Legal Advice Privilege Survives Dissolution of Company
A recent English decision gives guidance on what happens to legal advice privilege attaching to communications between a company and its lawyers, once that company has been dissolved.
A recent English Court of Appeal decision has held that legal advice privilege, once established, remains in existence unless and until it is waived.  Whether there is no one to waive it; or whether the Crown could have waived it but has not done so; does not matter.

What was the Background to the Case?

In Ireland, where a company has assets upon its dissolution, these assets transfer to the State. In England a similar process applies but the assets vest in the Crown. In this case investors in a scheme marketed by AnaBus Holdings Ltd (the Company) issued proceedings against the lawyers who acted for the (now dissolved) Company as they claimed the scheme was fraudulent. They sought documents in possession of the lawyers, who argued the documents were privileged as they were communications between the Company and its lawyers for the purpose of legal advice. The investors argued that as the Company was now dissolved, and the Crown had disclaimed all interest in the assets, that the privilege no longer existed.

The Rationale and Ambit of Legal Advice Privilege

The rationale behind legal professional privilege is that a client must be able to consult with its lawyer in absolute confidence with no restriction and these communications should be kept secret unless the client consents. This is a fundamental human right and remains absolute unless it is waived. 

What Happens to Legal Advice Privilege upon Death?

Privilege does not cease on the death of a living person, but personal representatives are entitled to waive privilege. 

The investors argued that a right must belong to someone and if there is no one then the right cannot exist. The Court of Appeal held that the correct question to ask was: when a person ceases to exist, is there anyone with the right to waive the privilege? 

Dissolution of a Corporation

The investors argued that privilege should not extend to a dissolved company.  The Court of Appeal held that this question could be resolved by considering the rationale for privilege: absolute confidence in communications with your lawyer.  If an exception were made in the case of a dissolved company this could undermine the certainty of that principle. 

The Court noted that although privilege can be overridden by legislation there was no suggestion of that in this case. 

The question then became was there anyone to waive the privilege here?  The Company's legal advice privilege had passed to the Crown on dissolution and although the Crown had disclaimed any interest in the assets, it had not waived privilege. Therefore, the Court of Appeal held that on the face of it there was no one to waive privilege in this case. 

Key Takeaway

When considering the dissolution of a company the correct question to ask is not who can assert privilege but who can waive it and if there is a person entitled to waive it, have they done so?  

See some of our related articles on privilege and shareholder disputes here and on internal investigations here.
 

Key Case: Addlesee and others v Dentons Europe LLP [2019] EWCA Civ 1600 (English Court of Appeal)

 

Contributed by: Catherine Thuillier

 

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Key Contacts

Derek Hegarty Partner

Adam Synnott Partner

Laura Murdock Consultant

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