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IN THE HIGH COURT OF JUSTICE
||Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
B e f o r e :
THE HONOURABLE MR JUSTICE BIRSS
|| (1) Grosvenor Chemicals Ltd
(2) Whyte Chemicals Ltd
(3) Melvyn Whyte
||- and -
||(1) UPL Europe Ltd
(2) UPL Deutschland GmbH
(3) Mishcon de Reya LLP
(4) Jeremy Milton Hertzog
Romie Tager QC (instructed by Gordon Dadds) for the Claimants
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
HTML VERSION OF JUDGMENT APPROVED
Crown Copyright ©
- This is an application under CPR r81.14(1) for permission to bring proceedings for committal for interference with the administration of justice. That is covered by Section III of CPR Part 81 (r81.12 to r81.14). The interference relied on is the use of documents disclosed in an action for a collateral purpose, contrary to CPR r31.22.
- The action in which the documents were disclosed was Claim No: HC-2015-001925. In that action UPL Europe Ltd and UPL Deutschland GmbH are the claimants. I will refer to them as "the UPL parties". The defendants in the main action are in two camps, represented separately. One camp consists of AgChemAccess Ltd and Mr Nicholas Gooch. I will refer to them as "the AgChemAccess parties". The other camp is Grosvenor Chemicals Ltd, Whyte Chemicals Ltd and Mr Melvyn Whyte. I will refer to them as "the Grosvenor and Whyte parties".
- This application for permission to bring committal proceedings is brought as a Part 8 Claim in which the claimants are the Grosvenor and Whyte parties. The first two defendants to this Part 8 Claim are the UPL parties. The third defendant in this Part 8 Claim is the firm Mishcon de Reya LLP which is the firm of solicitors representing the UPL parties in the main action and the Fourth defendant Jeremy Hertzog is the relevant partner at Mishcon de Reya representing the UPL parties in the main action.
- The UPL parties are producers of crop protection products and other industrial chemicals. They sell various pesticides to end users which are known as Plant Protection Products (PPPs) and obtain marketing authorisations for the sale and use of those PPPs in key agricultural markets. The UPL parties brought the main action because they believed that AgChemAccess Ltd under the direction of Mr Gooch had procured counterfeit versions of one or more PPPs for which UPL holds marketing authorisations and sold them to customers on the basis that they were either an authorised product produced by the UPL parties or were produced by the same process that UPL uses with the endorsement of UPL. The particular products complained of were versions of UPL's PPPs which contain an ingredient called metamitron. The products are sold under the names Metafol, Beetix and/or Bettix. The focus of the action seems to have been sales in Germany. The UPL parties believed that the products were manufactured by Grosvenor Chemicals Ltd
- The UPL parties believed that the sale of these goods amounted to the infringement of their trade marks and wrongful competition under German law (or passing off under English law as far as English law is applicable). The UPL parties also pleaded a conspiracy to use unlawful means to injure them.
- On 18th May 2015 at a hearing before Mr Justice Arnold and without notice, the claimants obtained a search order and freezing injunction against AgChemAccess Ltd and Mr Gooch. The search was executed on 20th May 2015 at the premises of the AgChemAccess parties in accordance with the search order.
- At the same hearing the court also granted a pre-action disclosure and Norwich Pharmacal order against Grosvenor Chemicals Ltd. At that stage Mr Whyte and Whyte Chemicals Ltd were not parties. The order required Grosvenor Chemicals to produce:
"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.
- In the usual way the Applicants for the Norwich Pharmacal order gave certain undertaking to the court. These were recorded in paragraph 4 of schedule 1 to the order, which provides for the use which the Applicants are permitted to make of documents disclosed pursuant to the order. Essentially the undertaking prevents the Applicants from using any of the documents or information obtained subject to an exception that documents obtained could be used:
"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."
- Disputes arose between the various parties about disclosure and an application was made by Grosvenor Chemicals to discharge the Norwich Pharmacal order.
- These disputes were resolved by a consent order on 26th November 2015 in the main action. By that stage Whyte Chemicals Ltd, the Whyte Group Ltd and Mr Whyte had been identified as potentially relevant parties.
- The first three recitals to the consent order explain:
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).
- The fourth recital to the consent order recites that the UPL parties and Grosvenor agree that the disclosure to be provided under the consent order shall be without prejudice to the obligation on Grosvenor to provide standard disclosure or other disclosure later, if the court so orders.
- The consent order itself then deals with disclosure and the provision of information. The disclosure and information to be provided is in essentially the same wide terms as the Norwich Pharmacal order at least for present purposes. Amongst other things it refers to the manufacture of metamitron based PPPs. It defines relevant categories of documents as including documents relating to acts done in some way by reference to metamitron based PPPs which were or intended to be marketed in connection with the UPL Parties' marketing authorisation or with a parallel trade permit for metamitron based PPPs which had been obtained using a reference product of the UPL parties.
- The disclosure is to be provided by list on 11th December 2015 and the information sought is to be provided a week later. The information required includes (a) a list of goods which are used or are intended to be used in respect of the various acts defined (i.e. therefore including manufacture), and (b) the name and address and contact details of everyone who has engaged "the Respondents" in any acts falling within the relevant categories. The Respondents are defined as Grosvenor Chemicals Ltd and the Whyte Group.
- The order also provides that the 18th May 2015 Norwich Pharmacal order "shall be replaced by this order with effect from the date of the consent order's approval by the court".
- Subsequently in the main action there were directions which included standard disclosure.
- The documents to which this application relates were disclosed first pursuant to the consent order. I am told they were then also included in the lists produced under standard disclosure following the later disclosure order.
- Given what has happened it is noticeable in retrospect that the consent order does not contain any reference to the terms on which the documents are to be used by the UPL parties who will be receiving them. There is no suggestion in the evidence before me that the parties agreeing the consent order discussed the question at the time. I am bound to say reading the consent order it looks more like a Norwich Pharmacal type order for disclosure than an order for standard disclosure. Nevertheless it is clear that the consent order replaces the 18th May 2015 order and therefore that must mean that the original undertakings given in 18th May order did not apply to documents or information provided under the consent order. Mr Tager QC, who appears for the Grosvenor and Whyte parties on this application, submits that the consent order has to be regarded as an order for specific disclosure in accordance with CPR Part 31 and therefore subject to rules in CPR 31.22.
- Although the documents were disclosed not long after the consent order, the UPL parties did not appreciate what they regarded as the significance of some of them until many months later. The key documents are emails which recorded discussions between individuals at the Grosvenor and Whyte parties and a gentleman called Dr Affi. In any event in autumn 2016 the UPL parties realised the importance of some of these emails.
- The relevance of the emails is this. The discussions in them are about the formulation of the product in issue, which is the one the Grosvenor and Whyte parties ultimately made and sold to AgChemAccess. Dr Affi is an ex-employee of the UPL parties and had knowledge of the formulation of the UPL parties' metamitron products.
- For example in an email dated 19th November 2014 Tanya Ball of Grosvenor Chemicals wrote to Melvyn Whyte saying
"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."
- There are other emails in a similar vein. The essential point is that they appear to indicate, from the UPL parties' point of view, that the product complained of was indeed formulated in order to be a match to the UPL product. They appear to show that Dr Affi had been assisting the Grosvenor and Whyte parties in making the formulation of their product as close as possible to the UPL product and that their ex-employee was making detailed comments and suggestions about how Grosvenor may go about matching the UPL formulation.
- By November 2016 when this point was appreciated, the trial of the main action was due to be heard in an April 2017 window.
- On 24th November 2016 Mishcon de Reya acting for the UPL parties wrote two letters. These two letters are the origin and basis for the application I now have to deal with. One letter was written to Gordon Dadds, the solicitors for the Grosvenor and Whyte parties in the main action and the other letter was written to Dr Affi personally. Given the centrality of these letters and the subsequent correspondence I will address them in detail.
The letter of 24th November 2016 to Gordon Dadds
- The letter starts by referring to a number of the emails in disclosure including the email I have quoted above and others. Next is a heading Breach of Confidence. At paragraph 1 Mishcon de Reya point out that the Grosvenor and Whyte parties are well aware that Dr Affi is an ex-employee of UPL and had been employed as their Development and Regulatory Affairs Manager for Europe. The letter asserts that he therefore would have had information about regulatory data and the precise formulation of Metafol.
- At paragraph 2 Mishcon de Reya contend that it was an express term of Dr Affi's contract of employment with UPL that he must keep UPL's confidential information confidential during and after the period of his employment and that the Metafol formulation was confidential information. At paragraph 3 the letter asserts that Dr Affi has disclosed UPL's confidential information to Gordon Dadds' clients as evidenced by the emails and asserts that it constitutes an egregious breach of contract and breach of confidence on his part. Paragraph 3 also states that "our clients are taking appropriate steps against Dr Affi as a consequence".
- The letter goes on at paragraph 4 to contend that the Grosvenor and Whyte parties were on notice that Dr Affi was disclosing UPL's confidential information to them and refers to the importance of protecting the formulation and other regulatory data. It submits that in using and disclosing UPL's confidential information the Grosvenor and Whyte parties are undermining and free-riding on investment which the UPL parties had made in its PPPs and causing damage to UPL.
- At paragraph 7 the letter requires the Grosvenor and Whyte parties to provide full information and disclosure relating to their breach of confidence and the breach of contract and confidence by Dr Affi and seeks a signed statement including various information.
- Paragraphs 8 and 9 refer to the Grosvenor and Whyte parties' chemical analyses and contends that the Grosvenor and Whyte parties' test results have not been disclosed but that since they are alleging that their copy Metafol product is chemically identical to Metafol, those documents are relevant and should be disclosed. The letter contends that disclosure so far has been inadequate.
- The conclusion is as follows:
"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."
- That is the end of the letter:
The letter of 24th November 2016 to Dr Affi
- This letter is addressed to Dr Affi and to Novastar Link Ltd, his then company.
- The letter is headed:
"** URGENT NOTIFICATION OF INTENDED LEGAL PROCEEDINGS **"
- The letter explains that Mishcon de Reya act for UPL Europe Ltd and UPL Deutchland GmbH and states that their clients believe that Dr Affi has misappropriated their clients' confidential regulatory data and shared that data with third parties and that conduct amounts to flagrant breach of confidence and breach of contract.
- The second paragraph states:
"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".
- In a background section the letter refers to Dr Affi's employment with UPL and at paragraph 3 states:
"you may be aware that in May 2015 UPL issued proceedings against Grosvenor Chemicals Ltd and Whyte Chemicals Ltd as well as others relating to their alleged dealings in counterfeit Metafol".
- Paragraph 4 refers to annex 2 of the letter, which includes copies of the internal emails which had been produced on disclosure in the main. The letter then recites two extracts from those emails of a similar kind to the extract I have quoted above.
- Then there is a heading "Breach of Confidence" which asserts that UPL's formulation data is without question confidential and proprietary information that it was disclosed to Dr Affi in the course of his employment and under circumstances which import an obligation of confidence. It asserts that his disclosure of that information to third parties, as evidenced by the emails, constitutes an egregious breach of confidence (that is paragraphs 5 and 6).
- Paragraph 7 refers to breach of contract by Dr Affi and at paragraph 8 it refers to Dr Affi's personal liability for any acts of Novastar pursuant to the principles set out in MCA Records v Charly  EWCA Civ 1441.
- Damage to UPL is addressed in paragraph 10 and 11 and under the heading "Action required from you" various matters are set out in paragraphs 12 – 15.
- Paragraph 12 states:
"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".
- Paragraph 13 states:
"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.
- Paragraphs 14 and 15 state:
"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.
- A substantive response is required by 8th December 2016.
Gordon Dadds' 9th December 2016 letter
- On 9th December 2016 Gordon Dadds replied on behalf of the Grosvenor and Whyte parties. Paragraph 1 of the letter states:
"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."
- At paragraph 2 Gordon Dadds explains that they will therefore treat the letter as if it were a pre-action protocol letter and that being the case their clients would normally have at least 14 days to respond. At paragraph 3 Gordon Dadds make the point that they are not aware that the UPL parties have obtained an order under Part 31.22 whereby documents disclosed by Gordon Dadds' clients could be used other than for the purpose of these proceedings. It continues:
"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".
- Paragraph 4 states:
"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."
- The letter then addresses the allegations of breach of confidence and explains that it is unclear what is said to be confidential about the Metafol formulation since much of it is not confidential or is capable of being analysed without difficulty. The letter points out that there is no patent covering the Bettix product and then invites the UPL parties to identify what they say is confidential about the Metafol formulation.
- The letter then states in paragraph 8:
"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."
- The next important paragraph is paragraph 11 in which Gordon Dadds make the point that the matters raised in paragraphs 8 and 9 of the Mishcon de Reya letter have nothing to do with the First and Third defendants (that is AgChemAccess and Mr Gooch). The letter continues:
"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".
- The final substantive paragraph states:
"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."
- There then follows a list of information sought. It includes an identification of what is said to be confidential about Metafol and at paragraph (v) states:
"(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."
- Finally in paragraph (vi) Gordon Dadds state that their clients are contemplating issuing contempt proceedings against the UPL parties and Mishcon de Reya. The letter ends with the statement that whether Gordon Dadds' clients do so "in part depends on your response to this letter".
Mishcon De Reya's 10th January 2017 letter
- The response to Gordon Dadds's 9th December letter came in a Mishcon de Reya letter on 10th January 2017. Attached to that letter was a draft Re-Re-Re-Amended Particulars of Claim which pleads out the UPL parties' case arising from the emails and also seeks to add Dr Affi as sixth defendant in the main action.
- Paragraph 1 of the letter is as follows:
"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.
- The letter then sets out factors which are said to show that it would be appropriate to bring the allegations of breach of confidence within the context of the existing proceedings:
"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 email chain 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)".
- The letter then addresses Dr Affi in paragraph 2. Here it contends that a claim for breach of confidence against the Grosvenor and Whyte parties would necessarily engage issues of factual evidence and argument which are germane to any connected claims which the UPL parties have against Dr Affi and therefore it would not be unreasonable to seek to amend their claim to add Dr Affi as a defendant in the proceedings in order to resolve in one set of proceedings the disputed facts and arguments which arise. At paragraph 3 the letter refers to the draft amended particulars provided with the letter and asserts that they plead out these claims.
- At paragraph 4 Mishcon de Reya make the point that while it would be possible to amend their clients' claim and still maintain the trial window, Gordon Dadds' clients and Dr Affi may raise arguments or defences which they may say could put the trial window in jeopardy. Paragraph 5 is as follows:
"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".
- At paragraph 6 the solicitors refer to the Aldi Stores v WSP Group  EWCA Civ 1260 and the possibility of a reference to the court for directions as how additional and connected claims should be managed.
- The possibility of an application for directions relating to the breach of confidence claim and the position of Dr Affi is ventilated at paragraph 7. It includes the possibility of an application under CPR 31.22 for permission to use the documents disclosed for the purpose of these other proceedings.
- In paragraph 9 the Grosvenor and Whyte parties are invited to confirm that they will agree the proposed amended draft particulars and that directions be given for the claims to be heard in April 2017. At paragraph 9.2 the Grosvenor and Whyte parties are invited to confirm that the UPL parties have the Grosvenor and Whyte parties consent to use the documents for the purposes of pursuing separate proceedings as against them or Dr Affi.
- At paragraph 11 Mishcon de Reya state:
"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."
- At the end of this paragraph the solicitors explain that their ability to respond substantially to Dr Affi is contingent upon Gordon Dadds' clients' response.
Gordon Dadds' letter of 18th January 2017
- On 18th January 2017 Gordon Dadds replied. On behalf of their clients they refuse to consent to the proposed amended particulars, explaining that the proposed amendments raise complex new issues which cannot be dealt with in time for the trial for a number of reasons. The letter rejects the contention of the UPL parties that there is any overlap between the confidence claim and the existing claim and explains that it involves a new defendant and a new cause of action. The letter also asserts that for that reason there can be no risk of the Henderson v Henderson abuse of process principle preventing further proceedings for breach of confidence being brought, but that in any event their clients would not object under Henderson v Henderson if that was to take place.
- The letter explains that the only option the UPL parties have is to launch separate proceedings against the Grosvenor and Whyte parties and Dr Affi. For that they would first require the court's permission under CPR 31.22 for the use of any documents disclosed in the main proceedings for the purpose of threatening or issuing different proceedings. At this point the letter states:
"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".
- The letter then turns to the alleged breach of CPR 31.22 and deals in detail with the rule itself and various cases relating to it. The letter then states under the heading Contempt:
"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".
- The letter states as follows:
"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".
- The letter then continues by pointing out that Gordon Dadds had notified Mishcon de Reya of the breach of rule 31.22 in earlier correspondence, that it was well known that a breach of the rules are a contempt of court. The letter then states:
"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."
- The letter from Gordon Dadds then states that the 10th January letter is a "cynical but misguided attempt to lessen the severity of your and your clients' contempt" and that the attitude taken and the failure to take any steps to purge the contempt aggravates its severity. The letter ends by explaining that they will now be preparing a committal application against Mishcon de Reya and their clients.
Mishcon de Reya's letter of 26th January 2017
- On 26th January in an eight page letter Mishcon de Reya replied to the Gordon Dadds' letter. The first substantive paragraph reads as follows:-
"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.
- The letter continues:-
"We have already confirmed to you in our letter of 10 January 2017 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."
- The letter then sets out an extensive history of the proceedings and the way in which the disclosure arrived and was analysed. It explains that Mishcon de Reya and their clients only appreciated the significance of the disclosure in November and when that occurred they took steps to pursue the claims for breach of confidence quickly and in a manner they deemed appropriate. The letter states "our intention was to do so in the current proceedings, but we regret not having made that clearer."
- The letter then deals with the issue of whether the breach of confidence claim could be brought in to the existing action with the existing timetable and accepts that the timing means it may not be possible to deal with it at the existing trial. The letter addresses the paragraphs in Gordon Dadds letter. On the argument from Gordon Dadds that Mishcon de Reya had recognised that the breach of confidence claim could be brought in separate proceedings, Mishcon de Reya respond that "whilst we acknowledge that the breach of confidence claim can be brought separately, that is very different from acknowledging that it should or can only be brought separately". The letter goes on to address problems it is said could arise with a separate claim for breach of confidence. The letter addresses the overlap between the existing proceedings and the breach of confidence claim and maintains that they are related in a number of ways. These include the Grosvenor and Whyte parties' knowledge of regulations relating to PPPs and marketing authorisations for the PPPs and the issue of identity of the Grosvenor and Whyte parties' metamitron PPP and the UPL parties' Metafol product. Mishcon de Reya argue that if the identity of the products is a consequence of misusing UPL's confidential information, that issue was plainly connected to the current proceedings and that if the Grosvenor and Whyte parties used the UPL parties' confidential information to improve the formulation of their own metamitron product, then that was also material to the issues in the current proceedings.
- As regards the breach of CPR 31.22 the letter deals with that in detail. It maintains that there are good reasons to believe that the scope of the rule is not as wide as Gordon Dadds contend and that therefore there has been no breach of the rule. The letter refers to the judgment of Scott J in Sybron v Barclays Bank  Ch 299 in which at paragraph 328 the Judge said:-
"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."
- The letter also refers to Miller and Scory  1 WLR 1122 in which Rimer J discussed Sybron and then the letter turns to the 5th Edition of the textbook on Disclosure by Matthews & Malik where at paragraph 19.25 it is stated:-
"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 letter then makes the point that "if this statement of principle is correct (and we have no reason to doubt it), it follows that it is not a breach of CPR 31.22 to apply to amend existing proceedings or to raise the prospect of doing so with potential defendants in correspondence, or indeed to write to ascertain their position on the potential issues raised by those claims with a view to an amendment." The letter then submits that given the importance under CPR of pre-action protocol procedure and the overriding objective to conduct litigation in a way which saves expense and deals with matters expeditiously,
"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."
- Accordingly Mishcon de Reya maintain that it was not a breach of CPR 31.22 to use documents disclosed in proceedings for the purpose of adding new claims or joining new parties to those proceedings or to seek to do so.
- At the end of the letter the solicitors state:-
"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 letter ends by accepting that if the UPL parties will pursue the breach of confidence claim, they will have to proceed as a separate action and they will require permission. The letter states that they are preparing such an application.
The committal application
- After that letter the Grosvenor and Whyte parties brought this application for permission to bring a committal application. It arose as follows. In early February 2017 I was asked to give permission to the Grosvenor and Whyte parties to issue this Part 8 Claim. In the form presented to me the Part 8 Claim was a claim for committal. The matter came to me on paper. It was not clear what was actually being sought and I invited Mr Cohen, the partner at Gordon Dadds to appear before me in the Applications Court, since I was currently the Applications Judge, and deal with the matter in private.
- I did not believe then and I do not believe now that the Grosvenor and Whyte parties needed the Court's permission to issue a Part 8 Claim which was seeking permission under CPR r81.14 to bring the committal proceedings. However Mr Cohen explained to me that he was concerned that the office would not issue that Part 8 Claim without my permission. Accordingly by an order dated 16th February 2017 I gave the Grosvenor and Whyte parties permission to issue the Part 8 Claim for permission to apply for committal for contempt of court. That order was not an order giving permission to apply for a committal. I remain of the view that no permission to issue that Part 8 claim was necessary.
- On 1st March 2017, in response to the service of the Part 8 claim form, Mishcon de Reya wrote to Gordon Dadds. The letter explains that they and Mr Hertzog would be represented by DWF LLP, who would deal with the application for permission to bring committal proceedings, while Mishcon de Reya would remain as the solicitors representing the UPL parties in the main action. Before me the UPL parties were separately represented from Mishcon de Reya and Mr Hertzog. The UPL parties were represented by Mr Bloch QC and Mishcon de Reya and Mr Hertzog were represented by Mr Croxford QC.
- As regards the position of the UPL parties themselves, Mishcon de Reya explain that whatever the legal position is regarding breach of CPR 31.22 their clients acted entirely based on their advice. The letter asserts that the UPL parties, who are based in Germany, have no knowledge of CPR or the relevant authorities other than what has been given to them by Mishcon de Reya. The letter concludes that if there has been a breach of CPR 31.22, which is not admitted, such a breach has been caused by Mishcon de Reya not their clients and therefore the UPL parties are entirely innocent in the claim for breach of 31.22.
- The committal matter then came before Mr Justice Marcus Smith on paper. On 11th April he decided that the application for permission to bring the committal could not be dealt with on paper (I respectfully agree) and directed that it be considered at an oral hearing. He also rejected the submission by the UPL parties that the application was improperly made procedurally and should have been brought under CPR Part 81.11 and CPR Part 23. The UPL parties alleged that the appropriate basis for the committal application should have been an allegation of breach by them or their solicitors of an undertaking. Marcus Smith J rejected that and noted that the breach relied on in the Part 8 claim was a breach of CPR31.22.
- The hearing was listed before me on a date which was after the trial in the main action. In the main proceedings the amendments in the proposed Re-Re-Re-Amended Particulars of Claim were never sought. The trial took place in May 2017 before Proudman J. Judgment was reserved. By the time of the trial the AgChemAccess parties had settled with the UPL parties. Therefore the trial only proceeded against the Grosvenor and Whyte parties.
- One might have said that this application ought to have been made to the trial judge. However I can see that given that the position of the UPL parties by then was that they did not wish to bring the confidential information claim in to the proceedings in their current form, it made sense simply to arrange matters so that this matter was dealt with by a judge after the trial. Nevertheless the person best able to assess the relationship between the confidential information allegations and the existing proceedings would have been the trial Judge.
The evidence on this application
- The Grosvenor and Whyte parties' evidence in support of their case for permission to bring the committal, and for committal itself, is the affidavit of Mr Philip Cohen the partner at Gordon Dadds. He essentially rehearses the history which I have addressed at length above. He explains that in his view there was a clear breach of CPR 31.22, that the allegation of breach of confidence has nothing to do with the allegations in the existing main action and the only connection is that both are concerned with metamitron based PPPs.
- Mr Cohen explains what is noteworthy from the 10th January letter is lack of apology or any expression of remorse. He then refers to the Gordon Dadds letter of 18th January, explaining that this made it apparent to the Grosvenor and Whyte parties that what he calls their attempt to brazen it out could not possibly succeed. In relation to the 26th January letter, Mr Cohen explains that since it was by then apparent to Mishcon de Reya that no consent to the amendment would be forthcoming, the letter expresses regret and remorse and tenders an unreserved apology but that
"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."
- Mr Cohen then addresses other matters in the 26th January letter which related to the details of how the November letters came to be written. In relation to the statement by Mishcon de Reya that it was the intention of the UPL parties to pursue the breach of confidence claim in the current proceedings, Mr Cohen states that it is "fanciful" and refers to the terms of the letter to Dr Affi in which "there is never a hint that the intention is to join Dr Affi in to the current proceedings".
- Mr Cohen also points out that the letter to Gordon Dadds on 24th November does not refer to amending the proceedings either and contends that the suggestion that the UPL parties intended all along to amend the current proceedings is merely something they asserted in the letter of 10th January 2107 as being the attempt to "brazen it out".
- Mr Cohen states that the indication on 26th January that Mischon de Reya and the UPL parties will seek the court's permission to use the documents for the purpose of bringing new claims is:
"surely like putting the money back in the till after one has been caught with one's hand in it".
- In his summary Mr Cohen finds "the expressions of regret and remorse at this dreadful mistake in the 26th January to be unsatisfactory and expressed simply as a preface to the proposal they intend to use the documents by hook or by crook anyway". Mr Cohen's affidavit makes clear his view that a serious and deliberate contempt of court has taken place and it would be in the public interest to bring committal proceedings.
- The evidence in reply was filed on 7th March 2017. The main witness statement was of Jeremy Hertzog himself. In addition there is a short statement from Mr Brown, also of Mishcon de Reya. He is the firm's General Counsel and Compliance Officer for Legal Practice (COLP). His evidence simply explains that the UPL parties support and repeat the contents of Mr Hertzog's witness statement. He states that Mishcon de Reya accept that UPL acted entirely on the advice given by the firm such that, if there has been a breach of r31.22, the breach was caused by Mishcon de Reya. Mr Brown contends that if the court is minded to give permission then the committal application should only proceed against Mishcon de Reya and Jeremy Hertzog and not against the UPL parties.
- Mr Hertzog's witness statement also deals with the history of the proceedings and the correspondence. He maintains that there has been no breach of CPR 31.22 but he also acknowledges that if there has been a breach, that matter is serious. Nevertheless, he contends, in this case such a breach would be at the lower end of the scale in terms of gravity and had already been purged as a result of the correspondence I have already mentioned. In running through the correspondence Mr Hertzog refers to the apology offered by his firm in the letter of 26th January if a contempt of court has occurred.
- Mr Hertzog points out that there is no suggestion of any prejudice to the Whyte Group as a result of the correspondence, and refers to a strong public interest in the use of disclosed documents in the investigation and exposure of aspects of conduct which involve dishonest, knowing or reckless breaches of the regulations which afford public and environmental protection relating to hazardous products.
- Mr Hertzog says that there is strong mitigation for the UPL parties because they were always acting in good faith on the advice of Mishcon de Reya. He makes the point that committal should be seen as a last resort and reserved for serious interference with the administration of justice. It should not be used without the court first having made an order requiring the party to perform the relevant undertaking and that that order requiring compliance having been breached. He contends that the contempt has already been purged because in the correspondence Mishcon de Reya have repeatedly agreed that they and the UPL parties will not, without consent, use the documents other than in the main action. So there is no risk of any further breach.
- Given the timing of the witness statement Mr Hertzog also addresses a concern of his about distraction from trial preparations but that is now not relevant given that this hearing was arranged to take place after the trial.
- The Grosvenor and Whyte parties submit that what Mr Hertzog's statement does not do is explain his or his firm's actual subjective thinking at the time the letters were written or at any stage during this process. Mr Hertzog's evidence is focussed on the correspondence and he explains that his clients did not waive privilege and it was common ground before me that no adverse inference can be drawn from a non-waiver of privilege. Nevertheless Mr Tager QC was critical of this evidence and submitted that the privilege would not have prevented Mr Hertzog from explaining what he thought or his colleagues thought, at the relevant times, about CPR 31.22. The privilege only relates to the advice given to the firm's clients.
- I do not accept that criticism of the evidence from Mishcon de Reya. I will address this further below, but I cannot read Mr Hertzog's witness statement as if it does not explain what he genuinely thinks. He explains his views: that the letters were not a breach of the rules but that if they were the breach will not be repeated, was technical in nature rather than serious, did not prejudice the Grosvenor and Whyte parties and no permission should be granted. Also taken with Mr Brown's evidence, it is clear that the firm is seeking to take full responsibility for any contempt which did occur, if that is what happened.
- There are two issues I have to decide, first whether this application has been brought in a procedurally correct manner, and second whether to give permission.
(I) Correct procedure
- On the first point, the UPL parties submitted that this should have been treated as a committal for a breach of solicitor's undertaking pursuant to CPR 81.11 and that therefore the correct way to apply for permission to bring such proceedings was by an application used under Part 23 in the main action. This is the same point which was put to Marcus Smith J but it was argued again and I will consider it.
- The Grosvenor and Whyte parties did not agree with the submission and contended that this was a matter to which Section III of CPR Part 81 applies, that is to say committal relating to the interference with the due administration of justice. Therefore permission was required to bring the committal application pursuant to rule 81.14, and that had to be brought by a Part 8 claim form.
- It could be said that the correct answer to that question might depend on the question of whether CPR r31.22 itself has completely replaced what used to be called the implied undertaking relating to disclosure/discovery of documents, which in turn arose from the compulsive nature of documentary disclosure itself. That undertaking had been explained in the cases before CPR r31.22 was enacted, such as Riddick v Thames Board Mills  1 QB 881 at 896. In SmithKline Beecham v Generics  1WLR 1479 the Court of Appeal held that CPR r31.22 was a complete code and replaced the previous implied undertaking. Notably in the textbook Phipson on Evidence, paragraphs 27-012 to 27-080, some of this aspect of the Court of Appeal's decision in SmithKline Beecham is criticised and the drafting of the rule is also described as "shockingly bad". If the issue before me could be analysed as a breach of an implied undertaking then I can see why it could be said that CPR r81.11 might apply. However it seems to me that this is not the appropriate occasion to analyse that question in any detail and I do not propose to do so.
- As the matter stands, the allegation is a breach of the rule in the CPR. On its face that provision operates as a rule rather than as imposing an undertaking. Therefore it was appropriate for the Grosvenor and Whyte parties to use the procedure in Section III of Part 81, and to use a Part 8 Claim to bring the application for permission.
(II) Whether to give permission
- The Grosvenor and Whyte parties submitted that the correct approach for determining the application for permission can be taken from the judgment of the Court of Appeal in Tinkler v Elliott  EWCA Civ 564. At paragraph 44 Gloster LJ held that the judge below (HHJ Pelling QC sitting as a judge of the High Court) had correctly summarised the relevant and well known principles. Tinkler was concerned with the more common situation in which the alleged interference with the administration of justice is a false statement of truth and the principles approved by the Court of Appeal were written with that in mind. Below is my summary of the relevant principles based on Tinkler but adapted to deal with the facts of this case. In doing this I intend to say nothing different from what is said in Tinkler other than making appropriate adaptations. The principles are:
- First, in order for the allegation of contempt to succeed there must be a deliberate or reckless breach of rule 31.22, by which I mean that the relevant persons must have known that the documents were subject to the rule and known that the acts complained of were a breach of that rule or in either case were reckless in the sense of Berry Piling Systems v Sheer Products  EWHC 347. This first point puts together the factors in paragraphs (i) and (iii) of the list in Tinkler.
- Second, the burden of proof is on the party alleging contempt, who must prove each element identified beyond reasonable doubt.
- Third, at this stage the question is permission. Permission should not be granted unless a strong prima facie case has been shown against the alleged contemnor (see Malgar v Leach  EWHC 843).
- Fourth, before permission is given the court should be satisfied that the public interest requires the committal proceedings to be brought; the proposed committal proceedings are proportionate; and the proposed committal proceedings are in accordance with the overriding objective.
- Fifth, in assessing proportionality regard is to be had to the strength of the case and also to the nature of the proceedings in which the documents were disclosed, which will include consideration such as the value of that claim and its nature. Also relevant will be the nature and possible value of the possible fresh claims which may (or may not) have been revealed by the documents. Also relevant will be the likely cost and the amount of court time required in dealing with the matter, bearing in mind the overriding objective.
- Sixth, in assessing whether public interest requires the permission to be granted regard should be had to the strength of the evidence relied on to show that the breach was deliberate or reckless. Also relevant is to take into account the extent to which there is a public interest in bringing home to the profession the importance of the restrictions in CPR r31.22.
- Finally that in assessing the permission application care should be taken to avoid prejudicing the outcome of the application if permission is to be given, by avoiding saying more about the merits of the complaint than is necessary to resolve the permission application see KJM Superbikes Ltd v Hinton  EWCA Civ 1280.
- At paragraph 18 of the Grosvenor and Whyte parties' skeleton argument, it is submitted that the weight to be given to the public interest on this application is less than in other situations of alleged interference with due administration of justice, such as the making a false witness statement or bribing or threatening a witness. This submission attracted the attention of counsel for the UPL parties who submitted that it was "dead wrong" and failed to appreciate the significant public interest element in applications of this kind. Counsel for the Grosvenor and Whyte parties replied that the submission was not that the public interest was not a highly material factor, he was simply making the point that different cases are different from one another, and so the fact that this is not a case of false statement of truth or bribery is a matter which needs to be taken in to account.
- I entirely agree with Counsel for the Grosvenor and Whyte parties that the nature of the allegation needs to be taken carefully into account. I also accept that this is not a claim about a false witness statement or bribery or threatening a witness; nevertheless when considering whether to give permission to bring proceedings for committal, it is always vital to consider the public interest carefully. The public interest will always be an important factor.
- I doubt the Grosvenor and Whyte parties intended anything else by the submission but if they did then I would not have agreed with it. Malgar v Leach emphasises that the Court would be concerned to see that the case is one in which the public interest requires committal proceedings to be brought. In KJM Superbikes v Hinton Moore-Bick LJ explained that the Court should remind itself that the proceedings are public in nature and that ultimately the only question is whether it is in the public interest for the proceedings to be brought. However as the Judge also said in paragraph 16, when answering that question there are many factors the Court will need to consider and (in paragraph 17) Moore-Bick LJ explained that the wider public interest would not be served if Courts were to exercise the discretion too freely in favour of allowing proceedings of "this kind" to be pursued by private persons.
- Since KJM Superbikes was a case about a false statement of truth it may be that one could read this statement by Moore-Bick LJ as a statement specific to applications relating to false statements of truth. However even if that is so, the statements by the learned judge are applicable generally to the exercise of deciding whether to allow committal proceedings to be brought by private persons. I also refer to the judgment of Christopher Clarke LJ in Tallal El Makdassi v Cavendish Holdings  EWCA Civ 1540 at paragraph 79 as follows:-
"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."
- Again in that paragraph the learned judge is referring to a committal based on a false statement of truth, but again it seems to me that the caution expressed there by the court is applicable generally.
- Finally on this topic I refer to the passage from the judgment of Briggs J in Sectorguard v Dienne  EWHC 2693 (Ch) referred to and endorsed by Hamblin J in Public Joint Stock Company Vseukrainskyi Atktsionernyi Bank v Makimov  EWHC 4370 (Comm) at paragraphs 21-22. Here these two judges are emphasising the importance of proportionality and the fact that committal proceedings are a last resort.
The rule in issue - CPR r31.22
- CPR 31.22(1) provides:-
"(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."
- This rule and its relationship with the historic and implied undertaking have been addressed in many cases. I can take the following from the judgment of Jackson LJ in Robert Tchenguiz v SFO  EWCA Civ 1409 at paragraph 56:-
"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."
- I can also refer to the judgment of Christopher Clarke LJ in the Court of Appeal in IG Index v Cloete  EWCA Civ 1128 which related to documents which had been disclosed before an employment tribunal which were then used in High Court proceedings. The Judge dealt with CPR r31.22 and the point in Smithkline Beecham v Generics that it is now a complete code in relation to the use of disclosed documents, and that this was common ground before the court there, and that the implied undertaking and now the rule applies not only to documents but to the information derived from those documents (based on Crest Homes v Marks  1 AC 829 and Sybron v Barclays Bank).
- At paragraph 40 Christopher Clarke LJ addressed "use" and held that it was a wide word and extended to the use of the document for example by reading it, copying it and showing it to someone else such as the judge, and to use of information contained in it. The judge also regarded it as extending to referring to the document and any of the characteristics of the document including its provenance.
- The court held that there had been use of the documents in that case and held (paragraph 42) that that conclusion was not inconsistent with the policy behind the rule. The policy was that compulsory disclosure is an invasion of a person's private right and this should be matched by corresponding limitation on the use of the documents disclosed. At paragraph 43 Christopher Clarke LJ also referred to another reason for the rule's existence, being to encourage those with documentation to make full and frank disclosure of it whether helpful or not. That disclosure can be made on the footing that, subject to exceptions, the documents will not be used save for the proceedings in which it is disclosed.
- The Grosvenor and Whyte parties also referred to a recent decision of Knowles J in Tchenguiz v Grant Thornton  EWHC 310 (Comm). This decision was given on 22nd February 2017 and therefore Counsel for the Part 8 defendants submitted that it could not have been in the minds of the solicitors in November 2016 when the letters were written. That is true but Knowles J's decision on the meaning of the words "use" follows, as the judge says expressly, from the decision of Christopher Clarke LJ in IG Index v Cloete.
- At paragraph 19 Knowles J states as follows:-
"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."
- I respectfully agree. With that introduction to the principles applicable under r31.22 I can turn to the application itself.
Strong prima facie case?
- I turn to consider whether there is a strong prima facie case of contempt of court. The first topic to address is the position of the UPL parties on this application as opposed to the position of Mishcon de Reya and Mr Herzog.
The relative positions of the parties and their solicitors
- Clearly if no permission should be granted to bring committal proceedings against Mishcon de Reya or Mr Hertzog, then I should also dismiss the application in relation to the UPL parties. Counsel for the Grosvenor and Whyte parties did not suggest otherwise.
- Counsel for the UPL parties submitted that even if permission was given to proceed against the solicitors Mishcon de Reya and Mr Hertzog, nevertheless it should be refused against the UPL parties. This is on the basis that there is no evidence of any knowledge or recklessness or other deliberate conduct by the UPL parties and so, even if there was a case against the solicitors, there is no case against the UPL parties.
- Of course the solicitors' letters were written on behalf of the UPL parties but even so I readily acknowledge that the position of the UPL parties is different from the position of their advisors. In principle it is possible that a case could be made against the advisors for contempt in relation to acts of the advisors acting for the clients, whereby there may not be a case of the same strength against the clients themselves. However the evidence before me only consists of a statement by the partner at the law firm who was responsible for the main action and a statement by another partner, the COLP. The COLP partner's statement simply explains, in effect, that he agrees with the first partner and confirms that the firm accepts that the client acted entirely on the advice given by the solicitor. Based on that evidence, it is not possible to distinguish between the client and the solicitor.
- In other words if there is a strong prima facie case of deliberate flouting of the rules by the solicitors then, based on the evidence I have and the position adopted by the UPL parties and their solicitors at this stage, it must follow that there must also be a same case against the UPL parties. On the evidence I have I cannot do anything other than assume that any deliberate or reckless misconduct by the solicitor, if that is what it was, was done on the instructions of clients, albeit those instructions were on the solicitor's advice.
- Therefore I reject the submission of Mr Bloch for the UPL parties that even if I find that I should give permission relating to the solicitors, I should reject the permission against UPL.
- Given that finding, it seems to me that the best way forward is to now focus on the position of the solicitors themselves.
The 24th November 2016 letter to Gordon Dadds
- I turn to consider first the letter of 24th November 2016 which was written to Gordon Dadds for the Grosvenor and Whyte parties. I propose to consider this letter first because Grosvenor and Whyte submit that this letter is itself a breach of r31.22, leaving aside the letter to Dr Affi.
- It is manifest that the letter amounts to "use" of the documents in question within the meaning of r31.22 and counsel for the solicitors did not suggest otherwise. Two questions remain. The first is what obligation attached to the documents in the first place having regard to the history of the consent order and the earlier Norwich Pharmacal order. The second whether the letter amounts to use only for the purposes of the proceedings in which the documents were disclosed if CPR r 31.22 is the applicable rule.
- Considering the consent order, as I mentioned already, it reads like a Norwich Pharmacal order and the history of the matter supports that conclusion. In which case it would be unsurprising if the party receiving the documents expected to be entitled to use those documents in a wider manner than would be covered by rule 31.22. The Norwich Pharmacal order itself was originally drafted on that basis. However on its own express terms it replaced the Norwich Pharmacal order and it is impossible to accept the submission of counsel for Mishcon de Reya that the wider terms of the Norwich Pharmacal order undertaking can or should be implied in to the consent order. They are simply not there. It would have been much better if the parties had turned their minds to and clarified what they thought the obligations on the receiving party would be relating to the disclosure which was to be provided pursuant to the consent order, but there is no suggestion they did. In the absence of any other provisions, the only applicable provision has to be CPR 31.22. In my judgment Mr Tager QC is right. This consent order, as drafted, has to be regarded as an order under CPR Part 31 with the attendant obligations that apply to it. That answers the first question.
- Turning to the second question of purpose, counsel for Mishcon de Reya repeatedly referred to the passage from the judgment of Scott J in Sybron v Barclays Bank which I have quoted above. This refers to the "commonplace" of joining additional parties as a result of disclosure. I would add that it is also commonplace that in civil proceedings a party's statement of case will be reformulated as a result of receiving documents on disclosure. In the course of the reformulation it may well be that further causes of action are added or removed in the same process. This is entirely unremarkable.
- The letter of 24th November is written in vigorous terms but this was serious commercial litigation between sophisticated parties using experienced solicitors on both sides. I have seen the value of something in the order of £3 to 4 million. Nothing turns on the tone of the letter.
- In the letter the solicitors acting for the claimants in a civil claim raise with the solicitors for the defendants allegations that the documents produced on disclosure by the defendants indicate that there are possible further claims or ways of reformulating existing claims which may be brought against the defendants and may also involve a third party not presently a defendant. None of this is anything other than entirely unremarkable and commonplace.
- In paragraph 31 of his decision in Tchenguiz v Grant Thornton Knowles J distinguishes between a situation in which (i) disclosed documents are reviewed in order to advise on whether other proceedings would be possible; and (ii) disclosed documents are reviewed in the course of the proceedings and in doing so it comes to light that proceedings would be possible. The former would be use for a collateral purpose whereas the latter would not.
- In this case there is no reason at all to think that the review itself took place for anything other than orthodox reasons in the course of the existing proceedings. That is to say, there is no basis to infer that this is anything other than a case within Knowles J's second limb and so the review itself is not collateral use. When a party realises that disclosed documents raised a possible further claim it would be entirely appropriate to write to the solicitors for the other party on that basis. And that is what Mishcon de Reya did.
- Mr Cohen for Gordon Dadds suggested that the link between the breach of confidence claim and the existing claim is or was a fig leaf. I am entirely unpersuaded that it is fair to regard that as a fig leaf.
- I have read the Particulars of Claim including the draft Re-Re-Re Amended Particulars of Claim. The existing proceedings relate to alleged "counterfeit" products but the word has a pejorative overtone which I will put to one side. On any view the main proceedings at least involved allegations of passing off. The UPL parties were contending that products made by the Grosvenor and Whyte parties were being sold as and for goods of the UPL parties. The product in question was the metamitron PPP product. The question of how it was formulated and the circumstances in which that arose and the relationship if any between that product and the UPL parties' own product was clearly part of the main proceedings in their existing form.
- The amendments would bring a claim for misuse of confidential information against the defendants and a new third party relating to the manufacture of the products in issue. In my judgment it was entirely appropriate for the solicitors for the UPL parties to write to Gordon Dadds and raise this confidential information allegation concerning the production of the Grosvenor and Whyte parties' PPP product based on information that appeared to have been coming from Dr Affi about the UPL parties' product as being something of significance.
- It would have been wholly unremarkable and commonplace for a court to be asked to approve amendments of the kind later set out in the draft Re-Re-Re Amended Particulars of Claim, in so far as they relate to the existing defendants. For the court to have given permission, assuming if it was otherwise appropriate to do so as a matter of case management at that stage, would have been unremarkable. It would also be wholly unremarkable for the court to be asked to permit the joinder of Dr Affi in the same circumstances.
- That takes me to the last point on this letter, which is that it does not indicate whether the matter is to be taken forward by amendment or by new proceedings. It does not state in terms that if satisfaction is not provided, the UPL parties will apply to amend the existing proceedings to add the allegation in to the existing action. Nothing is said in this letter about what is to happen if satisfaction is not provided, it simply reserves the claimants' rights. In my judgment that does not turn an otherwise unremarkable letter into something different. If raising the new claims against the defendants and against Dr Affi in a letter to the existing defendants' solicitors would not be a breach of r31.22 if they had been put as a request to amend the existing Particulars of Claim then it cannot be turned into a breach of 31.22 by being silent on the matter.
- In any event, as Mr Croxford QC put it, an objective bystander would expect that any claim arising out of the matters alleged in the 24th November letter would have been likely to be sought to be raised by way of an amendment to the existing claim.
- Overall taking the letter on its own, in my judgment there is no basis for an allegation that the 24th November letter to Gordon Dadds amount to use of the documents for any purpose other than purpose of the proceedings in which they were disclosed. That is because the party receiving disclosure is entitled to use documents produced on disclosure in the proceedings to raise new causes of action which relate to the same proceedings without fear of being in breach of rule 31.22 (see e.g. Miller v Scorey  1 WLR 1122 Rimer J at 1130 E-G, a case under the implied undertaking). The fact that the new causes of action may also involve a person not currently a party but who could properly be joined as a co-defendant does not make the circumstances fall outside r31.22. "The proceedings" referred to in the rule does not have a narrow meaning confined to a narrow view of the causes of action pleaded in the existing statements of case.
- If the new matters raised in the letter had been entirely separate and distinct from the existing proceedings, and would raise issues which could never sensibly or properly be brought in the same proceedings, then the matter would be different. I will refer to that sort of case as a truly collateral case. The correct course in that truly collateral case would be for a letter writer to conclude the letter by only seeking permission to use the documents for the relevant purpose, but that is not this case.
- I do not have to decide where the outer limits of the boundary is between "the proceedings" and a truly collateral case. One possibility canvassed in this case is that "the proceedings" in r31.22 ought to include anything which would fall within the Henderson v Henderson abuse of process doctrine. There is force in that since if Henderson v Henderson considerations mean a second claim could and should be brought in the same proceedings as a first claim, it would seem odd if the receiving party was not free to use documents disclosed in the proceedings in order to bring in the second claim. But I do not need to decide that question because on its face this case does not come close to whatever the outer limit of "the proceedings" is (and that includes taking into account that the allegations involve a third party).
The 24th November 2016 letter to Dr Affi
- I turn to consider the 24th November letter to Dr Affi. It is also in strong terms but they are not inappropriate given that the accusation is a serious one of misuse of confidence. Dr Affi is an ex-employee of UPL and the emails show discussions between him and the defendants about the formulation of the PPP products. Set in their context, and subject to r31.22, the emails justify raising the issue. It may well be that there is no good claim here because the formulation is not confidential and/or can be reverse engineered but that is not relevant at this stage. In this kind of litigation, the tone and content of the letter from Mishcon de Reya, subject to the issue of rule 31.22, was robust but unexceptional.
- The letter of 24th November to Dr Affi is clearly another use of the documents. Moreover, it threatens to issue proceedings. As drafted it is clearly contemplating separate proceedings from the existing main action. Counsel for Mishcon de Reya suggested that the words in the letter "we are instructed to issue proceedings against you without further delay or recourse to you" in paragraph 14 of the letter can be read as a reference to bringing an application in the main action to join Dr Affi as a further defendant. I do not agree. It is simply not what the words say. No doubt it would have been better if the letter had been that way, but I cannot read those words that way.
- In order to analyse the status of the letter to Dr Affi I will take the new causes of action articulated in the two letters of 24th November letters as a given and then consider three ways of using the disclosed documents. The first scenario is using the documents to support joining Dr Affi in the existing proceedings by, in the first instance, writing only to the solicitors for the existing defendants. The second is what I will call a letter before joinder. In other words without any prior permission using the documents to write to Dr Affi in order to put to him that if he does not give satisfaction, an application will be made to join him in the existing action as a co-defendant. The third is the letter which actually was written.
- I have already effectively held that if the UPL parties and their solicitors had confined themselves to the first scenario then there would have been no breach. In other words if Mischon de Reya had written the letter to Gordon Dadds first and then only approached Dr Affi with either the Grosvenor and Whyte parties' express permission or, if refused, the court's permission (which would probably have been given) then no breach of r31.22 could have occurred.
- The third case is the one which the letter to Dr Affi actually falls into, but in order to put the letter into context it is relevant to consider whether the second case would have been a breach of the rule at all.
- Mishcon de Reya placed reliance on the statement by Scott J in Sybron v Barclays Bank related to the joinder of additional parties, but as Mr Tager pointed out that statement has to be read in the context of a decision that the commencement of the second action for the same cause of action was a breach of what was then the implied undertaking. The position before Scott J was that the claimants were using documents covered by the implied undertaking and disclosed in the first action (the 1981 action) to start a second action (the 1983 action) based on the same cause of action as in the 1981 action but with further parties. In fact there were earlier proceedings still as well (the main action) but that does not matter. Documents disclosed in the first action were used to plead the case in the second action.
- Scott J held that the fact the cause of action was the same in both the first and second action did not mean there was no breach, even if the same parties were involved. Because the second action was another action, the use of the documents was a breach (see e.g. p320-H to 321-A). The passage relied on by Mischon de Reya is in the section of his judgment in which Scott J decides to give permission for the use of the documents in the second action. The point being made by the judge was that he could not see any reason why the court should regard the new action as inappropriate use of the discovered documents and therefore gave permission for their use for those purposes. But, as Mr Tager points out, the judge had already held that the use without permission was a breach of the implied undertaking.
- The correct approach to r31.22 is as follows. If a party reviewing documents disclosed in a given set of proceedings identifies that there is a properly arguable basis for joining a third party into those proceedings as a co-defendant with the existing defendants, in relation to the existing causes of action pleaded in the proceedings, then that party has done nothing other than use the documents for the purposes of the proceedings in which they were disclosed. Neither side before me argued to the contrary.
- Moreover in my judgment neither the use of the documents to support an application for joinder addressed to the existing defendants and the new putative co-defendant, nor the use of the documents to write a pre-application letter before joinder to that putative co-defendant, would be anything other than use of the documents for the proceedings in which they were disclosed. Neither side has drawn my attention to a case in which the contrary was decided.
- In the above example I have considered the case in which the causes of action are the same, to take the simplest case. Even when the causes of action are different, in other words when the new cause of action involving the third party is not one of the existing causes of action, in my judgment the same result follows as long as it is not a truly collateral case. To use documents disclosed in proceedings to write a letter before joinder to a third party (aside from a truly collateral case) is not a breach of r31.22. Again neither side has drawn my attention to a case in which the contrary was decided.
- Therefore I find that the letter to Dr Affi would not have been a breach of r31.22 if it had ended by threatening Dr Affi with an application to amend the particulars in the existing proceedings to join a new breach of confidence claim and join him as a co-defendant to those new causes of action.
- However the letter to Dr Affi did threaten to issue fresh proceedings against him and in my judgment that did make the letter a breach of the rule. It seems to me that the reasoning of Scott J in Sybron leads to that conclusion. Subject to the exceptions in the rule itself, CPR r31.22 does not entitle a party receiving documents to use them without permission for any purpose other than the proceedings in which they are disclosed. To threaten a third party with fresh proceedings without permission is prohibited by the rule.
- At this stage it is convenient to deal with the point about the case management of the trial. It is right that it probably would not have been possible to bring the confidential information claim to trial in the same April window as the main proceedings on case management grounds. That is because it was raised late in the proceedings. However this is not relevant to the issues I have to decide. The issue about whether the documents are being used for the purpose of the proceedings is not determined by the fact that the circumstances were such that one would not necessarily have permitted the matters to be added by amendment for case management reasons because they were late. Those are two different issues. If there had been plenty of time then on the face of the allegations, amendments of that kind would have been permitted and the court would have allowed Dr Affi to be joined as a further defendant. I should say again that in assessing this I am not concerned with the merits themselves of the confidential information claim. Compliance with r31.22 cannot depend on what the defendants or Dr Affi may say about the allegations.
- I will consider whether the breach of the rule was deliberate after dealing with the further correspondence.
The further correspondence
- The next task is to consider the letter of 10th January 2017 and the Draft Re-Re-Re-Amended Particulars of Claim. The Grosvenor and Whyte parties' submission is that these are nothing but a ploy and that the approach of Mishcon de Reya on 10th January letter sheds light on the earlier letters.
- I have already considered the draft amended particulars. They are not a ploy at all. The 10th January letter makes it absolutely clear that the solicitors were not then going to use the documents for any other purpose other than the proceedings in which they were disclosed without the Grosvenor and Whyte parties' consent. The draft amended particulars demonstrate the close relationship between the allegations and the existing proceedings, which is obviously what these particulars were intended to do. Far from aggravating any possible breach which had occurred, in my judgment the 10th January letter was a sensible and appropriate response by a responsible firm of solicitors seeking to address a serious allegation of misconduct brought against them by the solicitors for the Grosvenor and Whyte parties.
- Mr Cohen points out that there was no apology offered in the 10th January letter. That is true. However the next step was the 18th January letter from Gordon Dadds in which they pressed the point and submitted, wrongly in my view, that the 10th January letter was a belated and cynical attempt to justify actions which had already been taken. Eight days after that, on 26th January, Mishcon de Reya's response was entirely appropriate.
- The Mishcon de Reya' letter of 26th January does not admit that the letter to Dr Affi was a breach of CPR 31.22 but it offers an unreserved apology if they are wrong. That is not an indication of cynicism and aggravation as contended for by the Grosvenor and Whyte parties before me. Although the letter to Dr Affi was a breach of r31.22, the letter to Gordon Dadds on 24th November was not a breach of CPR 31.22 at all.
Was the breach of the rule deliberate?
- The solicitors obviously intended to write to Dr Affi and raise the breach of confidence allegation with him. There is no evidence to support the idea that the letter, or the reference to fresh proceedings in it, was drafted in error. Nor is there evidence that it was inadvertence that led to the inclusion of the threat of fresh proceedings. The question is whether there is a strong prima facie case that the solicitors knew or were reckless about whether the letter was a breach of the civil procedure rules.
- The point of Mr Hertzog's evidence is that he, and I infer his firm's, view was that nothing which happened was a breach of r31.22. The Grosvenor and Whyte parties contend there is no basis for drawing either inference about state of mind based on Mr Hertzog's evidence. I disagree. In paragraph 1.3 Mr Hertzog explains he makes the statement on his behalf and on behalf of the firm. In paragraphs 1.9 and 1.9.1 together Mr Hertzog states:
"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:
- This is clear evidence from Mr Hertzog of his belief that no breach of r31.22 occurred. It is unreal to approach this evidence on the basis that it does not at least purport to set out what Mr Hertzog and his firm truly believes.
- Now there is always a possibility that a witness is lying but there is no proper evidence before me to support such an inference and I reject it. There is nothing inherently implausible about Mr Hertzog's belief. I have found he was right (and his opponents were wrong) that the letter to Gordon Dadds is no breach of r31.22 at all. The letter to Dr Affi would not have been a breach if written in a different way and threatening to join Dr Affi into the existing proceedings.
- Nevertheless what Mr Hertzog's evidence does not do is explain whether he or his team turned their mind to r31.22 at the time of the letter or not. In other words it is possible to speculate about various possibilities. Perhaps Mr Hertzog's view that there was no breach was formed after the event, the letter having been written without considering r31.22 at all. Or perhaps there was careful consideration to r31.22 at the time and a considered (but wrong) view was arrived then that the letters were not contrary to the rules. But in either case the solicitor concerned has explained his belief about the propriety of the conduct in question. I do not believe this speculation advances the argument.
- Counsel for the Grosvenor and Whyte parties submitted that since the letter was a breach, knowledge that this is so should be imputed to the solicitors because the evidence does not explain what they actually thought. I have already addressed this. It does not reflect the evidence.
- The Grosvenor and Whyte parties rely on the further correspondence but I can see no foundation for the submission that the later conduct sheds unfavourable light on what happened in November. The later conduct does not suggest that the November letters were some sort of deliberate or cynical approach to attempt to flout the rules. The submission is fanciful.
- There is no reason not to take the statements in the letters from the solicitors at face value and those statements do not support the allegations now made by the Grosvenor and Whyte parties about the knowledge or state of mind of the solicitors at any relevant time. Therefore I would refuse this application on the ground that there is no strong prima facie case of deliberate or reckless breach of the rules.
- I have considered the merits in some detail so far having well in mind the principle expressed in Tinkler that the court needs to take care in relation to the merits to avoid prejudicing the outcome if permission is given. The reason I have taken this course is because in my judgment there is no strong prima facie case.
The public interest and proportionality
- CPR r31.22 is an important provision in civil justice for the reasons explained in the cases mentioned already. If there was clear evidence of a deliberate attempt to flout those rules then it might well be that it would be appropriate in the public interest to bring contempt proceedings if that had occurred. This case does not come close to that on the facts.
- If Mishcon de Reya had not offered on 10th January the undertaking which they did offer, to confirm that they would not make further use the documents disclosed for any purpose other than the proceedings in which they were disclosed, then undertakings could have been sought from the solicitors (or if refused an injunction). If those undertakings or that injunction had then been breached then contempt proceedings might be in the public interest, but that is not what has happened. As soon as the problem was raised the solicitors dealt with it in correspondence and confirmed that it would not be repeated without consent.
- Moreover, while I have found that the letter to Dr Affi was a breach, there was significant mitigation given the history of the proceedings and the fact that the documents were produced pursuant to the consent order which itself followed the Norwich Pharmacal order. As I have said the Norwich Pharmacal undertakings were not in force and they cannot be implied in to the consent order but they would remain a relevant part of the overall circumstance. The terms of the undertakings in the Norwich Pharmacal order would have permitted Mishcon de Reya to write the very letter they wrote to Dr Affi if the undertakings had still been in force at the relevant time.
- A point was suggested that there was a five week delay between the letter from Gordon Dadds on 9th December and the letter from Mishcon de Reya on 10th January. There is nothing in that point. It is true that the various deadlines both solicitors had been suggesting to each other were very short, however I am not surprised that it took that time to prepare the particulars, also bearing in mind it was the Christmas period. I do not believe there is any merit in that criticism.
- I also note that on 26th January Mishcon de Reya offered an apology. It was conditional but in this case that was not unreasonable since I have found that Mishcon de Reya were correct that the letter to Gordon Dadds was not a breach of rule 31.22 although the letter to Dr Affi was. At that time, and before me, Gordon Dadds were contending that both letters were a breach of r 31.22 and the Particulars of Claim were a ploy.
- There was also a suggestion that the lack of any further letter from Mishcon de Reya to Dr Affi was itself an aggravating factor. I disagree. It is quite clear why Mishcon de Reya had not written to Dr Affi after the original letter. They have not done so because of the complaint by Gordon Dadds, and Mishcon de Reya made that perfectly clear in correspondence.
- To permit these committal proceedings to continue would be to promote the worst kind of satellite litigation. Even if it was true that the letter to Dr Affi was a calculated flouting of rules (which is fanciful), nevertheless the solicitors' conduct afterwards makes it clear that any further proceedings in relation to that contempt would not be in the public interest. As soon as the problem was raised, the solicitors promised not to repeat the use and demonstrated why the issues were not collateral. When the matter was pressed, they apologised unreservedly. No prejudice to the Grosvenor and Whyte parties has been identified as a result of the letter to Dr Affi. None of this justifies committal proceedings. They would be costly and a major distraction.
- For these reasons I will dismiss this application.
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