The High Court has ruled against compelling a prominent law firm to release all documentation concerning a client’s sister company.
The High Court has dismissed an application demanding that a leading City law firm disclose all documents regarding a client’s sister company. The case was presented by the liquidators of the sister company, Eversholt Rail (365) Ltd, against the firm, Norton Rose Fulbright (NRF).
Insolvency and Companies Court Judge Burton stated that the request from the liquidators, appointed after the voluntary liquidation of 365Co, was excessively broad and lacked necessary justification. Applications were made under sections 235(2)(a) and 236(3) of the Insolvency Act 1986, seeking information from Eversholt Rail Ltd (ERL) and NRF.
Judge Burton noted the liquidators had misunderstood the court’s criteria for such requests, which require compelling evidence that the documents are essentially needed. The absence of proof indicating ERL’s non-compliance further weakened the liquidators’ position.
ERL was accused of withholding information, yet the court found it had cooperated consistently, rejecting requests only when they were either too far-reaching or inadequately supported. The judge criticised the liquidators’ argument comparing their position to if 365Co had managed its own records, asserting they must operate within the realities of the situation.
Furthermore, the application against NRF highlighted the liquidators’ perceived entitlement rather than a demonstrated necessity for the documents. Although DLA Piper, representing the liquidators, argued that 365Co was a client, direct evidence was lacking.
The judgement clarified that privilege, as protected under sections 235 and 236, was not nullified. ERL and 365Co, being sister companies without a parent-subsidiary relationship, did not share a joint interest privilege for legal advice. Any advice NRF provided to ERL on matters involving 365Co was insufficient alone to establish such a privilege.
Ultimately, Judge Burton concluded that without supporting evidence to clarify the necessity for the wide range of documents sought, the applications against both ERL and NRF could not succeed.
In failing to substantiate their extensive requests for documentation, the liquidators’ applications were overturned, reaffirming the need for specificity and justification in court-ordered disclosures.
