Kousouros v O’Halloran & anr [2014] EWHC 2294 (Ch)






The claimant (K) and second defendant (A) are brother and sister. They are the children of George Kousouros (D) who died in Cyprus in March 2007 leaving a large house in Islington (the property) where he had lived with K prior to returning to Cyprus in 2000 and which also provided a rental income. According to K, who still lives there and takes the rental income, D transferred the property to him in 2001 on terms which included a payment to A of £50,000 and pursuant on the oral terms his parents executed a deed of transfer of the registered title to the property in form TR1 which A was aware of but which was not registered. D subsequently executed a will in Cyprus in 2004 leaving his estate in equal shares to K and A.

In January 2008 A appointed the first defendant (S) to recover her share of the English estate and his assistant would deal with the administration of the estate. This subsequently became a joint retainer from A to recover her share and from the Cypriot executor of the will to administer the estate. In July 2009 IHT was paid on the basis that the property was part of the estate and in June 2010 S was granted letters of administration on the basis it was ‘for the use and benefit’ of A and applied for the property to be transferred to him. On 15 September 2010 S was sent a letter on behalf of K asking him to transfer the property into K’s sole name and to concur in the registration of K’s ownership of the property at HM Land Registry. In October 2010 S ceased to act for A and in letters dated 4 November 2010 and 28 January 2011 he sought repayment of IHT from HMRC on the basis that the property did not form part of the estate. The tax was subsequently repaid.

On 22 June 2012 K served particulars of claim on S and A seeking a declaration that he was entitled to the entire beneficial interest in the property, that it did not form part of the estate and was to be transferred to K and claiming that by letters dated 10 November 2010 and 28 January 2011 S had applied to HMRC for the repayment of inheritance tax incorrectly paid on the basis that the property did not form part of the D’s estate and no IHT should have been paid. A made no admissions in respect of this claim and her solicitors did not seek inspection of the letters. The letters were disclosed by S to the other parties. A applied for an order preventing inter alia any reference to parts of the letters to HMRC. There were also other documents which had not been disclosed in respect of which legal advice privilege and litigation privilege were asserted.

At first instance the judge concluded that where a solicitor acted for a beneficiary claiming under a will, legal advice privilege constituted a bar to disclosure. However, if the solicitor acted as the personal representative of the estate, the beneficiaries would have a joint interest in the administration of the estate and legal advice privilege is held jointly between them and cannot be asserted by one against the other. A appealed, submitting that the judge was wrong. S had acted in two different capacities: on her behalf as a beneficiary and as personal representative on behalf of the estate. The information he received from her in the former capacity was privileged at the time he received it and remained privileged. Were that not the case the principle of legal professional privilege would be grossly and unpredictably undermined.

Held: Appeal allowed [71]

  1. 1) The Judge was wrong in her conclusion that the material documents and/or their contents were not subject to legal advice privilege. While K and A had a joint interest as beneficiaries under the will in ensuring that it was properly administered the consequence was not that A was unable to maintain the legal advice privilege in relation to her original instructions to S and in relation to the advice she received. For joint interest privilege to exist it must have existed at the time that the communications which were in issue came into existence and the communications must have come into being for the furtherance of the joint interest. However, it remained unclear whether a client was necessarily prevented from asserting privilege in advice he had obtained simply because someone else, who was not a party to the original lawyer-client relationship, could assert a joint interest in the advice. Here, the privileged information had come into existence either on 16 or 17 January 2008. At this point S had no role in the administration of the estate and there was no question of a joint interest with anyone else and A was entitled to unburden herself to her legal advisor without reserve on the basis that he would be able to give her advice, without fear that the opposing party might rely on the communications if a dispute came before the court. Thereafter it was not open to S to decide that he was no longer bound by the duty of confidence to his client. If he came to the view that there was a conflict between his duties as an administrator of the estate and his duties to A he should have withdrawn entirely. Instead, it seems that he regarded himself as no longer under any duty of confidentiality to A. He was mistaken. K was entitled as one of the beneficiaries to know the broad circumstances in which IHT was paid and then reclaimed. However, the third paragraph of the letter 28 January 2011 contained privileged material which was properly the subject of an obligation of confidentiality, and A was entitled to the protection of the court in maintaining privilege in relation to it. [61]
  2. Although it was unnecessary to decide the point, to the extent that a joint interest arose, it could not be said to continue (at the very latest) beyond the point at which proceedings were commenced [60].

2) The court would normally intervene to prevent the use of the confidential information and it was not concerned with a balance between a public interest in the emergence of the truth (on the one hand) and the maintenance of confidentiality. However, once the party asserting the privilege or confidentiality of the document became aware of the facts, it had to act promptly. In many cases this would mean a request for an undertaking not to use the information and, if the undertaking was refused, an application for an injunction. To the extent that the material had come into the hands of the claimants an order should be made maintaining its confidentiality and precluding its use. Here there had been delay but it was clear that if a letter seeking to assert confidentiality had been written by A seeking an undertaking it would have been refused. Bearing in mind the issue of proportionality A’s delay in seeking relief was not fatal [70].

JUDGMENT SIMON J: Introduction [1] This is an appeal from the Judgment (dated 28 November 2013) and the Order (dated 17 December 2013) of Her Honour Judge Faber, sitting in the Central London County Court, in relation to the disclosure of documents by the second defendant. [2] The claimant and second defendant are brother and …
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Counsel Details

Counsel Mr Gerald Wilson (Tanfield Chambers, 2-5 Warwick Court, London WC1R 5DJ tel 020 7421 5300, email clerks@tanfieldchambers.co.uk) instructed by Hodge, Jones and Allen (180 North Gower Street, London NW1 2NB tel 0800 437 0322) for the second defendant.

Mr Grant Armstrong (6 Pump Court, Temple, London EC4Y 7AR, tel 020 7797 8400, email annexe@6pumpcourt.co.uk) instructed by YVA solicitors (YVA House 811 High Road, North Finchley, London N12 8JT tel 020 8445 9898, email info@yvasolicitors.com) for the claimant.

Legislation Referenced

  • Documentary Evidence, Hollander, 11th Ed, 2012
  • Thanki on the Law of Privilege, 2nd Ed
  • Williams, Mortimer and Sunnucks on Executors, Administrators and Probate 20th Ed 57-04