Master Finds Privilege Does Not Apply To Documents Held In Solicitors' Client Files Due To The Fraud Exception

A High Court Master has found that documents held by a firm of solicitors on behalf of a former client were not protected by legal professional privilege, as there was a strong prima facie case that the firm had been instructed for the purpose of furthering the client's fraudulent investment scheme: Addlesee v Dentons Europe LLP [2020] EWHC 238 (Ch).

It is well established that privilege does not attach to communications between lawyer and client if the lawyer is instructed for the purpose of furthering crime, fraud or iniquity. This is referred to as the fraud exception, or sometimes the iniquity principle. It is also well established that, to apply the fraud exception, the alleged fraud need not be established on the balance of probabilities. What is required is sufficient prima facie evidence.

The present decision is of interest for the Master's discussion of the standard of evidence that applies where the existence of fraud is in issue in the underlying claim, and in particular whether the test is a “strong” or a “very strong” prima facie case. The Master's conclusion, having analysed previous authorities, is that all the circumstances of the case must be taken into account in determining the appropriate standard, bearing in mind the principle that the court will be very slow to deprive a defendant of the protection of privilege on an interim application.

So while, on the facts of this case, the Master concluded that the appropriate threshold was astrong (rather thanvery strong) prima facie case, the decision leaves open the possibility of the higher standard being applicable in other circumstances. The relevant factors here included that the evidence before the...