EHi CAR SERVICES Ltd
| Jurisdiction | Cayman Islands |
| Judge | (Parker, J.) |
| Judgment Date | 02 August 2021 |
| Court | Grand Court (Cayman Islands) |
(Parker, J.)
Companies — arrangements and reconstructions — dissenting shareholders — fair value of shares — mistaken disclosure by company of without prejudice privileged documents — dissenting shareholders not entitled to documents — no waiver of privilege
	Held, ruling as follows:
	(1) The court accepted the company’s explanation that the emails were disclosed by mistake because a reviewer had failed to follow instructions. This was an inadvertent disclosure, not a voluntary disclosure, and was promptly pointed out. The court also accepted that prima facie without prejudice privilege applied to the emails. The court accepted the company’s explanation that the emails comprised a confidential without prejudice discussion regarding a proposal to settle the ongoing litigation and arbitration between the parties. The negotiations were also headed “Confidential and without prejudice” (paras. 25–29).
	(2) The primary purpose of the public policy behind the without prejudice privilege rule was to encourage parties to disputes to settle their differences. It operated to exclude from evidence admissions against interest made by a party in the course of negotiations in order to promote frank and open settlement negotiations. As a matter of public policy, there was protection from disclosure of without prejudice communications. In practice the rule prevented the use in evidence of all communications which were part of the continuum of negotiations between the parties (paras. 30–31).
	(3) The court did not accept the submission that as shareholders or former shareholders the dissenters enjoyed the same right to the information as the company in the without prejudice negotiations. The rule which allowed a shareholder to obtain the production of documents at a company in which he held shares, which documents would otherwise be protected by legal professional privilege, had no application to without prejudice communications involving third parties (para. 32).
	(4) The principles of inadvertent disclosure were not applicable to without prejudice privilege, which did not rely upon the protection of confidentiality as between litigants. Without prejudice privilege was generally a rule of admissibility, whereas legal professional privilege was a substantive right that could be waived at the behest of the party entitled to it. Without prejudice privilege could only normally be waived with the consent of the parties to the correspondence. In the present case, the company’s inadvertent disclosure could not have waived the joint privilege in relation to the emails. Without prejudice privilege material remained inadmissible regardless of whether or not the opposing party in a case had possession of the material. The cases on inadvertent disclosure were based on legal professional privilege, where confidentiality was an essential element; they did not apply to the waiver of without prejudice privilege. Nor could without prejudice privilege be waived unilaterally by one party, because it was a joint privilege. It mattered not that there were confidentiality protections and an implied undertaking in the discovered material (paras. 34–37).
	(5) There were exceptions to the rule against disclosure of without prejudice privilege communications. The situation in s.238 proceedings, where a company pleaded in the petition that an offer was made to and not accepted by certain shareholders and asked the court to determine the matter, did not provide a legitimate basis for making an exception to the without prejudice rule. There was no waiver of privilege over without prejudice discussions with third parties about the value of shares. It might well be the case that valuations of the company’s shares were exchanged by the parties to the email exchange and to that extent were relevant but the strength of the policy reasons for the without prejudice rule was clear. There was no unfairness to the dissenters which demanded an exception be made to the without prejudice rule in this case. The company had not waived or directly put the contents of the without prejudice negotiations in issue in this proceeding by way of the petition. There was no risk that the case could not be fairly determined without admission of the without prejudice evidence. The material in this case was not likely to be sufficiently important or probative to justify making any principled exception or discretionary exception on the merits. Nor was a more general exception justified because the acknowledged disparity of information between the company and dissenting shareholders in s.238 cases should thereby displace the privilege in without prejudice communications. Discovery in s.238 cases placed a considerable burden on a company. Where huge quantities of documentary material was uploaded for inspection to data rooms, mistakes sometimes happened, often as a result of human error as in this case. It was not necessary to determine whether the mistake was obvious. It was promptly pointed out as an error and in those circumstances the court expected the attorneys on both sides to cooperate to put matters right as soon as possible. The court would refuse the application for a declaration and discovery from the company by the dissenters or to make an order under GCR O.24, r.13 (paras. 38–48).
(1)	Arrow Trading & Invs. v. Edwardian Group Ltd. (No. 2), [2004] EWHC 1319 (Ch); [2004] BCC 955; [2005] 1 BCLC 696, referred to.
(2)	Astex Therapeutics Ltd. v. Astrazeneca AB, [2016] EWHC 2759 (Ch), referred to.
(3)	Atlantisrealm Ltd. v. Intelligent Land Invs. (Renewable Energy) Ltd., [2017] EWCA Civ 1029; [2018] 4 W.L.R. 6; [2017] BLR 489; [2017] C.P. Rep. 39, referred to.
(4)	Avonwick Holdings Ltd. v. Webinvest Ltd., [2014] EWCA Civ 1436, referred to.
(5)	Berkeley Square Holdings Ltd. v. Lancer Property Asset Mgmt. Ltd., [2021] EWCA Civ 551; [2021] 1 W.L.R. 4877, referred to.
(6)	CAS (Nominees) Ltd. v. Nottingham Forest plc, [2001] 1 All E.R. 954, referred to.
(7)	Cutts v. Head, [1984] Ch. 290; [1984] 2 W.L.R. 349; [1984] 1 All E.R. 597, considered.
(8)	EMW Law LLP v. Halborg, [2017] EWHC 1014 (Ch); [2017] 3 Costs LO 281, referred to.
(9)	Forster v. Friedland, C.A., November 10th, 1992, unreported, referred to.
(10)	Galliford Try Constr. Ltd. v. Mott MacDonald Ltd., [2008] EWHC 603 (TCC); [2008] TCLR 6, referred to.
(11)	Muller v. Linsley & Mortimer, [1996] PNLR 74, considered.
(12)	Ofulue v. Bossert, [2009] UKHL 16; [2009] 1 A.C. 990; [2009] 2 W.L.R. 749; [2009] 3 All E.R. 93; [2009] 11 EG 119; [2009] 2 P. & C.R. 17; [2009] Fam. Law 1042; [2010] 1 FLR 475, referred to.
(13)	Rush & Tompkins Ltd. v. Greater London Council, [1989] 1 A.C. 1280; [1988] 3 All E.R. 737, referred to.
(14)	Savings & Inv. Bank Ltd. v. Fincken, [2003] EWCA Civ 1630; [2004] 1 W.L.R. 667; [2004] 1 All E.R. 1125, referred to.
(15)	Sharp v. Blank, [2015] EWHC 2681 (Ch), referred to.
(16)	Stax Claimants v. Bank of Nova Scotia, [2007] EWHC 1153 (Ch), referred to.
(17)	Tchenguiz Imerman v. Imerman, [2012] EWHC 4047 (Fam), referred to.
(18)	Tom Jones Intl. Ltd. v. Att. Gen., Grand Ct., August 16th, 2010; 2010 (2) CILR N [3], referred to.
(19)	Torchlight Fund L.P., In re, Grand Ct., April 6th, 2016; 2016 (1) CILR N [9], referred to.
(20)	Unilever plc v. Proctor & Gamble Co., [1999] EWCA Civ 3027; [2000] 1 W.L.R. 2436; [2001] 1 All E.R. 783; [2000] FSR 344, referred to.
Grand Court Rules, O.24, r.13: The relevant terms of this rule are set out at para. 13(i).
	A declaration was sought that without prejudice privilege claimed in respect of certain documents had been waived, alternatively an order that the documents be discovered.
	Four documents, comprising a single email chain, had been uploaded by the company to a data room and subsequently removed. The documents were confidential without prejudice settlement discussions related to the ongoing litigation and arbitration, which included winding up proceedings in the Cayman Islands. A point taken in the winding up proceedings was that a merger was not in the interests of the company and that the merger consideration did not represent fair value.
	The Walkers dissenters contended that the company, by inadvertently uploading the four documents to the data room, had thereby waived without prejudice privilege. They sought a declaration that the without prejudice privilege claimed by the company in respect of the emails had been waived, alternatively an order that the company discover the emails by uploading them to the data room pursuant to GCR O.24, r.13.
	The company contended that the relief sought had no reasonable justification in law or in fact. The dissenters were seeking to gain some perceived advantage from an administrative error, which should have been resolved amicably and professionally between lawyers. There had been no intention to waive, nor actual waiver of, privilege over the emails by the inadvertent disclosure. Even if the mistaken disclosure did amount to a prima facie waiver, it was an obvious mistake and Walkers should have cooperated to put matters right.
	The dissenters submitted that (a) it was common ground that the emails were relevant to the fair value of the company’s shares; (b) it was standard practice in s.238 Companies Law cases for those with access to the data room simply to access documents directly—the receiving parties’ lawyers were not required to double check that the disclosing party had not erred in disclosing the documents; (c) the without prejudice rule, even when it applied, was not an immutable rule and documents so covered could ceaseto be so in a wide variety of cases; (d) the company had failed to explain why the emails attracted privilege; (e) given the company’s...
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