclosure made of any instructions which the client gave the solicitor or any advice the solicitor gave the client, whether in writing or orally.”

According to Bingham LJ, the nature of privilege precludes even an inquiry into communications passing between lawyer and client. It is not, therefore, simply a matter of making an inquiry and waiting to see whether anyone objects. Lord Hoffmann made much the same point in R (Morgan Grenfell & Co Ltd) v Special Commissioners of Income Tax [2002] UKHL 21, [2003] 1 AC 563 at [30]:

“It is not the case that LPP does no more than entitle the client to require his lawyer to withhold privileged documents in judicial or quasi-judicial proceedings, leaving the question of whether he may disclose them on other occasions to the implied duty of confidence. The policy of LPP requires that the client should be secure in the knowledge that protected documents and information will not be disclosed at all.”

The security of knowledge to which Lord Hoffmann referred must surely be knowledge at the time that the communication is made. That, to my mind, is clear from an earlier passage in his speech at [7] where he said:

“First, LPP is a fundamental human right long established in the common law. It is a necessary corollary of the right of any person to obtain skilled advice about the law. Such advice cannot be effectively obtained unless the client is able to put all the facts before the adviser without fear that they may afterwards be disclosed and used to his prejudice.”

It was that case that finally established that legal advice privilege was not confined to the question of disclosure in legal proceedings; but was a fundamental human right.

16.In B v Auckland District Law Society [2003] UKPC 38 , [2003] 2 AC 736 the Law Society was investigating a complaint against solicitors. They handed certain documents to counsel appointed by the Law Society on the express basis that privilege was not waived. The issue on appeal was whether the Law Society was entitled to refuse to return the documents to the solicitors. Lord Millett repeatedly emphasised the absolute nature of legal advice privilege and that its foundation was that the communication would not be revealed “at any time or under any circumstances”: see [39] and [42]. At [47] he said that legal advice privilege:

“… requires that a lawyer must be able to give his client an absolute and unqualified assurance that whatever the client tells him in confidence will never be disclosed without his consent.”

One of the arguments was that by handing over the documents to the Law Society’s counsel privilege had been waived.

Lord Millett dealt with that argument as follows:

“[68] The society's argument, put colloquially, is that privilege entitles one to refuse to let the cat out of the bag; once it is out of the bag, however, privilege cannot help to put it back. Their Lordships observe that this arises from the nature of privilege; it has nothing to do with waiver. It does not follow that privilege is waived generally because a privileged document has been disclosed for a limited purpose only…. The question is not whether privilege has been waived, but whether it has been lost. It would be unfortunate if it were. It must often be in the interests of the administration of justice that a partial or limited waiver of privilege should be made by a party who would not contemplate anything which might cause privilege to be lost, and it would be most undesirable if the law could not accommodate it.

[69] The society argued that, once the documents were produced to [counsel], they ceased to be privileged. Their Lordships consider that this is playing with words. It confuses the nature of the documents with the rights to which the arrangements with [counsel] gave rise. The documents are privileged because they were created for the purpose of giving or receiving legal advice. If they are not produced voluntarily, production cannot be compelled. If they are produced voluntarily, the right to withhold production no longer attaches to them. In that sense the privilege may be said to be lost. But they are the same documents, and it is not inappropriate to describe them as privileged. Their inherent characteristics are the same. The policy which protected them from unauthorised disclosure is the same. The cat is still a cat. It can be put back in the bag.”

[5] In the passages from authorities quoted in the main body of the article, the emphasis added by Lewison LJ to certain words/phrases has been removed. In the preceding footnote, where the passages are set out in full, the passages retain the Lewison LJ’s emphasis (made in bold since the quotes are already in italics). 

[6] As observed by Lewison LJ at paragraph 22 of Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600:

‘The last of these exceptions refers to what is commonly known as a Larke v Nugus statement, where a solicitor prepares a note recording observations about the client’s testamentary capacity.’

[7] Lewison LJ went on, at paragraphs 52 to 54, to the rely upon two passages, one from Lord Scott in Three Rivers DC v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, at paragraph 34:

‘It is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non-disclosure that the present law of privilege provides. But the dicta to which I have referred all have in common the idea that it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers' legal skills in the management of their (the clients') affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else.’

And one passage from Lord Sumption in R (Prudential plc) v Special Commissioner of Income Tax [2013] 2 AC 185, who, after quoting Lord Scott, said at paragraph 118:

‘The underlying principle is that those clients who do wish to consult a lawyer on the basis of absolute confidence should be entitled to do so, notwithstanding that absolute confidence may be less important to others.’

Lewison LJ remarked, at paragraph 54 that:

‘That was a dissenting judgment; but Lord Neuberger, giving the leading judgment of the majority (with which the other members of the majority agreed) said in terms at [20] that he could not improve on Lord Sumption’s explanation of the rationale for legal advice privilege.’

[8]Quoted, with approval, in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600 by Lewison LJ, at paragraph 32. In addition, Lewison LJ quoted, Three Rivers DC v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, paragraphs 34 and 112:

‘… the seeking and giving of [legal] advice is strongly in the public interest’

‘The public interest in a party being able to obtain informed legal advice in confidence prevails over the public interest in all relevant material being available to courts when deciding cases.’

Further, in the same case, Lord Carswell said, at paragraph 86: 

‘Determining the bounds of privilege involves finding the proper point of balance between two opposing imperatives, making the maximum relevant material available to the court of trial and avoiding unfairness to individuals by revealing confidential communications between their lawyers and themselves. The practice which has developed is a reconciliation between these principles: Seabrook v British Transport Commission [1959] 1 WLR 509, 513, per Havers J. There is a considerable public interest in each of these. The importance of keeping to a minimum the withholding of relevant material from the court, upon which Mr Pollock laid emphasis, is self-evident. It was stressed by Wigmore (Evidence in Trials at Common Law, vol 8, rev McNaughton (1961), p 554, para 2291), who expressed the opinion that the privilege should be strictly confined within the narrowest possible limits consistent with the logic of its principle, an approach echoed in the speech of Lord Edmund-Davies in Waugh v British Railways Board [1980] AC 521, 543. The competing principle of legal professional privilege is also rooted in public policy: cf B v Auckland District Law Society [2003] 2 AC 736, 756-757, paras 46-47. It is not based upon the maintenance of confidentiality, although in earlier case law that was given as its foundation. If that were the only reason behind the principle the same privilege would be extended to such confidants as priests and doctors, whereas it has been settled in a line of authority stemming from the Duchess of Kingston's Case (1776) 1 East PC 469 that it is confined to legal advisers: see, e g, Cross & Tapper on Evidence, 9th ed (1999), pp 461-465.’

[9] The two passages quoted next from R v Derby Magistrates’ Court ex p B [1996] 1 AC 487, [1996] 1 FLR 513, do not appear in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, however they are instructive of how the law has balanced/resolved this tension.

[10] Lewison LJ added emphasis to some words/phrases within some of the quotation by placing the words/phrases in italics. However, as the quotes in this article are in italics, the emphasis added by Lewison LJ is displayed as bold text.

[11]] In support of this analysis, Lewison LJ in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, at paragraph 25, quoted Lord Scott in Three Rivers DC v Governor and Company of the Bank of England (No 6) [2005] 1 AC 610, at paragraph 38:

‘In cases of doubt the judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law. If it does not, then, in my opinion, legal advice privilege would not apply. If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law. Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply? The criterion must, in my opinion, be an objective one.’

[12]] Lewison LJ in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, also said, at paragraph 27:

‘The concept of “iniquity” in this context is a broad one.’

[13] In support of characterizing the so-called ‘iniquity exception’ as as not so much an exception, rather a marking of a boundary, Lewison LJ quoted, at paragraph 27, from Civil Procedure 3rd, edited by Professor Zuckerman, where Professor Zuckerman explains, at paragraph 16.107:

‘Communications made for illegal or improper purposes, such as the furtherance of crime or the commission of fraud or furtherance of iniquity, are not privileged. This principle is not so much an exception to the rule that communications between client and lawyer for the purpose of obtaining legal advice … are privileged, as a mark of the outer bounds of the definition of privilege.’

[14] In Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, Lewison LJ said, at paragraph 28:

‘In my judgment, therefore, the boundaries of legal advice privilege, within which it is absolute unless and until waived, are that the communication in question must be a communication between lawyer and client, made in connection with giving or receiving legal advice, otherwise than for an iniquitous purpose.’

[15] On the proposition that privilege is more than simple a right to assert a shield from disclosure, Lewison LJ noted, paragraph 37, Arnold J’s description of legal professional privilege in Shlosberg v Avonwick Holdings Ltd [2016] EWHC 1001 (Ch) (not subject of argument in the Court of Appeal in Shlosberg v Avonwick Holdings Ltd [2017] Ch 210 (‘Shlosberg’), see paragraph 43), at paragraph 62:

‘Privilege is a right to resist the compulsory disclosure of information, and in particular documents which contain legal advice or were created for the dominant purpose of obtaining information or advice in connection with actual or contemplated litigation…It follows that it is purely a negative right.’

But, importantly, Lewison LJ said, at paragraph 40, that:

‘…privilege attaches to a document or communication. It is more than just a personal right to assert a refusal to produce the documents in question for inspection.’

[16] Fortifying this position, Lewison LJ referred, at paragraph 30 and 31 to sections 8 and 10 of the Police and Criminal Evidence Act 1984. In section 10, items subject to legal privilege are defined. After quoting section 10, Lewison LJ said, at paragraph 31:

‘This provision was said in R v Central Criminal Court, ex p Francis & Francis [1989] AC 346 to encapsulate the common law. Professor Zuckerman also considers that section 10 is “a useful definition of the common law privilege”: Civil Procedure (3rd ed) para 16.4. There is no requirement here for legal advice privilege to be positively asserted.’

[17] Lord Taylor in R v Derby Magistrates Court Ex Parte B [1996] 1 FLR 513, at 523, referred to:

‘…the long-established rule that a document protected by privilege continues to be protected so long as the privilege is not waived by the client: once privileged, always privileged.' 

[18] Lewison LJ viewed the Investors as arguing that the law should recognise an additional exception to the absolute and enduring nature of legal advice privilege (along side the waiver exception). But the Investors at one point sought to reframe the argument. That: (a) aside from Garvin Trustees, this was a novel point (which the court accepted); (b) what was in question was whether the law of privilege ought to extended to where a company had subsequently dissolved; (c) in Three Rivers, Lord Carswell, at paragraph 86, had noted an approach in Waugh v British Railways Board [1980] AC 521 that ‘…the privilege should be strictly confined within the narrowest possible limits consistent with the logic of its principle…’; and (e) R (Prudential plc) v Special Commissioner of Income Tax [2013] 2 AC 185 was an example of the court refusing to extend the scope of privilege, in that case, to legal advice given by accountants.

Lewison LJ rejected this argument, at paragraphs 48-51, saying, at paragraph 51:

‘…privilege attaches to a communication at the time when it is made. It is not a question of extending the scope of privilege, but of extending the circumstances in which privilege, once attached to a communication, ceases to apply.’

[19] Lewison LJ supplemented these comments with a quote from Etherton MR in Shlosberg v Avonwick Holdings Ltd [2017] Ch 210, where Etherton MR said, at paragraph 69:

‘[counsel for the bankrupt] accepted that the trustee can use privileged documentation and the information contained in it for the statutory purpose of getting in and realising the bankrupt's estate. He submitted, and the judge concluded, however, that the trustee can only use such documentation and information in a way that would not amount to a waiver of privilege. I agree.’

[20] In support of the proposition that it is a rule of the English common law that all property must belong to someone, Lewison LJ relied on the judgment of Romer LJ in Re Wells [1932] 1 Ch 29, where Romer LJ said, at 56:

‘… the rule at common law is that property must belong to somebody, and where there is no other owner, not where the owner is unknown, that is the distinction, it is the property of the Crown.’

[21] See paragraph 55

[22] In Lake Cumbeline Pty Ltd [1994] FCA 1479, [1994] 136 ALR 58 (‘Lake Cumbeline’), Tamberlin J said, at paragraph 38:

‘In my opinion, once it is established that the documents are privileged then the privilege is not lost unless there is a waiver express or implied by the person entitled for the time being to that privilege.’

Lewison LJ in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600 summarized Swaab v Commissioner of the NSW Police Service [2005] NSWSC 901 as holding that:

‘…privilege survived dissolution whether or not it had vested in the Australian Securities Commission, which is the equivalent of vesting in the Crown as bona vacantia.’

While not referred to by Lewison LJ in his judgment, it is striking how English law as determined by Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600 follows the law determined by Tamberlin J in Lake Cumbeline. A few passages from Lake Cumbeline will illustrate this. By way of introduction, UBA applied for an order for disclosure of some documents, assumed to be subject to legal professional privilege (both legal advice privilege and litigation privilege). The client for these document had been a company called Trawl, which subsequent to the documents creation, had entered liquidation and had been dissolved. The Commission can be compared to the English Crown. At paragraph 6:

‘The only two issues before me presently for decision are whether privilege can be maintained in respect of certain Trawl documents in the light of the fact that the company has been dissolved and whether there has been waiver of privilege in relation to any of the documents in respect of which damages in the nature of costs are claimed by the applicants.’

And from paragraphs 36 to 42:

‘…the Trawl documents attract legal professional privilege. Therefore, in my view as at the date of dissolution of Trawl, the documents were privileged and the privilege was that of Trawl and that privilege subsists until it is waived by a person or entity competent and able to waive.

Under the provisions of the Corporations Law this privilege passed to the Commission which is the successor to Trawl in respect of claims relating to the documents. The Commission has decided not to assert or waive the privilege.

In my opinion, once it is established that the documents are privileged then the privilege is not lost unless there is a waiver express or implied by the person entitled for the time being to that privilege. In the present case it is clear that Trawl has not waived the privilege. It is also clear in the letter from the Commission that the Commission has not waived the privilege nor does it intend to. Furthermore, the applicants in the present proceedings cannot waive the privilege because it is not their privilege. It is that of Trawl. Accordingly, nothing which they do or have done or which they say can have the effect of waiving the privilege that was originally vested in Trawl and now vests in the Commission.

I do not think that the right of confidentiality and privilege which the principle embodies has been lost as a result of the circumstance that Trawl has been dissolved. Indeed, in my opinion the right has survived and has passed to the Commission.

The question might be tested this way. Suppose the solicitor acting for Trawl in that previous litigation were asked in the present proceedings to give evidence as to the content of certain privileged advices which was given to Trawl and its directors, the applicants, in 1988. The solicitor would have no authority or power to disclose that advice unless there had been waiver by either Trawl or its successor, the Commission. Until such waiver has occurred the privilege remains and the solicitor has no authority to waive the privilege. That is the position, in substance, which has arisen here. There are privileged documents in the custody of the applicants or their agents and such privilege has not been waived. Hence the privilege continues notwithstanding the dissolution of Trawl.

…To now allow UBA to access, inspect, and use those confidential communications in the present proceedings is to act in a manner quite contrary to the expectations and confidences which formed the basis on which those communications were made. Disclosure of such material must inevitably open up the possible use of such confidential privileged material in the present proceedings.

For the reasons given above I am therefore of the opinion that in relation to the Trawl documents which UBA seeks to inspect, such inspection should be denied because in my view on the assumption that the documents were privileged in the first place the privilege still exists and has not been waived. This is not to say that it is not open to UBA to challenge if it wishes in relation to any particular documents as to whether they satisfy the tests of privilege. It is simply to say that on the assumption they are privileged I disagree with the submission that this privilege has been lost as a result of the dissolution of the company Trawl.’

[23] The USA cases proved unpersuasive because, in essence: (a) a different, shifting burden of proof, approach had been taken to the absolute nature of privilege in one state jurisdiction; (b) the law could not be assumed to be settled across the United States, in light of it being described as an ‘unsettled legal question’, and (c) the USA may not have struck the same decisive balance, as in England, in favour of protecting legal advice privilege.

On these last two points, at paragraph 56, Lewison LJ said:

‘The judge noted that the Fourth Circuit had described the question as an “unsettled legal question”. I am not prepared to assume that the law in this regard is settled across the United States. Moreover, it may well be that in the United States the balance between the public interest in protecting legal advice privilege and the public interest in placing all relevant evidence before a court has not been so decisively struck in favour of legal advice privilege as is has been in this jurisdiction. As Lord Taylor said in Derby Magistrates at 508E, the balancing exercise was performed once and for all in the 16 th century, and since then has applied across the board.’

[24] Lewison LJ states this in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, at paragraph 26, where he said:

‘These statements of high authority show that privilege attaches to a communication because of the nature of the communication and the circumstances under which it is made; and that the privilege thus established remains absolute unless it is waived.’

[25] Lewison LJ said, in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, at paragraph 61:

‘Privilege may be overridden by statute; but a statute cannot do so by general words. If statute is to have that effect, it must do so expressly or by necessary implication: Morgan Grenfell at [8]. It was that principle that this court applied in Shlosberg, in concluding that nothing in the Insolvency Act took away privilege attaching to communications between Mr Shlosberg and his lawyers; or enabled anyone else to waive it.’

Section 97 of the Magistrates Court Act 1980 is not such an overriding statute. See R v Derby Magistrates’ Court ex p B [1996] 1 AC 487 and Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, paragraph 42.

On the facts in Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, no party (in particular, the Investors) contended that the application of privilege was in any way overrode by a statute. See paragraph 62.

[26] For the exact detail on this, see Lord Neuberger in R (Prudential plc) v Special Commissioner of Income Tax [2013] 2 AC 185, at paragraph 17 (quoted in the main body of this article).

[27] See Addlesee v Dentons Europe LLP [2019] EWCA Civ 1600, paragraphs 2 and 90.