Confidentiality between client and lawyers is one of the bedrocks of the way the legal profession works and something that clients have always taken for granted (and indeed should be able to!)
One of the rare instances when that confidentiality does not apply quite as clients might expect is the situation in which their lawyer is acting not only for them but also for the mortgage lender in a property transaction - this happens in about 95% of cases. If mortgage lenders routinely instructed separate lawyers then the costs of buying property would increase significantly and this is why mortgage lenders are happy for the same lawyers to represent their interests and the interests of the buyer.
What happens, though, where for example the buyer ultimately defaults on the mortgage and the mortgage lender requests the lawyer's file? Many clients assume that the file cannot be released to the mortgage lender because of the confidentiality rules and that even if some papers can be released, then those released are limited to such documents as directly involve the lender.
However, the High Court has now confirmed that borrowers have waived their right to legal professional privilege over those documents in their mortgage files that may otherwise have benefited from that protection. The reason being that the borrower will have signed a mortgage application form which contains a declaration consenting to the whole file being handed over to the lender on request!
The case is a useful reminder to both lawyers and clients that signing a standard form which is as simple as an application for borrowing can have consequences which last well into the future.
