Privilege Survives Death or Dissolution (“PSD”)

The acronym “PSD” appears to have several different meanings depending on the context in which it is used. For example, Patient Specific Direction (medicine/nursing), Post-Stress Disorder (health and welfare), PhotoShop Document (social media), Portable Storage Device (IT) or Poor Shooting Disease (apparently, sport and certain leisure activities). Following the judgment of the English Court of Appeal in Addlesee & Ors v Dentons Europe LLP [2019] EWCA Civ 1600, lawyers throughout the common law world need no longer feel neglected and can refer to their own “PSD” – namely, “privilege survives death” (or “dissolution”).

Given that the policy that underpins legal professional privilege is the same throughout the common law world, the judgment of the English Court of Appeal should be of particular interest to jurisdictions such as Singapore and Hong Kong.

In short, the judgment is a resounding indorsement of the principle that legal advice privilege is a fundamental human right for all legal persons – a right that survives an individual’s death or a company’s dissolution. The right to waive the privilege belongs to the client and in the event of their death or dissolution the privilege survives. As is noted in the judgment, a lawyer’s mouth is “shut forever” until the privilege is waived by the client or anyone otherwise lawfully entitled to waive it.

In Addlesee (para. 1), the novel question for determination was posed as follows:

“The question on this appeal is easy to pose, but not so easy to answer. It is: what happens to legal advice privilege attaching to communications between a company and its lawyers, once that company has been dissolved; and the Crown has disclaimed all interest in its former property?”.

In brief, the claimant investors are stated to have invested in a scheme marketed by a Cypriot company. The company was represented by a law firm that subsequently became the defendant firm. The law firm was apparently in possession of certain documents that were assumed to be covered by legal advice privilege. The company was dissolved and, insofar as any rights in the documents passed to the Crown as bona vacantia, the Crown disclaimed all interest in them (without specifically waiving any privilege). The investors sued the law firm and sought access to the documents. The law firm had made extensive attempts to contact the former directors but these were not successful. In the absence of any waiver from the company, the law firm understandably resisted the claimants’ application.

In answer to the question posed, the court firmly rejected the claimants’ principal argument that if there was no legal person capable of asserting legal advice privilege the privilege ceased to exist.

There are a number of points worth noting. These include:

  • privilege attaches to a document or a communication at the time that it comes into existence. There must be a client at that time, in the sense of a legal person;
  • once a client ceases to exist, privilege is not lost simply because there is no one entitled to assert it. Rather, the question becomes whether there is anyone who is lawfully entitled to waive the privilege. This applies as much to a corporate entity as it does to an individual;
  • insofar as the Crown (basically, the relevant government department) acquires an interest in documents belonging to a dissolved company as bona vacantia, a disclaimer of interest is not tantamount to a waiver of privilege;
  • a lawyer must be cognisant of his or her duty to act in a client’s best interests. It is a lawyer’s duty to assert privilege in the absence of clear instructions from a client to the contrary. Whether a law firm, in circumstances such as Addlesee, chooses not to defend an application for documents in its possession (and insists on the applicant obtaining a court order), or whether it resists the application, is a matter for careful consideration by the firm depending on the facts and its own legal advice. At the very least, a law firm should insist on the protection of a court order (for example, see Asia-Pac Infrastructure Development Ltd [2018] 1 HKLRD 113);
  • given that a lawyer should never voluntarily reveal confidential legal advice without his or her client’s consent (as is made clear in Addlesee*), it is difficult to envisage how a law firm’s resistance to an application for the disclosure of privileged documents would expose it to the applicant’s legal costs. Indeed, in Addlesee, the law firm had acted entirely properly in resisting the claimants’ application and it was entitled to the majority of its legal costs;
  • readers could be forgiven for thinking that Addlesee is a further attempt by the English Court of Appeal to atone for what remains of Three Rivers District Council (No. 5) [2003] Q.B. 1556 (disapproved of by the Hong Kong Court of Appeal in Citic Pacific Ltd (No. 2) [2015] 4 HKLRD 20 – see Industry Insights, June 2018, “Privilege in Something of a Mess in England”).

*Editorial Note: Also see Addlesee (at para. 61) – “Privilege may be overridden by statute; but a statute cannot do so by general words. If statute is to have that effect, it must do so expressly or by necessary implication …”.

Jurisdictions: 

Senior Consultant, RPC