Various Claimants v G4S PLC

The shareholder principle remains recognised: in proceedings between a company and its shareholders, the company may be unable to assert privilege over legal advice concerning the subject matter of the dispute. Its scope is narrow and should not be extended without authority. The relevant shareholder is a direct registered shareholder, and qualification is assessed when the document came into existence. The principle covers legal advice privilege and litigation privilege, but not without prejudice privilege. Even where disclosure is legally required, the court may refuse or defer it where a late application creates insuperable case-management difficulties and threatens a fair trial.

The claimants, institutional investors in G4S, brought statutory claims under section 90A and Schedule 10A of the Financial Services and Markets Act 2000. They applied for disclosure of documents over which G4S claimed privilege, relying on the shareholder principle. Most claimants held shares beneficially through CREST; three had been registered shareholders for relevant periods. The application was made shortly before a six-week trial, after disclosure was largely complete. The issues concerned the existence and scope of the principle, the status and timing of share ownership, the types of privilege covered, and the practical consequences of disclosure.

1. The application was dismissed. The shareholder principle was sufficiently recognised by authority that a first-instance judge could not abolish it, despite doubts about its modern justification.
2. The principle is confined to direct registered shareholders. It is an incident of legal ownership and the relationship between the company and its members. Statutory standing under section 90A and Schedule 10A of the Financial Services and Markets Act 2000 may extend beyond those who are shareholders at law and does not automatically confer an entitlement to privileged documents.
3. The relevant time is when the document came into existence. A shareholder who later ceases to hold shares does not thereby lose the right in existing proceedings. The principle applies to legal advice privilege and litigation privilege, but not without prejudice privilege, which involves a third party.
4. Only three claimants were potentially entitled to disclosure, and for different periods. Disclosure at that stage would create serious compartmentalisation problems for lawyers acting for all claimants. A confidentiality club would not adequately prevent use of the documents for claimants not entitled to see them.
5. Under paragraph 17.3 of Practice Direction 57AB, proportionality and trial fairness justified refusing disclosure. The lateness of the application was relevant, and the court could not fairly manage a trial in which the privileged material might be deployed. The court noted that earlier application might have permitted separate case-management arrangements.

This was a first-instance interlocutory application at the third case management conference. Earlier case management orders had been made by Mrs Justice Falk and Mr Justice Trower, but no appeal was determined in this judgment.