England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		23/10/2009

Peter Smith. J.:

INTRODUCTION

1. This is a Part 8 application by the Claimant who is an insurer providing primary layer insurance cover to solicitors pursuant to the Solicitors Indemnity Insurance Rules. It relates to a firm of solicitors known as South Bank Solicitors ("The Firm") which was a partnership between a Mr Horace Onobrakpeya and Mr Colin Ikoku. The Claimant was the primary layer insurer of the firm under a claims made policy for the year commencing 1st September 2007.
2. The Defendant is the regulatory body for all solicitors in England and Wales. It intervened in the practice of the two solicitors in October 2007. Devonshires solicitors were appointed as agents to deal with the intervention.
3. During the period of insurance various claims were made against the firm arising from circumstances which the Claimant contends suggest that monies have been dishonestly and improperly paid away from the client account. It accordingly declined to provide an indemnity to Mr Onobrakpeya in respect of such cases where he sought an indemnity. Mr Ikoku has also sought indemnity from the Claimant which declined to indemnify him in respect of one case and reserved its position in relation to others. I have been told that between the hearing of this application and the handing down of judgment the Claimant has declined to indemnify him in respect of some of the other cases.
4. Upon intervention the Defendant has taken possession of all files and documents (whether paper or electronic) of The Firm where it has been able to locate them.

RELIEF SOUGHT

5. Simply put the Claimant requires (to use the wording in the Part 8 application) "access to all such documents of [The Firm] as the Defendant has in its possession or control including without limitation all accounting records to consider whether under the policy the Claimant is obliged to indemnify or obliged not to indemnify Mr Ikoku".
6. It will be seen that the Claimant does not limit its claim in respect of files where there are claims. It could not do that because as this judgment will show the Defendant has willingly provided access to files where there are claims. The Claimant wishes to go far beyond that and seek every document that the Defendant possesses arising out of its intervention. This extends not merely to the firm's internal documents but also to files where there are issues as to privilege and where there are no existing claims and where there are files where there might be issues as to confidence and where there are no claims.
7. The purpose of the present application is to enable the Claimant in effect to go through all of the documents where there have been no claims made with a view to determining whether or not it is obliged to indemnify one or other of the partners in respect of certain claims or prospective claims against the partners.

BACKGROUND

8. The firm was a two partner firm. Mr Onobrakpeya specialised in conveyancing and Mr Ikoku specialised in immigration.
9. There was a hearing under the Solicitors Act 1974 for disciplinary proceedings that were taken against a Mr Ayeni who is not relevant for the purposes of the present litigation and Mr Ikoku. The allegations against Mr Onobrakpeya appear to have been severed and dealt with under a separate tribunal. At the conclusion of the hearing the Tribunal determined that Mr Ikoku had breached various provisions of the Solicitors Account Rules 1998 and the penalty was a fine of £2000 with an order that he pay costs of a further £2000. Mr Ikoku had admitted liability in respect of those breaches. No allegation of dishonesty was made against Mr Ikoku and it appears from the rulings that in fact Mr Ikoku had reported some of the breaches to the Solicitors Regulatory Authority.
10. The allegations which are the subject of claims by third parties concerned conveyancing transactions carried out by Mr Onobrakpeya. It appears that the firm received into its client account sums of money from lenders for residential property transactions and those sums were subsequently paid out not in sums consistent with the application of loans for the purchase of property. In these cases the lender has subsequently alleged that the purchase price contemplated had not taken place and that the monies were paid out (a) without the authority of the person whose order the funds received and (b) by necessary implication dishonestly.
11. The largest sum appears to be a figure of £2,717,994.25 which has already been the subject matter of separate litigation in the Chancery Division HC07C026991 (in those proceedings Mr Onobrakpeya admitted paying out the money without authority, allegedly he did so under threats of violence).
12. The Claimant believes there are a substantial number of other potential claims. It has declined to provide as I said an indemnity to Mr Onobrakpeya. In practice as the firm was a two partner firm it will be obliged to provide an indemnity to the innocent partner, unless Mr Ikoku is not innocent, and in that event to satisfy any judgment that a third party obtains against the firm.
13. The purpose of the investigation is simply to see whether or not it can discover any evidence to show that Mr Ikoku is involved in any of the dishonest actions alleged against Mr Onobrakpeya. If the Claimant obtains such evidence it will be entitled to refuse to provide an indemnity. It has declined to provide an indemnity to Mr Ikoku in respect of one group of matters where the lender was Abbey National and money went out of the firm's account after Mr Ikoku had become aware of the improper dealings by Mr Onobrakpeya concerning the sum mentioned above. Mr Ikoku has the right to challenge that decision but has not yet done so. The Claimant had also reserved its position against Mr Ikoku in respect of all other claims in respect of which it understands he is claiming an indemnity, but I am told that in respect of three such claims it has, since the hearing of this application, declined him indemnity.

STANCE OF THE DEFENDANT

14. The Defendant's stance is set out in the first witness statement of James Henry Roberts Dunn dated 6th May 2009. He is a partner in the firm of Devonshires the intervening agent on behalf of the Defendant. Quite properly he is concerned when dealing with requests for documents held by the Defendant under its statutory powers to deal with the beneficial owners of the documentation who normally would know nothing about the intervention until it has happened. He is also concerned to protect the confidentiality in potential privileged nature of such documents in favour of such beneficial owners. It will be seen that the Claimant does not limit its claim to any exceptions. Mr Nicholas Davidson QC who appears for the Claimant frankly acknowledged that his claim to inspect documents extended to all documents which the Defendant might have whether confidential or privileged and whether or not the documents were relevant to any existing claim that had been made or not.
15. The Defendant's stance is that it follows the guidelines set out by Lightman J in Dooley v The Law Society [16-1-2002]. In paragraph [12] of the judgment Lightman J said this in relation to access to documents: -

"The legal position regarding access must be as follows. The Society is a public body subject to public law duties. These govern its decision whether to allow access to the documents and if so on what terms. The Society is legal custodian of the documents and with responsibility to deliver them to the solicitor's former clients or to their order and in the meanwhile to preserve client confidentiality and the integrity of the files. Its primary concern must be to protect the interests of the solicitor's former clients. The solicitor may have a legitimate interest in obtaining access to the files as a necessary preliminary stage before taking action to protect and enforce his right of recovery of sums due to him. The Society should have regard to that interest and balance that interest against the perceived interests of the former client. The policy of the Society of affording the solicitors only supervised access seems to me (certainly in any ordinary case and most particularly in a case such as the present where the solicitor is suspected of fraud); to reflect a fair and reasonable balance fully in accordance with its public law duties. "

16. He therefore rejected the application for inspection. The application was by the solicitor in the practice in which the intervention had taken place for him to obtain documents it was said that he needed to have in order to seek to recover outstanding fees.
17. The Defendant's stance is to refuse blanket requests for access on the basis such access would be inconsistent with the Defendant's responsibilities regarding the documents. The Defendant would not provide such access to an intervened solicitor in such circumstances and the position of the solicitor's insurers it is contended is no different.
18. The stance of the Defendant however is not a blanket refusal. It does co-operate where (for example) Mr Ikoku working with insurers has given signed authorities. Thus the Defendant acknowledges that the insurers in those cases have a legitimate interest. Where the access will not prejudice the interests of The Firm's former clients documents have been provided. Of course if the client is a victim of the fraud the production of that material would not be privileged if it involved for example the client bringing proceedings. In any proceedings involving a question of fraud against the client any privilege will inevitably be waived.
19. Thus in cases where the victim has been a prospective lender and it is proposing to bring proceedings against the firm for misappropriation of its monies any privilege will be waived and there will be no difficulty in producing the file.
20. The Defendant has received several requests from Bond Pearce who act for Mr Ikoku for the release of documents concerning claims made by a prospective lender as set out in paragraphs 25-31 of Mr Dunn's first witness statement. In all of those cases where there is no difficulty about breaching the Defendant's obligations as to maintaining privilege and confidentiality documents have been provided. Further the Defendant has responded to claims intimated by Levi Solicitors acting on behalf of the Claimant and requesting confirmation concerning the existence of a specific file relating to a conveyancing matter. The Defendant responded to this.
21. Finally Crutes LLP wrote to the Devonshires seeking various files in relation to specific complaints. However on 9th February 2009 Crutes made a request for access to all documents. Mr Dunn's reply dated 10th February 2009 set out the Defendant's position as regards blanket disclosure. Mr Dunn subsequently indicated that the stance would be maintained and the Defendant would not release any further documentation outwith the parameters set out above without an order of the Court. That led to the present application.
22. The answer to the Claim requires a consideration of this statutory framework under which solicitors practise including in particular the powers of the Law Society to intervene in practices from time to time and the obligation of the solicitors as regards maintenance of certain levels of insurance and the role of such insurers in that regime (if any). Mr Davidson QC's primary case is that the insurance obligation is part and parcel of the statutory regulatory regime and that the primary insurer as it is part of the statutory regime is entitled to access to documents in the same way as the Law Society is when it intervenes.
23. To understand this submission it is necessary to consider first the regulatory role of the Law Society and then consider the mandatory insurance obligations.
24. The second basis which Quinn asserts is rights to see all documents is under the terms of the policy (clause 6.2.a(4)). This concerns the notice and claims procedure and I set out the sub-clause in full: -

"6. 2 Notice and Claims Procedure

In the event of any occurrence which may give rise to liability under this Policy, and regardless of the likelihood or probability of a claim being brought under this Policy: - a) the Insured shall: -

(1) Notify the [insurer] immediately you become aware of any incident or as soon as practicably possible (or in accordance with any agreement made with the [insurer]) and as soon as possible thereafter, provide any other documentation that the [insurer] may require with regard to the occurrence.

(4) Give all such information and assistance as [the insurer] may require

25. I will deal with the regulatory regimes first.

THE STATUTORY PROCEDURE

26. The practice of solicitors is regulated under the Solicitors Act 1974. The public law requirements are set out in sections 35-37. Of those the first is section 35 which sets out the powers in Part II of Schedule 1 that are exercisable in the circumstances specified in Part I of that Schedule. The grounds are listed. It is not necessary to go into the grounds because the intervention has not been challenged. The powers on intervention comprise powers to vest in the Law Society all sums of money held by or on behalf of a solicitor or his firm in connection with his practice or any trust to which he is or formally was a trustee, and the power to require a solicitor to produce and deliver up all documents in connection with his firm. In effect the exercise of the powers leads to an effective closing down and destruction of a solicitor's practice. The powers have been described as draconian although necessary in the public interest. There is a limited right to challenge set out in Schedule 1. In practice a failure to act almost immediately will make any effective challenge unlikely see for example Holder v The Law Society [2003] EWCA Civ 39. In practice it is virtually impossible to challenge an intervention.

INSURANCE

27. The obligation to have insurance arises out of section 37 Solicitors Act 1974 and rules made from time to time.
28. Over a period of time 3 different schemes have been tried. The first was the Master Policy Scheme whereby solicitors were required to insure themselves under a Master Policy Scheme administered by the Law Society. That was replaced by the operation of a mutual indemnity scheme which was operated by the Solicitors Indemnity Fund Limited. The present scheme is one for insurance which is mainly on a semi open market. Insurance can be placed with any insurer which has been granted the status of "qualifying insurer" and the policy has to meet the standards required by the "Minimum Terms and Conditions Solicitors who are unable to obtain such insurance may obtain insurance from the "Assigned Risk Pool ("ARP") Insurance by this means (which involves the risk being taken out by qualifying insurers who participate in the pool) has at least two features. The premiums are substantially higher than those prevailing in the semi open market, and the policy terms are prescribed by statutory instrument. The qualifying insurer must participate in the ARP.
29. The applicable rules are the Solicitors Indemnity Insurance Rules 2007 ("SIIR"). Nothing turns on the application of those rules. The firm was insured by the Claimant at the primary level. Its relationship is governed by the terms of the policy.
30. Self evidently no ordinary client engaging a solicitor will have any idea whether the solicitor is insured in the general market or in the ARP or to what level.
31. Under the terms of the policy cover extended to claims made during the policy period (unless otherwise excluded).
32. Clause 6 sets out the obligations to notify to the insurer any occurrence which might give rise to a claim in respect of civil liability.
33. The insurer is not obliged to indemnify any particular person to the extent that any civil liability or related defence costs arise from dishonesty (clause 4.8).

CLAIMANT'S CONTENTIONS UNDER THE POLICY

34. The claimant is satisfied apparently that each claim arises out of the dishonesty and/or fraudulent act or admission committed or condoned by Mr Onobrakpeya.
35. The question (which it describes as a point of great importance in particular to Mr Ikoku and third party Claimants) is whether or not it is obliged to indemnify Mr Ikoku. This is the purpose of the application. As Mr Smith who appears for the Defendant points out it is simply a fishing expedition to go through all of the firm's documents in the hope that they can find material which implicates Mr Ikoku. If they can implicate him in any of the actions of Mr Onobrakpeya then they will not offer an indemnity to the Firm. Mr Ikoku has been disciplined of course but he has not been disciplined for dishonesty and no dishonesty is presumably alleged against him by the Claimant.
36. The factual premise for the Claimant's application is set out in paragraph 25 of Mr Nicholas Davidson QC's skeleton argument. "It is Quinn's position that it is or would be extraordinary that, when a small firm has been subject to such investigation one of the two partners should have succeeded in plundering millions of pounds from lenders through abuse of the client account without the other partner freshly reminded of his professional duties having been aware of (and therefore condoning) what was going on
37. Such a belief cannot possibly be used as a platform for a wide ranging search through all of the documents in the possession of the Law Society in the Micawber-like hope that something will turn up. It is predicated by a false assumption of dishonesty of every partner in a small firm.

PUBLIC LAW RIGHT TO DELIVERY UP

38. The essence of Mr Davidson QC's submission is that the Solicitors Act 1974 gives the Law Society the right to intervene in a firm in the circumstances set out in Schedule 1. This is part of the price that solicitors have to pay when serving the public. One aspect (it is submitted) of the public policy is the requirement also for solicitors to be insured. That maintains confidence in the profession and enables parties to feel comfortable dealing with solicitors. That is part of the regulatory procedure and as the SIIR show a solicitor either has to have main insurance or be part of the ARP. It is significant for example a firm can only remain in the ARP for no more than 24 months in any five year period. If it is no longer able to obtain insurance under the ARP for that reason it must seek insurance on the open market with a Qualifying Insurer. If it is not able to obtain either the firm must cease to carry on the practice.
39. The requirement to obtain and maintain professional indemnity insurance is clearly important from the public point of view so as to enable a level of protection to be provided to the public against the wrongful acts of solicitors. However as I have set out above the public do not know with whom a solicitor is insured nor its terms nor (for that matter) its level of cover. It does not follow merely because a firm has insurance with a Qualifying Insurer or is a member of the ARP that it will have cover for all possible claims. The indemnities offered have financial limits.
40. Given the importance of the obligation to be insured as part of the public aspects of the practice of solicitors and its regulation by the Law Society Mr Nicholas Davidson QC submits that as the insurance is a key part any insurer is elevated to the same position as the Law Society. That elevation he submits enables the Claimant to seek possession of all documents like the Law Society would on an intervention.
41. I cannot accept that. First if that was intended to be the arrangement the statutory regulation could have clearly said so. Second whilst there is a public interest in maintaining an insurance policy the purpose of the regulatory procedure is to enable the Law Society to regulate solicitors. There are many potential reasons for intervention or investigation which to do not affect insurance. There is not in my view a sufficient linkage between the clearly regulatory role of the Law Society to that of insurers to confer on the insurers an unfettered right to access to the solicitors documents. The Law Society is entitled to that access in its role as being a supervisory body of solicitors and to ensure compliance with the obligations as set out in the Solicitors Act 1974 and any subordinate rules arising thereunder. Not all concerns that arise under that will be matched with corresponding interest for the insurers. The whole purpose of the present application is not to exercise any kind of supervisory role in the conduct of the firm; it is merely an attempt to gather evidence for use to enable the Claimant to refuse an indemnity. Its purpose therefore is completely at odds with the regulatory role and in particular the insurers' alleged role in it. The purpose of the application is to obtain documents in the expectation that material will be found so as to refuse an indemnity to Mr Ikoku. The public at large will therefore be worse off if the exercise is carried out as the Claimant believes it will be as there will be no indemnity.
42. In short the fact that the Claimant is an insurer under the provisions of the Solicitors Act 1974 does not elevate it to having any role in the regulatory procedure so as to entitle it to act like the Law Society.
43. In this context I should emphasise that the Law Society acknowledges that where specific claims are made and there is no obstacle by reference to privilege or confidentiality documents will be released. Equally it accepts that if a case for access to documents on a fraud exception is made out it too will release documents on the basis that fraud will override any rights of privilege or confidentiality. It must be appreciated however that there is no allegation of fraud against Mr Ikoku; the Claimant is hoping by this exercise to obtain such material; it makes no such allegation now.
44. I do not see how it can be asserted by the Claimant that its rights as insurer of the solicitors enable it to obtain documents which would otherwise be a breach of the clients' confidence or privilege. It will be readily appreciated that this problem is not likely to occur frequently as most victims are likely to be clients. However there is of course a possibility (for example) of clients inadvertently receiving money that the solicitors have misappropriated from other clients. I do not see that the Claimant if it is right ought to be entitled to override the privilege of such innocent third party recipient of funds for example unless the Claimant could establish any one of the exceptions such as fraud or (possibly) a tracing claim where it was asserted that the other client was not necessarily innocent.
45. Merely because a solicitor is insured under the provisions of the Solicitors Act 1974 as a matter of obligation does not in my view carry with it the implicit suggestion that clients will expect such insurers to be able to go through any of the confidential or privileged documents when they are not involved in any claim or dishonesty unless they agree.
46. I cannot believe the clients would expect that the insurer had a right at any time to inspect their privileged and confidential files when they are not involved in any aspect of a claim or dishonesty.
47. Accordingly I reject the Claimant's first basis for its claim.

CLAIMS UNDER THE INSURANCE CONTRACT

48. There is a short point raised by the Defendant to which in my view there is no answer. The Law Society is not a party to the insurance contract between the Claimant and the Firm. It is therefore not bound by the provisions of the policy. It holds the documents under the exercise of its statutory powers to deal with them as is appropriate in the manner set out in the evidence put before me.
49. I do not see how the Claimant can by virtue of a contractual provision as between it and the solicitors put itself in a position to override the duties of the Law Society. Its duties are to administer the firm once the intervention has taken place. Part of that exercise involves accounting for any monies it has taken possession of to the rightful owner. As regards to the documents they belong beneficially to the relevant client. Its duty is to preserve those documents and hand them over to the relevant client.
50. There may be a residual amount of documents being the firm's own working papers and records which would not be the subject matter of a claim for privilege by the client. Ordinarily they would belong to the solicitor. However it is quite clear that paragraph 12 of Schedule 2 of the Solicitors Act 1974 removes that right: -

"12 The powers in relation to sums of money, documents and other property conferred by this Part of this Schedule shall be exercisable notwithstanding any lien on them or right to their possession. "

51. The Law Society's stance is that its possession of the documents is to fulfil its statutory duties. Whilst a solicitor whose retainer is terminated properly by the client is entitled to retain such personal documents as belong to him and only pass on the client's papers the Law Society will generally ensure given the overriding need to protect the interests of the client that the entire file including the solicitor's working papers are passed to the new firm.
52. As the Dooley case showed in paragraphs 11-12 the Law Society will in the appropriate cases allow access to the solicitor's working papers but it has a duty to balance the interest of the solicitor against that of the former client. I do not accept the Claimant's attempt to limit Dooley to a different point (documents being sought by a solicitor) and therefore submit it has no impact on the questions to be decided by me. In my view Lightman J's statements are of a general legal position and I agree with them and adopt them. He might only have been concerned with the position as regards an intervening solicitor but the fundamental position is set out in his judgment and the duty to preserve confidentiality and privilege remains the starting point.
53. As part of that exercise as I have set out above the Law Society asserts a right if necessary to transfer the solicitor's private papers over to the client's new solicitor equally in my view it is entitled to consider whether or not to release any of the firm's private documents in its possession to the Claimant. However the Claimant does not have an unfettered right to all of these documents. The Law Society has indicated provided there are no other obstacles (such as privilege and confidentiality) it is sympathetic to all requests by the Claimant to provide documents that are pertinent to any particular claim. However for that to be considered by the Law Society the Claimant needs to be specific. They will need to assert a particular basis for their concerns. Thus for example they might have to say Mr Ikoku was dishonest in respect of a particular transaction and they need to look at the firm's ledgers and/or bank statements for that point. The Law Society can only consider in my view a specific request in respect of these documents. It cannot be required to make the entirety of the documents available (even if one excludes privileged and confidential material) that constitute the working papers of the firm. If the Firm's right to it severely restricted as set out in the Dooley case I cannot see there is an exception in favour of the insurers.
54. Following this analysis the Law Society has provided a number of files to the Claimant on request. It has done that where the privilege and confidentiality has been waived so it would be unfair for the fact of the intervention to deprive a solicitor of documents which he would (but for the intervention) generally have in his possession and be entitled to deploy. This is clearly a situation for example where a client is suing a firm. On such an occurrence privilege is impliedly waived.
55. However the Law Society has not disclosed any documents based on the fraud exception. It does not it says have all the information the Claimant possess regarding allegations of fraudulent conduct of the firm. It rejects what it (correctly in my view) calls the colourful assertions made on behalf of the Claimant as regards Mr Ikoku (see the Claimant's skeleton paragraphs 8, 21 and 25). The Claimant might or might not have justified suspicions of Mr Ikoku but that is not a basis for seeking documents. As I have said above and as the Law Society stressed there is no intervention as against Mr Ikoku based on dishonesty.
56. Nor is there any allegation that any clients have been involved in any dishonesty. If there were then they would not be able to assert legal professional privilege in respect of any documents. Conversely I accept the proposition put forward by the Law Society if it is the dishonesty of the solicitor that is involved that does not have any impact on the privilege of the client because the privilege belongs to the client not the lawyer see Thanki "The Law of Privilege" (1st Edition) paragraphs 1. 33 et seq and 4. 3-4. 35.
57. Further there are indications that the principle of legal professional privilege is being eroded in certain areas (see Morgan Grenfell & Co v Special Commissioners Income Tax [2002] UKHL 21. I do not see as is submitted in paragraph 37 of the Claimant's skeleton that an additional and alternative exception would arise from the insurance scheme and its statutory foundation.
58. Equally the explanation of the decision in Parry-Jones v The Law Society [1969] 1 Ch 1 by Lord Hoffmann has no relevance to the issues before me. At best it shows on analysis that legal professional privilege could not be asserted so as to obstruct the exercise of the powers by the Law Society under its supervisory and investigatory role. The Parry-Jones case was not overruled but either way (that is to say based on the Court of Appeal reasoning or on Lord Hoffmann's reasoning) the position is clear. The investigatory role of the Law Society enables it to consider documents which ordinarily ought to have been the subject matter of legal professional privilege. For the reasons I have set out earlier in this judgment however I do not think that exception operates in favour of the Claimant.
59. Absent any of the exceptions (and none is made out by the Claimant) the privilege of the client remains paramount see for example Nationwide Building Society v Various Solicitors [1999] PNLR 52 at page 69 per Blackburn J.

CONSTRUCTION OF CLAUSE 6. 2

60. Equally I reject the Claimant's submission that the documents would have been recoverable from the solicitors and thus from the Law Society under the provisions of clause 6. 2. In my view when looking at the clause in its entirety clause 6. 2(a)(4) is not a freestanding obligation to provide information assistance whenever the insurer requires it. It is clear that when one looks at the clause as a whole the provision is dealing with an occurrence which might give rise to the likelihood of a claim. In that eventuality the obligations under 6.2(a)-(c) arise. Here there is no claim; the documents sought are where there has not yet been any claim. I am reinforced in that in my view by reference to the Court of Appeal in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 3) [2002] ECWA Civ 248. It is of course necessary to be cautious in having regard to a decision on the construction of a different document. What the Court of Appeal made clear however (see paragraphs 24-26 of the judgment of Mance LJ (as he then was)) is that the insured is only required to provide information to assist in a claim that is already made. An insured is not required to provide information solely for investigating whether or not a breach of the insured obligations can be established.
61. It seems to me that the Claimant's request is an attempt to obtain material as against its insured so as to enable it if possible to refuse an indemnity. As the Law Society set out in its skeleton argument (paragraph 62) a conflict will therefore arise and the contractual obligations to co-operate and disclose as set out in the policy cannot be relied upon by the Claimant to enable it to obtain whatever information it wants from the insured. That is the position set out in the Gan case above and the earlier case of Groom v Crocker [1939] 1 KB 194 at pages 203-204.

DISCLOSURE

62. Finally I should deal with the argument that the documents would be available on disclosure anyway (Claimant's skeleton paragraph 26). The documents are in the possession of the Law Society and any application for them would be made under CPR 31. 17 as documents held by non parties to litigation which would be relevant for an existing action. It is self evident that for that to apply there must be an existing action. Thus the Claimant would have to allege fraud in this instance in some detail in an action against Mr Ikoku to find a platform for disclosure against him as a Defendant and as against the Law Society as a third party. If such a claim was intimated by the Claimant the Law Society could provide access in any event.
63. I regularly make orders under CPR 31. 17 as in my judgment it is a useful and appropriate tool under the Civil Procedure Rules where claims can be dealt with more expeditiously and fairly if documents in the possession of a third party can be produced. However there are a number of factors that are relevant. First any such third party would ordinarily be expected to be indemnified against the reasonable costs incurred in complying with a request to produce documents in an action to which he is not a party. Second there is no power under CPR 31.17 to override any confidentiality or privilege. If the documents are confidential an order might be refused. Alternatively the order might be made if the confidentiality of the third party can be maintained. Third there is no question of overriding any legal professional privilege that any such third party has unless it is established as against that third party on application that there are any grounds for applying the exceptions to the principle of legal professional privilege.
64. Such applications are generally made ex-parte. My normal practice is to grant them if it is appropriate but give the third party liberty to apply to vary or discharge it and to assert (for example) privilege or confidentiality. Alternatively if there are risks about such procedure I would normally order the application to be served on such proposed third party.
65. Either way if one analyses it whilst it is possible that the Claimant might obtain restricted documents it can only be on the basis of a clearly formulated proper claim against Mr Ikoku to which it was relevant. Self evidently the Claimant cannot make such a claim against him at the present; that is why they are making the present application. If there is no such application as a platform for the relief the Claimant cannot seek the material.
66. Further the Claimant is seeking to override the privilege of every client of the firm. I cannot see realistically that the Court can do that under CPR 31.17 and certainly would not consider it without affording each of those potential clients an opportunity to assert privilege or not.
67. For all of those reasons I dismiss the Claimant's application.