“132. (A) Accounting records sufficient to show and explain the Company’s transactions and otherwise complying with the Statutes shall be kept at the Head Office, or at such other place as the Directors think fit, and shall always be open to inspection by the Directors provided that such records as are required by the Statutes shall also be kept at the Office. Subject as aforesaid no Member of the Company or other person shall have any right of inspecting any account or book or document of the Company except as conferred by statute or ordered by a court of competent jurisdiction or authorised by the Directors.”
“They recognise that in the complex world in which we live there are a multitude of reasons why individuals, whether humble or powerful, or corporations, whether large or small, may need to seek the advice or assistance of lawyers in connection with their affairs; they recognise that the seeking and giving of this advice so that the clients may achieve an orderly arrangement of their affairs is strongly in the public interest; they recognise that in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it; and they recognise that unless the clients can be assured that what they tell their lawyers will not be disclosed by the lawyers without their (the clients’) consent, there will be cases in which the requisite candour will be absent. It is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non-disclosure that the present law of privilege provides. But the dicta to which I have referred all have in common the idea that it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers’ legal skills in the management of their (the clients’) affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else….”
“19-02 Persons who grant a joint retainer to solicitors retain no confidence against one another; if they subsequently fall out and sue one another, neither can claim privilege against the other for documents generated in respect of the joint retainer. The trustee or successor stands in the shoes of the original party. Against the rest of the world, however, either can maintain a claim for privilege in respect of such documents. Because the privilege is joint it can be waived only jointly and not by one party alone… 19-05 Privilege may be claimed by a party or his successor in title. The death of a client does not destroy his privilege since it may be asserted by his heirs. A trustee in bankruptcy is not a successor in title for this purpose. The principle has been extended beyond a personal right: where it can be regarded as an incident of a property right, it may be asserted by a successor in title to that property…”
“… a party cannot resist production of documents which have been obtained by means of payment from the moneys belonging to the party applying for their production. I think that that is the general principle, and one which, to my mind, applies as between a shareholder and the directors who manage his property, when the documents are paid for out of his property.”
“I think that if this was an action by Mr Cox as a ratepayer against the corporation of the city of Bristol with regard to some matter or other which related to the raising of the rates, or to the expenditure of the rates, it may be quite possible, and it is very probable, that Mr Cox would have a right to see them, but this is an action by the mayor, alderman, and burgesses of the city of Bristol, not as against Mr Cox in any way whatever as a ratepayer, but as a corporation really defending the interests of the ratepayers themselves against the Defendant, who they say is injuring those interests. That is a totally different case altogether, and I am of opinion that that argument cannot prevail.”
“Where a company obtained [legal] advice in the common interest and paid for it out of the common fund, undoubtedly the shareholder would have a right to see it.”
“the general rule that where a company takes the opinion of counsel and pays for it out of the funds of a company a shareholder has a right to see it…”
“It is well established by authority that a shareholder in the company is entitled to disclosure of all documents obtained by the company in the course of the company’s administration, including advice by solicitors to the company about its affairs, but not where the advice relates to hostile proceedings between the company and its shareholders…”
“The foundation, as I understand it, of the general rule is the same as the foundation of the similar general rule that applies in the case of trustees and beneficiaries. Just as a trustee who takes advice as to his duties in relation to the running of a trust, and pays for it out of the trust assets cannot assert privilege against the beneficiaries who have, indirectly, paid for that advice, so too a company taking advice on the running of the company’s affairs and paying for it out of the company’s assets cannot assert a privilege against the shareholders who, similarly, have indirectly paid for it.”
“the principle itself, while well-recognised in the authorities, has a somewhat shaky foundation in the light of the current ways of viewing the position of shareholders and their company, and whether they are akin to beneficiaries under a trust. It is clear that a company is totally separate from its shareholders and holds its property for itself. Shareholders have no direct interest in the company’s property. Therefore, the common fund basis is now dubious.”
“Does the Shareholder Rule exist in English law?”
“So here, it seems to me, however you define the relationship which their joint interest creates, it is enough to entitle the plaintiffs whether as beneficiaries, cestui que trust, or as partners in a joint venture, or as principals, to the same inspection of documents relating to the Aramco claims as the defendants themselves had.”
“The questions of what type of relationship between the two parties can give rise to a ‘common interest’ in the communication concerned has been considered in a number of cases. Amongst the types of relationship that can give rise to a ‘common interest’ are those of insured and insurer and insurer/reinsured and reinsurer. The cases have refused to be prescriptive about the circumstances in which the two parties will have a sufficient ‘common interest’ in the particular communications concerned. The issue has to be decided on the facts of the individual case.”
“As the cases reviewed above demonstrate, it is established under English law that a company may not claim privilege against its shareholders. The rule was originally based upon the proprietary interest of the shareholder in the property of the company expended on obtaining legal advice. The justification of the rule has changed to the discharge of the fiduciary duties owed by a director to the shareholders (Evans-Lombe J in CAS (Nominees) Limited v Nottingham Forest plc[2001] 1 All ER 954 ) and the existence of a joint interest in the subject matter of the communication (Thanki: The Law of Privilege (3rd ed)).”
“Whether joint privilege exists, in such circumstances, is far from an ‘unruly horse’. The critical analysis will almost invariably be whether, having regard to the particular purpose for which the legal advice was obtained and the particular legal purpose in relation to which the applicant seeks to deploy it, the respective parties’ interest in the advice may fairly be said to be a joint or common one. The scope of the rule understood in this way is flexible and not a rigid status-based rule at all.”
“(a) it unreasonably restricts the freedom of companies to access the protection of legal professional privilege, save when litigation is in contemplation; (b) it implicitly [ignores] the separate legal personality of the company from its shareholders; and (c) it presumes that the company-shareholder commercial relationship translates into a commonality of interests whenever the company seeks legal advice, when the real commercial and legal relationship may be entirely different.”
“A shareholder has standing to assert a joint interest in legal advice a company has received. This is because there will potentially be various contexts in which a joint interest will arise, not because of any single overarching principle which applies in all cases without further analysis. Whether or not a shareholder’s joint interest will be recognised by a court depends on the legal and factual circumstances of the proceedings in which the joint interest claim is advanced.”
“183 As to the issue of privilege, I decline to declare that the principle of joint interest privilege is, so far as it relates to companies and shareholders, inapplicable in Bermuda. Insofar as an entitlement to see privileged material was once based on the notion that the shareholder had some form of interest in the property of the company that foundation has collapsed. But the joint interest principle, applicable to defeat what would otherwise be a successful claim to legal advice privilege, has a firm foundation in the recognition by the courts that the shareholder and the company may have a joint interest in the subject matter of the relevant communications, in like manner as a joint interest in communications may arise in the case of other relationships: see those summarised at 6.09 of Thanki and by me at [139] of Wong.” 184. Whether such a joint interest exists depends on the circumstances of each individual case. I would accept that the joint interest principle does not extend to give the shareholder an absolute right to access any company legal advice whatever, and would respectfully endorse the observations of Kawaley JA on the limits of the right.”
“Whether or not a shareholder’s joint interest will be recognised by a court depends on the legal and factual circumstances of the proceedings in which the joint interest claim is advanced.”
“16. There is no doubt that, unless there is a decision of a superior court to the contrary effect, a court in England and Wales can normally be expected to follow a decision of the JCPC, but there is no question of it being bound to do so as a matter of precedent. There is also no doubt that a court should not, at least normally, follow a decision of the JCPC, if it is inconsistent with the decision of a court which is binding in accordance with the [normal rules of precedent].”