Court Of Appeal Confirms Privilege Never Dies

The Court of Appeal has issued another important ruling on the law on legal advice privilege by overturning the decision of the Upper Tribunal (Tax and Chancery) in Garvin Trustees Limited v The Pensions Regulator [2015] Pens L.R. 1. This judgment will be welcomed by lawyers in general as it confirms that privilege never dies. Furthermore, it provides clear guidance on what happens to privileged communications between a company and its lawyers in the event that the company ceases to exist. It also provides some helpful guidance on what steps it is reasonable and appropriate for a law firm to take to protect a former client's privilege.

In brief, the Court of Appeal overruled Garvin, where Herrington J had held that privilege belonging to a company ceased to exist following dissolution and the expiration of the time period to restore the company to the register.

Background

This case came before the Court of Appeal because a group of investors in a scheme marketed by a Cypriot company, Anabus Holdings Ltd ("Anabus"), requested disclosure of documents belonging to Anabus held by a law firm, Dentons Europe LLP ("Dentons"), on the basis that Anabus had been dissolved and, therefore, could no longer assert privilege: meaning that such privilege had ceased to exist.

At common law, the interests of a dissolved company pass to the Crown as bona vacantia. Accordingly, the investors also advanced an alternative argument that, to the extent that the dissolved company's privilege had passed to the Crown as bona vacantia, the effect of a formal disclaimer by the Crown was to extinguish the privilege.

Unsurprisingly, the Garvin decision was of concern because it undermined what lawyers had long understood to be the sacred status of communications passing between a lawyer and his or her client. Readers will be familiar with R v Derby Magistrates Court ex p B [1996] 1 AC 487 where Lord Taylor stated 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."

However, Garvin created a dilemma for lawyers who on the one hand are duty bound to protect privilege belonging to their clients and former clients and on the other hand have to respond to requests for disclosure from third parties with legitimate interests in those documents, in circumstances where, for example, the former clients and/or...