12 May 2015

Birdseye and privilege


Katie Emerson
Associate | UK

Obtaining information, and then being able to use it, brings obvious benefits to those seeking to put right errors in the will drafting process or the administration of an estate (or trust). Often that information is held by solicitors who can claim privilege. Overcoming that obstacle may be critical to being able to establish your entitlement.

The High Court has ruled that the longstanding legal principle that an act of one executor binds all the executors overrides the general rule that where clients jointly instruct a solicitor a single client cannot waive privilege over documents without the other's consent. In other words, where executors jointly instruct a solicitor, any one of them can waive privilege over confidential documents relating to that instruction.

If a document is privileged, a party is entitled to withhold it from a third party (eg his opponent) or the Court.

Legal advice privilege applies if (1) there is a confidential communication, (2) between a lawyer and his client, (3) for the purpose of giving or receiving legal advice.

Privilege can be lost or waived both intentionally and unintentionally.

Facts

In 1980, Mr Dring made a will appointing Mrs Dring, Mr Pola and Mr Doubleday as executors and leaving his residuary estate to Mrs Dring.

In 1987, Mr and Mrs Dring bought Manor Farm in the name of Dring Bros, so that his brother and sister in law, Mr and Mrs Cooke (who were the tenant farmers), could continue to live there. Mr and Mrs Dring were the sole shareholders of Dring Bros.

In 1999, Mr Dring executed a codicil that left Manor Farm to Mrs Cooke. Roythornes drafted both the will and the codicil.

Mr Dring died in September 2008. Probate was granted to Mr Pola and Mr Doubleday (with power reserved to Mrs Dring).

Mrs Cooke died in November 2008. In December, Roythornes (acting for Mr Pola and Mr Doubleday) told Mrs Cooke's daughters (the ‘Daughters'), the administrators of her estate, that Mrs Cooke did not benefit under Mr Dring's estate. As Dring Bros owned the farm (not Mr Dring) the gift under the codicil had no effect because the farm was not Mr Dring's to give away. Mr Dring's shares in Dring Bros formed part of residue.

The Daughters brought various claims against the estate. These were compromised on terms that prevented further claims against Mr Dring's estate, Mrs Dring or Dring Bros, but not against Roythornes.

The Daughters then issued proceedings against Roythornes, alleging that they had acted negligently in drafting the codicil. They subsequently realised that Dring Bros' accounts had not always shown Manor Farm as an asset of the company.

In response to the Daughters' investigations Mr Doubleday provided a copy of Roythornes' estate administration file. Mr Pola wrote a detailed letter in which he referred to communications, meetings, advice and opinions and he said he would provide a witness statement if required.

The Daughters brought additional claims on the basis that the farm was held on trust for Mr Dring, and Roythornes had been negligent in failing to investigate the beneficial ownership of the farm. They included a paragraph referring to these communications in their amended Particulars of Claim.

Over a year later, Mr Pola issued an application claiming that the paragraph and any references to it should be struck out on the grounds that it referred to privileged information and he had not waived privilege.

The Daughters defended the application on the basis that:

  • The information was not privileged as against Mrs Cooke and her estate (ie the Daughters) because Mrs Cooke was a beneficiary of the estate; and
  • Even if the information in question was privileged, that privilege had been waived by Mr Doubleday/ Mr Pola.

The Judge identified the key issues as follows:

  • Were communications between the executors and Roythornes privileged as against Mrs Cooke and her estate?
  • Did Mr Doubleday waive privilege?
  • Did Mr Pola waive privilege?
  • Did the loss of confidentiality mean loss of privilege?
     

Decision

The Judge dismissed the application, addressing the issues in turn.

1. Were communications between the executors and Roythornes privileged as against Mrs Cooke and her estate?

A trustee cannot always assert privilege against the beneficiaries of a trust. However, if a person wants a trustee to disclose information to him, he must first establish a prima facie case that he is a beneficiary of that trust. A trustee can maintain privilege against a person who has only an arguable claim to be a beneficiary.

The Daughters claimed that Mrs Cooke was a beneficiary because she was named in Mr Dring's codicil regardless of whether Manor Farm formed part of his estate. However, the Judge found that in order for the Daughters to succeed on this issue, they would need to make out a prima facie case that Manor Farm was held on trust for Mr Dring and thus formed part of his estate (which they had not done). It was not enough that Mrs Cooke was named in the codicil.

2. Did Mr Doubleday waive privilege?

The general rule is that where clients instruct a solicitor jointly, a single client cannot unilaterally waive privilege. Mr Pola argued, therefore, that Mr Doubleday could not waive privilege without his consent.

The Daughters contended that Mr Doubleday was able to waive privilege because of the legal principle that an act of one executor is binding on all the executors (this differs from the position for trustees who must act together). Mr Pola argued that they were acting as trustees, rather than executors, at the time the advice was taken.

The Judge found that the advice was taken as executors not trustees and that the ‘deeply entrenched' principle for executors applied and displaced the general rule regarding waiver of privilege. Therefore, in circumstances where executors instruct solicitors jointly, it is possible for one to waive privilege unilaterally.

3. Did Mr Pola waive privilege?

The Daughters argued that even if Mr Doubleday did not waive privilege, Mr Pola did. His letter set out the substance of the advice and relied upon it, even offering to provide the documents if required.

Mr Pola argued that, because he did not have legal representation, he was unaware of his rights at the time he wrote the letter and could not, therefore, waive privilege. He also maintained that although case law suggests privilege can be waived by accident, this applies only at trial or during disclosure and it cannot, in general, be waived unintentionally.

The Judge did not accept that privilege could be waived only where the person entitled to it is aware of his rights. He said that once privileged material is disclosed, even by accident, inadvertently or where there is no intention to do so, it is lost, regardless of the circumstances. Therefore, Mr Pola would have waived privilege, even if Mr Doubleday had not already done so.

4. Did the loss of confidentiality mean loss of privilege?

The Judge noted that confidentiality is a precondition for privilege and, in the circumstances, it was hard to see how privilege could be sustained. The Daughters already had the documents in question and that had been included in Mr Doubleday's list of documents. In the absence of a successful application for injunctive relief, the documents should be included in the bundles for the forthcoming trial. If the documents were to go before the trial judge, it would not be right to strike out the paragraph from the Particulars of Claim.

Katie Emerson Associate | London

Category: Article