Garvin Trustees Ltd v The Pensions Regulator

Factual and Procedural Background

This decision concerns two applications relating to whether legal professional privilege attaches to certain documents held by one of the Applicants, referred to here as Applicant A, following the dissolution of the sponsoring employer, Company A. The documents were passed to Applicant A by the joint liquidators of Company A, which was the employer linked to a pension scheme (the Scheme). Applicant A seeks directions on whether he is obliged to maintain privilege over these documents. The Trustee of the Scheme also applies for a direction that the documents were never privileged, invoking the iniquity exception to privilege, and seeks production of additional documents over which privilege is asserted by other interested parties (the Targets).

The background to the references involves prior litigation concerning jurisdictional issues related to contribution notices issued by the Regulatory Authority under pension legislation. Company A, a clothing manufacturer, entered a Members' Voluntary Liquidation (MVL) in June 2004 after losing its sole customer. The controlling shareholders, the Targets, were alleged to have deliberately caused Company A to cease trading and enter MVL to limit its pension scheme liabilities. The Regulatory Authority issued contribution notices against some of the Targets, which were challenged and referred to the Upper Tribunal.

Following jurisdictional determinations, directions were given for disclosure of documents related to the case, including those held by Applicant A. The current applications arise in the context of whether privilege attaches to these documents and whether they must be disclosed.

Legal Issues Presented

1. Whether Applicant A is obliged to maintain legal professional privilege over documents passed to him by the liquidator of Company A, which has since been dissolved (the "Dissolution Argument").
2. Whether the right to privilege vested in the Crown as bona vacantia upon dissolution of Company A, and if so, whether the Crown has waived privilege (the "Crown Waiver Argument").
3. Whether the joint liquidators waived privilege by passing the documents to Applicant A without restrictions (the "Joint Liquidators Waiver Argument").
4. Whether the documents fall outside privilege under the iniquity principle because the advice was sought for the purpose of effecting wrongdoing (the "Iniquity Principle Argument").

Arguments of the Parties

Applicant A's Arguments

• Applicant A seeks directions on whether he must maintain privilege over documents received from the joint liquidators.
• He denies that the iniquity principle applies to these documents.
• Applicant A is broadly neutral on his own application but wishes to rely on some documents in the proceedings.
• He states that he obtained the documents with permission, without restrictions, and has retained them confidentially since dissolution.

The Trustee's Arguments

• The Trustee contends that the joint liquidators waived privilege by permitting Applicant A to retain documents without confidentiality conditions.
• The Trustee argues that the documents fall within the iniquity exception to privilege and thus are not privileged.
• The Trustee supports disclosure of documents over which privilege is asserted by the Targets.

The Regulatory Authority's Arguments

• The Regulatory Authority supports the Trustee's contention that privilege has been waived.
• It argues that because Company A is dissolved, there is no entity to assert privilege, so disclosure is permitted.
• Alternatively, if privilege vested in the Crown as bona vacantia, the Crown has waived privilege by declining to assert it.

The Targets' Arguments

• The Targets maintain that privilege persists despite the dissolution of Company A.
• They argue that the Crown's failure to assert privilege does not amount to waiver.
• They oppose disclosure on practical grounds, citing concerns about increasing the trial bundle and associated costs.
• They contend the iniquity exception is misconceived and does not apply.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began with the premise that Company A, having been dissolved, no longer exists as a legal entity capable of asserting rights, including legal professional privilege. It relied on established authority that dissolution extinguishes the company's capacity to assert rights unless it is restored to the register within statutory time limits, which was not possible here. Therefore, the company itself cannot maintain privilege.

The court then considered whether privilege vested in the Crown as bona vacantia upon dissolution. Although the Crown becomes the legal and beneficial owner of the company's property and rights, it acts only as a custodian and does not assert or waive privilege concerning documents that cannot be monetized. The Crown explicitly declined to assert privilege, but this did not amount to a waiver.

Applicant A's fiduciary and contractual duties to maintain confidentiality ceased with the company's dissolution, as the company cannot enforce such obligations. The court rejected arguments that Applicant A remained bound to maintain privilege on these grounds.

Regarding the joint liquidators' waiver argument, the court found no clear evidence that privilege was waived when the documents were passed to Applicant A without restrictions. Applicant A maintained confidentiality, indicating an implied continuing duty until dissolution.

On the iniquity principle, the court acknowledged the principle that privilege does not attach to communications made for the purpose of wrongdoing. However, the court found that the evidence did not show a sufficiently strong prima facie case of iniquity to deny privilege. Factors included the timing of the advice relative to legislative developments, lack of findings of bad faith by the Determinations Panel, and the Targets' good faith assertions and statutory interpretation arguments.

Consequently, the court concluded that privilege would persist but for the dissolution issue. Since the company no longer exists and the Crown does not assert privilege, Applicant A is not obliged to maintain privilege over the documents, and disclosure is permitted.

Holding and Implications

The court's final ruling is as follows:

Applicant A is not obliged to maintain legal professional privilege over the documents passed to him by the joint liquidators of Company A due to the dissolution of the company.

As a direct consequence, the documents held by Applicant A must be disclosed in the proceedings. The same applies to any documents held by the Targets over which privilege was claimed but cannot now be asserted because of the company's dissolution.

The court did not find that privilege was waived by the Crown or the joint liquidators, nor did it find that the iniquity principle applied to deny privilege. The decision does not set new precedent on the iniquity principle but clarifies the effect of company dissolution on privilege claims in this context.