Re Jardine Strategic Holdings Ltd (Privilege and other issues)

• Jurisdiction: Bermuda
• Judgment Date: 21 April 2023
• Court: Supreme Court (Bermuda)
• Docket Number: Civil Jurisdiction 2021 Nos 107–109, 111–126

In the matter of Jardine Strategic Holdings Limited

And in the matter of the amalgamation agreement between JMH Investments Limited and JMH Investments Limited

And in the matter of section 106 of the Companies Act 1981

[2023] Bda LR 44

Civil Jurisdiction 2021 Nos 107–109, 111–126

In The Supreme Court of Bermuda

Privilege over legal advice — Whether litigation was reasonably contemplated by the Defendant — Constituent elements of this ground of privilege — Whether communication must have been made for the sole or dominant purpose of conducting litigation — Costs

The following cases were referred to in the judgment:

Sharp v Blank [2015] EWHC 2681

Woodhouse v Woodhouse [1914] TLR 559

W Dennis & Sons Ltd v West Norfolk Farmers Manure and Chemical Co-Op Ltd [1943] Ch 220

Arrow Trading v edwardian Group (No 2) [2004] BCC 955

In the matter of 58.com Inc Cayman FSD 275/2020

Director of the Serious Fraud Office v Eurasian Natural Resources Corp Ltd [2019] 1 WLR 791

Binns v Burrows [2012] Bda LR 3

Seepersad v Persad & Anor (Trinidad and Tobago) [2004] UKPC 19

Credit Suisse Life (Bermuda) Ltd v Ivanishvili [2021] Bda LR 116

Mr J Adkin KC, Mr M Chudleigh, Ms L Williamson and Mr D Thom; Mr M Watson; Mr D Duncan and Mr R Hawthorne for the Plaintiffs

Mr M Moore KC, Mr J Wasty, Ms K Krige and Mr J Knight for Jardine Strategic Holdings Ltd and Jardine Strategic Ltd

JUDGMENT of Hargun CJ

Introduction

1. This Judgment deals with issues arising out of the earlier Judgment of this Court dated 14 February 2023. The issues are: (i) the scope of the privilege arising from the Court's finding that hostile litigation against Jardine Strategic Holdings Limited (the “Company”) in the form of section 106 proceedings was indeed in contemplation by the time the Transaction Committee was established on 19 February 2021; (ii) a stay pending appeal; (iii) the Court's inspection of the redacted documents; (iv) the “essence” of the request issue; and (v) the costs of these applications.

The privilege issue

2. At paragraph 169 of the earlier Judgment the Court held that litigation in the form of section 106 proceedings was indeed in contemplation by the time the Transaction Committee was established on 19 February 2021. As a result, in accordance with the decision of Nugee J in Sharp v Blank[2015] EWHC 2681 (Ch), any legal advice sought and received on or after 19 February 2021 by the Company and/or the Transaction Committee in defence of or in connection with the contemplated section 106 proceedings will fall within the exception to the general rule and is privileged against the Plaintiffs. The Court is asked to clarify the meaning of the expression “in connection with the contemplated section 106 proceedings.”

3. Mr Adkin KC submits that the appropriate wording which encapsulates this point is to provide that the privilege can be claimed for documents which are created from 19 February 2021 for the dominant purpose of being in defence of or in connection with the contemplated section 106 proceedings.

4. In response, Mr Moore KC submits that the Judgment is not dealing with litigation privilege but with legal advice privilege. He says that it is clear that the joint interest privilege can be sundered by matters where litigation is not contemplated. He further says that the joint privilege can be lost where the “interests have diverged”. In any event, he says that the authorities relied upon by Mr Adkin KC do not support the proposition that privilege can only be claimed if the documents were created for the dominant purpose of being in defence of or in connection with the contemplated proceedings.

5. At the hearing in December 2022, in relation to the issue of joint interest privilege, the Company submitted first, the Court should hold that the English rule relating to joint interest privilege does not apply in Bermuda. Second, even if the English rule does apply in Bermuda that the rule has no application in relation to shareholders who are no longer shareholders of the company. Thirdly, the Company submitted, in its written submissions dated 8 December 2022, that: “in any event, the legal advice obtained by Jardine Strategic in connection with the Amalgamation falls within the established exception to the general English rule as it was obtained in circumstances where Jardine Strategic board (and Independent Transaction Committee) reasonably contemplated hostile litigation against the Defendants … It follows that Jardine Strategic (and now the Company) can assert privilege vis-à-vis its former shareholders in relation to advice received in connection with or relevant to, such litigation” (paragraphs 174(b) and 206). This submission is recorded at paragraph 155 of the judgment and it appeared to the Court that the Company was relying upon litigation privilege. Paragraphs 155 to 169 of the judgment deal with the issue of privilege in circumstances where hostile litigation is reasonably contemplated.

6. Mr Adkin KC correctly points out that the submission that joint interest privilege ceases to apply when the parties' interests are adverse was in fact made by counsel in Sharp v Blank[2015] EWHC 2681 (Ch) at [7]. That submission, as recorded in the earlier Judgment at paragraph 164, was rejected by Nugee J at [10]:

“The decision inWoodhousedoes not, I think, give any support to the notion that the determining question of whether the general rule or the exception applies is whether the interests of the company and the interests of its shareholders are wholly aligned or not. Like all other judgments, statements of principle must be read on the basis of the facts in each case and on the facts of that case there had been actual litigation, and it is quite clear from the way in which Phillimore LJ. approached the judgment that the opinions were written in connection with the actual litigation either after it had been brought or in preparation for it. It is not surprising that in those circumstances he referred to the parties having been sundered by litigation, or that Lush J referred to the parties' interests as adverse. The foundation of the exception is still, it seems to me, the existence of actual or threatened litigation, and the taking of advice in connection with the actual or threatened litigation.”

7. Looking at the authorities relied upon by Counsel, it seems clear that the necessary “connection” between the advice sought/received and the contemplated litigation has to be a firm one. Thus, in Woodhouse v Woodhouse[1914] TLR 559, Lush J held that the legal opinions obtained by the company would be privileged if they were obtained “to enable it to carry on the litigation.”

8. In W Dennis & Sons Ltd v West Norfolk Farmers Manure and Chemical Co-Op Ltd[1943] Ch 220, Simonds J held at 222:

“The general rule, which applies equally as between a company and shareholders and as between a trustee and his beneficiaries is the stated at pp. 518 and 519 of the Annual Practice, 1943: “a cestui que trust… is entitled to see cases and opinions submitted...