In the recent case of Re Lemos, the court considered the practical impact of the 2016 decision in Shlosberg v Avonwick which held that legal professional privilege does not vest in a TiB.
Mr Lemos’ sister obtained a default judgment against Mr Lemos for around $17.9m. As a result, Mr Lemos petitioned for his own bankruptcy and was adjudged bankrupt in March 2015.
Mr Lemos’ TiBs obtained documents from Mr Lemos’ solicitors which they believed would assist them in investigating possible transactions defrauding creditors. The TiBs brought an application seeking directions as to whether those documents could be used in future proceedings. The TiBs submitted that not allowing such information to be used would prevent them from carrying out their statutory duties.
The Court dismissed the application, applying Shlosberg v Avonwick and reiterating that legal professional privilege was a fundamental human right applying to both liabilities and assets. The Court also held that such privilege cannot be waived unless statutory provisions provide for it or the Bankrupt provides consent – neither being the case here.
Whilst this is a limitation on the powers of IPs, it highlights how important legal professional privilege is. As such the Court is unlikely to step away from protecting such privilege unless specifically obliged to do so.