As a result of this successful appeal from the Court of Appeal for Bermuda, and a Willers v Joyce direction made by the Privy Council, “the Shareholder Rule” is abrogated for the purpose of litigation in the Courts of England and Wales.
The Shareholder Rule, that companies cannot claim privilege against their shareholders, developed by analogy with “the Trustee Rule”, that trustees could not claim privilege against their beneficiaries for materials which they had obtained at the beneficiaries’ expense.
As such, the Shareholder Rule was initially justified on a proprietary basis, which has since fallen away as a result of the recognition that a company is both the legal and beneficial owner of its property.
Other justifications for the Shareholder Rule have been put forward, including that the Rule is a sub-set of joint interest privilege.
However, the Privy Council found that the Shareholder Rule is, and has always been, “a rule without justification” and that it should not exist, if it ever did, in the law of England and Wales.
Read the full judgment here: https://jcpc.uk/uploads/jcpc_2024_0077_judgment_701b311f53.pdf
Read Alex Heylin’s Case Digest here: Case Digest July 2025 No. 12
