Practice

Legal professional privilege - minority shareholders party to proceedings concerning public limited company in which they held shares - entitled to disclosure of privileged documents concerning company's decisionsIn re Nottingham Forest Plc: ChD (Evans-Lombe J): 31 July 2000

In the course of proceedings pursuant to s.459 of the Companies Act 1985, the petitioners sought an order for specific disclosure of certain documents, consisting of legal advice received by the board of the first respondents in relation to the acquisition of shares by the third respondent, together with a draft circular to shareholders to be distributed prior to the extraordinary general meeting convened in order to approve the acquisition.

David Chivers (instructed by Berwin Leighton) for the petitioners.

Catherine Roberts (instructed by Nabarro Nathanson) for the respondents.

Held, granting the application, that all the documents in question had been brought into being at about the time of, and were connected with, the decision by the first respondents' board to support the third respondent's proposed acquisition of shares in the second respondent and the preparations for the extraordinary general meeting of the company to approve that transaction; that the directors of the company had at all material times realised that going ahead with the transaction would probably result in litigation by substantial minority shareholders opposed to the deal; that where persons had a common interest in property, an opinion having regard to that property, paid for out of the common fund (the company's money), was the common property of the shareholders' cestui que trust, unless relations between the parties had already broken down into litigation, in which case an opinion obtained by one such party was privileged as against the others; that that rule was based on principles of equity in relation to the duties of directors which were unaffected by the size of the company concerned; and that, consequently, the documents in respect of which disclosure was sought were not protected by legal professional privilege since they had been created by lawyers or others for the purpose of procuring the company to take certain actions, albeit in the anticipation that their actions might give rise to litigation in which a challenge might be mounted by the present petitioners.