No joint interest privilege between commercial counterparties

11/05/24

Mexico Infrastructure Finance LLC (“Mexico”) loaned money for the construction of a development in Hamilton, Bermuda against the security of a guarantee and mortgage granted by the Corporation of Hamilton (“Hamilton”). Hamilton agreed that Mexico should be permitted to rely upon a legal opinion  from Hamilton’s solicitors, Terra Law Limited (“Terra”) as to Hamilton’s powers to grant the security. The Privy Council subsequently held Hamilton had no power to enter into the guarantee and it was contended that there was no power to mortgage either. Mexico sued Terra and Hamilton.

Subair Williams J held that the joint interest in the finalisation of Terra’s opinion between Mexico and Hamilton gave rise to a joint interest privilege between those parties and ordered disclosure of privileged internal communications in the possession of Terra leading up to the completion of the opinion.

The Bermuda Court of Appeal (Sir Christopher Clarke P, Kawaley and Bell JA) allowed Hamilton’s  appeal. Although in one sense there was a common or joint interest between the parties, in reality they were commercial counterparties both negotiating in their respective interests. There were a number of established categories where joint interest privilege could apply (joint venturers, company and shareholders, trustee and beneficiary). Those categories could be subject to principled extension, but the present case fell well outside the principle.

The judgment is here.