EASTERN CARIBBEAN SUPREME COURT IN THE COURT OF APPEAL "rERRITORY OF THE VIRGIN ISLANDS HCVAP 20121026 (On appeal from the Commercial Division) BETWEEN: [1] SHEIKH MOHAMED ALI MALHAMRANI [2] SHEIKH SIRAJ ALI MALHAMRANI [3] SHEIKH KHALID ALI MALHAMRANI [4] SHEIKH ABDULAZIZ ALI MALHAMRANI [5] SHEIKH AHMED ALI MALHAMRANI [6] SHEIKH FAHAD ALI MALHAMRANI Appellants and SHEIKH ABDULLAH ALI ALHAMRANI Respondent Before: The Hon. Mde. Janice M. Pereira Chief Justice The Hon. Mde. Louise Blenman Justice of Appeal The Hon. Mr. Mario Michel Justice of Appeal Appearances: Mr. Victor Joffe, QC with him Mr. Lynton Tucker and Ms. Coleen Farrington of Harney Westwood Riegels, for the Appellants Mr. Simon Hattan, for the Respondent 2012: October 3. Civil appeal - Order for discovery - Documents passing between client and attorney ­ Legal professional privilege - Whether documents privileged - Basis on which an appellate court will interfere with the discretion of a judge The appellants ('1he Brothers") and the respondent ("Sheikh Abdullah") are brothers engaged in a dispute concerning the ownership of previously jointly owned assets. In 2008, under a court ordered Buy/Sell Process, Sheikh Abdullah purchased the Brothers' interests in Alhamrani Universal Company ("Universal"), a limited liability company incorporated in Saudi Arabia. During the Buy/Sell process the Brothers, who were on the board of directors of Universal, had sought and obtained legal advice from an attorney employed by Universal, Mr. Tawfiq Hardan. In the course of advising the Brothers, communications and emails ('the Documents") which related to the Buy/Sell process were brought into existence. Some of the Documents included electronic documents which were left on the Alhamrani Group servers and other computers when Sheikh Abdullah took over the Group in December 2008. Sheikh Abdullah filed an application for disclosure of the Documents so that they can be relied on by him in the present BVI proceedings. The learned trial judge, Bannister J, found no claim to privilege could properly be maintained with respect to the Documents against Sheikh Abdullah and granted the application sought. The Brothers appealed the learned trial judge's decision. The learned justice of appeal confirmed the orders Bannister J made for discovery, dismissed the appeal and upheld the learned trial judge's ruling on the basis that (1) the advice was provided by Mr. Hardan in the course of his employment by Universal in which Sheikh Abdullah was a partner; (2) the Brothers and Mr. Hardan were aware of the respondent's objections to Mr. Hardan providing legal advice when the respondent as part of the Alhamrani Group was paying for it; (3) the documents were stored on the Alhamrani Group computer system and communicated via its email system and (4) it must plainly have been in the contemplation of the parties that the result of the process would be that Sheikh Abdullah would buy the Brothers' interests. The appellants now appeal to the Full Court against the findings of the learned justice of appeal. Held: allowing the appeal; revoking the decision of Mitchell JA [Ag.] and setting aside paragraphs 5and 6of the Order of Bannister J, that: 1. For a document to have legal professional privilege attached it must be confidential. Mr. Hardan, being an attorney at law, engaged by the Brothers for the purpose of giving legal advice to them would be considered to be in the business of confidential communication. As legal professional privilege attaches to confidential communications generated between an attorney and their client when the communication was made for the dominant purpose of giving or obtaining legal advice, the Documents would be subjected to legal professional privilege. Moreover, only the client can waive privilege. The Brothers being the clients in the present case did not waive privilege. Consequently, privilege cannot now be transferred to Universal and more importantly to Sheikh Abdullah. 2. A breach of Mr. Hardan's contract by him could not have changed his status as a qualified lawyer and the Brothers' status as his clients or changed the status of the advice as confidential and privileged advice as a breach of duties by the legal advisor does not of itself invalidate privilege. Harris v Harris [1931] P 10 applied; Goddard v Nationwide BS [1987] aB 670 applied. 3. The legal advice given to the Brothers by Mr. Hardan, a professional attorney, was prima facie confidential and further privileged. That confidentiality and privilege 2 was not lost merely because some of the Documents were stored electronically and discovered by Sheikh Abdullah. BBGP Managing General Partner Limited v Babcock & Brown Global Partners [2011] Ch 296 applied. 4. Directors are to act bona fide in the best interests of the company. They are not to engage in dealings where their interests would or possibly may conflict with that of the company. The evidence before the Court did not establish that the Brothers, acting as directors of Universal acted in some way which conflicted with the interests of Universal. The legal advice provided by Mr. Hardan related to the dispute between the Brothers and Sheikh Abdullah. It bore no relation to the business of Universal. As such it was not proven that the Brothers had acted in a manner whereby their interests as directors conflicted with that of the company. In re Smith and Fawcett, Limited [1942] Ch 304 applied; Section 120(1) of the BVI Business Companies Act, 2004 applied. 5. Where a decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact plainly wrong, an appellate body is entitled to interfere with that decision. The decision of the learned justice of appeal, having exceeded the generous ambit within which reasonable disagreement is possible, the appellate court is entitled to interfere and allow the appeal. Dufour and Others v Helenair Corporation ltd. and Others (1996) 52 WIR 188 followed. REASONS FOR DECISION INTRODUC1'ION [1] BLENMAN JA: This is an appeal to the Full Court against the order of Mitchell JA [Ag.], sitting as a single judge of this Court dismissing the appellants' appeal and upholding the Order of Bannister J. The Order of Bannister J pertained to disclosure of certain documents and emails, which documents and emails he ruled were not confidential and not privileged and he gave directions for the documents and emails to be disclosed. The appellants objected to their production and appealed his decision. Mitchell JA [Ag.] upheld the ruling of Bannister J. [2] The appeal was heard on 3rd October 2012. This Court gave an oral decision allowing the appeal, revoking the Order of Mitchell JA [Ag.] and setting aside 3 paragraphs 5 and 6of the Order of Bannister J, with written reasons to follow. We now do so. [3] It is helpful to reproduce the relevant paragraphs of the Order of Bannister J: "5. The Defendants [the Brothers] shall by 4 pm on 14 August 2012 provide to the Claimant's lawyers true copies of all communications between any of the Defendants or their agents and Tawfiq Hardan ("Mr Hardan") between 12 February 2008 and 30 September 2008 which are directly relevant to the matters in issue in this action (other than any such communications which are subject to legal advice privilege by reasons that they consist of or relate to legal advice by any lawyers acting on behalf of any of the Defendants other than Mr Hardan) "6. The Cla.imant shall have liberty to deploy and rely upon any documents directly relevant to the issues in the action which came into his possession as a result of his taking control of the Alhamrani Group Headquarters building and equipment therein in December 2008 which are or include communications with Mr Hardan between 12 February 2008 and 30 September 2008 (other than any such communications which are subject to legal advice privilege by reason that they consist of or relate to legal advice by any lawyers acting on behalf of any of the Defendants other than Mr Hardan)." Background [4] The following statement of facts is substantially taken from the judgment of Mitchell JA [Ag.]. The appellants ('the Brothers") and respondent ("Sheikh Abdullah") are brothers engaged in a bitter and longstanding dispute concerning, what were until 2008, the jOintly owned assets originating from the estate of their late father. Prior to 2008 both the appellants and respondent, together with their sisters, jointly owned or owned interests in a number of companies collectively known as the Alhamrani Group (although there was no formal holding company). The dispute led to an agreement being entered into whereby their interests would be disengaged from one another ('the Disengagement Agreemenf'). Pursuant to the Disengagement Agreement the respondent took responsibility for the management of certain jOintly owned assets outside of Saudi Arabia and gave up responsibility for management of the companies within the 4 Alhamrani Group. Although in 2004 the Disengagement Agreement was eventually declared void by the Saudi Court, Sheikh Abdullah continued (he says wrongly) to be excluded by the Brothers from management of the Alhamrani Group companies. [5] In 2008, the Saudi Court proposed a compromise of the dispute between the siblings whereby the Brothers would value all the jOintly owned assets and provide Sheikh Abdullah with a price at which he could either sell his share of those assets to the Brothers or buy their shares from them, at his option (''The Buy/Sell Process"). Having received the Brothers' valuation, Sheikh Abdullah elected to buy the Brothers' interests. Under the Buy/Sell Process, which took place between February 2008 and September 2009, and under circumstances which are disputed and form a material part of the British Virgin Islands proceedings, Sheikh Abdullah purchased the interests of the Brothers in some (as the Brothers say) or all (as Sheikh Abdullah says) of the Alhamrani family's jointly owned interest in the Group and other assets. It is not in dispute that Sheikh Abdullah purchased the Brothers' interests in Alharmani Universal Company ("Universal"), a limited liability company incorporated in Saudi Arabia. Universal is not a party to these proceedings. The precise scope of what was included in the assets ('the Sale Assets") and in particular whether the Brothers' interests in Chemtrade were included, is the subject of the ongoing proceedings in the BVI. [6] The Brothers had challenged Sheikh Abdullah's decision to buy. The Saudi Court settled that dispute on 11 August 2008 when they issued judgment in favour th of Sheikh Abdullah ordering the Brothers to transfer the Sale Assets to Sheikh Abdullah. The judgment was enforced by the Saudi authorities who took posseSSion, as far as possible, of the Alhamrani Group of companies and handed tllem over to Sheikh Abdullah, who has been in control of the Alhamrani Group since then. [7] Mr. Tawfiq Hardan, a qualified attorney, was employed at different times by different companies within the Alhamrani Group. He was twice excluded from 5 Saudi Arabia at the instance of Sheikh Abdullah for acting on behalf of the Brothers in relation to various disputes between them. It is important to note at this point that Sheikh Abdullah in his skeleton arguments acknowledged that Mr. Hardan did indeed act for the Brothers as their legal adviser. On his return to Saudi Arabia in 2007 he entered into a contract with Universal as a "legal consultanf'. Article 2 of Mr. Hardan's employment contract provided that his role was to: "perform responsibilities of aforementioned position and all other duties within its sphere with necessary sincereness and honesty and abide by instructions and directive issued for him by [Universal] and to devote all his time for the service of [Universal's] interests and establishments benefit with due care and diligence and to abstain from working to Third Party with or without pay whether during or out of the official work hours and shall maintain in confidence all information to which he has access by virtue of his position." [8] In 2011, the Preliminary Committee for Settlement of Labour Disputes..Jeddah Governate ('1he Jeddah Committee") found that Mr. Hardan was employed by the Alhamrani Group of Companies. [9] During the Buy/Sell Process, Mr. Hardan advised the Brothers on variolJs matters relating to litigation and disputes with Sheikh Abdullah and in the course of his doing so the communications ('1he Documents") that were the subject of the application before the learned trial judge, Bannister J, were brought into existence. Mr. Hardan's conduct in so doing was known and approved of by the board of Universal which consisted of the appellants. [10] Some of the Documents included electronic documents which were left on the Alhamrani Group servers and other computers when Sheikh Abdullah took over the Group in December 2008. As a result of electronic searches done in the course of carrying out Sheikh Abdullah's disclosure exercise in the present proceedings, numerous documents created by or communications with Mr. Hardan were found. Those specific documents were in Sheikh Abdullah's possession when the disclosure exercise started. 6 [11] At first instance, Sheikh Abdullah filed an application asking the court for disclosure of the Documents and to declare that the Documents be relied on by him in the proceedings as they could not be subjected to a claim for legal professional privilege. The learned trial judge, Bannister J, found no claim to privilege could properly be maintained with respect to the Documents against Sheikh Abdullah and granted the application sought. The Brothers appealed those parts of the judgment which provide as follows: "(i) Well, I have to decide whether to order disclosure of all communications between any of the Defendants or their agents and a gentleman called Mr Hardan which were made between the 12th February, 2008 and the 3rd of September, 2008 a date when ... Mr Hardan ceased to be employed by an entity in the Alhamrani Group of Companies which is now being acquired by Sheikh Abdullah, the Claimant. "(ii) Mr Hardan has or was entitled to possession of documents which were generated during the period of his employment at this company, and it is said by the Defendants that none of the information contained in those documents ... can be disclosed ... to Sheikh Abdullah because it represents legal advice ... given to them by Mr Hardan during the course of his employment by the entity now owned by Sheikh Abdullah ... Ms Jones for Sheikh Abdullah says that if the Defendants were using Mr Hardan's services, which effectively were meant to be directed for the benefit of the company ... of which he was the employee, they risked any privilege which ... might have attached to the documents had they gone to a completely unconnected lawyer, they risked that privilege being broken because Sheikh Abdullah, the employer of Mr Hardan, would be entitled to everything generated by him in the course of his employment, and the fact that ... some third party had been given legal advice against Sheikh Abdullah's wishes would be irrelevant. The fact is that the company was not holding itself out as providing legal advice to all the partners, although Mr Joffe does say it was generally accepted that that would be done. "(iii) The position ... seems to have been that Mr Hardan was meant to be advising the company, and nobody else, and that in the circumstances it seems to me that if in breach of the arrangements Sheikh Abdullah thought to obtain, others sought Mr Hardan's advice, they might assert privilege against third parties, but they can't assert privilege against the Company which was paying Mr Hardan's wages. It does seem to me that in those circumstances a privilege defence can't work in favour of the Defendants, and accordingly, I'm going to make an 7 order in the terms of Paragraph 3.3 of the Application Notice, as it affects Mr Hardan."1 The Present Appeal [12] In this appeal, the appellants take issue with the findings contained in paragraphs 27-34 of Mitchell JA's [Ag.] judgment. They object to Mitchell JA's [Ag.] finding that the communications between Mr. Hardan and the Brothers did not have the necessary quality of confidentiality against either Universal or Sheikh Abdullah for those communications to be privileged against them. The learned judge based this finding on the following (1) the advice was provided by Mr. Hardan in the course of his employment by Universal in which Sheikh Abdullah was a partner; (2) the Brothers and Mr. Hardan were aware of Sheikh Abdullah's objections to Mr. Hardan providing advice when Sheikh Abdullah as part of the Alhamrani Group was paying for it; (3) the documents were stored on the Alhamrani Group computer system and communicated via its email system and (4) it must plainly have been in the contemplation of the parties that the result of the process would be that Sheikh Abdullah would buy the Brothers' interests. [13] Sheikh Abdullah argues that the learned justice of appeal's findings are correct and that this Court should decline to interfere with it. He contends that Mitchell JA [Ag.] took into account the relevant matters in determining the application and that both the decision of Bannister J and Mitchell JA [Ag.] cannot be said to be outside the bounds within which reasonable disagreement is possible. Accordingly, he submits, this Court should not interfere with the decision of the learned justice of appeal. The Law Pertaining To Legal Professional Privilege [14] It is the law that communications whether oral or in writing passing between an attorney and his client in general are afforded legal protection by the court, i.e. they are treated as privileged communications. For a document to have legal 1 See judgment of Mitchell JA [Ag.] dated 10111 September 2012, para. 12. 8 professional privilege attached it must be confidential. That is the first hurdle. If it is not confidential, then there can be no question of legal professional privilege arising or being maintained. Mr. Hardan, being an attorney at law and providing legal advice to the Brothers would be considered to be involved in confidential business with the Brothers, so to speak. The Documents would therefore, prima facie, be confidential. However, confidentiality does not by itself enable privilege to be claimed. The Documents were sent by Mr. Hardan to the Brothers and were not sent for and on behalf of Universal. Rather the Documents were between Mr. Hardan and the Brothers in their personal and private capacity. This was approved and authorised by the Board of Directors of Universal. In the case at bar, since confidential communications between client and legal adviser made for the purpose of obtaining or giving legal advice, the communications were plainly subject to legal advice privilege. [15] It must be remembered that the privilege is that of the client.2 It exists for the benefit of the client. Accordingly, only the client may waive privilege. The Brothers being the clients in the present case did not wa.ive privilege. Consequently, privilege cannot now be transferred to Universal and more importantly to Sheikh Abdullah. [16] The solicitor-client privilege has long been regarded as fundamentally important to our judicial system. Well over a century ago in Anderson v Bank of British Columbia3 the importance of the rule was recognised: 'the object and meaning of the rule is this: that as, by reason of the complexity and difficulty of our law, litigation can only be properly conducted by professional men, it is absolutely necessary that a man, in order to prosecute his rights or to defend himself from an improper claim, should have recourse to the assistance of professional lawyers, ... to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman who he consults with a view to the prosecution of his claim, or the substantiating of his defence...that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him should be kept secret, unless 2 Minet v Morgan (1873) 8Ch App 361 adopted in Waugh v British Railway Board [1980] AC 521. 3 (1876) 2Ch D644 (CA) at p. 649. 9 with his consent (for it is his privilege, and not the privilege of the confidential agent), that he should be enabled properly to conduct his litigation." [17] Further, as Lord Lyndhurst observed in Regina v Derby's Magistrate Court ex parte B:4 "the principle upon which the rule is established in that communications between aparty and his professional advisers ... should be unfettered and they should not be restrained by the apprehension of such communications being afterwards divulged and made use of to his prejudice. The necessary confidence will be destroyed if it be known that the communications can be revealed at any time." [18] It is indeed important for information to be made known to the court so that justice can prevail. However as explained by Baroness Hale in Three Rivers District Council and others v. Governor and Company of the Bank of England:5 "Legal advice privilege restricts the power of a court to compel the production of what would otherwise be relevant evidence. It may thus impede the proper administration of justice in the individual case. This makes the communications covered different from most other types of confidential communication, where the need to encourage candour may be just as great. But the privilege is too well established in the common law for its existence to be doubted now. And there is a clear policy justification for singling out communications between lawyers and their clients from other professional communications. The privilege belongs to the client." [19] With respect to candour, we find the enunciation of Sir James Knight Bruce VC in the case of Pearse v Pearse6 quite instructive: "The discovery and vindication and establisbment of truth are main purposes certainly of the existence of Courts of Justice; still, for the obtaining of these objects, which, however valuable and important, cannot be usefully pursued without moderation, cannot be either usefully or creditably pursued unfairly or gained by unfair means, not every channel is or OUght to be open to them. The practical inefficacy of torture is not, I suppose, the most weighty objection to that mode of examination ... Truth, like all other good things, may be loved unwisely - may be pursued too 4 (1996) AC 487. [20041 UKHL 48. 5 6 (1846) 1 De G& Sm 12,28-29 (cited with approval by Lord Carswell in Three Rivers District Council and others v. Governor and Company of the Bank of England, [20041 UKHL 48, para.112) 10