“28. … The materials disclosed in relation to the settlement agreement are obscure and incomplete, but even on the best case advanced by the defendants it seems that the effective proceeds of a settlement of the Webinvest claim against Globoid in the sum of US$172 million , have been transferred to Castle, and not to Webinvest (the owner of the relevant contractual rights against Globoid), in circumstances where Castle proposes to pay on to Webinvest only half that amount to make it available to recovery by the claimant. No good explanation has been given on why the whole amount of the proceeds of sale should have been diverted to Castle rather than simply going to Webinvest (as owner of the relevant rights being compromised) and then being available for the claimant to execute against …. 29. Furthermore, on a less optimistic and generous interpretation of the various documents, contrary to the submissions of the defendants, it appears that there is a real risk that even half of the proceeds of the settlement sum of US$172 million which the defendants say will be available for Webinvest (and hence for the claimant) will in reality not be paid to Webinvest at all, leaving the claimant with nothing against which to execute the Judgment that it has obtained.”
“The trustee shall take possession of all books, papers and other records which relate to the bankrupt’s estate or affairs and which belong to him or are in his possession or under his control (including any which would be privileged from disclosure in any proceedings).”
“In view of the fact that Avonwick has already obtained a judgment against Mr Shlosberg for approximately US$200 million and Mr Shlosberg now benefits from the protection of a bankruptcy order it is difficult to envisage what other claims against Mr Shlosberg Avonwick could advance – so far as we are aware, none are intimated.”
“The relevant legislative purpose here is to my mind perfectly clear. Bankruptcy, putting it in the simplest terms, is a process whereby on the one hand all a debtor’s property, with certain specific exceptions, is vested in his trustee in bankruptcy for realisation and distribution of the proceeds among his creditors and, on the other hand, he is forever relieved of personal liability to those creditors. The specific exceptions exist either because the property is not appropriate for distribution among the bankrupt’s creditors, such as property of which he is only a trustee, or because, unlike an insolvent company, the bankrupt is a human being whose life must continue during and after insolvency. For this reason s. 283(2) excepts from the bankrupt’s estate the tools and other items of equipment necessary for his personal use in his employment, business or vocation and also the clothing, bedding, furniture, household equipment and provisions necessary for the basic domestic needs of the bankrupt and his family. For the same reason the court may not make under s. 310 an income payments order reducing his income below what appears to the court to be necessary for meeting his reasonable domestic needs and those of his family. For the same reason again the bankrupt is, within limits, allowed to keep damages awarded to him for injury to his person, such as damages for slander - see Ex parte Vine, Re Wilson (1878) 8 ChD 364. There is no example, however, either in the Act or in the many authorities that were cited to me, of the bankrupt being entitled to retain for his own benefit a purely financial or commercial asset capable of realisation for the benefit of his creditors and not necessary for his personal use in his employment, business or vocation.”
“The property which vests in the trustee includes ‘things in action’: see section 436. Despite the breadth of this definition, there are certain causes of action personal to the bankrupt which do not vest in his trustee. These include cases in which ‘the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind, or character, and without immediate reference to his rights of property’: see Beckham v. Dale (1849) 2 H.L.Cas. 579, 604, per Erle J. and Wilson v. United Counties Bank Ltd. [1920] A.C. 102. Actions for defamation and assault are obvious examples. The bankruptcy does not affect his ability to litigate such claims.”
“In my judgment it is inconceivable that Parliament envisaged, by passing the Act, that the effect of bankruptcy should be that a bankrupt’s personal correspondence should be available for publication to the world at large at the behest of the trustee in bankruptcy. In my opinion, the concept of such a gross invasion of privacy is repugnant. I do not believe that Parliament intended it, any more than it intended creditors to have the right to damages for injury to his person or character. In my judgment, on its proper construction in the context of its apparent legislative purpose, the effect of the Act is that a bankrupt’s estate does not include the bankrupt’s personal correspondence which, like a right of action for damages for libel, is of a nature peculiarly personal to him and his life as a human being. … I reach this conclusion apart from the provisions ofarticle 8 of the Convention , but I am confirmed in that conclusion by the fact that it seems to me at least strongly arguable that the construction of the Act contended for by the trustee in bankruptcy would indeed constitute an infringement of article 8. I recognise, of course, that the personal correspondence may include letters relating to other property of the bankrupt that is included in the estate, of which it may be necessary for the trustee to have possession, in order properly to administer that estate. The situation is covered, in my judgment, by section 311(1) of the Act, which I have already read, and entitles the trustee to possession of documents relating to the bankrupt's estate, even though such documents are not themselves comprised in the estate. Indeed, the very terms of section 311 to my mind contemplate the possibility that there may be documents, belonging to the bankrupt, which are not part of his estate and for which, therefore, express provision has to be made by section 311(1).”
“A necessary implication is not the same as a reasonable implication… A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, had it thought about it, probably have included and what it is clear that the express language of the statute must have included. A necessary implication is a matter of express language and logic not interpretation.”
“… in my judgment it is clearly established that legal professional privilege of a predecessor in title does enure for the benefit of his successor. This is so stated in Halsbury's Laws of England, 3rd ed., vol. 12 (1955), pp. 42 and 49, and in my judgment correctly so. The point was first clearly settled in Minet v. Morgan (1873) 8 Ch.App. 361. It is unequivocally expressed in the second part of the headnote. The judgment does not say so quite specifically but, in my view, when analysed the case clearly so decided.”
“As to the question whether the trustee had power to waive privilege, the law is I think clear. The power and the right to waive legal professional privilege in relation to the estate and affairs of a bankrupt pass to his or her trustee in the same way that his assets and the right to possession of the books papers and other records of the bankrupt relating to his or her estate and affairs pass to the trustee unders 311 of the Insolvency Act 1986 : see Re Konigsberg[1989] 1 WLR 1257 and R v Molloy[1997] 2 Cr App R 283 . It does not follow that the trustee has power to waive privilege in relation to matters which do not concern the estate or affairs of the bankrupt, such as a prosecution for assault which is not relevant to his or her assets, liabilities or financial transactions. For present purposes it is unnecessary and undesirable to seek to define the extent of the trustee’s power to waive privilege. The waiver contained in the letter of17 September 1997 relates only to the affairs of the bankrupt, which clearly means his financial affairs, and is a waiver which it was competent of the trustee to give.”
“Thus, if the matter had stood as simply between the administrators and Diana, I would have required disclosure. That being so, there is no reason for the court to say that the trustee should not do that which he thinks is best in the administration of his office.”
“..the successor in title to identified property is entitled to assert the privilege of the vendor at least in respect of documents prepared for the purpose of obtaining legal advice in relation to the property transferred and in relation to the advice given.”
“It seems to me that in this passage [sc. the final paragraph quoted above] Peter Gibson J. is not basing his decision on the right of the trustee to obtain the information. What this passage does is to point to the anomaly which would arise if the trustee could call for the privileged information, which he undoubtedly could, but could not assert the privilege.”
“30. … In addition to excluding any reference to solicitor-client privilege, Parliament does not confer all of the bankrupt’s property and personal rights in the trustee. Section 2(1) of the BIA defines ‘property’ to include: Money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, and whether situated in Canada or elsewhere, and includes obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property; The ‘property’ that vests in the trustee includes almost ‘every conceivable type of asset’: Chetty v Burlingham Associates Inc (1995), 121 DLR (4th) 297 (Sask. C.A.) at 300. Some types of property, however, are specifically excluded (e.g. property held in trust for another person, pursuant to s. 67(1)) or do not fall within the confines of the definition. 31. Notably, personal property and personal rights are very different and the cases interpreting the BIA distinguish between the two. For example, ‘things in action’, such as a cause of action for custody or divorce, are matters personal to the bankrupt and are not captured by s. 2(1) of the BIA: Gano v Alberta Motor Association Insurance Co (1997), 209 A.R. 118 (Q.B.). Tax refunds for the support of disabled persons are the ‘property of bankrupt’: Re Neufeld (Bankrupt) (1993), 144 A.R. 182 (Q.B.). Nor does a cause of action for damage to the reputation of a bankrupt vest in a trustee: Egan v Grayson (1956), 8 D.L.R. (2d) 15 (Alta. S.C.); Rahall v McLennan (1996), 190 A.R. 183 (Q.B.). In my view, solicitor-client privilege is a personal right, at least as fundamental and individual as damages to reputation, which falls into a category of interests which are not transferred to or conferred upon a trustee by the BIA. As noted by Yoine Goldstein in ‘Bankruptcy as it Affects Third Parties: Some Aspects’ [1985] Meredith Mem. Lect. 198 at 227: ‘I can think of nothing more attached to the person and nothing less pecuniary than a communication to a person bound by professional secrecy. 32. The distinction between property rights and personal rights, such as privilege, however, is far from absolute. For example, the BIA dictates that trustees take possession of all property of the trustee, including books, records and documents. The trustee argues that if a privileged communication has been reduced to writing (for example, in the form of an opinion letter) the tangible letter is property that must be produced. But the very essence of the solicitor-client privilege (the personal right of the bankrupt) protects the privileged communication from being communicated. … 33. Section 16 of the BIA and other related provisions are neither sufficiently broad nor explicit enough to empower the trustee to take possession of and use privileged communications, advice or opinions which may fall under the BIA’s definition of ‘property’. Certainly a privileged communication is not property divisible amongst creditors such as contemplated in s. 67. In short, while there may be a physical record or document which records the communication, the essence of the document is still the privileged communication, a personal right and not property contemplated by or falling under the BIA. The personal right of privilege attaches to the document and, in my view, that personal right, retained by the bankrupt, precludes disclosure of the communication to the trustee whatever form the communication takes. .. 35. In my view, there is no attempt in the legislation to displace the common law confidentiality rights enjoyed by a bankrupt with respect to its communications with solicitors. The privilege itself is not property under the BIA. Nor is the right to waive a power attaching to property divisible amongst creditors under s. 67. The essence of the privilege, whatever its form, is the confidential communication to which privilege attaches. An explicit delegation would be required in order for trustees to have a categorical right to waive privilege for bankrupts … ”
“47. In my view, the fact disclosure is sought in a bankruptcy context, where creditors’ financial recovery might be enhanced by disclosure, is insignificant compared to the benefits derived from protection of a bankrupt’s solicitor-client privilege. Insolvent entities and persons in financial difficulty frequently need legal advice, perhaps even more so that those who enjoy financial stability. The ability of these individuals or corporations to obtain fully informed and reliable legal advice should not be compromised by threat of disclosure in the possible event of a bankruptcy. In my view, creditors may benefit more from the provision of good legal advice to persons on the brink of insolvency than they would from disclosure of solicitor-client communications between these debtors and their lawyers. 48. It is not helpful to simply say that in the public’s interest trustees obtain all information that will help maximize asset recovery without also recognizing the public interest in solicitor-client privilege. Frequently, contrary public interests may compete with the public interest in solicitor-client privilege, but most often, the public interest and in the rationale for solicitor-client privilege prevail. … ”
“88. This legislation highlights that we are really dealing with two different issues: the trustees obtaining physical possession of the file and waiver. I do not accept that merely because the trustee may obtain possession of the solicitor’s file, this alone would give the trustee the power to waive the privilege. That is a different issue … 89. In addition, even though the trustee is entitled to possession of these privileged documents, their use would be limited to the affairs and property of the bankrupt. The trustee must not use these documents to said third parties in any action against Bre-X or any other party. 90. Put simply, the focus of the trustee in examining the solicitor’s files, privileged and non-privileged, must be the property and affairs of the bankrupt. Further, the trustee, as an officer of the court, must strictly ensure the sanctity of the solicitor-client privilege of Bre-X. In other words, the trustee must not disclose the contents of these privileged communications to any third party. … ”
“Whether legal professional privilege remains with the bankrupt is perhaps not beyond doubt. Legal professional privilege is essentially a concept personal to the bankrupt, it is not property. It can only be removed by statute where there are the clearest words or by necessary implication. I am not inclined to take a view contrary to that currently taken by Federal Court judges experienced in the bankruptcy jurisdiction, especially in the light of the respondent’s concession. Mr Dunwoody was not precluded from claiming legal professional privilege because of his bankruptcy.”
“When a company is dissolved, all property and rights whatsoever vested in or held on trust for the company immediately before its dissolution (including leasehold property, but not including property held by the company on trust for another person) are deemed to be bona vacantia and – (a) accordingly belong to the Crown, and (b) vest and may be dealt with the same manner as other bona vacantia belonging to the Crown.”
“38. [The Crown’s] response [to an inquiry made by Mr Gordon’s solicitors] brings into clear relief the position of the Crown in relation to bona vacantia. Although it becomes both legal and beneficial owner of the property and rights concerned it is more akin to a custodian to whom assets are given for safekeeping. Like all custodians, it will not seek to act on its own initiative, save as it is permitted to do so by the legislation and it knows that it is free to dispose of property without repercussions if it decides to exercise that power. In relation to a right which is not capable of being turned to account, such as the right to privilege, it is clear that its policy is to do nothing, so the Crown will neither assert not waive the right. That is entirely consistent with the statutory scheme: the Crown has no power to act on behalf of the company concerned because the company no longer exists and [has] no right of its own to assert privilege. If any person has an interest in the right being asserted then the appropriate course is for an application to be made to restore the company to the register and then the person who is entitled to assert it can do so. 39. It is therefore clear that the Crown is not a successor in title to the Company in the same way that the executors of a deceased person’s estate are successors in title to the deceased and can, as the authorities show, assert any privilege which the deceased was entitled to maintain…. ”
“… the parties agree that if at the time of the bankruptcy, the bankrupt had in his bank a sum which included money paid as damages for a libel, that sum would vest in his trustee because the right to the money formed part of his estate and therefore was available to pay off the bankrupt's creditors. That was to be contrasted with an action personal to the bankrupt, such as a libel action, which was not settled before the end of the bankruptcy. In such circumstances the cause of action would remain with the bankrupt as would any damages awarded after discharge.”
“(a) any unprofitable contract, and (b) any other property comprised in the bankrupt’s estate which is unsaleable or not readily saleable, or is such that it may give rise to a liability to pay money or perform any other onerous act.”
“The grant of an injunction and the form of any injunction are discretionary, regard being had to the perceived threat to the client’s rights: see Lock International Plc. v. Beswick [1989] 1 W.L.R. 1268, 1281. Where there has been the previous relationship of solicitor and client and the solicitor at the date of his proposed new retainer possesses relevant confidential information, in the ordinary course the court will in my view grant an injunction restraining the solicitor acting, as in In re A Firm of Solicitors [1992] Q.B. 959. (The contrast in this respect between the court's approach in the case of this confidential relationship and other confidential relationships is brought out by the judgment in G.D. Searle & Co. Ltd. v. Celltech Ltd. [1982] F.S.R. 92.) But, in the case where without any such previous relationship a party’s solicitor illegitimately becomes possessed of confidential information of the other party to the suit or dispute, in the ordinary course the court will merely grant an injunction restraining the solicitor making use of that information: it will not prohibit his continuing to act: see English & American Insurance Co. Ltd. v. Herbert Smith [1988] F.S.R. 232 and Goddard v. Nationwide Building Society [1987] Q.B. 670.”