In an oral judgment delivered at the end of a one-day hearing, the High Court has refused an application by the claimants in a securities class action for disclosure of privileged documents by the defendant company: Various Claimants v G4S PLC [2023] EWHC 2863 (Ch).

The decision considers the boundaries of the so-called “shareholder principle”, ie that a company cannot assert privilege against its shareholders unless the documents were produced for the dominant purpose of litigation between the company and its shareholders. The judge noted that the principle had been recognised in many authorities, including the Court of Appeal’s decision in Woodhouse and Co (Ltd) v Woodhouse [1914] 30 TLR 559, and in Hollander on Documentary Evidence which states that the rule is so well established that it is now probably only the Supreme Court that could overturn it. Accordingly, the judge said, “as a lowly first instance judge, and even though I have my doubts as to the justification now for such a principle”, he could not say that the principle did not exist or should be got rid of.

Ultimately the judge declined to order disclosure on case management grounds, given the real practical difficulties caused by the lateness of the application and the fact that, on the judge’s conclusions, only a small proportion of the claimants would be entitled to see the defendant’s privileged documents. He considered that it would be impossible to manage a trial where privileged documents were deployed by certain claimants and could not be disclosed to others, particularly as the claimants had the same solicitors and counsel. And it was too close to trial to separate out the claimants into different trials to protect privilege.

He did however express his views on a number of points as to the application of the shareholder principle which are unclear in the case law. In particular, while noting that there is no authority on these points, the judge expressed a view that:

  • the principle should apply only to registered shareholders, rather those who hold shares through the CREST securities depository or the broad class of those with “interests in securities” sufficient to bring a securities class action under s.90A and Sch.10A of the Financial Services and Markets Act 2000 (FSMA);
  • there should be no requirement that relevant individuals are still shareholders when proceedings are issued or disclosure is ordered; and
  • litigation privilege (as well as legal advice privilege) should be included within the principle but not without prejudice privilege.


The decision arose in the context of a securities class action brought against G4S PLC under s.90A and Sch.10A of FSMA. The claimants claim that they suffered losses as a result of allegedly false and misleading statements or omissions made by G4S regarding its billing practices between 2011 and 2013. The claim was issued in July 2019 and is listed for a six-week trial of (primarily) defendant liability issues to start on 29 January 2024.

On 30 October 2023 the claimants applied for disclosure of certain documents which the defendant had withheld on grounds of privilege. The claimants argued that the documents were covered by the shareholder principle.

Of the 90 claimants, the application was pursued on behalf of three claimants who were registered shareholders at various times, as well as claimants who were not registered shareholders but held shares through the CREST system via custodians and sub-custodians. The application was not pursued on behalf of one group of claimants who had derivative interests in shares.

The defendant argued that: (i) the shareholder principle should apply to registered shareholders only; (ii) it should be limited to those who were still shareholders and had been at the relevant time; (iii) it should apply only to legal advice privilege, not litigation privilege or without prejudice privilege; and (iv) in any event, the case management consequences of permitting the application so close to trial meant the court should exercise its discretion to refuse disclosure.


The High Court (Michael Green J) refused to order disclosure and dismissed the application on case management grounds, given the real practical difficulties caused by the lateness of the application and the fact that, given the views he expressed, only a small proportion of the claimants would have been entitled to see the defendant’s privileged documents. He was critical of the claimants for not raising the point earlier, as the defendant had asserted privilege over the documents some 20 months before the hearing.

The judge noted that he had not been shown any authority which had tested the boundaries of the principle, particularly in relation to ultimate beneficial owners or the timing of ownership. He took as his starting point that it is better to err on the side of caution and preserve privilege unless there is good reason not to: in other words, he would not override privilege unless bound by precedent to order disclosure.

Registered shareholders only

The judge noted that there was no authority where the principle had been applied to non-registered shareholders. This may have happened in Sharp v Blank [2015] EWHC 2681 (Ch), but it was not clear from the judgments in the case. He therefore had to work out whether the principle should be applied to non-registered shareholders, and stated that he had “difficulty with” that proposition for a number of reasons including:

  • The shareholder principle had a “somewhat shaky foundation” as it was based on the notion of advice obtained in the common interest and paid for out of the common fund, by analogy to the position as between trustees and beneficiaries. The judge did not consider the analogy a strong one, as a company is totally separate from its shareholders and the shareholders have no direct interest in the company’s property. Therefore, he said, “the common fund basis is now dubious”.
  • The principle, if anything, seemed to be based on the relationship between shareholders and their company. It was an incidence to the legal ownership of shares, akin to the right to receive dividends or a distribution on a solvent liquidation. Similarly, the rights under the articles which govern the relationship between shareholders and the company are limited to registered shareholders and can only be enforced by them.
  • Claims under s.90A and sch.10A of FSMA are the creature of statute. The right to bring a claim is granted to a certain class of claimants extending beyond a company’s shareholders to those with “interests in securities”. It would be “quite an extension to say that all such claimants are automatically entitled to privileged documents from the company”, and the judge did not think it would be right to extend the principle in that way.

The judge would therefore have held that only the three claimants who had been registered shareholders were entitled to disclosure of the privileged documents.

The timing issue

The judge rejected the defendant’s argument that the test should be whether a claimant was still a shareholder at the time the obligation of disclosure arose, or at the outset of the proceedings. This would produce anomalous results, including in the present case since claimants who were shareholders at the start of the proceedings had since sold their shares on the privatisation of the defendant. He suggested that it would make more sense for it to apply to the time the documents came into existence.

What sorts of privilege

The judge noted that there was no authority either way on whether the rule should apply only to legal advice privilege, or also to litigation privilege or without prejudice privilege. He concluded that without prejudice privilege was not covered by the rule, as it had the complication of a third party being involved and the principle had never been extended to that form of privilege. However, he would have held that litigation privilege was included within it.

Case management issues

The judge commented that there would be very real practical issues in ordering the disclosure sought, and those issues were heightened by the late nature of the application.

The judge noted that only the three registered shareholder claimants would be entitled to privileged documents, and even among those three it would be for different periods of time. He queried how it would be possible to prevent the documents being used by claimants who were not entitled to use them, particularly noting that the same counsel and solicitors act for all the claimants.

The claimants had suggested that any practical difficulties could be overcome by case management directions and the imposition of a confidentiality club, or if necessary that the claims could proceed initially with only the three registered claimants (the rest being hived off to a later occasion). The judge commented, however, that it was probably too late for such a radical change and the defendant would probably object as it would want all the claimants bound by the result in trial 1.

The judge viewed this as an intractable problem which had been caused by the claimants leaving the application so late. If raised at the first CMC, directions “could have been made, perhaps, to separate off the Claimants to protect privilege”, but it was now too late for that. It was not reasonable and proportionate to order disclosure of the privileged material to the three claimants at this time, as it would be impossible to manage a trial where such documents were deployed. And there was also the defendant’s possible threat of applying for an injunction to prevent the claimants’ lawyers from acting for all the claimants (having seen the defendant’s privileged information to which most of the claimants were not entitled).