Factual and Procedural Background
This judgment concerns three main issues arising from a dispute between two corporate shareholders, Company A and the UTB parties (comprising Company B, UTB 2018 LLC, and two individual parties). Both Company A and the UTB parties each hold 50% of the shares in a company ("Blades"), which owns a subsidiary running a football club ("FC"). The dispute arises from shareholding arrangements, financing, and alleged breaches of a shareholders' agreement ("ISA").
Relations between the parties deteriorated, leading Company A to serve a notice offering to buy the UTB parties' shares at a low price, expecting a counternotice that would trigger property call options benefiting Company A. The UTB parties transferred a large portion of their shares to another entity, claiming this prevented the call options from being triggered. This caused significant contention.
Company A initiated proceedings seeking specific performance of the share sale and declarations regarding the call options, alongside a conspiracy claim and a petition under section 994 of the Companies Act 2006 alleging unfairly prejudicial conduct. The litigation is complex and involves substantial financial and governance issues concerning the football club and its funding.
The court held a pre-trial review in April 2019, with a lengthy expedited trial scheduled shortly thereafter. The judge handling the pre-trial matters was not the trial judge, due to the need to inspect certain documents claimed to be privileged.
Legal Issues Presented
- In what circumstances should the court apply the provisions of Practice Direction 51U ("PD51U") relating to the "Disclosure Pilot for the Business and Property Courts"?
- What amendments should Company A be permitted to make to its Defence and Counterclaim and to its Petition under section 994 of the Companies Act 2006?
- Whether, and in respect of which documents, the UTB parties should be permitted to assert legal professional privilege, including the question of extended disclosure applications.
Arguments of the Parties
Appellant's Arguments (Company A)
- Company A contended that certain documents for which privilege was claimed, particularly correspondence between an individual associated with the UTB parties (Mr Giansiracusa) and a principal (Prince Abdullah), were not properly privileged as Mr Giansiracusa was acting as a "man of business" rather than a lawyer.
- Company A argued that the disclosure process was flawed, pointing to gaps in document production during critical periods and questioned the robustness of the privilege claims.
- Company A sought disclosure of privileged documents, including two specific redacted email exchanges, and proposed that the court inspect these documents to determine whether privilege was justified.
- Company A sought to amend its pleadings to particularise alleged financial incapacity of the UTB parties and Prince Abdullah, linking this to the ability to complete share purchases and support the company financially.
- Company A challenged the application of PD51U, arguing for a strict interpretation of privilege claims and disclosure obligations.
Respondent's Arguments (UTB Parties)
- The UTB parties maintained that Mr Giansiracusa was acting in a legal capacity when giving advice to Prince Abdullah and that the privilege claims were properly made and justified.
- They relied on evidence from their legal team describing a thorough and careful review process to distinguish privileged from non-privileged documents.
- The UTB parties argued that privilege could be claimed for documents as a class under PD51U and that the burden of proof shifted appropriately once evidence of privilege was provided.
- They resisted the disclosure applications as disproportionate and unnecessary, noting the large volume of documents already disclosed and the need for proportionality in the litigation.
- The UTB parties opposed the proposed amendments relating to financial incapacity as irrelevant or prejudicial, and argued that the court should not entertain extended disclosure requests that were not reasonably and proportionately linked to the key issues.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners [1972] 2 QB 102 |
Legal adviser acting in dual capacities; privilege applies only to legal advice given in a relevant legal context and requires independence. |
The court applied Lord Denning's principle that a legal adviser must be independent and that communications in a non-legal capacity are not privileged. |
| Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48 |
Clarification of legal advice privilege scope; advice must relate to rights, liabilities, obligations or remedies under law. |
The court applied Lord Scott's test for marginal cases to determine whether communications were privileged, focusing on the legal context of the advice. |
| West London Pipeline and Storage Limited v. Total UK Limited [2008] |
Claim to privilege must be properly particularised; burden of proof principles. |
The court recognised the burden on parties claiming privilege and the evidential requirements under PD51U. |
| WH Holding Ltd v. E20 Stadium LLP [2018] EWCA Civ 2652 |
Inspection of documents claimed to be privileged is a matter of broad judicial discretion. |
The court considered inspection powers and exercised caution in reviewing privileged documents, balancing proportionality and necessity. |
| Blackpool Corp v. Locker [1948] 1 KB 349 |
Communications by a solicitor acting in a non-professional capacity are not privileged. |
The court applied this principle to distinguish between professional legal advice and executive or business communications. |
| Derby v. Weldon (No. 7) [1990] 1 WLR 1156 |
Iniquity exception to legal professional privilege requires very strong prima facie case of fraud. |
The court noted that the iniquity exception was not pressed and would require exceptional circumstances. |
| Prudential PLC and Prudential (Gibraltar) Ltd v. Special Commissioner of Income Tax and Philip Pandolfo [2013] UKSC 1 |
Advice given by unqualified persons does not attract privilege. |
The court acknowledged this principle in assessing the nature of legal advice given by Mr Giansiracusa, a foreign lawyer. |
| IBM v. Phoenix International (Computers) Ltd [1995] 1 All ER 413 |
Privilege applies to advice from foreign qualified lawyers acting as lawyers. |
The court found this precedent supported the privilege claim for foreign legal advice given in this case. |
Court's Reasoning and Analysis
The court first clarified the application of PD51U, concluding that the Disclosure Pilot applies to all relevant proceedings in the Business and Property Courts from 1 January 2019 onwards, including those with pre-existing disclosure orders unless varied or set aside. This interpretation was supported by statutory language and prior judicial authority.
Regarding the amendments sought by Company A, the court allowed limited amendments that related to the loss-making nature of Company A and its need for investor support, as these were relevant and non-controversial. Amendments concerning the financial position of Prince Abdullah and the UTB parties were refused, as they raised new, peripheral issues close to trial and risked expanding the scope unnecessarily.
On the disclosure applications, the court examined the role of Mr Giansiracusa, who acted both as a lawyer and in business capacities. Applying the legal principles from key precedents, including the test articulated in Three Rivers (No 6), the court recognized the difficulty in marginal cases but emphasized the need to assess whether communications related to legal rights, liabilities, obligations, or remedies.
The court inspected two redacted documents to determine the validity of privilege claims and found that the privilege was properly asserted, as the documents related to legal advice given in the context of asserting rights under legal agreements. The court accepted the thoroughness of the disclosure review process conducted by the UTB parties' legal team.
The court emphasized proportionality and the overriding objective under PD51U, noting that extended disclosure should not be used as a tactical weapon or to burden litigation unnecessarily. It found that the majority of Company A’s criticisms were minor and did not undermine the privilege claims.
Disclosure requests relating to the Riyadh strategy meeting, personal documents such as passports and scheduling information, and financial details of Prince Abdullah were refused as they were unlikely to have probative value on the central issues and were disproportionate.
The court underscored the need for cooperation between parties and adherence to the principles of reasonableness and proportionality throughout the disclosure process, warning against further expansive disclosure applications.
Holding and Implications
The court ALLOWED Company A's application to amend its pleadings to a limited extent, specifically concerning the loss-making status of Company A and its need for investor support, and refused other proposed amendments.
The court REFUSED Company A's applications for extended disclosure of documents claimed to be privileged, including correspondence between Mr Giansiracusa and Prince Abdullah, documents relating to a strategy meeting, personal scheduling and passport information, and financial documents of Prince Abdullah.
The court upheld the UTB parties' claims to legal professional privilege over the relevant categories of documents, finding no substantive basis to doubt the privilege claims.
The decision enforces the principles of proportionality and cooperation under PD51U, emphasizing that disclosure must be focused on key issues and not used as a tool for tactical advantage or fishing expeditions. The judgment serves to limit the scope of disclosure in complex commercial litigation, particularly in expedited trials, and stresses the importance of focusing on the real issues in dispute.