Candey Ltd v Bosheh and another
| Jurisdiction | England & Wales |
| Neutral Citation | [2021] EWHC 3409 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
2021 Nov 24, 25; Dec 16
Practice - Privilege - Legal professional privilege - Solicitor representing defendant in fraud action on contingency fee basis - Client settling on terms that prevented solicitor from receiving payment for services - Solicitor alleging failure to receive payment caused by various deceptions and wrongs committed by client - Solicitor’s action against client for recovery of fee relying on privileged material - Whether iniquity exception to privilege applying - Whether solicitor who acted on contingency fee basis entitled to use privileged material in action against former client for recovery of fee
The claimant solicitors acted for the first defendant in a fraud action, central to which was an allegation that the first defendant was being used as a front by the second defendant. The action was settled on terms which did not entitle the claimant to receive payment under a conditional fee arrangement it had with the first defendant. The claimant brought an action against the first defendant, alleging that (1) he had falsely represented that he would act in his best interests alone, and the fraud claim would not succeed; (2) the retainer was subject to an implied term that the first defendant would act in his best interests and in good faith towards the claimant, and (3) by his misrepresentations and settling the fraud action on the basis that he did, the first defendant had acted in bad faith and deprived the claimant of payment under the retainer. The second defendant was a party to the claim on the basis that he had wrongfully conspired with the first defendant and induced the breach of the retainer. The defendants contended that key elements of the claim related to the content of privileged communications between the claimant and the first defendant. The claimant maintained that it was entitled to rely on the material either because the iniquity exception to privilege applied or because privilege did not apply in relation to a solicitor who was suing a former client, whom the solicitor had represented on a contingency fee basis.
On the defendants’ application for an order restraining the claimant from using privileged material—
Held, granting the application, that even taking the claimant’s case at its highest, the alleged deceptions and other wrongs were within the ordinary run of case where a client was accused of fraud, and therefore did not satisfy the test of iniquity; that the alleged conspiracy did not alter that position; that further, the claimant had not established that there was any special rule where a solicitor acted on a contingency fee basis; that a client represented by a solicitor acting on a contingency fee basis was entitled to the same protection in seeking legal advice as one acting on an ordinary hourly basis; and that, accordingly, inadmissible privileged material in the claimant’s witness statements, exhibits and particulars of claim would be struck out (post, paras 45–47, 49, 50, 55).
APPLICATIONS
The claimant solicitor, Candey Ltd, brought a claim (1) against the first defendant, its former client, Basem Bosheh, for damages for fraudulent misrepresentation, deceit and breach of the retainer, together with various declarations to the effect that the retainer had been rescinded and was void ab initio, and (2) against the second defendant, Amjad Salfiti, for conspiracy and inducing the first defendant’s breach of the retainer. The claimant applied for permission to amend its particulars of claim, permission to rely on witness statements and documentation from an action in which it had represented the first defendant and his son, and for a freezing injunction. On 29 July 2021 the defendants applied for summary judgment and/or an order striking out the claim, relief in respect of privileged/confidential information, in particular that the claimant be restrained from relying on privileged or confidential information and also that the parts of the evidence referring to such material be struck out. On 25 August 2021, Cockerill J ordered that the applications be heard together.
The facts are stated in the judgment, post paras 1–5, 10.
Mohammed Haque QC (instructed by Candey Ltd) for the claimant.
Hannah Ilett (instructed by B A International Solicitors Ltd) for the defendants.
The court took time for consideration.
16 December 2021. CLARE AMBROSE handed down the following judgment.
Introduction1 The court is asked to decide a number of applications relating to a claim for over £3m made in fraud by the claimant, a London law firm, against a former client relating to that firm’s role in representing the client in defending similar fraud allegations on a conditional fee agreement. The claimant is now seeking a freezing order and to amend its claim. The defendants are seeking relief against the claimant’s use of confidential information and are seeking summary judgment or an order striking out the claim. The applications raise questions as to the terms implied into the law firm’s retainer and the extent to which a solicitor alleging fraud against a former client may use information that would otherwise normally be treated as confidential or privileged.
2 These proceedings relate to work done by the claimant in two separate High Court actions started in the Chancery Division in 2018 and 2019. The claimant acted as a solicitor for Mr Bosheh, the first defendant, and also his son Sulaiman Bosheh (together “the Boshehs”). The work was done under a retainer (“the Retainer”) made on a contingency fee basis. The first Chancery action was discontinued against Mr Bosheh. Fraud, knowing receipt and conspiracy was alleged against Mr Bosheh in the second Chancery action (“the Chancery Action”) and he made a substantial counterclaim. The Boshehs settled this action shortly before trial on a drop hands basis as part of a global settlement. They were unwilling to settle on terms negotiated by the claimant that involved them not giving evidence but offered a share of any recovery against the second defendant, Mr Salfiti (who was also being sued in the Chancery Action).
3 The settlement meant that although the claimant could recover fees for the discontinued proceedings and earlier orders, it was unable to recover further fees based on the successful outcome of the Chancery Action. The claimant has not claimed fees from Mr Bosheh or his son. There appears to be no basis for this under the Retainer. However, on 25 June 2021, a few hours after delivering the settlement agreement to Mr Bosheh and giving him notice terminating the Retainer, the claimant issued and served a claim form on Mr Bosheh with particulars of claim drafted by leading counsel that claimed damages for fraud and breach of contract. The claimant claims it has suffered loss of more than £3m (reflecting the value of its work) on the basis that Mr Bosheh and his son falsely represented that they would act in their best interests only and act in good faith, that the Chancery Action against them would not succeed, and that central allegations about Mr Bosheh owning an RBS Account and a Yahoo e-mail account in that action were unfounded.
4 The second defendant in this action, Mr Salfiti, is a qualified solicitor who works as a consultant for a law firm in London. In the Chancery Action he was also sued in fraud and conspiracy, but also for breach of fiduciary duty. He had a separate legal team in both Chancery actions. He was targeted as the primary wrongdoer and was being sued by former clients (including an individual referred to in this case as Sheikh Mohamed) on grounds that he had falsely induced high interest loans by using Mr Bosheh as a front (including using his name on the Yahoo e-mail account and RBS Account). Under the global settlement Mr Salfiti paid £150,000 to the Sheikh Mohamed parties.
5 In these proceedings the claimant claims damages in the same sum of £3m (or more) from Mr Salfiti on the basis of unlawful conspiracy and inducing Mr Bosheh’s breach of the Retainer. It says that Mr Salfiti and the Boshehs conspired to take advantage of its services and agree a settlement that deprived it of fees.
6 There have been a number of applications in this case which are now listed before me following the consent order of Cockerill J dated 25 August 2021 providing that they be heard together. These include the claimant’s applications: (a) for a freezing injunction (dated 21 July 2021); (b) for permission to amend its particulars of claim (dated 13 August 2021); (c) for permission to rely (i) on witness statements and documentation from the Chancery Action relying on CPR r 32.12(2)(b); (ii) documents provided to the claimant and disclosed to other parties in those proceedings (this application was dated 16 November 2021).
7 In addition I have the defendants’ application dated 29 July 2021 for: (a) an order striking out the claim in whole or part under CPR r 3.4 or granting summary judgment under CPR r 24.2; (b) relief in respect of privileged/confidential information, in particular that the claimant be restrained from relying on privileged or confidential information, based on CPR rr 31.22 and 32.12, and also that the parts of the evidence referring to such material be struck out; (c) an order that the hearing of this application, and the application for the freezing order be heard in private.
8 At the beginning of the hearing I refused the defendants’ application for the matter to be heard in private. In order to preserve the status quo regarding certain matters not yet decided I directed that any reference to a document was not to be treated as the document having been deployed or used in open court.
The claim9 Given that a large part of the applications depended on the merits and basis of the claim...
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Candey Ltd v Basem Bosheh
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Iniquity Exception To Privilege Does Not Apply Just Because Defendant To Fraud Claim Lies To Their Solicitors And The Court
...privilege in all cases where it is found that they have made false statements to their solicitors and the court: Candey Ltd v Bosheh [2021] EWHC 3409 (Comm). It is well established that privilege will not protect communications made in furtherance of a crime, fraud or equivalent conduct. Th......
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Iniquity Exception To Privilege Does Not Apply Just Because Defendant To Fraud Claim Lies To Their Solicitors And The Court
...privilege in all cases where it is found that they have made false statements to their solicitors and the court: Candey Ltd v Bosheh [2021] EWHC 3409 (Comm). It is well established that privilege will not protect communications made in furtherance of a crime, fraud or equivalent conduct. Th......