Mortgage Business Plc v Oliver and Co [2013] EWHC 3240 (QB) (unreported)

Without doubt confidentiality is at the corner stone of a solicitors practice. In Miers v Evans (1839 3 Jur 170), Patteson J held:
'…it would be a dangerous doctrine to lay down, that we can compel an attorney, because he is an attorney, to give a copy of, or produce, a document in his hands belonging to a client, except at the instance of the client himself … when an attorney holds a document for a client, it is not competent to the court, in an action by a third party against the attorney, to order him to give a copy of it…'

The duty can lead to a number of difficult issues for solicitors and indeed clients. Take a typical scenario where a lender is reviewing its security and considering a potential claim to recover its loss following default by a borrower. As part of that process it will be necessary to review the documents from the original lending transaction. That will involve obtaining the file from the Solicitors who acted when the lender took security.

If the solicitors acted for the borrower it would require the borrower to consent given the key duty of confidentiality. If the borrower is involved in any wrongdoing such consent is very unlikely.

What if the solicitors acted for both parties? In such a case, there are two separate retainers. Accordingly the borrowers consent is required. In Nationwide Building Society v Various Solicitors [1999] PNLR 52, Blackburne J held:
'…there was no implied waiver of confidentiality nor legal professional privilege by the borrower in favour of the lender, nor any implied authorisation for the solicitor to make disclosure to the lender of documents passing between the borrower and the solicitor. Any implied authorisation was merely an authorisation to pass on the information and not to divulge the communication itself.'

The previous Code of Conduct (2007) provided a more detailed guide on joint retainers. Paragraph 8 (c) provided:
'Where a lender asks for a conveyancing file and you have kept a joint file for both borrower and lender clients, you cannot, without the consent of the borrower, send the whole file to the lender, unless the lender can show to your satisfaction that there is a prima facie case of fraud. If the client does not consent, you should send only those parts of the file which relate to work done for the lender.'

It should of course be noted that the privilege is that of the client, not the solicitors.


The right to assert privilege by the client was noted by Blackburne J in Nationwide (see above) to be absolute in nature. It was said: 'The lawyer's mouth is "shut for ever".'

In the context of lender claims, the absolute right of privilege has been the subject of further consideration by the court and a novel approach by lenders. In Mortgage Express v Sawali [2010] EWHC 3054 (Ch) the lenders sought delivery up of a number of files from a predecessor firm of the defendant solicitors. There was a joint retainer between the borrower and the lender. The defendants argued that the lender was not entitled to the entire file where some documents were the borrower's and thus covered by privilege.

The Court noted the borrower's right to privilege and confidentiality, as set out in Nationwide and the then SRA 2007 Code Of Conduct. However, in this case it was material that the borrower had signed a declaration in favour of the lender which stated: “I/We irrevocably authorise my/our conveyancer to send their entire file relating to the whole transaction (not just the loan) to you at your request”.

The lender argued that having signed the declaration, the borrower did not retain any right of privilege. Whilst there were arguments mounted by the solicitors as to the meaning and effect of the declaration (raised on behalf of the borrower), the court held that the declaration was unambiguous and binding upon the lender and borrower. In the context of a loan transaction, there had to be frank disclosure. HHJ Simon Brown QC held that the lender was entitled to the files. As a matter of 'commercial commonsense' against the background knowledge that the declaration was essential to make the transaction work, the declaration must be objectively construed to mean exactly what it says. The borrower expressly authorised his conveyancer to provide 'the entire file' to the lender for the purposes of entering into the transaction notwithstanding the absolute privilege at common law.

In simple terms this was a contractual matter between the parties. The declaration was to be construed as a clear waiver of privilege, not unduly onerous or unfair.

Mortgage Business Plc v Oliver and Co [2013] EWHC 3240 (QB) (unreported) provides a further interesting encroach upon the privilege rule. This was a decision of District Judge Lambert sitting at Bristol District Registry.

The lender sought delivery up against solicitors in respect of documents contained in various conveyancing files which belonged to the borrower. The solicitors had acted for both the lender and the borrower. It was alleged by the lender that the borrower had made certain representations as to funds available.

Pursuant to the mortgage conditions, the borrower appointed the lender as attorney pending full repayment of the loan. The powers of attorney entitled the lender to instruct any person, such as a solicitor, who held documents relating to the properties, to allow "any documents about the property" to be viewed or copied by, or sent to, them.

The lender argued that the powers of attorney amounted to express consent by the borrower to the inspection or delivery up of confidential or privileged information. The solicitors argued that they were obliged to assert the borrower's rights of confidentiality and privilege, and that the powers of attorney did not amount to a waiver of those rights.

The Court held that the power of attorney had to be construed strictly. It noted Mortgage Express v Sawali (see above) and held that the power of attorney amounted to an effective waiver of privilege and confidentiality in relation to the documents. The clause was unambiguous clearly binding, and its construction was clear.

The court held that the power of attorney should not be restricted so as to apply only to documents relating to the property. The phrase "any documents about the property" was wide enough to include documents relating to payment of a mortgage. Whilst the power of attorney related only to the provision of copies of documents, and the lender sought delivery up, under the terms of the power of attorney the lender was entitled to either inspect the documents or obtain delivery.

Accordingly the lender was entitled to delivery up of the files.


Both Mortgage Express v Sawali and Mortgage Business Plc v Oliver and Co highlight contractual provisions which are very often overlooked by lenders, borrowers and their advisors. It proves a further weapon for the lender to deploy prior to any potential claim and strikes at the heart of privilege. Most well drawn charges will contain a clause appointing the lender as having a power of attorney, with the consequence that the borrower will be deemed to have waived privilege and confidentiality. Whilst in certain situations a lender can apply for pre-action disclosure, such application can not get around the privilege rule. Accordingly, adopting the contractual approach can be a fatal blow to borrowers and third parties.

Given its contractual nature one issue may arise. If the borrower is a consumer for the purposes of the Unfair Terms in Consumer Contracts Regulations 1999, there may be an issue as to whether a clause in the charge is unfair and therefore potentially unenforceable.

Finally, it is worth recalling that the court retains supervision and jurisdiction over solicitors. Notably, section 68 of the Solicitors Act 1974 provides that the courts have jurisdiction to make orders for the delivery up by a solicitor of any documents in their possession. Again, that power is subject to the rule of privilege and the contractual waiver noted in the cases above. Counsel in Sawali sought to raise a number of submissions that the court’s inherent jurisdiction over its officers did not extend to cases where the applicant had no underlying substantive cause of action against the solicitor for delivery up of the file; and/or the solicitor's client was not a party to the application. Those submissions were rejected by the court on the basis of the contractual provision between the lender and the borrower.

Perhaps the lawyer’s mouth is open gasping for air at the erosion of a sacred rule?

I would like to thank and acknowledge Westlaw UK for highlighting and reporting Mortgage Business Plc v Oliver and Co [2013] EWHC 3240 (QB).