A law firm and its clients, both defendants in a litigation battle worth more than £400,000, have been ordered to hand over documents with legal advice they exchanged.
The claimant in Barrowfen Properties v Patel & Ors successfully applied to the High Court challenging the defendants’ right to withhold disclosure relating to advice given by Surrey firm Stevens & Bolton LLP.
The firm acted for Barrowfen until December 2015 and the property management company now alleges that it acted in breach of its fiduciary duties and its common law duty of care, as well as alleging that it dishonestly assisted one of its former directors, Girish Patel, to commit breaches of his fiduciary duties.
The claims against Stevens & Bolton were subject of an unsuccessful application to strike out which was determined by Mr Justice Birss in May.
The next stage in the litigation was to decide on disclosure of documents containing legal advice given by Stevens & Bolton to Girish Patel. The firm said it was neutral on this application, but was under a duty to preserve client privilege until the court ordered otherwise.
Lawyers for the firm also submitted that it ‘vigorously defended’ the claims against it and was confident that if all of the relevant documents were put before the court, they would absolve the firm from liability.
Hearing the disclosure application, Tom Leech QC (sitting as a judge of the Chancery Division) stressed that he formed no view about the strength of the underlying allegations. The claimants applied for disclosure under the so-called iniquity exception, where a client may not continue to assert legal professional privilege in relation to documents brought into existence for the purpose of furthering a criminal or fraudulent purpose. The judge noted that the iniquity exception applied whether or not the solicitor was aware of the wrongful purpose or was unwittingly used as an instrument of fraud.
The court heard that Barrowfen alleged that Girish Patel wrongfully withheld from his brothers and fellow directors the fact he was taking steps and intended to place the company in administration.
The judge ruled that Barrowfen has a strong prima facie case that Girish Patel consciously or deliberately preferred his own interests over the interests of the company ‘under a cloak of secrecy’, therefore the iniquity exception was engaged. He granted the application and made an order for disclosure of all matter files or documents containing legal advice provided by Stevens & Bolton.