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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Grosvenor Chemicals Ltd & Ors v UPL Europe Ltd & Ors [2017] EWHC 1893 (Ch) (26 July 2017) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2017/1893.html Cite as: [2017] EWHC 1893 (Ch) |
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CHANCERY
DIVISION
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
(1) Grosvenor ![]() ![]() (2) Whyte ![]() ![]() (3) Melvyn Whyte |
Claimants |
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- and - |
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(1) UPL Europe Ltd (2) UPL Deutschland GmbH (3) Mishcon de Reya LLP (4) Jeremy Milton Hertzog |
Defendants |
____________________
Michael Bloch QC (instructed by Mishcon de Reya) for the First and Second Defendants
Ian Croxford QC (instructed by DWF) for the Third and Fourth Defendants
Hearing dates: 27th June 2017
Judgment Approved
____________________
Crown Copyright ©
Birss J:
"documents evidencing any manufacture, packing, labelling, shipping, storage and other dealings by the Respondents …….in any plant protection product which (i) contains or is purported to contain Metamitron …(iii) or is produced and/or packed and/or labelled or sold as being Metafol or Beetix or subject to a parallel trade permit for the PPP produced by the First Applicant and known as Metafol or Beetix.
"for the purposes of these proceedings (including adding further Respondents) or commencing civil proceedings in relation to the same or related subject matter to these proceedings or obtaining evidence."
i) that the parties have agreed to replace the 18th May 2015 Norwich Pharmacal order by the consent order;
ii) that the parties have agreed to settle the application of Grosvenor Chemicals
on the terms of the consent order save for the costs;
iii) that Whyte Chemicals
Ltd and The Whyte Group agreed to be bound by the consent order (and I note that by an amendment to the Particulars of Claim in February 2016 Whyte
Chemicals
and Melvyn Whyte were joined as defendants in the main action).
"today we saw Affi….we went through our formulation and we have been selling it as a direct match to UPL but Affi said it is missing emulsion DSB as crystal inhibitor. We tested the product ……against Betrix (sic) the UPL sample from the UK market….Affi wants a good price…..he makes the point it is not the correct formulation."
The letter of 24th November 2016 to Gordon Dadds
"the matters raised in this letter are extremely urgent in particular regarding your client's breach of confidence concerning UPL's confidential information your client's complete and compliant response to this letter is required within 7 days in the absence of your client's compliance we expect to be instructed to make the appropriate applications for specific disclosure and delivery up without delay or further recourse to you. In the meantime, all our client's rights are reserved."
The letter of 24th November 2016 to Dr Affi
"this is a very serious matter which requires your urgent attention we recommend you seek legal advice as a matter of high priority and respond by the stated deadline. In the meantime and in any event UPL rights and remedies are strictly reserved, particularly UPL's rights to apply for an immediate injunction in the event your response falls short of what is required to avoid litigation".
"you may be aware that in May 2015 UPL issued proceedings against GrosvenorChemicals
Ltd and Whyte
Chemicals
Ltd as well as others relating to their alleged dealings in counterfeit Metafol".
"you have abused your position of trust as a senior employee within UPL by misappropriating our clients' proprietary information and breaching our clients' confidence. Our clients will not tolerate such flagrant transgressions of their rights".
"if you wish to avoid UPL issuing proceedings against (you) for breach of confidence and breach of contract you must take the following initial steps immediately"
and then requires a signed statement setting out the sort of information one might expect about what has happened.
"14. Unless you co-operate with the above demands and do so by no later than 8th December 2016 we are instructed to issue proceedings against you without further delay or recourse to you which may include an application for an immediate interim injunction to prevent you from further using and disclosing our clients' confidential information. The proceedings will also include a claim for damages, a permanent injunction and legal costs.
15. We emphasise that this is a serious matter which requires your immediate attention again we recommend you seek independent legal advice without delay all of UPL's rights are reserved in the event you do not comply with the demands set out above within the stated timeframe. In the event that legal proceedings pursue please confirm by return that you will be instructing solicitors to receive service of proceedings on your behalf and inform us of their name and address.
Gordon Dadds' 9th December 2016 letter
"It is self evident that the allegation of breach of confidence has nothing to do with the causes of action in the current proceedings and causes of action alleged in that. The only link is that it concerns Metafol but that is all. In particular it is clear that you are primarily engaged with Dr Affi indeed if there is any cause of action, the principal party is clearly Dr Affi. He is obviously not a party to these proceedings."
"as you know, such can only be used for such collateral purposes in certain circumstances. Our clients have not agreed to it, the documents have not been read out in open court or referred to at a hearing which has been held in public. Accordingly it was incumbent on your client to first issue an application to obtain permission of the court (Part 31.22(1)(b) and 31.22(3) no application notice has been received by ourselves and such would have been resisted".
"It is clear that you have used these emails for the purpose of taking steps against Dr Affi and we now know that some of the emails have been relied on and exhibited in a letter from yourselves to Dr Affi. In the circumstances, it appears clear that you have seriously breached Part 31.22. Such is a contempt of court and maybe restrained by an injunction (see para 19.4, Disclosure, Malek (2012)) at present our clients reserve all its rights."
"In any event our clients did not find out the formulation of Bettix or indeed any UPL formulation from Dr Affi or Novastar. Discussions ensued between our Clients and Novastar because the latter wished to buy surplus stock from our clients to sell in to Eastern European countries. Upon reviewing our clients' formulation Dr Affi made suggestions for it to be suitable for cold countries where crystallisation occurs. This is a particular problem with old stock (the surplus stock was 18 months old) in the end this sale never proceeded."
"it is clear from your clients' statement of case that these proceedings are not about Metafol at large but what is alleged to be a conspiracy with the First and Third defendants in relation to what is described as counterfeit Metafol".
"In summary your attempt to bypass pre-action protocol in relation to matters which fall outside the ambit of the current action and in the process, what would appear to be a clear breach of Part 31.22 is rejected. Our client is prepared to engage in pre-action correspondence on this matter provided you set out the relevant facts and matters."
"(v) If your client has breached Part 31.22, your clients and yourselves giving an undertaking not to use the disclosed emails against Novastar or Dr Affi and inform Dr Affi to that effect, as we understand it, other than these emails your client has no grounds for alleging breach of confidence against Dr Affi. If that is correct we invite you to notify Dr Affi that there was no basis for making the allegations that you have done so as against him."
Mishcon De Reya's 10th January 2017
letter
"it is not a collateral or ulterior use, or breach of CPR 31.22, to use documents disclosed in proceedings for the purposes of adding new causes of action or parties to the application in which the documents have been disclosed. Indeed adding new causes of action and joining new parties is common following disclosure (and has already occurred in this case). It is possible for our clients to apply to further amend their Particulars of Claim to plead a breach of confidence claim against your client regarding their use of our clients' confidential proprietary information relating to the formulation of Metafol, and indeed they envisaged doing just that.
"a) your clients alleged that they do not produce a copy of our clients' Metafol product, but that they merely manufacture to the order of and formulation provided by their customers; and that they merely know in general terms the nature of the agrichemicals that they manufacture. They also deny that they knew or turned a blind eye to the fact that they were manufacturing a product that was not an authorised parallel import of another PPP. Clearly an allegation that your clients knowingly acquired and used UPL's confidential formulation data from a former UPL employee in order to formulate and sell a PPP that more closely resembled UPL's authorised formulation is highly relevant to those disputed issues.
b) the disclosure in issue ……indicates that your clients were actively involved in seeking to copy Metafol no doubt perhaps among other things to help further their conspiracy with the First and Third defendants, and this is contrary to your clients' pleaded defence.
c) an emailchain
dated 19/20 November 2014 between your clients and Dr Affi which relates to our clients allegations of breach of confidence already forms part of the parties' Statements of Case (see paragraph 31A of our clients' Re-Amended Particulars of Claim and paragraph 32A of your clients' Amended Defence)".
"Ultimately the best way to address the claim is a matter of case management if separate proceedings are to be required we accept the effect of CPR31.22 is that we would need the court's permission to rely on documents disclosed in these proceedings for the purpose of those separate proceedings. We also confirm that, absent your clients' consent or order of the court we will not use documents disclosed by your clients for any purpose other than proceedings in which they have been disclosed".
"we must also engage with Dr Affi regarding the above proposals but noting the complaints raised in your letter of 9th December 2016 we wish to avoid any suggestion that our client is going beyond what is permitted under CPR 31.22."
Gordon Dadds' letter of 18th January 2017
"as you have never set out any cogent basis for the grant of such permission and your conduct to date is unapologetic, you do not have our clients' consent and any application will be opposed".
"It is also clear that just as a breach of the implied undertaking was a contempt of court, so a breach of rule 31.22 is a contempt of court".
"We view that contempt as serious by reason of the following:
1) the use of the emails to write a letter before action to Dr Affi several months ago without any attempt to introduce the allegations in to the current proceedings or seek the court's permission
2) the unapologetic stance of yourselves
3) the belated and indeed we view the cynical attempt to justify your actions by introducing the allegations a substantial period later into the current proceedings when on any rational basis, they have nothing to do with the current proceedings which is concerned primarily with ACA's actions with our clients, in effect, being alleged to be an accessory to the alleged unlawful acts of ACA and there is little or any prospect of them being allowed".
"However, the letter of 10th January dismisses any prospect of wrongdoing on your or your clients' part and rather than seeking to purge the contempt by making an application under rule 31.22, entrenches the position by continuing to threaten improper use of the material to apply to add a new cause of action and a new defendant."
Mishcon de Reya's letter of 26th January 2017
"Whilst we maintain that our and our clients' position has been a reasonable one to adopt, and we expand upon our reasons for maintaining that view below, it is a matter of regret to us that the manner in which we have conducted this matter has caused such concern that you and your clients feel it is appropriate to pursue contempt proceedings. If our letters to your clients and/or Dr Affi of 24 November 2016 amount to use of certain documents disclosed in proceedings for purposes other than those proceedings then we acknowledge that we were wrong, in breach of article 31.22 and in contempt of court to send those letters without first obtaining your clients consent or order of the court: and we apologise unreservedly to your clients and the court for having done so. If your clients require further information or action on behalf of this firm or our clients in relation to (i) that conduct; or (ii) any prejudice your clients may have suffered as a result of it, we invite them to set out those requirements in correspondence so that we may address them as fully as possible.
"We have already confirmed to you in our letter of 10 January2017
that, absent your clients' consent or order of the court, we will not use documents disclosed by your clients for any purpose other than the proceedings in which they have been disclosed. If your clients require further assurance, information or other reasonable actions on behalf of this firm or our clients in relation to (i) the conduct referred to above or (ii) any prejudice they may have suffered as a result of it, we invite them to set out those requirements in correspondence so that we may address them as fully as possible.
As well as confirming expressly we will not use disclosed documents other than for the purpose of current proceedings (as CPR 31.22 requires) you will recall that we also sought your clients' consent to supply Dr Affi with the draft Amended Particulars and the Relevant Disclosure as defined in our letter of 10 January), again making it clear that we would not take any further steps that, you might suggest, would exceed what we are permitted to do under CPR 31.22. For the avoidance of any doubt, we confirm that we will not use the Relevant Disclosure (or any other documents disclosed by your clients) to assert claims – even in the current proceedings – against Dr Affi or any other person not already a party to the proceedings without your clients' consent or permission of the court."
"Joinder of additional parties has as a consequence of discovery is a common procedural occurrence. Neither I nor Counsel will have ever in practice heard of an objection to such joinder on the ground that discovered documents ought not to be used for such purpose. If, instead of joinder, a new action is started, the substance of the situation does not seem to me relevantly different. I cannot see any sensible reason why the Court should regard this new action as inappropriate for the use of the discovered documents. For these reasons in my judgment the Plaintiffs ought to have leave to use the documents for the purposes of the 1983 action."
"It is not a collateral or ulterior use to use documents disclosed on discovery for the purposes of adding new causes of action or parties to the action in which the documents have been disclosed, joinder of additional parties as a consequence of discovery is a common procedural occurrence."
"the Court would be likely to interpret CPR 31.22 to allow a party first to discuss in correspondence with those potentially concerned the potential addition of actions and/or parties, rather than requiring a party to apply to amend its case without having first taken such steps."
"12 We regret that our letters of 24tNovember 2016 were not put on different terms to expressly state that we contemplated our clients' claim would be further amended to bring the breach of confidence claim. That was in our contemplation, and without waiver of privilege we confirm that our records corroborate that fact.
13 The above paragraphs represent a cogent and reasonable position to adopt. However, if we are wrong on all points put above, we acknowledge, as we stated at the outset of this letter, there has been a technical and unintentional breach of CPR 31.22 for which we apologise unreservedly."
The committal application
The evidence on this application
"these are all crocodile tears expressed now it is apparent that the correspondence will be put before the court because the 10th January letter has not done the trick. I therefore dismiss the 26th January letter as a mere exercise in hypocrisy."
"surely like putting the money back in the till after one has been caught with one's hand in it".
This application
(I) Correct procedure
(II) Whether to give permission
The approach
"The critical question, in this and every case, is whether or not it is in the public interest that an application to commit should be made. That is not an issue of fact but a question of judgment. The discretion to permit an application to commit should be approached with considerable caution. It is not in the public interest that applications to commit should become a regular feature in cases where at or shortly before trial it appears that statements of fact in pleadings supported by statements of truth may have been untrue."
The rule in issue - CPR r31.22
"(1) A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where –
(a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;
(b) the court gives permission; or
(c) the party who disclosed the document and the person to whom the document belongs agree."
"56. The courts have stated the rationale of the collateral purpose rule on a number of occasions. First, a party receiving documents on discovery impliedly undertakes not to use them for a collateral purpose. Secondly, the obligation to give discovery is an invasion of the litigant's right to privacy and confidentiality. This is justified only because there is a public interest in ensuring that all relevant evidence is provided to the court in the current litigation. Therefore the use of those documents should be confined to that litigation. Thirdly the rule against using disclosed documents for a collateral purpose will promote compliance with the disclosure obligation."
"In my view it is possible to answer the matter simply, by applying the words of the relevant rules. It is also important to take this approach. Parties need to be able to rely on the words of the rules themselves to tell them what is expected, especially where (as here) the consequences of breach can be very serious, and may be treated as a contempt of court."
Strong prima facie case?
The relative positions of the parties and their solicitors
The 24th November 2016 letter to Gordon Dadds
The 24th November 2016 letter to Dr Affi
The further correspondence
Was the breach of the rule deliberate?
"1.9 I make this witness statement in opposing the Permission Claim, or in seeking the adjournment of its hearing until after trial or settlement of the Main Action, because:
1.9.1 There was no breach of CPR 31.22 or the implied undertaking because:
…"
The public interest and proportionality