Addlesee & Ors v Dentons Europe LLP, Court of Appeal - Chancery Division, November 13, 2018, [2018] EWHC 3010 (Ch)

Resolution Date:November 13, 2018
Issuing Organization:Chancery Division
Actores:Addlesee & Ors v Dentons Europe LLP
 
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Neutral Citation Number: [2018] EWHC 3010 (Ch)

Case No: HC-2016-001537

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST (ChD)

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Date: 13/11/2018

Before:

MASTER CLARK

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Between:

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Thomas Munby (instructed by Forsters LLP) for the Claimants

William Flenley QC and Adam Kramer (instructed by Clyde & Co) for the Defendant

Hearing date: 17 September 2018

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Judgment ApprovedMaster Clark:

Application

  1. This is my judgment on that part of the claimants' application dated 7 September 2018 which seeks:

    (1) a declaration that the documents in the client files held by the defendant solicitors in respect of Anabus Holdings Limited (a Cypriot company, now dissolved) (``the Company'') are not protected by legal professional privilege, and that the parties are entitled to make use of such documents for the purposes of these proceedings; and

    (2) an order that the defendant give disclosure and inspection in these proceedings without withholding inspection of any document on the grounds of the prima facie privilege of the Company.

    For the avoidance of doubt, this judgment is solely concerned the effect of the dissolution of the Company on the relevant legal professional privilege, and not with the existence or extent of the so-called iniquity exception to such privilege, which remains in issue between the parties.

    Parties and the claim

  2. The claimants are about 240 investors in an investment scheme operated by the Company, under which investors were invited to invest in gold dust. The scheme was promoted by the Company to investors from spring 2010 through an agent and a network of ``introducers''. The scheme closed on 31 October 2010 and, despite later promises of payment, left the majority of the investors unpaid. The claimants say the scheme was fraudulent (which the defendant does not admit); and that they lost (collectively) over €6.5 million.

  3. The defendant is an English LLP which previously operated as an SRA-regulated firm known as Salans LLP. It acted for the Company during the life of the scheme.

  4. The claim in summary (which is sufficient for present purposes) is that the defendant recklessly and/or negligently enabled the scheme, and induced many of the individual claimants to invest, by affording the scheme apparent respectability by endorsing it as the Company's legal adviser.

  5. The Company was dissolved on 20 June 2016 under the provisions of the Companies Law 2012 of Cyprus (``the Cypriot Companies Act''), which, so far as relevant, provide:

    ``328 Where a company is dissolved, all property and rights whatsoever vested in or held on trust for the company immediately before its dissolution (not including property held by the company on trust for any other person) shall, subject and without prejudice to any order which may at any time be made by the Court under sections 326 and 327 be deemed to be bona vacantia and shall accordingly belong to the Republic, and shall vest and may be dealt with in the same manner as other bona vacantia accruing to the Republic."

    and

    ``327(7) If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register, the Court on an application made by the company or member or creditor before the expiration of twenty years from the publication in the Gazette of the notice aforesaid may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register, and upon an office copy of the order being delivered to the registrar for registration the company shall be deemed to have continued in existence as if its name had not been struck off; and the Court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.''

  6. The defendant's solicitors have made extensive attempts to contact the former directors of the Company by letters and emails, in which they have asked them if they are willing to waive privilege and confidentiality in the documents held in the client files for the Company. Perhaps not surprisingly, they have received no response.

  7. Both sides have written to (and provided copies of the application notice and evidence in the application to) the Bona Vacantia Division of the UK Government Legal Service, but have not sought to join the Crown as a party. The Crown's position (as set out in its emails of 12 and 14 September 2018) as at the date of the hearing can be summarised as follows:

    (1) The assets (in this jurisdiction) of a foreign dissolved company vest in the Crown as bona vacantia at common law;

    (2) These assets include the client files of their solicitors;

    (3) The Crown does not hold any documents belonging to the Company and is not seeking to take possession or control of them;

    (4) Once the Crown is satisfied as to jurisdiction, it intends to disclaim any interest in the client files;

    (5) The disclaimer will expressly exclude any suggestion that such a step should be taken as either an assertion or a loss or waiver of privilege.

    (6) The Crown does not consider that the effect of disclaimer is to waive privilege; its effect is that the asset does not vest in the Crown as bona vacantia.

  8. Following the hearing of the application, on 22 October 2018, the Crown disclaimed its interest in ``Property'' identified as:

    ``The books and records of the Company situated in the United Kingdom whether physical or electronic including in particular but without prejudice to the generality of the foregoing the client files of Dentons Europe LLP in relation to the affairs of the Company.''

  9. The Notice of Disclaimer continues:

    ``The Treasury Solicitor as nominee for the Crown (in whom the Property vested on the dissolution of the Company) and without either asserting or waiving any legal professional privilege that may attach to any part of the Property hereby disclaims the Crown's title (if any) in the Property the vesting of which having come to his notice on 10 September 2018.''

    Issues in the application

  10. The parties were agreed that:

    (1) the documents the subject of this application are relevant and likely to be of importance in the claim;

    (2) (for the purposes of this part of the application only) if the Company had not been dissolved, then any documents subject to legal professional privilege would not be disclosable in the claim unless and until the privilege was waived.

  11. The primary issue in this part of the application was therefore the effect, if any, of the Company's dissolution on its legal professional privilege.

  12. This issue arose in similar circumstances in the decision of the Upper Tribunal in Garvin Trustees Ltd v The Pensions Regulator [2014] UKUT B8 (TCC), [2015] 1 Pens LR 1. That case concerned a company incorporated in Northern Ireland, and the privilege, if any...

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