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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Coll v Floreat Merchant Banking Ltd & Ors  EWHC 1741 (QB) (03 June 2014)
Cite as:  EWHC 1741 (QB),  WLR(D) 247
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| FEDERIKA COLL
|- and -
|FLOREAT MERCHANT BANKING LIMITED
SW PROPERTY GROUP LIMITED
JAMES CHARLES WILCOX
HUSSAM SHAFIQ AL-OTAIBI
|- and -
|(5) MISHCON DE REYA
(6) ADAM MORALLEE
|- and -
UK SOCIAL HOUSING SPC LIMITED
OBLIGO INVESTMENT MANAGEMENT AS
|- and -
|THE SOLICITORS REGULATORY AUTHORITY
for the Claimant and Third Parties
Jeffrey Chapman QC and David Drake (instructed by Mischcon de Reya)
for the First to Fourth Defendants (except the committal application)
Andrew Bodnar (instructed by Berwin Leighton Paisner)
for the First to Fourth Defendants (committal application only)
James Lewis QC (instructed by Robin Simon LLP)
for the Proposed Fifth and Sixth Defendants
The Intervener making written submissions but not otherwise appearing
Hearing dates: 1 and 16 May 2014
Crown Copyright ©
Mr Justice Hickinbottom :
"You will appreciate that as my PC is a personal PC rather than a company one, it contains lots of personal and sensitive information including personal photographs, bank account details both for myself and my family as well as confidential information on my close friends and family. I am sure you understand the sensitivity of the matter and the reasons why I cannot provide you with the details or give my consent to access this personal information."
"Clearly there is now a dispute between the parties as to who the Computer belongs to and unless we have your confirmation that you will return it to our client within seven days (subject to the provision of the undertakings referred to below) our client will be left with no alternative other than to issue proceedings against you and the other parties involved for the conversion of our client's property."
The letter then went on to refer to invoices and shipment documents relating to the computer, and continued:
"Clearly until the matter is resolved by the Court or agreement the Computer needs to be preserved. Accordingly please provide the following undertakings by 4pm tomorrow:
That you personally and SWP and/or Floreat by their servants, agents or otherwise will not
1. open or tamper with the Computer until agreement or further order and
2. that you will forthwith procure the delivery up of the Computer into our custody upon our undertaking to hold it and not to allow any deletion of any material contained in it pending agreement or further order.
If we do not receive the undertakings by the deadline referred to we will immediately apply for an injunction to preserve the position pending the resolution of this dispute either by agreement or proceedings…".
"Notwithstanding that your client is not entitled to any relief, our client is prepared to allow this firm to take safe keeping of the Computer pending resolution of this dispute. On any view this obviates the need for your client to seek any relief."
"The offer in… your letter is wholly inadequate as you fail to offer any undertakings to preserve the Computer, to retain it and not to open or tamper with it.
To avoid an ex parte application today please confirm and/or provide the following:
1. Confirm the Computer has not been opened, accessed or tampered with in any way. If it has then please provide full details of what steps have been taken to access the Computer and what information has been downloaded or removed from it….
2. An undertaking that your clients will deliver the Computer into the custody of Mishcon de Reya forthwith and no later than 4pm today….
3. Mishcon de Reya hereby undertakes that until agreement or order of the court, the Computer will be held within its custody and control at all times and
(a) Mishcon de Reya shall not part with possession of the Computer without agreement of the parties or the court and
(b) the Computer will not be accessed, opened or interfered with in any way whatsoever until either agreement of the parties or court order."
The letter asked for a response by noon that day, failing which (it said) an application to the court would be made.
"In relation to the undertakings requested, we confirm that: (i) our client will deliver the Computer to this firm as soon as reasonably possible and in any event by 6pm today; and (ii) that this firm will not part possession with the Computer, or allow any party to access, open or interfere with the Computer, other than by agreement of the parties or order of the court."
MMS to Mr Morallee, at 11.52:
"I note that you once again have not offered undertakings nor have you confirmed whether or not the computer has been accessed a question we have been asking for some time now.
Unless we receive properly enforceable undertakings and have an answer to the question we will have to ask for the court's assistance today.
Please may I have the undertakings that I have requested so that we can avoid an application to court at 2 o'clock."
Mr Morallee to MMS, at 12.23:
"We have given the undertakings requested at 2 and 3 of your letter notwithstanding that your client has not established title nor the type of information allegedly on the work computer. In the circumstances, our client has behaved beyond reasonably and we simply cannot understand why an application is or was necessary."
MMS to Mr Morallee, at 12.35:
"As I read your email timed 11.06 you were offering promises rather than undertakings but now that you have offered undertakings then that is acceptable, subject to you answering the question as to whether the computer has been accessed in any way. We have asked this question many times now and your client has failed to address this.
Please provide the confirmation."
Mr Morallee to MMS, at 12.40:
"Our client is under no obligation to give information to your client about what it has done, or not done, with its computer that your client used in the course of her employment only in circumstances where she cannot even begin to describe the nature of the information belonging to her that she claims is private; or to substantiate the claim to ownership (which is denied).
The undertakings have been offered, for the avoidance of doubt, without any admission that your client is entitled to any relief whatsoever in respect of the computer – which it is not."
MMS to Mr Morallee, at 13.06:
"We are greatly concerned by your equivocal response and you're quite wrong to suggest that your client is under no obligation to provide information as to what it has or has not done with information on the computer particularly as the only document that your have produced shows that the computer does not belong to SWP.
You will appreciate that if a court subsequently determines that this computer does not belong to your clients but to [the Claimant] then if your firm or your clients have accessed it then they will be liable to both civil and criminal sanctions.
It is not open to you to continue to be equivocal in these matters and we respectfully suggest that you now provide direct answers to the following direct questions. If you do not do so then we will be applying to the court for an order that your firm does so forthwith:
1. Have your clients and/or your firm in fact accessed any of the information contained on the computer?
2. If so, when and what?
3. Also if so, have any copies been made of any information contained on the computer?
In any event we seek a further undertaking by return that to the extent that any copies of any nature whatsoever have been made of any information contained on the computer, all such copies will also now be returned to/kept in safe custody of your firm and that no further attempt to access the same will be made without further agreement/order of the court."
That made clear that MMS did not consider that they had received an undertaking that Mishcon de Reya and the Defendants would not access the contents of the computer or a copy thereof: because they specifically asked for such an undertaking. Mr Morallee responded to MMS, at 14.19:
"We refer to your previous emails and letters on this matter and suggest that before you start threatening to make further applications, in order to move this dispute forward, you provide the information requested in our letter of Friday 22 November."
MMS to Mr Morallee, at 18.44:
"We do not understand the stance adopted in your email because you have conceded that undertakings are necessary to reserve the position until the dispute is resolved and yet you are refusing to state whether or not the computer has been accessed. If this has taken place, and we suspect now that it has given your client's evasive answers, then there will be little point in preserving the computer if your client is accessing all of the data on it through other means. With the greatest respect, your client's position is wholly illogical and we consider that the Court is likely to take a dim view of your offering of the undertakings in question if the reality is that your firm/your clients are accessing the material in question already."
The letter then set out details of why the Claimant claims ownership of the computer, and, by repeating the Claimant's email of 13 November, the personal information on the computer. It then concludes:
"Now that we have answered your letter we expect you to answer the questions posed in our emails of today and in particular the email times 13.06. If we do not hear from you with the information we have requested by 12 noon tomorrow then we reserve the right to make an application to court."
"… Given that you have received the undertakings as to preservation, I simply cannot understand what order you would be applying for, or what the need for urgency is which does not allow this firm proper time to respond to correspondence."
MMS replied, at 14.19:
"The urgency is because you have refused to say whether the Computer has been accessed or not. For all my clients know the information on the Computer has been copied, accessed and disseminated to all and sundry…".
"(1) The computer the subject of this claim be forthwith delivered up by the [Defendants'] solicitors to the [Claimant's] solicitors to be retained by them for safekeeping pending the speedy trial provided for below.
(2) All copies made by the [Defendants] of the contents of the computer similarly be forthwith delivered up to the [Claimant's] solicitors to be retained by them for safekeeping pending the speedy trial provided for below.
(3) To the extent that any such copies as have been made by the [Defendants] are in electronic form, such copies are forthwith to be permanently and irretrievably deleted.
(5) By 4pm on Friday 6 December 2013 the [Defendants] are each to file and serve an affidavit setting out both the dates of and nature of any and all access which they have made/has been made on their behalf to the contents of the computer and all use that has been made by them of the same."
i) The Defendants and Mishcon de Reya undertook (a) to deliver up the computer to MMS, and (b) "not to access the Claimant's personal data either on the image of the Computer… or by any other means whatsoever": "the Claimant's personal data" was defined in terms of the Claimant's email of 13 November 2013 (i.e. "personal photographs, bank account details both for myself and my family as well as confidential information on my close friends and family": see paragraph 12 above), and expressly excluded "documents and communications passing to and from [SWP]".
ii) The Claimant and MMS undertook (a) to retain the computer at MMS's offices, and (b) to access only her personal data and no Confidential Information or SWP's property as defined in the Order.
iii) Otherwise adjourned the matter to 13 December 2103, with directions for service of further evidence.
i) denied the computer belonged to the Claimant, averring that it belonged to SWP;
ii) relied upon the Claimant's contractual obligations of confidentiality, including those contained in a Non-Disclosure and Non-Circumvention Agreement;
iii) admitted that the contents of the computer had been imaged and, on inspection on 28 November, the contents were found to include evidence that the Claimant had copied over 2000 confidential files belonging to Floreat or SWP to a cloud server account, with five synchronisations, the last being on 4 November 2013; and
iv) counterclaimed for breach of the Claimant's duty of confidentiality, in copying those confidential files to the cloud account and providing confidential information to Mr Eggesbo.
The Current Applications
Application 1: The Claimant applies under CPR Rule 81.11 for permission to apply for the committal of the Defendants, including Mr Morallee and/or Mishcon de Reya whom they seek to join into the action as additional defendants for that purpose. The basis of the application is that they breached the undertakings given by Mr Morallee to MMS on 22 and 25 November 2013.
Application 2: The Claimant applies to amend her Particulars of Claim. This is closely linked to Application 1, because the main proposed changes are to bring into issue the imaging of the computer contents and subsequent searches, and to add the two additional defendants and seek an order for committal of all six defendants for contempt of court.
Application 3: The Claimants and the Third Parties, joined by the Order of Master Eastman dated 4 April 2014, apply to set aside that order.
Application 4: The Defendants apply to amend their Defence and Counterclaim, to include the allegations involving the Part 20 Third Parties.
Application 5: The Defendants apply for an expansion of the Confidentiality Club, to include individuals within the firm dealing with the claim against the Third Parties.
Application 6: The Defendants apply to amend the timetable to accommodate the Part 20 claim.
Application 7: The Claimant applies for an order that the Defendants serve a proper Electronic Documents Questionnaire ("EDQ"), on the basis that the EDQ they have served is inadequate.
Application 1: The Application for Permission to Make a Committal Application
"When one comes to look at the cases it seems that in all of them what happened was that the person to whom the undertaking was given sought from the court an order upon the solicitor to do the act which he had undertaken to do, that being an act which it was within his power to do – for example, the payment of money, the entering of an appearance, or the like. In one case the application was for committal, but that part of the application was stood over, the court making an immediate order on the solicitor to perform the undertaking. It therefore appears that in the exercise of this jurisdiction, what in practice has always been done is that the court, if the circumstances warrant it, makes an order upon the solicitor to do the act which he has undertaken to do. Then if the solicitor disobeys that order, no doubt an application for committal would follow and the order would be made.
No case was cited in which the court made an order for committal upon direct application to commit for breach of the undertaking without having first made an order to perform the undertaking. I do not say that there is no jurisdiction to make such an order, but neither counsel was able to point to a case in which such an order had been made. There is a further difficulty that the court could not, it seems to me, make an order upon a solicitor to do an act except an act which lies in his power to do."
In the event, in that case, the applicant abandoned his committal application for other relief.
i) The court's jurisdiction over solicitors is conceptually very wide, being curtailed only to the extent that legislation limits it.
ii) However, although now maintained by section 50 of the Solicitors Act, the jurisdiction is one which the High Court has taken to itself as part of its inherent powers in pursuit of its duty to supervise the conduct of solicitors as officers of the court. The court has, in practice, imposed boundaries on the exercise of its own jurisdiction.
iii) The jurisdiction has both punitive and compensatory elements. However, given that solicitors are now the subject of a comprehensive and sophisticated regulatory regime through the SRA, the jurisdiction will only usually be exercised where someone has lost out as a result of the solicitor's conduct and the court is the appropriate forum to require that loss to be put right on a summary basis. The jurisdiction is therefore primarily compensatory, although in a disciplinary context. However, whilst misconduct is necessary, simply because there has been misconduct is not sufficient for the jurisdiction to be exercised. Whether the court intervenes in a particular case is always a matter for the court's discretion.
iv) Where another forum is more appropriate than the court for the investigation of misconduct by a solicitor and the subsequent imposition of a sanction, then the court will not exercise its discretion to act against that solicitor. The SRA is appointed by Parliament to investigate and deal with allegations of misconduct by solicitors: the court will not exercise its disciplinary function over solicitors if the alleged misconduct conduct can be as, or more, appropriately dealt with by the SRA.
v) Where a solicitor has given an undertaking to the court, like anyone else, if he breaches that undertaking, he is liable to committal for contempt.
vi) However, the courts have a general power summarily to enforce any undertaking given by solicitors as solicitors. Therefore, where a solicitor has failed to perform a positive undertaking (e.g. to pay money) then usually the appropriate course will be to issue proceedings under Part 8 for an order of the court that he performs the undertaking. An appropriately speedy hearing of the Part 8 claim can be obtained, in cases that warrant such a hearing. If the application is successful, then, if the solicitor fails to comply with the resulting order, the beneficiary of the undertaking will be able to pursue committal proceedings against the solicitor.
vii) Where a solicitor is unable to comply with a positive undertaking (e.g. because it is impossible of performance), then it is open to the beneficiary of the undertaking to seek compensation for breach of undertaking. It will usually be appropriate for that too to be dealt with by way of a Part 8 claim, but by a Part 7 claim if (e.g.) there are likely to be significant disputes of fact.
viii) Where a solicitor has failed to perform a negative undertaking – an undertaking that he would not do something – then the appropriate course will be to seek an injunction (or undertaking to the court in lieu) preventing him from further non-compliance, which, if breached, will found an application to commit. It may also be appropriate to report the solicitor to the SRA for the breach of the regulations that require a solicitor to comply with undertakings he gives as a solicitor. It will not usually be appropriate to seek to commit the solicitor straightaway, because these other steps will usually be available.
ix) Furthermore, there would be considerable difficulties in the court now exercising a jurisdiction to commit a solicitor for breaching an undertaking not to the court. Such proceedings would be criminal proceedings for the purposes of article 6 of the European Convention on Human Rights. Consistent with article 7(1) of the Convention (cross-headed, "No punishment without law"), in R v Rimmington and Goldstein  UKHL 63 at , Lord Bingham, after reviewing the relevant authorities, said this:"There are two guiding principles: no one should be punished under a law unless it is sufficiently clear and certain to enable him to know what conduct is forbidden before he does it; and no one should be punished for any act which was not clearly and ascertainably punishable when the act was done."In R v Jones (Margaret)  UKHL 16, he expanded upon that, identifying:"… what has become an important democratic principle in this country: that it is for Parliament representing the people of the country in parliament, not the executive and not the judges, to decide what conduct should be treated as lying so far outside the bounds of what is acceptable in our society as to attract criminal penalties. One would need very compelling reasons for departing from that principle."Given the other procedures available, in my judgment, there will generally be no compelling reason for seeking to commit a solicitor in these circumstances. One can never say "never"; but, as presently advised, I cannot conceive of circumstances in which immediate committal proceedings would be appropriate.
x) Furthermore, such proceedings should generally in any event be discouraged, on grounds of public policy, as they may be harmful to the interests of justice by unreasonably disrupting the legal affairs of that solicitor's client, particularly if the solicitor is conducting litigation for that client. There is clear potential for tactical mischief by a party seeking to commit a solicitor, which application might require that solicitor, at least temporarily, to withdraw from acting from his client.
"(a) On 22 November 2013 Mr Morallee/Mishcon de Reya whether acting on behalf of the First-Fourth Defendants or otherwise undertook to the Claimant that they would take safe-keeping of the Computer pending resolution of this dispute. He stated that: 'On any view this obviates the need for your client to seek any relief'.
(b) On 25 November 2013 Mr Morallee/Mishcon de Reya whether acting on behalf of the First-Fourth Defendants or otherwise undertook that Mishcon de Reya would not part possession with the Computer, or allow any party to access, open or interfere with the Computer, other than by agreement of the parties or order of the Court."
"… [Mishcon de Reya] will not part possession with the Computer, or allow any party to access, open or interfere with the Computer, other than by agreement of the parties or order of the court."
He submitted that, in breach of that undertaking, Mr Morallee and the Defendants inspected the image on 28 November 2013, having been served with proceedings the previous day. Mr Quinn submitted that the true construction of those undertakings was that that they extended to data, and thus to the image of the contents of the computer: in other words, they precluded searching the image (as well as the physical computer itself), as Mishcon de Reya, Mr Al-Otaibi and Proven had done.
Application 2: The Claimant's Application to Amend Particulars of Claim
Application 3: The Application by the Claimant and Third Parties to Set Aside the Order of Master Eastman to add the Third Parties
Application 4: The Defendants' Application to Amend their Defence and Counterclaim
i) There is little overlap between the claims against the Claimant (which concern the computer and her data on it), and the claims against the Third Parties (which are wide claims concerning the whole business relationship between Mr Al-Otaibi and Mr Eggesbo over several years, including claims under the Companies Acts and for an account, in respect of which the Claimant has no interest).
ii) The trial of the Claimant's claim is set to be heard later this year: a trial window of October to December 2014 was fixed by paragraph 23 of the Order of Judge Seymour sealed on 7 February 2014. By joining in the claims against Mr Eggesbo and his companies, that claim will be delayed by 6-12 months and last, not one week, but 2-3 weeks. Furthermore, the Eggesbo claims involve matters such as partnership accounts and intellectual property claims, which will mean not only delay and additional expense, but the Claimant becoming embroiled in lengthy, time consuming and expensive Chancery Division proceedings.
iii) The Defendants are trying to evade the normal processes of pre-action disclosure and the implied undertaking as to collateral use of documents disclosed in proceedings, by relying on information obtained from the computer – Mr Quinn says, information improperly obtained.
iv) That poor conduct was compounded by the application to amend to include the Part 20 claims being made without notice, in circumstances in which the Defendants well knew that the Claimant would oppose such a move (because MMS had made that clear in correspondence).
In the event, he submits, justice requires that the claims are kept separate; and the Claimant's claim proceeds to trial with the trial date later this year being kept.
"The matters to which the court may have regard include –
(a) the connection between the additional claim and the claim made by the claimant against the defendant
(b) whether the additional claimant is seeking substantially the same remedy which some other party is claiming from him
(c) whether the additional claimant wants the court to decide any question connected with the subject-matter of the proceedings –
(i) not only between existing parties but also between existing parties and a person not already a party; or
(ii) against an existing party not only in a capacity in which he is already a party but also in some further capacity."
Application 4: The Defendants' "Confidentiality Club" Application
Application 6: The Defendants' Application to Amend the Procedural Timetable to accommodate the Part 20 claims
Application 7: The Claimant's Application for an Order in respect of the Defendants' EDQ