The High Court (Master Clark) has held that, as a matter of policy, it had to maintain the privileged status of documents that had belonged to a company that had been dissolved, unless and until there was no prospect of the privilege being enforced.
The court distinguished the decision in Garvin Trustees Ltd v The Pensions Regulator [2014] UKUT B8 (TCC) that a company’s dissolution meant that an individual holding documents on the company’s behalf was not obliged to maintain the company’s privilege in those documents. The court distinguished Garvin as having been decided on the (albeit factually questionable) basis that there was no longer any possibility that the company could be restored. For more information on Garvin, see Legal update, Privilege: company documents held by a former shareholder following the company’s dissolution not privileged (Upper Tribunal).
In the current case, it would be possible until 2036 to apply (under Cypriot law) for the company to be restored. Accordingly, although, as in Garvin, the British Crown had declined to assert or waive the right of privilege that had devolved to it as bona vacantia (and indeed disclaimed the relevant documents), the court could not allow that right to be irretrievably lost while there was a theoretical prospect of the dissolved company returning to existence.
The court, however, resisted attempts to narrow Garvin’s application even further to cases where the relevant documents were not held by solicitors. It also dismissed submissions that privilege was a type of “inchoate right” belonging to the company that was not capable of being passed to the Crown but could be revived if the company was restored. In the circumstances, the right of privilege had indeed devolved to the Crown as bona vacantia (being a right located in its jurisdiction, although originally owned by a foreign company).
Obiter, the court also held that the principle in Garvin would still apply even if the Crown had not actively declined to assert the privilege.
This decision will be welcome to the solicitors involved, but will also benefit the countless other companies who are struck off the register without settling their affairs and later restored (often for the purposes of litigation). Claimants against such companies will not be so sanguine, but a strong law of privilege ultimately benefits all clients in the legal industry.
Case: Addlesee and others v Dentons Europe LLP [2018] EWHC 3010 (Ch) (13 November 2018) (Master Clark). Credit: Practical Law