We previously addressed the shareholder privilege rule insofar as it has been recognised and applied as a matter of Irish law[1], albeit om the context of a Privy Council[2] decision involving Bermuda. This principle entitled a shareholder in a company to obtain confidential privileged communications with the company without the loss of the company’s privilege. However, it applied only where the communications did not relate to hostile litigation against the shareholder(s) involved. The principle had its roots in shareholders being understood as having a proprietary interest in the assets of the company, including legal advice. As the recognition of separate legal personality for companies developed,[3] it came to be justified on the basis of a joint interest being shared. The existence of the shareholder privilege rule was addressed - and rejected - by the Privy Council last year[4].
Our previous analysis questioned whether Irish law would change as a result, especially given that the principle had been applied in Ireland in the relatively recent past.[5] In light of a recent High Court decision,[6] which we address in more detail in this article, that question has definitively been answered in the affirmative.
Background
The plaintiff in this case is a company which provides a ‘cloud-based’ employee reward and recognition service with substantial international reach and significant turnover. The first defendant is a shareholder of the plaintiff and the other defendants are indirect investors and their officers. The plaintiff contended that the defendants caused it to lose the beneficial and transformative opportunity to acquire another company in the industry. The defendants allegedly changed their stance during the course of negotiations to advance their own interests to the detriment of the plaintiff. The allegations were denied and the defendants counterclaimed for breaches of relevant agreements.
In making discovery, privilege was asserted by the plaintiff over certain communications with solicitors concerning the proposed transaction. In challenging the assertion of privilege, the defendants asserted that the shareholder rule entitled them to sight of the legal advice obtained by the plaintiff company regarding the proposed acquisition. The defendants argued that, under Irish law, shareholders are generally entitled to access legal advice given to the company. Relying on the principle of joint interest, it was contended that the rule overrides legal advice privilege, although they did not claim it overrides litigation privilege.[7]
The decision
Mr Justice Michael Quinn reviewed the law around the scope and status of the shareholder privilege rule. He noted that the defendants relied heavily on Carlo Tassaro Assets Management SA v Eire Composites Teo[8]. In that case, Mr Justice Haughton formally recognised the rule in Irish law, but noted that there was an “absence of clear-cut Irish case law on the point” and he was referred to extensive English case law. Mr Justice Quinn therefore proceeded to review the development of the principle as a matter of English law and noted that it had changed since the Privy Council decision in Jardine[9]. He summarised the key findings from that decision, which the Privy Council said also applied as a matter of English law, as including:
- The proposition that shareholders could be said to be beneficial owners of the property of a company cannot survive the rule in Saloman v Saloman – a company has a legal personality distinct from its shareholders and is the legal and beneficial owner of its own property.
- There is no parallel between the relationships of beneficiary and trustee, and shareholder and company, which had been relied on in the early pre-Saloman case of Gourand v Edison Gower Bell Telephone Company of Europe[10].
- The English decision of CAS (Nominees) Ltd & Ors v Nottingham Forest plc & Ors[11], which was relied on by the plaintiff and cited by the Irish court in Carlo Tassaro in endorsing the rule, was wrongly decided.
- A status-based automatic shareholder rule was not justified.
- The relationship of company and shareholder does not fall within the family of relationships to which the principle of joint interest privilege applies.
Faced with Jardine’s rejection of the shareholder privilege rule, Mr Justice Quinn had to determine how Irish law should address it. In Worldport Ireland Limited,[12] Mr Justice Clarke had set out circumstances where a court may not be obliged to follow the decision of another judge of the same court. Mr Justice Quinn considered that this guidance should apply here. A prior High Court decision - Mr Justice Haughton’s ruling in Carlo Tassara - had relied on English case law that has since been rejected at the highest appellate level. Accordingly, Mr Justice Quinn was:
...not prepared to treat Carlo Tassara as authority for a shareholder rule, in any formulation, without regard to the analysis of the Privy Council in Jardine.”
The logic of Jardine, while not binding, was “compelling and… should be followed.” He went on to explicitly confirm that assets of the company, including legal advice, are the property of the company.
Although the shareholders benefit from the value of the assets through their interests in the shares, the shareholders are not joint or beneficial owners of those assets. A company acts via its board and directors, who may seek and obtain advice on behalf of the company, but the interests of the company do not always coincide with the interests of the shareholders or separate groups of them. Ultimately, he held that the relationship of shareholder and company does not itself establish a right on the part of the shareholder to company legal advice.
Comment
The decision is important because it has decided definitively that the shareholder privilege rule no longer applies in Ireland. It is also interesting that, despite the fact Jardine was not binding, the High Court was still prepared to accept that the position adopted by the Privy Council should apply as a matter of Irish law. Although Jardine originally concerned Bermuda law, the Privy Council expressly stated that it also applied to English law. This was significant because Irish recognition of the shareholder privilege rule had relied heavily on English authority. Even without Mr Justice Quinn’s dexterity regarding the rules of precedent, the result makes sense as a matter of logic as it is entirely coherent with the doctrine of legal personality. It also brings Irish law into consistency with English law on the issue from which the principle initially derived. Therefore, going forward, companies cannot be required to share privileged communications with shareholders as of right.
For more information and expert advice on commercial disputes, contact a member of our Commercial Disputes team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
[1] Eg Carlo Tassaro Assets Management SA v Eire Composites Teo [2016] IEHC 103; Delappe v Brock [2023] IEHC 318
[2] The Judicial Committee of the Privy Council is the final court of appeal for UK overseas territories and Crown dependencies.
[3] From Saloman v Saloman [1897] AC 22
[4] Jardine Strategic Ltd v Oasis Investments II Master Fund Ltd (No.2)(Bermuda) & Ors [2025] UKPC 34
[5] In 2023, in Delappe v Brock [2023] IEHC 318
[6] Globoforce Group PLC (t/a Workhuman) v Luxembourg Investment Company 276 SARL & Ors [2026] IEHC 397
[7] Litigation privilege may arise in respect of communications where the dominant purpose of prosecuting or defending anticipated or actual legal proceedings.
[8] [2016] IEHC 103
[9] [2025] UKPC 34
[10] [1887] 57 LJ CH 498
[11] [2001] 1 All ER 954
[12] [2005] IEHC 189
