What Happens To Privilege When A Company Ceases To Exist?

In late 2019 the English Court of Appeal delivered a trenchant defence of legal professional privilege, declining to recognise a novel exception notwithstanding that the holder of the privilege had ceased to exist (Addlesee v Dentons Europe LLP [2019] EWCA CIV 1600). The specific issue was what happens to legal advice privilege attaching to communications between a company and its lawyers, once that company has been dissolved.

By way of background, a large group of investors invested in a scheme marketed by a company called Anabus Holdings Ltd, which was subsequently dissolved. But prior to that, Anabus had sought and obtained legal advice from its law firm, Dentons. The investors issued proceedings against Dentons for deceit and negligence, and sought to obtain copies of the documents which had passed between Dentons and its client. The question on appeal was whether legal advice privilege could be asserted, notwithstanding the dissolution of the client. In other words, is privilege lost if there is no person entitled to assert it at the time when a request for disclosure is made.

The Court of Appeal relied heavily on the decision of the House of Lords in Three Rivers (Three Rivers DC v Governor and Company of the Bank of England (No 6) [2004] UKHL48) as articulating the underlying policy behind the recognition of legal advice privilege. That policy requires that once privilege has been conferred, a client can be certain that, subject to certain limited exceptions, the information she has imparted will never be revealed without consent.

Privilege attaches to a communication because of the nature of the communication and the circumstances under which it is made. Thus established, the privilege remains absolute unless it is waived.

Privilege does not cease on the death of a living person, but is instead conferred on that person’s successors. Even though the authorities refer to privilege as a “right”, and in the case of a company there is no successor in title, the privilege continues to exist. The Court in Dentons rejected the argument that a right must belong to someone, or that the right cannot exist if there is no-one to whom it can be said to belong.

Notwithstanding there was no identifiable prejudice to the client arising from disclosure of the legal advice the investors were not entitled to it. The strong underlying policy arguments in favour of protection of legal professional privilege prevailed.

I believe a New Zealand court would be likely to take a similar approach.