[1] Sheikh Mohamed Ali M Alhamrani [2] Sheikh Siraj Ali M Alhamrani [3] Sheikh Khalid Ali M Alhamrani [4] Sheikh Abdulaziz Ali M Alhamrani [5] Sheikh Ahmed Ali M Alhamrani [6] Sheikh Fahad Ali M Alhamrani Appellants v Sheikh Abdullah Ali Alhamrani Respondent
| Jurisdiction | British Virgin Islands |
| Judge | Mitchell JA [AG.],Don Mitchell,Justice of Appeal [Ag.] |
| Judgment Date | 10 September 2012 |
| Judgment citation (vLex) | [2012] ECSC J0910-1 |
| Court | Court of Appeal (British Virgin Islands) |
| Docket Number | HCVAP 2012/026 |
| Date | 10 September 2012 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE COURT OF APPEAL
The Hon. Mr. Don Mitchell Justice of Appeal [Ag.]
HCVAP 2012/026
(On appeal from the Commercial Division)
Mr. Ian Mann for the Appellants
Mr. Jack Husbands for the Respondent
Civil appeal - Interlocutory appeal - Order for discovery - Documents passing between party and legal adviser - Whether documents privileged - Case management discretion of trial judge - Basis on which an appellate court will interfere
Saudi Arabian brothers are disputing the ownership of previously jointly owned assets. One of these assets is a BVI company. The respondent brother has, pursuant to a Saudi court order for a Buy/Sell arrangement, bought out the interests of his other six brothers (the appellants in this appeal). During the Buy/Sell process, the six brothers sought and obtained legal advice from a company lawyer. The respondent brother has bought the assets, including the company which employed the lawyer. The six brothers, acting as directors for one of the Group companies, had employed the lawyer as legal adviser to the company. The lawyer had provided legal advice and prepared documents for the six brothers during the Buy/Sell process against the interest of the other brother, despite twice having previously been deported from Saudi Arabia for working for the six brothers against the one. The purchasing brother obtained documents and emails passing between the lawyer and the six brothers which he found on the computers and email servers of the company. He wishes to produce them in evidence in his suit in the BVI relating to the asset in dispute here. The six brothers object to their production on the basis that the documents and correspondence are confidential and privileged as having been prepared for them by their legal adviser. They argue that as directors of the company they were entitled to authorise a variation of his employment contract to permit him to work personally for individual directors to whom legal professional privilege, even as against the company, would arise. At a case management conference the trial judge ruled that the documents were not confidential and not privileged and he gave directions for the documents to be disclosed prior to the trial which was shortly to occur. The six brothers appealed.
Held : disallowing the appeal, upholding the ruling of the trial judge, and confirming the orders he made for discovery, that:
1. In their capacity as directors the six brothers were under a duty to act bona fide in the interests of the company. They cannot maintain that a decision by them to direct an employee of the company to act at the company's expense for them in their individual capacity was a decision taken in the best interests of the company. Directors have no power to authorise an action which prefers one group of shareholders over another. This is necessarily true where the group of shareholders being preferred is made up of the same directors. Accordingly, any decision taken of the sort relied on was taken without authority and is invalid and liable to be set aside.
Boardman and Another v Phipps [1967] 2 AC 46 ; Mohan Singh Bhullar and Others v Inderjit Singh Bhullar and Another [2003] 2 BCLC 241; In re Smith and Fawcett, Limited (1942) Ch 304; Howard Smith Ltd. v Ampol Petroleum Ltd. and Others [1974] AC 821; Criterion Properties plc v Stratford UK Properties LLC and Others [2004] 1 WLR 1846; Douglas and Others v Hello! Ltd. and Others (No. 3) [2006] QB 125; Wilson v Rastall (1792) 4 Durn & E 753; and Smith v Jones [1999] 1 SCR 455 applied.
2. Legal professional privilege attaches to a document that is confidential as between lawyer and client. Without that confidentiality there can be no privilege. First, both the brothers and the lawyer knew that the advice was being provided during the lawyer's employment by the company which was now owned by Sheikh Abdullah; second, both the brothers and the lawyer were aware that Sheikh Abdullah had previously objected to the lawyer providing advice to the brothers in their personal capacity when Sheikh Abdullah was paying for it; third, the documents were stored on the company computer system and the emails communicated on the company email system; fourth, the lawyer and the brothers must have been aware that as a result of the Buy/Sell process Sheikh Abdullah would buy the brothers' interests in the company and would end up being the sole owner of them, which is precisely what happened. In these circumstances, the judge was right to hold that the communications between the lawyer and the brothers did not have the necessary quality of confidentiality against either the company or Sheikh Abdullah for those communications to be privileged against them.
Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48 ; [2005] 1 AC 610 applied.
3. The cases of joint retainer do not apply. There was no joint retainer or anything analogous to one. Rather, the lawyer was employed under a contract which expressly prohibited him from acting for third parties and in circumstances where both he and the brothers knew that the purchasing brother objected to the lawyer working for them.
The Sagheera [1997] 1 Lloyd's Rep 160 ; Harris v Harris [1931] P 10; Goddard and Another v Nationwide Building Society [1987] QB 670; In re Pickering (1884) LR 25 Ch D 247; and Aron Salomon v A. Salomon and Company, Limited [1897] AC 22 distinguished.
4. The equitable jurisdiction of the court to restrain a party from relying on otherwise confidential and privileged documents which have come into his hands will be exercised taking into account the normal principles of equity. It is fundamental that, 'He who comes into equity must come with clean hands.' In the present case the brothers cannot be said to have clean hands. They obtained advice from the lawyer in relation to their dispute with Sheikh Abdullah when he had twice been forced to leave Saudi Arabia for acting against Sheikh Abdullah. The lawyer has sued the company for employment compensation which will have to be paid by Sheikh Abdullah, in circumstances where he was advising the brothers in their dispute against Sheikh Abdullah. The court is being asked to permit the lawyer to breach his duty of fidelity to his employer.
Calcraft v Guest [1898] 1 QB 759 ; and Goddard and Another v Nationwide Building Society [1987] 1 QB 670 applied.
5. The trial judge was performing a case management function in which he was called on to exercise a discretion whether or not to allow discovery. An appeal against a judgment of a trial judge in the exercise of a judicial discretion will not be allowed unless the court is satisfied that (1) in exercising his or her judicial discretion, the judge erred in principle either by failing to take into account or being influenced by irrelevant factors and considerations, or by taking into account or been influenced by irrelevant factors and considerations; and (2) that as a result of the error or the degree of the error in principle, his decision exceeded the generous ambit within which reasonable disagreement is possible and may therefore be said to be clearly or blatantly wrong. In this case the appellants have not passed the requisite threshold. They have not been able to satisfy the Court that the trial judge, in exercising his discretion to admit the documents and to give the directions he did, erred in principle. He gave all appropriate weight to all the relevant considerations.
Rule 26.3 of the Civil Procedure Rules 2000 applied; Dufour and Others v Helenair Corporation Ltd. and Others (1996) 52 WIR 188 followed.
This is an interlocutory appeal made with the leave of the trial judge against an order made by Bannister J for disclosure of documents prior to a trial which has been set down for a period of time commencing 20 th September 2012. The order granted an application made by the respondent that documents recording certain communications between the appellants and a Mr. Tawfiq Hardan ("Mr. Hardan") should be disclosed in the trial. In accordance with rule 62.10 of the Civil Procedure Rules 2000 (" CPR 2000") it comes before me as a single judge of the Court to determine on the basis of the filed submissions of the parties.
The background may be shortly stated. The parties to these proceedings are Saudi Arabian brothers who have unfortunately since about 2000 been engaged in a series of disputes between them about the management and, now, ownership of what were until 2008 the jointly owned assets originating from the estate of their late father. An agreement was entered into under which their interests would be disengaged from one another ("the Disengagement Agreement"). As part of that agreement Sheikh Abdullah Ali Alhamrani ("Sheikh Abdullah") took responsibility for the management of certain jointly owned assets outside of Saudi Arabia, but gave up responsibility for management of the companies within the Alhamrani Group. In 2004, the Saudi court held the Disengagement Agreement to be void. Sheikh Abdullah continued (he says wrongly) to be excluded by his six brothers ("the Brothers") from management of the Alhamrani Group of Companies ("the Group"), which comprised interests in a number of companies owned by the Alhamrani family. The Group was not a holding company but consisted of various directly held companies with different shareholders. Sheikh Abdullah continued to be a so called "partner" in the Group and continued to have a one eighth share...
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