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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> McKillen v Misland (Cyprus) Investments Ltd & Ors  EWHC 1158 (Ch) (26 April 2012)
Cite as:  EWHC 1158 (Ch)
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IN THE MATTER OF COROIN LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
The Rolls Building
7 Rolls Building
London EC4A 1NL
B e f o r e :
| PATRICK McKILLEN
|- and -
|(1) MISLAND (CYPRUS) INVESTMENTS LIMITED
(A company registered in Cyprus)
(2) DEREK QUINLAN
(3) ELLERMAN CORPORATION LIMITED
(a company registered in Jersey)
(4) B OVERSEAS LIMITED
(a company registered in the British Virgin Islands)
(5) RICHARD FABER
(6) MICHAEL SEAL
(7) RIGEL MOWATT
(8) COROIN LIMITED
AND Claim No. HC 11 C03437
PATRICK GERARD MCKILLEN
|- and -
|(1) SIR DAVID ROWAT BARCLAY
(2) SIR FREDERICK HUGH BARCLAY
(3) MISLAND (CYPRUS) INVESTMENTS LIMITED
(4) ELLERMAN CORPORATION LIMITED
(5) B OVERSEAS LIMITED
(6) MAYBOURNE FINANCE LIMITED
(7) THE TRUSTEES OF THE SIR DAVID AND SIR FREDERICK BARCLAY FAMILY SETTLEMENTS
(8) RICHARD FABER
(9) MICHAEL SEAL
(10) RIGEL MOWATT
(11) NATIONAL ASSET LOAN MANAGEMENT LIMITED
1st Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.
Telephone No: 020 7067 2900. Fax No: 020 7831 6864)
MR. STEPHEN AULD QC, MR. MICHAEL FEALY and MR. MICHAEL d'ARCY (instructed by Messrs. Quinn Emanuel Urquhart & Sullivan LLP)
appeared for Derek Quinlan.
MR. KENNETH MACLEAN QC and MISS EMMA JONES (instructed by Messrs. Weil, Gotshal & Manges) appeared for Misland (Cyprus) Investments Limited, Ellerman Corporation Limited, B. Overseas Limited and Maybourne Finance Limited.
MR. JOE SMOUHA QC and MR. EDWARD DAVIES (instructed by Messrs. Ashurst LLP) appeared for Richard Faber, Michael Seal and Rigel Mowatt.
LORD GRABINER QC and MR. EDMUND NOURSE (instructed by Messrs. Weil, Gotshal & Manges) appeared for Sir David Barclay and Sir Frederick Barclay.
MR. WILLIAM WILLSON (instructed by Messrs. Hogan Lovells International LLP) appeared for National Asset Loan Management Limited.
MS. VICTORIA JOLLIFFE appeared for the publishers of The Times, The Guardian, The Financial Times, The Irish Times and The Irish Independent, instructed by their respective legal departments.
Crown Copyright ©
MR. JUSTICE DAVID RICHARDS :
"(1) whether the petitioner will assert he did have discussions or would have had discussions with any particular third parties or, if not, particular kinds of third parties for funding; (2) if so, the identities of third parties or kinds of third parties; (3) in any case, what amount of funding he would have sought at the relevant times; (4) what, if any, security he would have offered in return for such funding; (5) the terms that he would have been prepared to agree and, in particular, what interest and other fees he would have been prepared and able to pay in order to obtain such funding."
"21. I turn then to the balance of the disclosure application relating to the financial circumstances of Mr. McKillen. Its relevance appears clear to me. It is not Mr. McKillen's case that he would have raised non-recourse finance, in which event his personal circumstances might be of little interest to prospective lenders. Mr. Cunningham is clear in his evidence that discussions proceeded on the basis of a personal loan to Mr. McKillen. In fact a proposal by one possible lender for a loan to a special purpose vehicle was specifically rejected. In those circumstances it is to be expected that prospective lenders would be concerned to assess Mr. McKillen's ability to service the loan, pay the fees and repay the principal. They would be likely to be concerned to assess the risk of bankruptcy.
22. Mr. Marshall relied on the evidence given by Mr. Cunningham, especially paragraph 58 of his witness statement where he says:
'In all of my discussions with the above-mentioned lenders, none have ever made any enquiry into Mr. McKillen's ability to service the loan being sought or in carrying out due diligence on Mr. McKillen personally. Most did or do want to undertake some due diligence on the Company. They are perfectly comfortable with Mr. McKillen as a proposed Debtor.'
23. Mr. Cunningham may be right in this, but the respondents are not required to accept it at face value, particularly as none of the lenders is being called to give evidence. In my judgment, the categories of documents sought in the application fall within the requirement for standard disclosure under CPR 31.6 having regard to the case being run by Mr. McKillen."
"33. Thirdly, Mr. McKillen is concerned about the commercial confidentiality of his negotiations with prospective lenders and of his own financial position. He is particularly concerned because the Barclay Interests have had discussions with Mr. McKillen's own bankers seeking to purchase from them their loans to Mr. McKillen and there is evidence that they have been seeking to obtain confidential information about him and his finances.
34. I think Mr. McKillen is entitled to have concerns in this respect. The information and documents provided by Mr. McKillen must be subject to a confidentiality regime restricting access to those documents to the parties' solicitors and counsel and preventing any disclosure to their clients or others without the consent of either Mr. McKillen or the court.
35. I can envisage that it may be thought appropriate to instruct an accountancy or other expert in relation to the disclosure provided. In that event application can be made for a relaxation of the confidentiality regime, but subject of course to the expert himself being subject to confidentiality undertakings. Whether that is necessary or not, I know not, but I indicate the sort of relaxation which might be permitted.
36. In due course consideration will have to be given to the protection of confidentiality during the trial. I think it premature to make directions about that at this stage. But I envisage that there may well need to be a regime in relation to it.
37. Confidentiality regimes of this sort are unusual in litigation of this type, but are fairly common in other areas of litigation, in particular certain types of intellectual property litigation."
For those reasons, paragraph 5 of the order provides that:
"The confidential information shall only be disclosed to the relevant advisers and any permitted persons. The relevant advisers and any permitted persons shall keep the confidential information confidential and shall not disclose it to any other party otherwise than in accordance with subsequent order of the court."
"Confidential information" is defined so as to refer to the documents and materials to be disclosed by Mr. McKillen, and the "relevant advisers" are the solicitors and counsel identified in a schedule to the order and any others subsequently added by order of the court.
"10. There are certain features of a common law trial which are fundamental to our system of justice (both criminal and civil). First, subject to certain established and limited exceptions, trials should be conducted and judgments given in public. The importance of the open justice principle has been emphasised many times: see, for example, R v Sussex Justices, Ex p McCarthy  1 KB 256, at p 259, per Lord Hewart CJ, Attorney General v Leveller Magazine Ltd  AC 440, at pp 449H-450B, per Lord Diplock, and recently R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No. 2) (Guardian News and Media Ltd intervening,  QB 218, paras 38-39, per Lord Judge CJ.
11. The open justice principle is not a mere procedure rule. It is a fundamental common law principle. In Scott v Scott  AC 417, Lord Shaw of Dunfermline (p 476) criticised the decision of the lower court to hold a hearing in camera as 'as constituting a violation of that publicity in the administration of justice which is one of the surest guarantees of our liberties, and an attack upon the very foundations of public and private security.' Lord Haldane LC (p 438) said that any judge faced with a demand to depart from the general rule must treat the question 'as one of principle, and as turning, not on convenience, but on necessity'.
12. Secondly, trials are conducted on the basis of the principle of natural justice. There are a number of strands to this. A party has a right to know the case against him and evidence on which it is based. He is entitled to have the opportunity to respond to any such evidence and to any submissions made by the other side. The other side may not advance contentions or adduce evidence of which he is kept in ignorance."
"Where, as here, the basis for any claimed restriction on publication ultimately rests on a judicial assessment, it is therefore essential that (a) the judge is first satisfied that the facts and circumstances of the case are sufficiently strong to justify encroaching on the open justice rule by restricting the extent to which the proceedings can be reported, and (b) if so, the judge ensures that the restrictions on publication are fashioned so as to satisfy the need for the encroachment in a way which minimises the extent of any restrictions."
"Similarly, where the whole object of the proceedings is to protect a commercial interest, full disclosure may not be possible if it would render the proceedings futile. This problem occurs in intellectual property proceedings. It is commonplace to deal with the issue of disclosure by establishing 'confidentiality rings' of persons who may see certain confidential material which is withheld from one or more of the parties to the litigation at least in its initial stages. Such claims by their very nature raise special problems which require exceptional solutions. I am not aware of a case in which a court has approved a trial of such a case proceeding in circumstances where one party was denied access to evidence which was being relied on at the trial by the other party."
"If, however, the case were one of so esoterically technical a character that even with the help of his expert advisers the party himself could really form no view of his own upon the matter in question but would be bound to act merely upon advice on the technical aspects, disclosure to him of the facts underlining the advice might serve little or no useful purpose. In such a case a court might well be justified in directing disclosure of allegedly secret material only to expert or professional agents of the party seeking discovery on terms they should not, without further order, pass on any information so obtained to the party himself or anyone else, but should merely advise him in the light of the information so obtained. Even so, if the action were to go to trial, it would seem that sooner or later the party would be bound to learn the facts, unintelligible though they might be to him, unless the very exceptional course were taken of excluding him from part of the hearing. Even where the information is of a kind the significance of which the party would himself be able to understand, it may nevertheless be just to exclude him, at any rate during the interlocutory stages of the action, from knowing it if he is a trade competitor of his opponent."
"Each case has to be decided on its own facts and the broad principle must be that the court has the task of deciding how justice can be achieved taking into account the rights and needs of the parties. The object to be achieved is that the applicant should have as full a degree of disclosure as will be consistent with adequate protection of the secret. In so doing, the court will be careful not to expose a party to any unnecessary risk of its trade secrets leaking to or being used by competitors. What is necessary or unnecessary will depend upon the nature of the secret, the position of the parties and the extent of the disclosure ordered. However, it would be exceptional to prevent a party from access to information which would play a substantial part in the case as such would mean that the party would be unable to hear a substantial part of the case, would be unable to understand the reasons for the advice given to him and, in some cases, the reasons for the judgment. Thus what disclosure is necessary entails not only practical matters arising in the conduct of the case but also the general position that a party should know the case he has to meet, should hear matters given in evidence and understand the reasons for the judgment."
"In the course of argument yesterday afternoon it was explained that neither the current patent Judges nor Lord Justice had any experience of any case in which a party had been excluded from access to evidence at the trial. That being the position, it would appear that the first course proposed in relation to the confidentiality club on this application would be unprecedented. In these circumstances Mr. McKillen does not seek to pursue that course and instead only asks the court to accede to his alternative proposal, based on the precedent of cases such as Roussel Uclaf v ICI and Warner-Lambert v Glaxo Laboratories: (1) that the confidentiality club should be expanded to include a limited number of client's representatives and that they should be provided with the materials relied on for the case against them and (2) in any event, whatever materials they are permitted access to should be on the basis of undertakings to prevent misuse as described in the submissions set out in yesterday's transcript at page 140, line 20 to page 141, line 22."
"Spoke to BoSI regarding their loans to PMcK. They believe they can't sell them to us without his permission. However they told me that they would do the work for us and are planning to demand repayment and put him on default. Good news. They have promised to keep us posted."
Nothing seems to have come of this approach either.
"As we discussed and wish to reiterate, NAMA will not engage in any communications with respect to a NAMA related person with a third party."
"Mr. McKillen's secured lending includes lending over his residential properties which may be a potential target for a commercial strategy from the Barclay interests so as to put pressure on Mr. McKillen."
"30. Information as to a private citizen's earnings and income is private. Where that information concerns profit distributions made by the partners of a commercial law firm in a competitive market for legal services may be understood also to be commercially sensitive [sic].
31. The information which would identify profit distributions received by individual partners and the firm's profit from client fees is not otherwise available to the public, the firm's competitors, the firm's clients or the firm's employees."
"I am a property investor with a long-term hold business model designed to create and sustain income from extremely well managed prime office, retail and hotel investments. I have established a pension style property portfolio over 35 years of hard work and carefully planned and executed business strategies. I have enjoyed strong healthy professional and trusted banking and business relationships with banking and business individuals and institutions over this period."
"In short each case must be decided on its own facts and the judge was correct to say, as he did at paragraph 42, that without entering into a preliminary enquiry as to whether any particular piece of information should be allocated a business or personal characterisation, the question to ask in relation to each of the categories individually was whether there was a reasonable expectation of privacy."