Q&As

A company director is subject to disqualification proceedings as a result of selling assets of the company, which led to the insolvency of the company. The sale was effected following legal advice, which is privileged, and the liquidators have taken control of the company's privilege. Can the lawyer who gave the legal advice answer questions as regards the advice, or does a waiver of privilege/confirmation that privilege is not being asserted by the company need to be sought?

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Produced in partnership with XXIV Old Buildings
Published on LexisPSL on 20/05/2019

The following Restructuring & Insolvency Q&A Produced in partnership with XXIV Old Buildings provides comprehensive and up to date legal information covering:

  • A company director is subject to disqualification proceedings as a result of selling assets of the company, which led to the insolvency of the company. The sale was effected following legal advice, which is privileged, and the liquidators have taken control of the company's privilege. Can the lawyer who gave the legal advice answer questions as regards the advice, or does a waiver of privilege/confirmation that privilege is not being asserted by the company need to be sought?

This Q&A considers whether in the course of the disqualification proceedings the lawyer is able to answer questions about that advice without obtaining a waiver.

For the purposes of this Q&A, it has been assumed that the privilege belongs to the company, and is therefore controlled by the liquidators.

The first question is whether there is any privilege that the company could rely on as against the director. It is assumed that the advice was given to the director either in writing or orally, albeit in their capacity as director. There may be an argument that as between the company and the director there can be no confidence and therefore no privilege. Thus, although the director would owe fiduciary duties to maintain the company's privilege as against third parties, in proceedings between the company, or its liquidators, and the director the company may not be able to maintain its claim to privilege (see eg Derby v Weldon (No 10)). However, in disqualification proceedings neither the company nor the liquidators are parties, although the latter may be witnesses. The parties are the Secretary of State or the Official Receiver and the director. Therefore, the advice is likely to remain privileged (see also Re Lomb

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