Court Of Appeal Considers Iniquity Exception To Privilege

• Published date: 11 August 2022
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Disclosure & Electronic Discovery & Privilege, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Herbert Smith Freehills
• Author: Ms Anna Pertoldi, Maura McIntosh and Jan O'Neill

The Court of Appeal has upheld a High Court decision (considered here) which found that parties will not necessarily be prevented from maintaining privilege in all cases where it is found that they have made false statements to their solicitors and the court: Candey Ltd v Bosheh [2022] EWCA Civ 1103.

It is well established that privilege does not apply to protect communications made in furtherance of a crime, fraud or equivalent conduct (often referred to as the "iniquity exception"). In considering whether this exception applies, the question is whether the disputed communications are part of the ordinary course of the professional engagement of the solicitor or whether there has been an abuse of the solicitor client relationship, such that privilege over those communications is negated. In this case, the solicitors were seeking to rely on alleged fraudulent statements made in the underlying action where they acted for the client. There was no new or different fraud which took the case out of the ordinary run and the iniquity exception was therefore not applicable.

The court also rejected an alternative argument, raised for the first time on appeal, that the documents were not privileged because there was no confidentiality in the documents as between the solicitors and client. Solicitors were obliged to keep privileged information confidential from third parties, including the court, when it was not in the public domain.

So far as confidential non-privileged documents are concerned, where the documents have been obtained improperly, the court has to consider whether the public policy interest in excluding evidence improperly obtained is trumped by the important (but narrower) objective of achieving justice in the particular case. That was not the position on the facts of this case, so permission to use the documents was denied.

Background

A firm of solicitors brought claims against their former client concerning their entitlement to be paid their fees for acting under a conditional fee agreement (CFA) in the defence of a Chancery action brought against the client alleging fraud.

The Chancery action had been settled on a drop hands basis, on terms that did not give rise to an entitlement for the solicitors to receive a payment based on a successful outcome under the CFA. The solicitors sought to recover their fees by bringing a number of claims against the former client, including in deceit and for breach of an alleged duty of good faith in settling the...