This judgment was handed down in private but the judge hereby gives leave for it to be reported in this form.
The judgment is being distributed on the strict understanding that in any report no person other than the advocates or the solicitors instructing them (and other persons identified by name in the judgment itself) may be identified by name or location and that in particular the anonymity of the children and the adult members of their family must be strictly preserved.
Strand, London, WC2A 2LL
B e f o r e :
|- and -
Mr Philip Rutter (of Collyer-Bristow) for the respondent husband
Mr Eason Rajah (instructed by Taylor Wessing) for the anstalt
Mr Ian Cook (instructed by Messrs X) for Messrs X
Hearing date: 21 February 2006
Crown Copyright ©
Mr Justice Munby :
"At the relevant time Mr C was acting secretly with the intention of defeating our client's claims. We therefore make it clear that even if legal advice privilege is established in relation to any document we reserve the right to argue that it should be forfeited under these exceptions."
"the test is whether the communication or other document was made confidentially for the purposes of legal advice. Those purposes have to be construed broadly. Privilege obviously attaches to a document conveying legal advice from solicitor to client and to a specific request from the client for such advice. But it does not follow that all other communications between them lack privilege. In most solicitor and client relationships, especially where a transaction involves protracted dealings, advice may be required or appropriate on matters great or small at various stages. There will be a continuum of communication and meetings between the solicitor and client. The negotiations for a lease such as occurred in the present case are only one example. Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach. A letter from the client containing information may end with such words as 'please advise me what I should do'. But, even if it does not, there will usually be implied in the relationship an overall expectation that the solicitor will at each stage, whether asked specifically or not, tender appropriate advice. Moreover, legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context."
He added at page 332:
"whether such documents are privileged or not must depend on whether they are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate."
"all communications between a solicitor and his client relating to a transaction in which the solicitor has been instructed for the purpose of obtaining legal advice will be privileged, notwithstanding that they do not contain advice on matters of law or construction, provided that they are directly related to the performance by the solicitor of his professional duty as legal adviser of his client."
"In relation to legal advice privilege what matters today remains the same as what mattered in the past: whether the lawyers are being asked qua lawyers to provide legal advice."
"to extend privilege without limit to all solicitor and client communication upon matters within the ordinary business of a solicitor and referable to that relationship [would be] too wide."
"This remark is, in my respectful opinion, plainly correct. If a solicitor becomes the client's "man of business", and some solicitors do, responsible for advising the client on all matters of business, including investment policy, finance policy and other business matters, the advice may lack a relevant legal context. There is, in my opinion, no way of avoiding difficulty in deciding in marginal cases whether the seeking of advice from or the giving of advice by lawyers does or does not take place in a relevant legal context so as to attract legal advice privilege. In cases of doubt the judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law. If it does not, then, in my opinion, legal advice privilege would not apply. If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law. Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply? The criterion must, in my opinion, be an objective one."
"it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers' legal skills in the management of their (the clients') affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else".
"The principle which runs through all these cases, and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests ... it is not for the sake of the applicant alone that the privilege must be upheld. It is in the wider interests of all those hereafter who might otherwise be deterred from telling the whole truth to their solicitors."
"the "purpose of legal advice" test will result in most communications between solicitor and client in, for example, a conveyancing transaction being exempt from disclosure, either because they are privileged or because they are immaterial or irrelevant."
"Despite its long pedigree the Court of Appeal in this case appear to have been less than enthusiastic about the very notion of legal advice privilege. In particular, they thought that it was not clear why it should attach to matters such as the conveyance of real property or the drawing up of a will: see  QB 916, 935, para 39, per Lord Phillips of Worth Matravers MR. I do not share these doubts."
"The case law refers to "crime or fraud" (Reg v Cox and Railton (1884) 14 QBD 153, 165), "criminal or unlawful" (Bullivant v Attorney-General for Victoria  AC 196, 201), and "all forms of fraud and dishonesty such as fraudulent breach of trust, fraudulent conspiracy, trickery and sham contrivances" (Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd  Ch 553, 565). The case law indicates that "fraud" is in this context used in a relatively wide sense."
"the court must in every case, of course, be satisfied that what is prima facie proved really is dishonest, and not merely disreputable or a failure to maintain good ethical standards and must bear in mind that legal professional privilege is a very necessary thing and is not lightly to be overthrown, but on the other hand, the interests of victims of fraud must not be overlooked. Each case depends on its own facts."
"for the purpose
(a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or
(b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make."
"it must have been obvious to the defendants that the bank might, once it learnt of the challenged transactions, start proceedings The dominant purpose was to stop the bank from interfering with the defendants' use of what they regarded as family assets."
He continued at page 1252:
"the client was seeking to enter into transactions at an undervalue the purpose of which was to prejudice the bank. I regard this purpose as being sufficiently iniquitous for public policy to require that communications between him and his solicitor in relation to the setting up of these transactions be discoverable."
"If the strong prima facie case turns out to be correct then the defendants have deliberately indulged in something which I would categorise as sharp practice."
"with the intention of defeating the [other spouse's] claim for financial relief",
that is (see section 37(1)), with the intention of
"preventing financial relief from being granted or reducing the amount of any financial relief which might be granted, or frustrating or impeding the enforcement of any order which might be or has been made".
"The statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact."
Lord Wrenbury in the same case said at page 632:
"the plaintiff must go at any rate so far as to satisfy the Court that his allegations of fraud are not merely the bold assertions of a reckless pleader, but are such as to be regarded seriously as constituting prima facie a case of fraud resting on solid grounds."
"No privilege can be invoked so as to cover up fraud or iniquity. But this principle must not be carried too far. No person faced with an allegation of fraud could safely ask for legal advice. To do away with the privilege at the discovery stage there must be strong evidence of fraud such that the court can say: "This is such an obvious fraud that he should not be allowed to shelter behind the cloak of privilege.""
"In any given case, the court must weigh, on the one hand, the important considerations of public policy on which legal professional privilege is founded and, on the other, the gravity of the charge of fraud or dishonesty that is made. There are many contexts in which the court similarly has to strike a balance between the need to do justice to the plaintiff, on the one hand, and, on the other, the extent to which interlocutory relief may result in an unjustified interference with the defendant's property and his right to privacy. The point at which the balance is struck must depend on the extent to which the relief sought may unjustifiably invade the defendant's rights. So if a plaintiff can show that he has a fairly arguable case and if the defendant can be fully protected by a cross-undertaking in damages, the court in granting or refusing a purely negative injunction will be primarily concerned with a balance of convenience. More is required (in ascending order of importance) if the plaintiff seeks a mandatory injunction or or if the plaintiff seeks Mareva relief or an Anton Piller order or the disclosure of confidential banking documents.
There is a continuous spectrum and it is impossible to, as it were, calibrate or express in any simple formula the strength of the case that the plaintiff must show in each of these categories. An order to disclose documents for which legal professional privilege is claimed lies at the extreme end of the spectrum. Such an order will only be made in very exceptional circumstances but it is, I think, too restrictive to say that the plaintiff's case must always be founded on an admission or supported by affidavit evidence or that the court must carry out the preliminary exercise of deciding on the material before it whether the plaintiff's case will probably succeed, a task which may well present insurmountable difficulties in a case where fraud is alleged and the court has no more than affidavit evidence.
no clear line can be drawn. All that can be said is that all the circumstances must be taken into account and that the court will be very slow to deprive a defendant of the important protection of legal professional privilege on an interlocutory application."
"Mr Justice Munby: Just remind me, I have rather lost track of what I have or have not had in all these various bundles. What is the evidence before me which is relied upon as showing a prima facie case that the Anstalt is the alter ego of the husband?
Miss Carew Pole: My Lord, in the absence of any disclosure whatsoever from the husband, and on the basis that the Anstalt has owned the family home for the last 23 years that was owned before the marriage in respect of which the parties have had the exclusive occupation during the entirety of the marriage, we say on its face
Mr Justice Munby: Yes, but the trustees of the Duke of Marlborough's settled estate no doubt have had Blenheim Palace vested in them for 250 years and the Duke of Marlborough, and the Duchess have always lived there and so has their heir. The fact that the Duke of Marlborough has always lived in Blenheim Palace does not mean that the trustees of his settled estate are simply his alter ego. Indeed, they almost certainly are not.
Miss Carew Pole: My Lord, on the basis that since Tuesday of this week the Anstalt and the husband have been apprised of the wife's case in relation to the Anstalt and as at this moment nothing has been put forward which would rebut the wife's assumption that the Anstalt is the alter ego of the husband.
Mr Justice Munby: I am sorry, that is the world of Humpty Dumpty, and even this Division does not go that far. It is for plaintiffs to establish their case, or at least to put forward a prima facie case. We do not work on a system by and large where the plaintiff simply asserts and says, "well, unless and until the defendant produces evidence to disprove our bald assertion, our bald assertion holds the field."
"It is now material to her case to understand on a more informed basis not only when the negotiations and arrangements relating to the sale commenced but also what notice the purchasers were given as to her ongoing occupation, how for example the property information form was completed and what further enquiries were raised and also the discussions that took place in relation to the sale price. It is also important for her to understand who was conducting those negotiations on the sale. My client seeks this information from both the vendor's solicitors and also the purchaser's solicitors. To ensure she has a clear and informed view of both sides of that transaction, she seeks production in full of both files."
"At this moment in time my client reserves her position on arguing that the husband's bad behaviour in terms of the sale of this property ought to be taken into account. That conduct argument may well fall away once we have sight of the file, but the issue has been raised at a very early stage in the litigation because of the circumstances of the sale and the sooner it is grappled with the better, either to identify the particular argument that is to be run or indeed to narrow the issues if there is nothing that is grist to that particular mill".
A little later she said:
"It may well be the case, having seen the file, that the house has been sold at an undervalue. I can tell your Lordship on the basis of murmurs on the grapevine and you will recall that it was murmurs on the grapevine that led in the first instance to my client's application that halted the sale and froze the monies that well known personalities such as were interested in the property at a sale price of 40 million. Now, my Lord, that may be nothing more than rumour on the grapevine but it may very well have some substance."
And a little later again:
"It is far more serious than idle curiosity based on a feeling of resentment or anger. There may very well be serious and significant consequences to the way in which the husband has gone about the sale of this property And of course your Lordship will appreciate that we have little confidence in a helpful response to a questionnaire, given the husband's and anstalt's dogged refusal thus far to provide the file itself. My Lord, in circumstance where the sale took place while my client was in the dark, in my submission, extra openness, if there can be such a thing, is required in order to allay any fears or suspicions that may be lurking. And they are more than lurking, my Lord will appreciate, in my submission. So, my Lord, that, in addition to the points I have made in writing, is the thrust of my application in relation to the conveyancing files."
"My view is that an order of this sort is not to be made if it is a mere fishing expedition or if it is designed simply to satisfy the curiosity of a wife as to what has been going on in the background. It has got to be justified by some proper forensic advantage and some proper issue in the case. It seems to me that, against the background of the events of that week in 2005 when I dealt with a succession of applications, this is a case where, on the face of it, it would seem that there were attempts by the husband and/or the anstalt to sell the former matrimonial home (which appears to be, if not the only matrimonial asset of any substance, certainly the most valuable matrimonial asset) behind the wife's back and in circumstances where she can legitimately assert, at least on the face of it, that that was part of an attempt not merely to sell the property behind her back but also to dispose of the proceeds of sale in a way which would defeat her matrimonial claims
There is a further point, although at present it is identified as no more than a possibility based upon rumours on the grapevine, that there were other bidders in the market who might have been prepared to pay a higher price than was in the event achieved. The wife, it seems to me, has a legitimate interest in exploring that because, after all, it goes to the question of the amount of the matrimonial assets available for the court's investigation.
On the back of all that, this being a case in which there appears to be at present at least a prima facie case of what the wife arguably could assert is litigation misconduct, she is entitled to explore that with a view to making good, if she can, a case of conduct which the court should take into account.
In substance, therefore, it seems to me that this is not a fishing expedition. It is an exploration of matters which fairly and properly require to be investigated for the purpose of the litigation. The argument that the application is premature or that the matter should be dealt with by questionnaire does not appeal to me at all. It seems to me that the sooner everybody knows whether there is substance to the wife's concerns, the sooner everybody knows whether there is or is not something of importance in this conveyancing file, the better. If there is no substance, the sooner that particular part of the case is put to bed, the better."
"That, I think, is an imposition which is not justified at this stage and would not be a proportionate interference with their rights. [Messrs X] were acting as solicitors for the anstalt, which in fact is now a party. If, having examined [Messrs X's] file, a proper case can be made for the need to examine the other file, then that case can be made and if it is accepted by the court no doubt the appropriate order can be made. But I am not persuaded at present that it is proportionate, let alone necessary, to require both files to be obtained."
"But there is nothing in the rule, or in the authorities, to constrain the court to hold that, in every case where a claim to privilege is made and disputed, the party seeking production is entitled to come to the court and (as it were) demand as of right that the court should go behind the oath of the opposite party and itself inspect the documents. The question whether the court should inspect the documents is one which is a matter for the discretion of the court, and primarily for the judge of first instance. Each case must depend on its own circumstances; but if, looking at the affidavit, the court finds that the claim to privilege is formally correct, and that the documents in respect of which it is made are sufficiently identified and are such that, prima facie, the claim to privilege would appear to be properly made in respect of them, then, in my judgment, the court should, generally speaking, accept the affidavit as sufficiently justifying the claim without going further and inspecting the documents."
"the husband is 'cocking a snook' at the court the husband has no intention of assisting in the process or complying with court orders or taking any part in the proceedings at all. His whole attitude is, 'You can whistle for it, you can have it if you can find me or it'. It is reprehensible in the extreme and completely contrary to both the letter and spirit of this process."
" there is a clear duty in this type of proceedings, as set out in the rules, on both parties to make full, complete and frank disclosure to the court of their means. In this case the husband has failed to abide by the rules and also is in breach of orders of the court. He therefore forfeits, in my judgment, any entitlement in relation to retaining the usual cloak of legal privilege.
 he is, it is clear, taking every conceivable step he can to defeat his wife's legitimate claim. Whether or not she is claiming too much, I know not. All I know is that the actions which he has taken, on the face of it, appear to be designed to defeat her proper claim
 Accordingly, even if the husband is not in contempt of court, the public interest is fully engaged in this application and it is in the public interest to get to the bottom of where this man is and what he has done with the parties' resources."