Shlosberg v Avonwick Holdings Ltd & Ors

Shlosberg v Avonwick Holdings Ltd & Ors

The court held that the trustees in bankruptcy acquired the benefit of Mr Shlosberg’s privilege only in respect of documents relating to property that vested in the trustees (category (a)), but not in respect of other privileged documents (categories (b) and (c)). Privilege is not property within the meaning of the Insolvency Act, nor a power over property, and remains personal to the bankrupt except as to property that passes to the trustee. Given Dechert’s review of privileged documents and the conflict of interest, an injunction was granted requiring Dechert to cease acting for Avonwick, but not for the Trustees.

Parties
Applicant: Mikhail Shlosberg; First Respondent: Avonwick Holdings Limited; Second Respondent: Dechert LLP; Third Respondents: Jeremy Mark Willmont and Emma Sayers (as the Joint Trustees of Mikhail Shlosberg’s Estate in Bankruptcy)
Jurisdiction
England and Wales
Judgment Date
05 May 2016
Procedural Posture
Bankruptcy Application / Ruling on Application for Order That Dechert LLP Cease Acting for Avonwick and the Trustees
Outcome
Application granted in part
Legal Topics
Devolution of Privilege in Bankruptcy, Conflict of Interest for Solicitors, Trustee Powers Under Insolvency Act, Confidentiality of Privileged Documents
Insolvency Bankruptcy Legal Professional Privilege Devolution of Privilege in Bankruptcy Conflict of Interest for Solicitors Trustee Powers Under Insolvency Act Confidentiality of Privileged Documents

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Parties

Mikhail Shlosberg

Applicant

Avonwick Holdings Limited

First Respondent

Dechert LLP

Second Respondent

Jeremy Mark Willmont and Emma Sayers (as the Joint Trustees of Mikhail Shlosberg’s Estate in Bankruptcy)

Third Respondents

Procedural Posture

Bankruptcy Application / Ruling on Application for Order That Dechert LLP Cease Acting for Avonwick and the Trustees

Legal Issues

  1. 1 Does legal professional privilege in documents belonging to a bankrupt vest in the trustees in bankruptcy?
  2. 2 Should Dechert LLP be restrained from acting for Avonwick and/or the Trustees due to conflict of interest and possession of privileged/confidential information?

Ratio Decidendi

The court held that the trustees in bankruptcy acquired the benefit of Mr Shlosberg’s privilege only in respect of documents relating to property that vested in the trustees (category (a)), but not in respect of other privileged documents (categories (b) and (c)). Privilege is not property within the meaning of the Insolvency Act, nor a power over property, and remains personal to the bankrupt except as to property that passes to the trustee. Given Dechert’s review of privileged documents and the conflict of interest, an injunction was granted requiring Dechert to cease acting for Avonwick, but not for the Trustees.

Court Disposition

Application granted in part

Orders

  • Injunction granted requiring Dechert LLP to cease acting for Avonwick Holdings Limited.
  • No order at present requiring Dechert LLP to cease acting for the Trustees; further argument may be heard if necessary.