Jardine Strategic Limited v Oasis Investments II Master Fund Ltd and 80 others No 2 (Bermuda)

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.

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

• 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.