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The applicant trustees in bankruptcy applied for specific disclosure of privileged documents passing between the bankrupt’s spouse and her legal advisers, on the basis that waiver had occurred. Deputy Insolvency and Companies Court Judge Baister declined to find that privilege was waived, notwithstanding the fact that the wife referred to the advice within a witness statement filed in advance of trial. Written by Faith Julian, barrister, at 9 Stone Buildings.
Re Bedborough  EWHC 3506 (Ch)
It is well-established that where a party defends and/or justifies their position by reference to legal advice, great care must be taken when drafting the relevant witness statement so as not to waive privilege. Indeed, it is very often posited by opposing parties to litigation that a mere reference to advice amounts to waiver. However, this case confirms that a reference (in and of itself) is unlikely to be sufficient. Context, fairness, the level of detail provided, and the extent of the party’s reliance (if any), are all key considerations in answering what is a nuanced question. This is, to some extent, rather liberating—but those drafting witness statements would be well advised to consider the principles set out in this case, and in Brennan v Sunderland City Council  ICR 479, when putting pen to paper.
The applicant trustees in bankruptcy issued an application to set aside a declaration of trust entered into in 2012, whereby the bankrupt and his wife hold their matrimonial home as tenants in common, 95% to the wife and 5% to the bankrupt, as either a transaction at an undervalue and/or a transaction defrauding creditors. The wife defends the application on a Papanicola v Fagan  EWHC 3348 (Ch),  BPIR 320 basis, ie, she refrained from bringing divorce proceedings, and in return her husband transferred her 45% of his beneficial interest in the property. In support of her position, the wife has given evidence that she received legal advice on two separate occasions—in 2007–2008, and again in 2012. The wife also relies on the evidence of the solicitor whom she consulted.
In such circumstances, the trustees applied for an order for specific disclosure of communications passing between the wife and her solicitor in 2007–2008 and 2012, on the basis that she (and her solicitor) had waived privilege by deploying material which would otherwise be privileged in both statements. The wife ought not to be permitted to cherry pick, and it was accordingly fair to order disclosure.
The wife resisted the application on the basis that she had not waived privilege and only she (and not her solicitor) could waive it. All she had done was rely on the fact and effect of having received advice, not the content itself. Little detail was provided and, given the nature of her defence, it was inevitable that she must say something about the events leading up to the declaration. It would be unjust to put her in the position of having to put forward a weak defence by depriving her of the ability to refer to the fact of having taken advice unless she waived privilege on the terms contended for on behalf of the applicant. Further, the documents sought would really only go to credibility (in that they would confirm whether she took the advice she says she took), and as such an order for specific disclosure was inappropriate.
The court declined to consider whether the wife’s solicitor had waived her privilege within the contents of his witness statement. Having regard to the importance of privilege, waiver must come clearly from the client or be expressly adopted by her (if it comes from someone else) before it can be held to have been waived by the actions of an agent. The judge could not know what the wife was advised or told by the solicitor about the evidence he had given—that would be privileged.
The judge considered the wording of the wife’s witness statement in careful detail and held that it dealt with nothing more than the fact of having taken legal advice. Some parts went a little further, tiptoeing into broad brush detail of what she discussed with her solicitor, and what he suggested or advised. While the fuller the information provided the greater the risk waiver will have occurred, here the information was not very full at all. Rather ‘it amounts to little more than what one would expect it to be in a case of matrimonial difficulty where one of the spouses feels her security and that of the children of the marriage to be under threat. It would come as no surprise to another lawyer, so really takes the parties nowhere significant. That means that its deployment is deprived of almost any significance, and reliance is of the most obvious kind’ (judgment at para ).
Accordingly, the judge held that it would be unfair and disproportionate to hold on the basis of limited reference to, deployment of, and reliance on, trite material that the wife has waived the privilege to which she is otherwise entitled. Interfering with a serious established right requires rather more because to do so is draconian. Further, the court considered that in this particular context, the order sought was unlikely to produce much, or perhaps anything at all, that would assist in resolving any of the issues in the substantive application as it relates to the wife. Accordingly, even if waiver had occurred, he would have declined to make an order for specific disclosure in any event.
Faith Julian is barrister at 9 Stone Buildings. If you have any questions about membership of LexisPSL’s Case Analysis Expert Panels, please contact email@example.com.
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Zahra started working as a paralegal at LexisNexis in the Lexis®PSL Banking & Finance and Restructuring & Insolvency teams in April 2019 and moved to the Corporate team in June 2020, where she currently works as a Market Tracker Analyst. Zahra graduated with 2.1 honours in BA French and Spanish and completed the GDL at BPP University. She has undertaken voluntary work for law firms in London, Argentina and Colombia.
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