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 th August 2008 when they issued judgment in favour
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.

5 [20041 UKHL 48.

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
keenly – may cost too much. And surely the meanness and the
mischief of prying into a man’s confidential communications with his
legal adviser, the general evil of infusing reserve and dissimulation,
uneasiness, and suspicion and fear, into those communications
which must take place, and which, unless in a condition of perfect
security, must take place uselessly or worse, are too great a price to
pay for truth itself.” (My emphasis).
[20] The Brothers not having waived their privilege to the Documents it follows that the
Documents would be afforded the necessary legal professional privilege. There
was no sufficient reason proffered by Sheikh Abdullah which would remove the
privilege attached to the Documents. Even though the advice was provided by Mr.
Hardan in the course of his employment with Universal, the Board of Universal
approved of this.
(21] Moreover, there was no evidence which suggested that Mr. Hardan breached his
contract with Universal. Even if he did, any breach on his part could not have (a)
changed his status as qualified lawyer and legal advisor to the Brothers, or (b)
changed the status of the Brothers as his clients for this purpose, or (c) changed
the status of the advice as confidential and privileged advice. As held in Harris v
Harris7
and Goddard v Nationwide 8S,8 a breach of duties by the legal advisor
does not of itself invalidate privilege.
[22] The Brothers submit that there is no logical or legal reason put forward by Sheikh
Abdullah why the Brothers should lose their protection in equity and substantive
legal rights in respect of the Documents (which belong to them and them only)
simply because their legal advisor happened to be employed by a company at the
time the communications came into existence. They further submit that the
existence of an employment relationship between Universal and Mr. Hardan
should not alter the confidential nature and privileged status of the
communications. These submissions this Court wholly accepts.
7[1931] P10, pp. 12-13.
8[1987] OB 670, p. 678.
11
[23] The learned justice of appeal also determined that since Sheikh Abdullah objected
to Mr. Hardan providing advice to the Brothers, this meant that the Documents
lacked the necessary confidentiality for them to be privileged. We must disagree
since Sheikh Abdullah’s objections do not affect the quality of confidentiality
attached to the Documents.
[24] In addition, the learned justice of appeal took into consideration matters which this
Court does not consider to be relevant to the confidentiality and resulting legal
professional privilege which would be attached to the Documents. One such
matter being that the Documents were stored on the Alhamrani Group computer
system and communicated via its email system. The Brothers relied on Norris J’s
statement in BBGP Managing General Partner Limited v Babcock & Brown
Global Partners9 where he said:
”The starting point is the nature of the matter communicated not the
manner of communication. Legal professional privilege is a substantive
right founded on an important public policy namely that a client should be
able to communicate freely with his legal advisor without fear that what
passes between them will be used against him. Documents generated in
the course of a solicitor/client relationship are presumed confidential. The
confidentiality that prima facie attaches to legal advice is the correct
starting point … I accordingly find and hold that communications …
remain confidential and capable of being the subject of a claim to legal
professional privilege notwithstanding that digital copies are to be found
on the B&BGroup database.”
[25] Sheikh Abdullah contends that to ask whether in the circumstances the presumed
confidence in the relevant communications has been lost by their transmission and
storage on a particular system is to start the enquiry at the wrong end. They urge
the Court that BBGP Managing General Partner Limited was wrongly decided
and ought not to be followed.
[26] However, the principle enunciated in BBGP Managing finds favour with us. There
was no authority relied on by Sheikh Abdullah to say otherwise. We accept that
notwithstanding the Documents were stored on Alhamrani Group computer system
9 [2011] Ch 296, paras. 48-50.
12
and communicated via its email system, the Documents do not lose their
confidentiality and their resulting privilege.
[27] The appellants contend that the learned justice of appeal’s finding that any
decision relied on by the Brothers was taken without authority, either actual or
apparent, is invalid and liable to be set aside was wholly wrong. The learned
justice of appeal held this on the basis that the Brothers actions involved breaches
of: (a) the self-dealing rule; (b) the requirement to act bona fide in the interest of
the company of which they were directors; and (c) the principle that a director has
no power to authorise an action which prefers one group of shareholders over
another. Mitchell JA [Ag.] cited the case of Boardman v Phipps10 and Bhullar v
Bhullar11
in support of that ‘finding.
The Law Relating To That Particular Finding
[28] The Brothers as directors of Universal were in a fiduciary position with Universal
and ought to have reflected this relationship in all they did. Further, section 120(1)
of the BVI Business Companies Act, 2004 states: “Subject to this section, a
director of a company, in exercising his powers or performing his duties, shall act
honestly and in good faith and in what the director believes to be in the best
interests of the company.” Directors are in a fiduciary position with the company
and are prohibited from doing any acts deemed prejudicial to the company. As
fiduciaries, directors must at all times act bona fide in the best interests of the
company. This principle is enunciated in the case In re Smith and Fawcett,
Limited,12 where it was held that, “[Directors], must exercise their discretion bona
fide in what they consider – not what acourt may consider – is in the interests of
the company, and not for any collateral purpose.” (My emphasis).
10 [1967] 2 AC 46.
11 [2003]2 BCLC 241.
12 [1942] Ch 304 p. 306.
13
[29] Moreover a director is prohibited from ‘self~dealing’. As they are in a fiduciary
position they are bound by duty succinctly stated by Lord Cranworth LC in
Aberdeen Railway Co. vBlaikie Brothers:
”This, theretore, brings us to the general question, whether a Director of a
… Company is or is not precluded from dealing on behalf of the Company
with himself, or with a firm in which he is a partner … And it is a rule of
universal application, that no one, having such duties to discharge, shall
be allowed to enter into engagements in which he has, or can have, a
personal interest conflicting, or which possibly may contlict, with the
interests of those whom he is bound to protect.”13
[30] The above principle lays down the rule that directors are not to engage in dealings
where their interest would or possibly may conflict with that of the company.
[31] The company in this instance is Universal and the directors are the Brothers.
Sheikh Abdullah contended that the Brothers would be in breach of the prohibition
on ‘self dealing’ if they were to authorise Mr. Hardan to provide advice to them in
their personal capacity in their dispute with him. The learned justice of appeal
agreed with their submission. This contention, however, cannot be supported.
Firstly, for the principle against self dealing to arise the director must have acted in
away which conflicts with the interest of the company and not that of athird party.
There was no evidence before this Court that showed that the Brothers, acting as
directors of Universal, acted in some way which conflicted with the interests of
Universal.
[32] Sheikh Abdullah argued that the Brothers, by directing Mr. Hardan, an employee
of Universal, to advise them personally in their dispute with Sheikh Abdullah were
plainly putting their own interests in conflict with those of Universal and that they
could not have believed that they were acting bona fide in Universal’s interest.
The learned justice of appeal accepted their argument and concluded that the
Brothers, as directors, could not maintain that a decision by them to direct an
employee of Universal to act at Universal’s expense for them in their individual
capacity was a decision taken in the bests interests of the company. However,
13 (1854) 1Macq 461, p. 471.
14
this Court is unable to accept the whole chain of reasoning by which the learned
justice of appeal arrived at his conclusion. The Brother’s advice related to the
dispute with Sheikh Abdullah. It did not relate to anything pertaining to the
business of Universal and had no ill bearing on the company. Simply stating that
the Brothers were putting their own interests in conflict with those of Universal and
not providing evidence of this, cannot be accepted. There was no evidence
presented by Sheikh Abdullah to prove his contention that there was any possible
conflict of interest between the Brothers and Universal or that any of the Brothers
had failed to act bona fide in the best interests of Universal. There was no
evidence to show, for example, that Mr. Hardan offered advice to the Brothers at
the expense of the discharge of his employment duties to Universal.
[33] Sheikh Abdullah asserts that the Brothers provided no evidence to suggest that
Mr. Hardan carried out his work on the Brothers’ behalf outside his normal office
hours. However, it is relevant to note that the Board of Directors of Universal
knew, authorised and approved Mr. Hardan’s work for the Brothers, evidence of
which was not disputed by Sheikh Abdullah. Mr. Hardan’s employment contract
provided that he would abide by instructions and directives issued for him by
Universal.
[34] The evidence before this Court was that the Board of Universal did in fact give
directives and instructions to Mr. Hardan to provide legal advice to Alhamrani
family members of which the Brothers, were of course, included. This piece of
evidence was confirmed by Sheikh Abdullah. Sheikh Abdullah failed to provide
any evidence to show that the Brothers’ interests conflicted with those of Universal
and that the Brothers by receiving legal advice from Mr. Hardan in relation to the
dispute between themselves and Sheikh Abdullah (and which did not relate to or
have any ill bearing on Universal) failed to act bona fide in the best interests of
Universal.
[35] A director’s duty is not merely to serve the company’s interests. He must avoid
placing himself in a position where he prefers his own interests, or the interests of
15
a third party, instead of or to the detriment of the company’s interests. The
learned justice of appeal concluded that the Brothers as directors did not act bona
fide in the best interests of Universal. We can find nothing in the evidence to
support this as it was not shown that the Brothers acted to the detriment of the
company’s interests.
[36] Most importantly, Sheikh Abdullah and Universal are two separate distinct legal
persons. They can sue and be sued in their own name. There is nothing that
would prevent Sheikh Abdullah from suing Universal and Universal from suing
Sheikh Abdullah. Section 27 of the BVI Business Companies Act, 2004
establishes that ‘A company is a legal entity in its own right separate from its
members and continues in existence until it is dissolved’.
[37] It is a well-established principle that a company is a separate and distinct entity
from its shareholders. This is so even if the company has only one shareholder as
established by the landmark case of Salomon v A. Salomon &Co. Ltd.14
[38] Sheikh Abdullah, being a legal person separate and distinct from Universal would
be considered a third party in relation to the confidentiality and privilege of the
Documents. Even assuming that Universal was entitled to call for and see the
Documents (which Documents are of a privileged nature against Universal) the
right or entitlement to do so lies with Universal only and not Sheikh Abdullah
because (1) he is separate and distinct from Universal even if he is the only
shareholder and (2) when he purchased Universal he did not purchase confidential
and privileged information.
[39] In passing, it bears stating that Mr. Hardan sued the Alhamrani Group for
employment compensation in other proceedings. The appellants contend the
learned justice of appeal’s finding that it is effectively Sheikh Abdullah who is the
ultimate owner of all the companies in the Group and that the cost of paying any
compensation to Mr. Hardan will fall on him, despite the fact that compensation
14 [1897] AC 22 at p. 31.
16
relates to a period during which Mr. Hardan was advising the Brothers in their
dispute against Sheikh Abdullah. We do not agree with this finding. The learned
justice of appeal took into consideration matters which were not strictly relevant to
the issue of confidentiality and further legal professional privilege. The fact
remains that Sheikh Abdullah is separate and distinct from Universal or any of the
companies within the Alhamrani Group. A company hires its own employees in its
own right and capacity and it pays them from its own money. There was no
evidence presented which established that Sheikh Abdullah would personally be
responsible for compensating Mr. Hardan.
[40] The learned justice of appeal held that directors have no power to authorise an
action which prefers one group of shareholders over another. He relied on
Howard Smith Ltd. v Ampol Petroleum Ltd. and Others15
in support of his
proposition. This certainly rings true, however, that case can be differentiated
from the present as there was no evidence presented to show that the Brothers
who gave authorisation to Mr. Hardan to provide them with legal advice were
exercising their powers to prefer one group of shareholders in their capacity as
directors over Sheikh Abdullah in his capacity as shareholder in the same
company.
[41] Furthermore, there was no evidence to show that Sheikh Abdullah was adversely
affected in his capacity as shareholder in relation to the legal advice provided
which legal advice had to do with the Brothers’ personal affairs, rather than the
business or affairs of Universal, or the rights of Sheikh Abdullah in his capacity as
shareholder of Universal.
Estoppel
[42] The appellants raised the issue of estoppel alleging that they will suffer undoubted
detriment if Universal decides to go back on its conduct in permitting legal advice
to be taken without demanding that it be shared with them (which conduct has
plainly let to the appellants not taking steps to protect the privilege by seeking
15 [1974] AC 821.
17
•

advice from external lawyers). As such, Universal plainly estopped from
demanding access to the advice.
[43] The case of Thomas Hughes v Metropolitan Railway16 is instructive on this
point where the Lord Chancellor Lord Cairns said:
“…it is the first principle upon which all Courts of Equity proceed, that if
parties who have entered into definite and distinct terms involving certain
legal results…afterwards by their own act or with their own consent enter
upon a course of negotiation which has the effect of leading one of the
parties to suppose that the strict rights arising…will be kept in suspense,
or held in abeyance, the person who otherwise might have enforced those
rights will not be allowed to enforce them where it would be inequitable
having regard to the dealings which have thus taken place between the
parties.”
[44] Since the Board of Universal had already authorised the giving of legal advice by
Mr. Hardan to the Brothers in relation to their dispute with Sheikh Abdullah,
estoppel would operate to prevent Universal and further Sheikh Abdullah having
access to the Documents as it would be inequitable having regard to the dealings
between Mr. Hardan and the Brothers.
Challenge To The Learned Justice Of Appeal Finding Of Facts
[45] Where a party asserts that a judge exercised his judicial discretion, the Court of
Appeal will not interfere unless certain provisions are met. In DuFour v Helenair
Corporation Ltd17
Sir Vincent Floissac CJ articulated the basis on which an
appellate court would interfere with the exercise of a judicial discretion by a trial
judge. He said:
‘We are thus here concerned with an appeal against a judgment given by
atrial judge in the exercise of ajudicial discretion. Such an appeal will not
be allowed unless the appellate court is satisfied (1) that in exercising his
or her judicial discretion, the judge erred in principle either by failing to
take into account or giving too little or too much weight to relevant factors
and considerations, or by taking into account or being influenced by
irrelevant factors and considerations; and (2) that, as a result of the error
or the degree of the error, in principle the trial judge’s decision exceeded
16 (1877) 2App Cas 439.

17 (1996) 52 WIR 188.

18 the generous ambit within which reasonable disagreement is possible and
may therefore be said to be clearly or blatantly wrong.”
[46] We adopt Gordon JA’s words in the case Edy Gay Addari v Enzo Addari:
18
”The first condition was explained by Viscount Simon LC in Charles
Osenton &Co v Johnson [1941] 2 ALL ER 245 page 250. There, the
Lord Chancellor said:
”The appellate tribunal is not at liberty merely to substitute its own
exercise of discretion for the discretion already exercised by the
judge. In other words, appellate authorities ought not to reverse
the order merely because they would themselves have exercised
the original discretion, had it attached to them, in a different way.
If, however, the appellate tribunal reaches the clear conclusion
that there had been a wrongful exercise of discretion, in that no
weight, or no sufficient weight, has been given to relevant
considerations such as those urged before us by the appellant,
then the reversal of the order on appeal may be justified.”
”The second condition was explained by Asquith LJ in Bellenden
(formerly Satterthwaite) v Satterthwaite [1948] 1 ALL ER 343 in
language which was approved and adopted by the House of
Lords in G v G [1985] 2 ALL ER 225 and which I have gratefully
adopted in this judgment. Asquith LJ said ([1948] 1 ALL ER at
page 345):
“…We are here concerned with ajudicial discretion, and it
is of the essence of such a discretion that on the same
evidence two different minds might reach widely different
decisions without either being appealable. It is only where
the decision exceeds the generous ambit within which
reasonable disagreement is possible, and is, in fact
plainly wrong, that an appellate body is entitled to
interfere.”
[47] That being said, we have no doubt that the decision of both Bannister J and
Mitchell JA [Ag.] exceeds the generous ambit within which reasonable
disagreement is possible and is in fact plainly wrong. Consequently, an appellate
body is entitled to interfere as no sufficient weight has been given to the relevant
18 Territory of the British Virgin Islands High Court Civil Appeal No.2 of 2005 (delivered 27th
June 2005).
para. 10.
19 considerations such as those urged before us by the Brothers. A reversal of the
order of Mitchell JA [Ag.] is therefore justified.
Conclusion
[48] The appeal is allowed. It is ordered that the decision of Mitchell JA [Ag.] delivered
10th
on September 2012 is revoked and paragraphs 5 and 6 of the Order of
Bannister J dated 25th
July 2012 are hereby set aside.
[49] We gratefully acknowledge the assistance of learned counsel.
Louise Blenman
Justice of Appeal
Mario Michel
Justice of Appeal
20