UK: Bankrupts, Trustees In Bankruptcy And Privilege In England

Mr Shlosberg, a Russian businessman domiciled in England who was made bankrupt in January of last year, has obtained an injunction restraining Dechert LLP from acting on behalf of the main claimant, Avonwick Holdings Limited (Avonwick) in proceedings in which he is a defendant.

Dechert were previously acting as solicitors for both Shlosberg's Trustees in Bankruptcy (Trustees) and Avonwick, in the ongoing litigation. Dechert reviewed a large quantity of privileged documents provided by Mr Shlosberg to the Trustees.

Avonwick subsequently wanted to rely on the information Dechert had learned from that review in the separate ongoing proceedings involving Mr Shlosberg.

Mr Shlosberg sought an order of the court that Dechert cease to act for Avonwick on the basis that the information Dechert had learned was privileged.

The court therefore had to determine whether a bankrupt's right to privilege in respect of information contained in documents within the Trustees' possession passed to the Trustee by virtue of his bankruptcy.

Decision

The court held that they did not. Mr Schlosberg was therefore entitled to prevent the review and dissemination of his privileged information, including by Dechert in the context of the separate proceedings as opposed to in its capacity as solicitors advising the Trustees.

Dechert had already reviewed the documents in question in detail and had not put any safeguards in place in order to protect privilege i.e. information barriers or separate teams for each instruction. Mr Justice Arnold was therefore of the view that the only way to sufficiently protect Mr Shlosberg's right to privilege was to injunct Dechert from acting for Avonwick.

Comment

An interesting High Court decision, which indicates that a bankrupt will retain his right to legal professional privilege, even in circumstances where a trustee in bankruptcy has been appointed over his estate.

Shlosberg v Avonwick Holdings Ltd and others [2016] EWHC 1001 (Ch) (5 May 2016)

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