Summary
Legal advice privilege is a fundamental and ordinarily absolute protection. An automatic status-based Shareholder Rule cannot be justified by shareholders’ alleged proprietary interest in company assets or by a presumed joint interest between every company and its shareholders. The company-shareholder relationship is not an established category of joint interest privilege. A fact-sensitive test based on the circumstances of later litigation is also unsuitable because directors need reasonable certainty about confidentiality when advice is obtained. The Board therefore abolished the Shareholder Rule in Bermuda and directed that courts in England and Wales treat the decision as abrogating the Rule there.
Factual background
Following a 2021 amalgamation, dissenting shareholders commenced appraisal proceedings under section 106 of the Companies Act 1981. They sought disclosure of pre-litigation legal advice concerning the proposed US$33 valuation. The Company claimed legal advice privilege. The Chief Justice of the Supreme Court of Bermuda held that the Shareholder Rule displaced privilege for advice obtained before 19 February 2021. The Court of Appeal for Bermuda upheld the rule, treating it as an aspect of joint interest privilege, but adjusted the relevant date to 8 March 2021. The appeal concerned whether the Rule existed, and alternatively whether former, beneficial or later-acquiring shareholders could invoke it and when any privilege exception ended.
Held
- Disposition. Lord Briggs and Lady Rose, in the joint judgment of the Board, advised His Majesty to allow the appeal on Ground 1. Issues 2–4 were left undecided because they became otiose once the Shareholder Rule was rejected.
- Nature of privilege. Legal advice privilege is a fundamental right protecting confidential lawyer-client communications. It is ordinarily absolute, subject to waiver and statutory override. It is not displaced merely by a competing public interest: see R v Derby Magistrates’ Court, Ex p B [1996] AC 487, R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] UKHL 21 and Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48.
- Shareholder Rule. The automatic Rule forms no part of Bermudian law and should no longer be recognised in England and Wales. Its proprietary foundation is inconsistent with the separate legal personality of a company recognised in Salomon v Salomon [1897] AC 22 and confirmed in BTI 2014 LLC v Sequana SA [2022] UKSC 25. Shareholders have no proprietary interest in company funds used to obtain advice.
- Joint interest. The company-shareholder relationship is not an established category of joint interest privilege. Shareholders may have conflicting interests between themselves and with the company. A solvent company must also consider other stakeholders. The contractual relationship between company and shareholder commonly restricts access to company documents.
- Certainty. The Board rejected the circumstances-based approach proposed by Kawaley JA. Directors must know with reasonable certainty, when advice is sought, whether it will remain confidential. An open-textured inquiry into the parties’ interests in later litigation would undermine that purpose. Even on the facts, the interests of the 85 per cent majority and the minority shareholders in the valuation plainly diverged.
- England and Wales. Applying Willers v Joyce (No 2) [2016] UKSC 44, the Board declared that courts in England and Wales should treat this decision as abrogating the Shareholder Rule for litigation in those courts.
The court’s approach to earlier authorities
Available to signed-in members.
Appellate history
- Privy Council: Appeal from [2024] CA (Bda) 7 Civ allowed on the privilege issue.
- Court of Appeal for Bermuda: Dismissed the Company’s cross-appeal and upheld the application of the Shareholder Rule as an aspect of joint interest privilege, while changing the relevant date to 8 March 2021: [2024] CA (Bda) 7 Civ.
- Supreme Court of Bermuda: Held that the Rule applied to advice obtained before 19 February 2021, but not to advice obtained once litigation was contemplated: [2023] SC (Bda) 8 Civ; supplemental judgment [2023] SC (Bda) 37 Civ.
Appeal route
- Appealed from[2024] CA (Bda) 7 CivThis appealappeal allowed
- This judgment [2025] UKPC 34 Privy Council
Key cases cited
The 30 most senior of 31 authorities cited.
- BTI 2014 LLC v Sequana SA and others [2022] UKSC 25
- Willers v Joyce (No 2) [2016] UKSC 44
- Three Rivers District Council and others (Respondents) v. Governor and Company of the Bank of England (Appellants) (2004) [2004] UKHL 48
- Regina v Special Commissioner and another, Ex p Morgan Grenfell & Co Ltd [2002] UKHL 21
- R v Derby Magistrates' Court, Ex parte B [1995] UKHL 18
- Salomon v A Salomon & Co Ltd [1897] AC 22
- Travelers Insurance Co Ltd v Armstrong [2021] EWCA Civ 978
- Dawson-Damer v Taylor Wessing LLP [2020] EWCA Civ 352
- Avonwick Holdings Ltd & Anor v Shlosberg [2016] EWCA Civ 1138
- Bowman v Fels [2005] EWCA Civ 226
- Aabar Holdings SARL v Glencore PLC & Ors [2024] EWHC 3046 (Comm)
- Various Claimants v G4S plc [2023] EWHC 2683 (Ch)
- Sharp & Ors v Blank & Ors [2015] EWHC 2681 (Ch)
- Winterthur Swiss Insurance Company & Anor v AG (Manchester) Ltd & Ors Rev 1 [2006] EWHC 839 (Comm)
- Arrow Trading & Investments Est 1920 v Edwardian Group Ltd [2004] BCC 955
- Wang v Grand View Private Trust Co Ltd [2021] BdA LR 29
- Ziegler v Green Acres (Pine Lake) Ltd [2008] ABQB 552
- In re 58.Com Inc unreported, 22 March 2003, FSD 275 of 2020
- CAS (Nominees) Ltd v Nottingham Forest plc [2002] BCC 145
- Surface Technology plc v Young [2002] FSR 25
- State of South Australia v Barrett (1995) 64 SASR 73
- FORMICA LTD. v. SECRETARY OF STATE ACTING BY THE EXPORT CREDITS GUARANTEE DEPARTMENT [1995] 1 Lloyd's Rep 692
- McPherson v Institute of Chartered Accountants of British Columbia (1988) 32 BCLR (2d) 328
- CIA BARCA DE PANAMA S.A. v. GEORGE WIMPEY & CO. LTD. [1980] 1 Lloyd's Rep 598
- Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553
- Schneider v Leigh [1955] 2 QB 195
- Woodhouse & Co Ltd v Woodhouse (1914) 30 TLR 559
- Talbot v Marshfield (1865) 2 Dr & SM 548
- Mayor and Corporation of Bristol v Cox
- In Re Wincham Shipbuilding, Boiler, and Salt Co
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Cases citing this case
1 later case · 1 positive
Most senior citing decisions:
- The Serendipity Centre Limited v Susan Tinson [2026] EWHC 349 (Ch) followed
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