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England and Wales High Court (Chancery Division) Decisions
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Cite as:  1 WLR 2479,  EWHC 2900 (Ch)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (Ch D)
IN THE MATTER OF SECTION 50 OF THE SOLICITORS ACT 1974
Strand, London, WC2A 2LL
B e f o r e :
| (1) HARCUS SINCLAIR LLP
(2) HARCUS SINCLAIR UK LIMITED
|- and -
|YOUR LAWYERS LIMITED
|- and -
Richard Coleman QC, Sophie Holcombe and Philip Ahlquist (instructed by Your Lawyers Limited) for the Defendant
Hearing dates: 27th, 28th and 29th September 2017, 2nd October 2017
Crown Copyright ©
Mr Edwin Johnson QC :
Structure of this Judgment
(I) Introduction 2-8
(II) The emissions litigation 9-18
(III) Procedural history of this action and the claims in this action 19-32
(IV) The agreed issues 33-37
(V) Witnesses 38-45
(VI) Factual background-September 2015 to 10 April 2016 46-65
(VII) Factual background-Entry into the NDA 66-74
(VIII) Factual background-12 April 2016 to 27 April 2016 75-80
(IX) Factual background-The April Meeting 81-92
(X) Factual background-May 2016 to September 2016 93-126
(XI) Factual background-October 2016 to November 2016 127-159
(XII) Factual background-December to January 2017 160-171
(XIII) The relationship between the claimants 172-180
(XIV) Did sentence 2 constitute a solicitor's undertaking 181-247
(XV) What is the proper construction of sentence 2 248-326
(XVI) Did sentence 2 cease to have effect as a result of the discussion between the parties at the April meeting 327-328
(XVII) Did the defendant give express permission to the claimants to act for the group of claimants for whom they act in the emissions litigation 329-337
(XVIII) Are the claimants or either of them in breach of sentence 2 338-351
(XIX) Has the defendant lost the right to enforce sentence 2 as a result of acquiescence, waiver or estoppel 352-385
(XX) Did the first claimant use any information that was confidential to the defendant for a purpose other than provided for in sentence 1, without first obtaining the written agreement of the defendant 386-428
(XXI) What relief should be granted 429-480
(XXII) Conclusions 481-483
"2. The Recipient [the First Claimant] undertakes not to use the Confidential Information for any purpose except the Purpose, without first obtaining the written agreement of the Discloser [the Defendant]. The Recipient further undertakes not to accept instructions for or to act on behalf of any other group of Claimants in the contemplated Group Action without the express permission of the Discloser."
"1. The Discloser intends to disclose information (the Confidential Information) to the Recipient for the purpose of obtaining legal advice on behalf of Claimants in a large Group Action (the Purpose)."
(II) The Emissions Litigation
(1) An action commenced by claim form issued on 25th January 2016 (HQ16X00241). There were originally 5 individuals named as claimants in this action, who were identified in a schedule to the claim form and whom I understand to have been selected as representative claimants. The firm of solicitors on the record in this action ("the January Action"), acting for these claimants, was the Defendant. The Defendant remains on the record for these claimants in the January Action. The defendant to the January Action was named as Volkswagen Group United Kingdom Limited ("VUKL"), which I understand to have been the company, incorporated in England and Wales, which marketed Volkswagen branded vehicles for sale in the United Kingdom and supplied these vehicles to various dealerships.
(2) An action commenced by claim form issued on 19th October 2016 (HQ16X03625). There were originally 66 parties named as claimants in this action, who were identified in a schedule to the claim form. The firm of solicitors on the record in this action ("the October Action"), acting for these claimants, was originally the First Claimant. The First Claimant was replaced by the Second Claimant, as the firm of solicitors on the record for the claimants in the October Action, by a notice of change of legal representative dated 25th January 2017 and signed by Mr. Parker in his capacity as a director of the Second Claimant. The defendants to the October Action were named as Volkswagen Aktiengesellschaft (which I understand to be the parent company of the Volkswagen Group of companies), Audi Aktiengesellschaft, KODA Auto a.s., SEAT S.A., VUKL, and Volkswagen Financial Services (UK) Limited.
(1) The claimants in the October Action, jointly represented by the Second
Claimant and Slater and Gordon (UK) LLP ("S and G").
(2) The Respondents.
(3) The claimants in the January Action, represented by the Defendant.
(4) Two other firms of solicitors, Leigh Day and E. Rex Makin & Co.
"By 4pm on 14 July 2017, Your Lawyers shall file and serve a witness statement stating whether, and if so how, any dispute between Your Lawyers and Harcus Sinclair affects the making of a Group Litigation Order. By 4pm on 28 July 2017, Harcus Sinclair, if so advised, may file and serve a Witness Statement in response."
(III) Procedural history of this action and the claims in this action
"7.1 The Undertaking [Sentence 2], being one that was given by the First Claimant in their personal capacity and not in the course of their professional activities as solicitors, is not subject to the inherent summary supervisory jurisdiction of the Court; and/or
7.2 In the exercise of its discretion, having regard to the issues in dispute and the practical implications of making an order, the Court should decline to invoke its inherent summary supervisory jurisdiction to enforce the Undertaking."
(1) I will refer to the claims made by the Claimants against the Defendant in the
action as "the Claim".
(2) I will refer to the counterclaims made by the Defendant against the Claimants
and each of them in the action as "the Counterclaim".
(3) I will refer to the claims made by the Defendant against Mr. Parker in the
action as "the Additional Claim".
(IV) The agreed issues
(1) Does Sentence 2 constitute a solicitor's undertaking?
(2) What is the proper construction of Sentence 2? In particular:
(i) Does Sentence 2 preclude the Claimants (or either of them) from accepting instructions from or acting for the group of claimants for whom they act in the Emissions Litigation, or for any other group of claimants save for the Defendant's group, without the express permission of the Defendant?
(ii) Does Sentence 2 bind the Second Claimant and the Third Party (Mr. Parker) in addition to the First Claimant?
(iii) Does Sentence 2 preclude the First Claimant from procuring, facilitating or permitting the Second Claimant to do anything which, if done by the First Claimant, would amount to a breach of Sentence 2 by the First Claimant?
(3) Did Sentence 2 cease to have effect as a result of the discussions between the parties on 28 April 2016?
(4) Did the Defendant give express permission to the Claimants to act for the group of claimants for whom they act in the Emissions Litigation?
(5) Are the Claimants (or either of them) in breach of Sentence 2 by acting for the group of claimants for whom they act in the Emissions Litigation, and in the other respects alleged in paragraph 70 of the Re-Amended Defence, Counterclaim and Particulars of Defendant's Additional Claim against a Third Party?
(6) Has the Defendant lost the right to enforce Sentence 2 as a result of acquiescence, waiver, or estoppel?
(7) Did the First Claimant use any information that was confidential to the Defendant for a purpose other than that provided for in Sentence 1, without first obtaining the written agreement of the Defendant?
(8) Should the court make the declarations sought by the Claimants?
(9) Should the Court make the declarations and orders sought by the Defendant?
(1) In my order made on 15th September 2017, at the pre-trial review, I directed that issues of quantum, in relation to the Defendant's claims for damages and compensation (for alleged breach of solicitor's undertaking) should be determined separately from this trial. Accordingly such issues of quantum, if and in so far as they may arise, will require separate determination.
(2) At the conclusion of the oral closing submissions I directed that the parties should, sequentially, lodge further written submissions on two particular issues, namely whether Sentence 2 was unenforceable as being in restraint of trade, and how the Defendant put its case that information was, in breach of obligations of confidence, passed by the First Claimant to the Second Claimant. The Defendant's Note on these further points included an additional section, in which the Defendant made reference to a decision of the Court of Appeal to the effect that the Court's supervisory jurisdiction over solicitors, in respect of solicitor's undertakings, is confined to individual solicitors, and does not extend to recognised bodies, such as limited liability partnerships and companies, through which solicitors conduct their practice. The Defendant therefore accepted that the Court's jurisdiction in respect of the claim for breach of solicitor's undertaking (if Sentence 2 was a solicitor's undertaking) was limited to Mr. Parker. The Claimants' Note in response confirmed this position. The effect of this was that a substantial part of agreed issue (1) disappeared as a live issue.
(1) Gregory Fairley - a director of Capital Interchange Limited, a company which acts as a broker in the obtaining of third party finance for litigation, including group claims such as the Emissions Litigation.
(2) Nicholas Moore an employee of Therium Capital Management Limited, a company which provides third party finance for litigation, including group claims such as the Emissions Litigation.
(3) Oliver Campbell QC Leading Counsel instructed by the Claimants in the Emissions Litigation. The precise nature of the original instructions to Mr. Campbell in this matter is in issue. I return to this issue later in this Judgment.
(4) Adam Heppinstall Counsel instructed by the Claimants in the Emissions Litigation. The precise nature of the original instructions to Mr. Heppinstall in this matter is also in issue. I return to this issue later in this judgment.
(5) Desiree Maghoo a partner in Questor Consulting, a marketing and public relations firm.
(6) Mungo Park a digital marketing consultant and co-founder of blueprint.tv, a content marketing agency.
(7) Jacqueline Young a partner in S and G and the head of that firm's Group Litigation practice.
(8) David Strawson chairman of the claimant committee which has been established to manage the claims being made by the group of claimants for whom the Second Claimant and S and G now jointly act.
(1) Jonathan Whittle a chartered legal executive and senior manager of the Defendant.
(2) Thomas Goodhead Counsel instructed by the Defendant in the Emissions Litigation, on behalf of the claimants for whom the Defendant acts, including the claimants in the January Action.
(VI) Factual background September 2015 to 11th April 2016
(1) The Defendant began extensive marketing efforts to recruit potential claimants in the proposed group claim as clients, and set up a dedicated website for the purposes of signing up such clients.
(2) On 26th October 2015 the Defendant sent an initial letter before action to Volkswagen Group UK Limited and subsequently engaged in pre-action correspondence with Freshfields, solicitors for VUKL.
(5) A claim form on behalf of 5 representative claimants was issued in the Queen's Bench Division on 25th January 2016. This was the claim form by which January Action was commenced.
(6) By April 2016 the Defendant had obtained instructions from approximately 4,000 potential claimants in the proposed group claim.
(1) A Note prepared by the Defendant on the proposed group claim. The proposed group claim was referred to, on the front page of that Note ("the Defendant's Note"), as the VW Group Litigation.
(4) The letter before action dated 26th October 2015.
(5) The claim form by which the January Action had been commenced.
(6) Correspondence with Freshfields following the letter before action.
(7) The transcripts from the proceedings in the United States.
(8) Wikipedia information relating to the Emissions Events.
(VII) Factual background Entry into the NDA
"You like NDAs, I feel. Could you bear to look?"
"Signed version and tracked change version. I have made a number of minor changes including: changing the date, adding one definition, amending the signature blocks for the LLP and adding a counter-parts clause along with some minor formatting to accommodate these changes. I hope they will not be controversial."
(1) Mr. Parker signed the NDA without reading the NDA or giving it any thought.
(2) Ms. Morrissey read and considered the NDA and, subject to her minor revisions, (i) regarded the NDA as an agreement which it was acceptable for the First Claimant to enter into, and (ii) regarded the restrictions in the NDA as restrictions to which it was acceptable for the First Claimant to become subject.
(3) At the time when the NDA was entered into, both Mr. Parker and Ms. Morrissey were familiar with the concept of non-disclosure agreements, and understood and accepted their use by firms of solicitors seeking external advice and assistance in respect of contemplated group actions.
(VIII) Factual background 11th April 2016 to 27th April 2016
(1) It was an agreement for two firms of solicitors to work together on what was defined in the draft as "the Claim".
(2) The two firms would be working together to combine their strengths with a view to ensuring the optimum result for the combined Claimant group; see recital (3) of the draft agreement.
(3) Each firm would have its own clients. This was clear from the wording of a number of clauses in the draft agreement.
"Proposed collaboration between Your Lawyers & Harcus Sinclair and outline framework for that"
(IX) Factual background The April Meeting
(1) The basis on which the April Meeting took place, and the basis on which the parties thereafter proceeded was that the parties would be working towards agreeing the terms of a written collaboration agreement, in whatever terms were developed and agreed from the first draft of such a collaboration agreement produced by Mr. Parker.
(2) Following the April Meeting, an informal process of collaboration commenced. Pending the signing of such a written collaboration agreement, neither the Defendant nor the First Claimant was legally committed to this process of informal collaboration which followed the April Meeting. Pending such a written collaboration agreement, either party was free to walk away from the informal collaboration process at any time.
(3) Neither Mr. Johal nor Mr. Parker addressed their minds, either at the April Meeting or thereafter, as to what would happen if the terms of a written collaboration agreement could not be agreed, and one or both parties walked away from the informal process of collaboration which followed the April Meeting. There was a very good reason for this. Mr. Johal assumed that he had the protection of the NDA, so that if the process of collaboration ended without agreement on the terms of a written collaboration agreement, the Defendant would be protected by the NDA from competition in the proposed group claim from the First Claimant. On his side, Mr. Parker's assumption, which was confirmed in his oral evidence, was that he and the First Claimant would be free to strike out on their own or in collaboration with another firm or firms, in terms of acting for their own group of claimants in the proposed group claim. Mr. Parker held this assumption not because of anything which passed at the April Meeting, or because of anything said to him by Mr. Johal or any other representative of the Defendant. Mr. Parker held this assumption because he had not read the NDA, and was thus in ignorance of the restriction in Sentence 2, and of the other restrictions in the NDA.
(4) Nothing occurred at the April Meeting which had the effect of releasing the First Claimant from its obligations in Sentence 2, or indeed from any part of the NDA. Nor was anything agreed between the parties, at the April Meeting, which could have functioned as any kind of release from Sentence 2, or from any other part of the NDA.
(X) Factual background May 2016 to September 2016
"I want to kick on with this and the Fairley/Johal Dream Team are holding it up. Alternatively I can put it to the committee on the basis that HS alone is acting and Greg/Aman can fight over the 5% introducer fee when we win!"
"Like it. Would that I could bring myself to. Aman has just sent something through that he has spoken to me about but I have not read. Shall we discuss a response when you have seen it."
"We should say that we are in contact with and are now working with Your Lawyers Limited ("Your Lawyers") and have seen the correspondence between your two firms. Together with Your Lawyers, we act (as opposed to being in receipt of expressions of interest) for approximately 5,000 potential claimants."
"You have asked about our "actual status". We act directly for those claimants on whose behalf we have identified ourselves as acting. As we are instructed by others, we will from time to time identify them to you instead of writing separate letters of claim. We act for Your Lawyers' clients through Your Lawyers, having been instructed by them to correspond with you on their behalf."
(1) During this period the informal process of collaboration between the First Claimant and the Defendant in respect of the proposed group claim continued, pending agreement on the terms of a binding collaboration agreement.
(2) It might seem odd that the First Claimant should commit such substantial legal resources (its own and those of counsel instructed by the First Claimant) without a formal collaboration agreement in place. I find that there were two reasons for this. First, it is in the nature of group claims that a good deal of initial investment may be required, in putting the claim together and getting it off the ground. Whether that initial investment can then be recovered, depends upon what happens thereafter in relation to the group claim. Second, Mr. Parker explained to me in his oral evidence that, if funding could be achieved from Therium, it would cover the initial expenditure [1/65:16-20].
(3) Negotiations over the terms of a binding collaboration agreement continued during this period, but without agreement being reached.
(4) By late August 2016 Mr. Parker was aware that there was a diminishing prospect of Therium agreeing to fund the proposed group claim with the Defendant in a prominent role, and without the First Claimant in a leading role. Mr. Parker did not share this information with the Defendant.
(5) There was no discussion between the parties as to what would happen if the parties failed to agree on the terms of a binding collaboration agreement. Mr. Johal assumed that he would have the protection of the NDA in this event. Mr. Parker, in continuing ignorance of the restrictions in the NDA, assumed that he and the First Claimant would be free to act for their own group of claimants in the proposed group claim, if they so chose.
(6) The Defendant was made aware, in each case after the event, of the retention of the First Claimant and/or the Second Claimant by Ms. Gabrel and Mr. and Mrs Parkes as clients of the First Claimant and/or the Second Claimant. The Defendant acquiesced in this on the basis that it was accepted by the Defendant to be part of the informal process of collaboration which was continuing between the Defendant and the First Claimant, and was part of the working up of the Defendant's case in the proposed group claim, which was intended to be pursued in collaboration with the First Claimant, if the terms of a binding collaboration agreement could be agreed.
(7) By the end of September 2016 Mr. Parker had begun to form, without the knowledge of the Defendant, his own group of claimants, separate from the Defendant's group of claimants. This group of claimants was separate to those clients, namely Ms. Gabrel and Mr. and Mrs Parkes, of whom the Defendant was aware and to whom the Defendant had not objected. The solicitors acting for these claimants were the First Claimant. Whether, in some cases the Second Claimant was also acting for these claimants, by virtue of having sent out the relevant letter of retainer, is a question I come to in the next section of this Judgment.
(8) As at the end of September 2016 Mr. Parker had not given up on the prospect of collaboration with the Defendant, and the informal process of collaboration was continuing.
(XI) Factual background October 2016 to November 2016
"1. An arrangement whereby Your Lawyers instructed this firm to conduct correspondence on its behalf would not be at all confusing, or indeed unusual in the context of group litigation with more than one firm of solicitors acting for claimants. Nevertheless, in order to avoid controversy, this letter is sent on our clients' behalf only.
2. We enclose a schedule of clients on behalf of whom this letter is sent."
(1) Mr. Parker was subjected to considerable criticism by Mr. Coleman for concealing (to use Mr. Coleman's expression) his dealings with S and G from the Defendant. I find that those dealings were not disclosed to the Defendant by Mr. Parker. The information which was given by Mr. Parker to the Defendant, to the effect that he had met with S and G, did not, I find, amount to disclosure of those dealings. Indeed it was not until January 2017, as I shall describe in the next section of this Judgment, that the Defendant learnt of the collaboration agreement between the Second Claimant and S and G. I do not however find that this non-disclosure constituted deliberate deception on the part of the Mr. Parker. I find that the explanation for this non-disclosure was as follows. First, Mr. Parker had not read the NDA and thus remained unaware of the restrictions in the NDA. In any event, those restrictions did not prevent Mr. Parker having discussions with S and G, provided that the obligations of confidentiality in the NDA were observed. Second, in October and November 2016 the informal process of collaboration between the Defendant and the First Claimant, while faltering, had not been treated as abandoned by either party, in their dealings with each other, and had not finally been abandoned by either party. In these circumstances I can understand that Mr. Parker, as a matter of professional courtesy, felt some embarrassment in having to tell Mr. Johal that he was in fact engaged in collaboration negotiations with another firm of solicitors. I find that this was the second reason for Mr. Parker's failure to disclose to the Defendant his dealings with S and G.
(2) During this period the informal process of collaboration between the First Claimant and the Defendant in respect of the proposed group claim, pending agreement on the terms of a binding collaboration agreement, was faltering, but was not treated as abandoned by either party, in their dealings with each other, and had not finally been abandoned by either party. Nor had the parties, in their dealings with each other, formally given up on the prospect of collaboration. Mr. Parker, by virtue of his dealings with S and G, would have known that this was a remote prospect, but he did not communicate that knowledge to the Defendant.
(3) Negotiations over the terms of a binding collaboration agreement were not formally abandoned during this period, but were treated as continuing.
(4) There continued to be no discussion between the parties as to what would happen if the parties failed to agree on the terms of a binding collaboration agreement. Mr. Johal assumed that he would have the protection of the NDA in this event. Mr. Parker, in continuing ignorance of the restrictions in the NDA, assumed that he and the First Claimant and/or the Second Claimant would be free to act for their own group of claimants in the proposed group claim, in collaboration with S and G, if they so chose.
(XII) Factual background December 2016 to January 2017
(1) The dispute which broke out in January 2017 marked the effective end of the informal process of collaboration which had commenced following the April Meeting, although neither Mr. Johal nor Mr. Parker formally abandoned the prospect of collaboration.
(2) It was not until the exchanges of 6th and 7th January 2017 that the parties addressed, as between each other, the question of what the legal position was between themselves, in the absence of agreement on a formal collaboration agreement and in circumstances where the informal process of collaboration was at an effective end and the First Claimant was acting, with S and G, for its own group of claimants.
(XIII) The relationship between the Claimants
(XIV) Did Sentence 2 constitute a solicitor's undert aking?
(1) The First Claimant gave the undertaking on its own behalf, and not on behalf of a client. An undertaking cannot be a solicitor's undertaking, unless it is given in connection with a transaction involving a client.
(2) Even if this was wrong, the undertaking was not given by the First Claimant in the course of the First Claimant acting as a solicitor, but in connection with the pursuit of a business opportunity. As such, it could not have taken effect as a solicitor's undertaking.
"46 I am quite satisfied that the Court's supervisory jurisdiction does not extend to anyone or any body who or which (a) is not a solicitor, (b) does not act as one, and (c) does not pretend to be one for the simple reason that anyone in that category is not, and does not purport to be, an officer of the Court. The Court's jurisdiction arises in respect of its officers. That it does so is confirmed by section 50 of the 1974 Act which provides:
"(1) Any person duly admitted as a solicitor shall be an officer of the Senior Courts;
(2) Subject to the provisions of this Act, the High Court, the Crown Court and the Court of Appeal respectively, or any division or judge of those courts, may exercise the same jurisdiction in respect of solicitors as any one of the superior courts of law or equity from which the Senior Courts were constituted might have exercised immediately before the passing of the Supreme Court of Judicature Act 1873 in respect of any solicitor, attorney or proctor admitted to practise there."
47 A corporate body recognised under section 9 of the 1985 Act may provide legal services entirely lawfully. But it does not, on that account, become an officer of the Court and thereby subject to the supervisory jurisdiction. Noticeably neither the 1985 Act nor the LSA 2007 makes any provision for the exercise of the Court's jurisdiction in respect of solicitors to be extended to non-solicitors although section 14(4) of the LSA 2007 does extend the contempt of court jurisdiction to those who offend against section 14(1) . Recognised legal bodies may, of course, have members who are solicitors, in respect of whom the court will have jurisdiction; but that will not apply to a body such as MWP a BVI company itself."
"In my judgment the true position is as follows. There are three ways in which a party who seeks to enforce a professional undertaking given by a solicitor can proceed:
(1) By an action at law, if there is a cause of action.
(2) By an application to the court to exercise its inherent supervisory jurisdiction.
(3) By an application to the Law Society. In The Professional Conduct of Solicitors (The Law Society, 1986) it is stated in Paragraph 15.02:
"A solicitor who fails to honour the terms of a professional undertaking is prima facie guilty of professional misconduct. Consequently the Council will require its implementation as a matter of conduct."
"(2) Subject to the provisions of this Act, the High Court, the Crown Court and the Court of Appeal respectively, or any division or judge of those courts, may exercise the same jurisdiction in respect of solicitors as any one of the superior courts of law or equity from which the Senior Courts were constituted might have exercised immediately before the passing of the Supreme Court of Judicature Act 1873 in respect of any solicitor, attorney or proctor admitted to practise there."
"This court has from time immemorial exercised a summary jurisdiction over solicitors. They are officers of the court and are answerable to the court for anything that goes wrong in the execution of their office. Even if the solicitor has been guilty of no fault personally, but it is the fault of his clerk, he is accountable for it: see Myers v Elman  AC 282. This jurisdiction extends so far that if a solicitor gives an undertaking in his capacity as a solicitor the court may order him straightaway to perform his undertaking. It need not be an undertaking to the court. Nor need it be given in connection with legal proceedings. It may be a simple undertaking to pay money, provided always that it is given 'in his capacity as a solicitor': see United Mining & Finance Corporation Ltd v Becher  2 KB 296, 307 by Hamilton J."
"This was not the common case of an undertaking given to the court in which any default is akin to a contempt and naturally attracts the remedy of attachment and committal. The undertaking in question here was not given to the court. It was not even given in the course of litigation. There is clear authority, however, from the earliest days that a solicitor, being an officer of the court, is liable to attachment for a breach of an undertaking - even though the undertaking is not given to the court itself. But the first requirement of the exercise of that jurisdiction, as Lord Denning MR has pointed out, is that the undertaking in question must have been given by the solicitor in the course of his activities as a solicitor. It must be given by him professionally as a solicitor and not in his personal capacity. The reason for that is clear enough, because a remedy of this kind is intended primarily to discipline the officers of the court, to ensure the honesty of those officers. The court is thus concerned only with their activities as solicitors, and anything done by a solicitor in his private capacity is outside this jurisdiction."
"The first question in the present case is whether the solicitor gave the undertaking "in his capacity as a solicitor." This is difficult to define. But I think it will usually be found, in regard to money, that it is an undertaking to pay money which he has in his hands on trust, or on an undertaking that he will apply it in a particular way. Thus if a solicitor is acting for a client on the sale of land and gives an undertaking to a bank that he will pay over so much of the money, when received, to the bank, the undertaking is given 'in his capacity as solicitor': see In re A Solicitor (Lincoln)  1 WLR 1604. So also, if a solicitor gives an undertaking that he will hold a sum of money in his hands pending the conclusion of negotiations, that too is given in his capacity as a solicitor, as in United Mining and Finance Corporation Ltd v Becher  2 KB 296. But this case is very different from either of those cases. The solicitor here was not holding money in his hands at all. All that happened was that Mr. Batts received money and paid it over to a client, Mr. Izzet, and promised to repay it to Mr. Silver. It was an undertaking to repay money lent. That is all. It was at good interest too, 2 per cent, a month. The money may have been for the benefit of a client. But that does not matter. It was in truth nothing more nor less than an undertaking to repay money lent. That is not an undertaking 'in his capacity as a solicitor'."
"On its face it is simply an undertaking to repay a debt which is being contracted by the solicitor in question. If a solicitor borrows money personally and incurs a personal obligation in that regard, his promise to pay the money is not a promise in his capacity as a solicitor, even though he sits in his office when he receives the money and even though he acknowledges the debt on his professionally headed notepaper. Another possible view of this particular case is that this was in truth the giving of a guarantee by a solicitor for a debt incurred by his client. But looking at it in that way it seems to me to make no difference. Here again one cannot describe this as an act done in the capacity of a solicitor merely because a client of the partnership was involved in the transaction. "
"The evidence establishes that two requirements must be fulfilled before an undertaking is held to be within a solicitor's ordinary authority. First, in the case of an undertaking to pay money, a fund to draw upon must be in the hands of, or under the control of, the firm; or at any rate there must be a reasonable expectation that it will come into the firm's hands. Solicitors are not in business to pledge their own credit on behalf of clients unless they are fairly confident that money will be available so that they can reimburse themselves. Secondly, the actual or expected fund must come into their hands in the course of some ulterior transaction which is itself the sort of work that solicitors undertake. It is not the ordinary business of solicitors to receive money or a promise from their client, in order that without more they can give an undertaking to a third party. Some other service must be involved."
"Whatever that expression may mean, I think it must at least go as far as this, that when a solicitor, in the course of business which he is conducting for clients with third parties in the way of his profession, gives an undertaking to those third parties incidental to those negotiations, that undertaking is one which is given in his capacity as solicitor and not as a mere layman undertaking the office of stakeholder or guaranteeing the payment of money. It seems to me that the part which solicitors are nowadays known to play in elaborate negotiations, which constantly have to be embodied at various stages in legal forms of a highly technical character, constantly involves for the purpose of facilitating the business, the giving of subsidiary undertakings largely because they are solicitors and deemed therefore, and found to be, especially worthy of trust."
"The essential requirement is that the undertaking should have been given by the solicitor in his capacity as a solicitor since that is the element which attracts the supervisory jurisdiction of the court. The mere fact that the giver of the undertaking happens to be a solicitor is not enough. The undertaking must therefore be given as part of or in connection with a transaction or activity which is "solicitorial" "
"It is part of the usual or normal course of the business of a solicitor to be in possession or receipt of funds of or for a client in the course of handling a substantial transaction for that client. On the other hand it is not part of the usual or normal business of a solicitor either to receive money or a promise from a client in order that without more they can give an undertaking to a third party, or to give guarantees for the debt incurred by a client."
means a statement, given orally or in writing, whether or not it includes the word "undertake" or "undertaking", made by or on behalf of you or your firm, in the course of practice, or by you outside the course of practice but as a solicitor or REL [Regulated European Lawyer], to someone who reasonably places reliance on it, that you or your firm will do something or cause something to be done, or refrain from doing something."
(XV) What is the proper construction of Sentence 2?
(i) The arguments
"As set out in section D of Harcus Sinclair's skeleton argument, on its proper construction, Sentence 2: (1) was confined to Harcus Sinclair LLP, (2) was confined to the group action that was contemplated in the information in respect of which confidence was to be preserved, which Your Lawyers intended to disclose to Harcus Sinclair LLP in anticipation of discussions between them about a possible collaboration; (3) did not preclude Harcus Sinclair LLP from representing clients of their own; and (4) governed the position only until the parties agreed to collaborate."
(1) First, there is the question of whether the Second Claimant is itself bound by the restriction in Sentence 2, as a matter of contract. The answer to that point seems clear to me. The Second Claimant was not a party to the NDA. It has a separate legal personality and, in the course of the trial, Mr. Coleman accepted (realistically) that this was not a case where I could pierce the corporate veil, so as to treat the Claimants as the same party. As a matter of contract I cannot see how the Second Claimant is itself bound by the restriction in Sentence 2. As I have previously mentioned, this was accepted by Mr. Coleman in closing submissions.
(2) This leaves Mr. Coleman with what I understood to be two arguments, so far as the enforceability of the NDA against the Second Claimant is concerned.
(3) The first of these arguments is that the First Claimant was not, either by itself or Mr. Parker, entitled to act in a way which prevented performance of the obligation in Sentence 2. As such, as I understand the argument, the Defendant is entitled to relief, in respect of the breach of Sentence 2, which extends to the Second Claimant. This seems to me to be an argument which is better dealt with when I come, in a later section of this Judgment, to consider the question of breach of Sentence 2.
(4) The second of these arguments, which I should consider in this section of the Judgment, is that the NDA was subject to an implied term. The formulation of this implied term was put in the following terms in the Defendant's (also very helpful) Note on the Oral Evidence submitted as part of the Defendant's closing submissions.
"The implied term could be formulated in a number of ways, but its essence is that the First Claimant undertakes that the Second Claimant will not do anything that, if done by the First Claimant, would be a breach of the undertakings in the NDA."
(5) The Claimants' case is that the legal requirements for the implication of such a term come nowhere near being satisfied.
(1) In view of the expedited nature of the trial, and the large amount of preparation work which the parties were required to carry out in a short space of time, I took the view, both in the pre-trial hearings and at the trial itself, that a certain amount of flexibility should be exercised in the making of case management decisions.
(2) The restraint of trade point (ie. the point that Sentence 2 was, on the Defendant's construction, unenforceable as being in restraint of trade) was indirectly foreshadowed in paragraph 30 of Mr. Beresford's witness statement, which was ordered to stand as part of the Particulars of Claim in this action, and also in paragraphs 61-63 of the Claimants' Skeleton Argument for trial, where it was contended that the restraint of trade point was relevant as an aid to construction of Sentence 2.
(3) Given the quantity of evidence which I had heard and read, I took the view that the restraint of trade point was essentially a matter for argument, and did not raise unexplored factual issues.
(4) I took the view that any prejudice caused to the Defendant by the late introduction of this point could be met by giving the Defendant permission to lodge a separate written submission on this point, with permission for the Claimant to respond, also in writing. I gave directions to this effect at the conclusion of the trial hearing.
(5) My original object, in directing an expedited trial, was to secure a swift resolution of this dispute. It seemed to me to be unsatisfactory to make a decision in this dispute whilst leaving a potentially critical point undecided.
(ii) What do the words of Sentence 2 mean?
"21 The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other."
"As set out in section D of Harcus Sinclair's skeleton argument, on its proper construction, Sentence 2: (1) was confined to Harcus Sinclair LLP, (2) was confined to the group action that was contemplated in the information in respect of which confidence was to be preserved, which Your Lawyers intended to disclose to Harcus Sinclair LLP in anticipation of discussions between them about a possible collaboration; (3) did not preclude Harcus Sinclair LLP from representing clients of their own; and (4) governed the position only until the parties agreed to collaborate."
(iii) Can a term be implied into the NDA?
"16. There have, of course, been many judicial observations as to the nature of the requirements which have to be satisfied before a term can be implied into a detailed commercial contract. They include three classic statements, which have been frequently quoted in law books and judgments. In The Moorcock (1889) 14 PD 64 , 68, Bowen LJ observed that in all the cases where a term had been implied, "it will be found that the law is raising an implication from the presumed intention of the parties with the object of giving the transaction such efficacy as both parties must have intended that at all events it should have". In Reigate v Union Manufacturing Co (Ramsbottom) Ltd  1 KB 592, 605, Scrutton LJ said that "[a] term can only be implied if it is necessary in the business sense to give efficacy to the contract". He added that a term would only be implied if "it is such a term that it can confidently be said that if at the time the contract was being negotiated" the parties had been asked what would happen in a certain event, they would both have replied "'Of course, so and so will happen; we did not trouble to say that; it is too clear'". And in Shirlaw v Southern Foundries (1926) Ltd  2 KB 206 , 227, MacKinnon LJ observed that, "[p]rima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying". Reflecting what Scrutton LJ had said 20 years earlier, MacKinnon LJ also famously added that a term would only be implied "if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common 'Oh, of course!'".
17. Support for the notion that a term will only be implied if it satisfies the test of business necessity is to be found in a number of observations made in the House of Lords. Notable examples included Lord Pearson (with whom Lord Guest and Lord Diplock agreed) in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board  1 WLR 601 , 609, and Lord Wilberforce, Lord Cross, Lord Salmon and Lord Edmund-Davies in Liverpool City Council v Irwin  AC 239 , 254, 258, 262 and 266 respectively. More recently, the test of "necessary to give business efficacy" to the contract in issue was mentioned by Lady Hale in Geys at para 55 and by Lord Carnwath in Arnold v Britton  2 WLR 1593 , para 112.
18. In the Privy Council case of BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 52 ALJR 20 , 26, Lord Simon (speaking for the majority, which included Viscount Dilhorne and Lord Keith) said that:
"[F]or a term to be implied, the following conditions (which may overlap) must be satisfied:
(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
19. In Philips Electronique Grand Public SA v British Sky Broadcasting Ltd  EMLR 472 , 481, Sir Thomas Bingham MR set out Lord Simon's formulation, and described it as a summary which "distil[led] the essence of much learning on implied terms" but whose "simplicity could be almost misleading". Sir Thomas then explained that it was "difficult to infer with confidence what the parties must have intended when they have entered into a lengthy and carefully- drafted contract but have omitted to make provision for the matter in issue", because "it may well be doubtful whether the omission was the result of the parties' oversight or of their deliberate decision", or indeed the parties might suspect that "they are unlikely to agree on what is to happen in a certain eventuality" and "may well choose to leave the matter uncovered in their contract in the hope that the eventuality will not occur". Sir Thomas went on to say this at p 482:
"The question of whether a term should be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the court comes to the task of implication with the benefit of hindsight, and it is tempting for the court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting, but wrong. [He then quoted the observations of Scrutton LJ in Reigate , and continued] [I]t is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred "
20 Sir Thomas's approach in Philips was consistent with his reasoning, as Bingham LJ in the earlier case The APJ Priti  2 Lloyd's Rep 37, 42, where he rejected the argument that a warranty, to the effect that the port declared was prospectively safe, could be implied into a voyage charter-party. His reasons for rejecting the implication were "because the omission of an express warranty may well have been deliberate, because such an implied term is not necessary for the business efficacy of the charter and because such an implied term would at best lie uneasily beside the express terms of the charter"."
"21 In my judgment, the judicial observations so far considered represent a clear, consistent and principled approach. It could be dangerous to reformulate the principles, but I would add six comments on the summary given by Lord Simon in BP Refinery as extended by Sir Thomas Bingham in Philips and exemplified in The APJ Priti . First, in Equitable Life Assurance Society v Hyman  1 AC 408, 459, Lord Steyn rightly observed that the implication of a term was "not critically dependent on proof of an actual intention of the parties" when negotiating the contract. If one approaches the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting. Secondly, a term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term. However, and thirdly, it is questionable whether Lord Simon's first requirement, reasonableness and equitableness, will usually, if ever, add anything: if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable. Fourthly, as Lord Hoffmann I think suggested in Attorney General of Belize v Belize Telecom Ltd  1 WLR 1988, para 27, although Lord Simon's requirements are otherwise cumulative, I would accept that business necessity and obviousness, his second and third requirements, can be alternatives in the sense that only one of them needs to be satisfied, although I suspect that in practice it would be a rare case where only one of those two requirements would be satisfied. Fifthly, if one approaches the issue by reference to the officious bystander, it is "vital to formulate the question to be posed by [him] with the utmost care", to quote from Lewison, The Interpretation of Contracts 5th ed (2011), para 6.09. Sixthly, necessity for business efficacy involves a value judgment. It is rightly common ground on this appeal that the test is not one of "absolute necessity", not least because the necessity is judged by reference to business efficacy. It may well be that a more helpful way of putting Lord Simon's second requirement is, as suggested by Lord Sumption in argument, that a term can only be implied if, without the term, the contract would lack commercial or practical coherence."
(iv) Was Sentence 2 unenforceable as being in restraint of trade?
"A contract in restraint of trade is one in which a party (the covenantor) agrees with any other party (the covenantee) to restrict his liberty in the future to carry on trade with other parties not parties to the contract in such manner as he chooses."
"Finally, were Sentence 2 to be construed as governing the position only until the parties agreed to collaborate (rather than for the 6 year period specified in clause 7), that again would involve a narrower and more reasonable restriction, which would more obviously protect Your Lawyers' perceived interest. By contrast, a restriction preventing Harcus Sinclair from ever having an involvement in litigation arising out of the emissions scandal self-evidently goes well beyond the reasonable protection of that interest."
"It is one thing for a clause to prevent an intermediary from being cut out of a deal which it is arranging pursuant to a request from its customer, thereby depriving it of its opportunity to earn commission. It is something else again for a clause in effect to give CGCF an exclusive status in a transaction for which it does not even have a mandate."
"For one thing a solicitor is always (except to some extent in legal aid cases) entitled to refuse to act for a particular person, and it is difficult to see any reason why he should not be entitled to bind himself bycontract not to act in future for a particular group on persons."
(v) The construction issues summary of conclusions
(1) Sentence 2 precludes the First Claimant from accepting instructions from or acting for the group of claimants for whom the First Claimant has acted in the Emissions Litigation (the HS Group), or for any other group of claimants in the Emissions Litigation save for the Defendant's group, without the express permission of the Defendant.
(2) The NDA is subject to the Implied Term.
(3) The restriction in Sentence 2 is not unenforceable as being in restraint of trade.
(4) Sentence 2 does not bind the Second Claimant as a matter of contract. In stating this conclusion I leave open the question of whether any relief is available against the Second Claimant, if and in so far as there has been a breach of Sentence 2 on the part of the First Claimant.
(5) It is common ground that Sentence 2 does not bind Mr. Parker, as a matter of contract.
(6) By virtue of the Implied Term, the First Claimant undertakes that the Second Claimant will not do anything that, if done by the First Claimant, would be a breach of the undertakings in the NDA. The First Claimant is therefore precluded from procuring, facilitating or permitting the Second Claimant to do anything which, if done by the First Claimant, would amount to a breach of Sentence 2 by the First Claimant.
(XVI) Did Sentence 2 cease to have effect as a result of the discussion between the parties at the April Meeting?
(1) The NDA and the restrictions contained therein were not discussed or considered at the April Meeting.
(2) No agreement was reached between the parties, as a result of the discussion between the parties at the April Meeting, which either had any effect upon the restrictions in the NDA, or was capable of having any effect upon the restrictions in the NDA.
(XVII) Did the Defendant give express permission to the Claimants to act for the group of claimants for whom they act in the Emissions Litigation?
(XVIII) Are the Claimants or either of them in breach of Sentence 2?
(1) The First Claimant has been (since 29th September 2016) and remains in breach of Sentence 2, and has been (since at least 25th January 2017) and remains in breach of the Implied Term.
(2) I leave open, for determination at the quantum hearing, the question of whether the breach of the Implied Term and one of the breaches of Sentence 2 which I have found commenced earlier than 25th January 2017.
(2) The Second Claimant is not, itself, in breach of Sentence 2 because it is not directly bound by the restriction in Sentence 2.
(XIX) Has the Defendant lost the right to enforce Sentence 2 as a result of acquiescence, waiver or estoppel?
"The plaintiffs rely in the alternative on estoppel by convention and estoppel by acquiescence to defeat the applicability of the bar created by section 34. A general review of the requirement of these estoppels is not necessary. It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: K. Lokumal & Sons (London) Ltd. v. Lotte Shipping Co. Pte. Ltd.  2 Lloyd's Rep. 28 ; Norwegian American Cruises A/S v. Paul Mundy Ltd.  2 Lloyd's Rep. 343 ; Treitel, The Law of Contract , 9th ed. (1995), pp. 112-113. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention."
"That brings me to estoppel by acquiescence. The parties were agreed that the test for the existence of this kind of estoppel is to be found in the dissenting speech of Lord Wilberforce in Moorgate Mercantile Co. Ltd. v. Twitchings  A.C. 890. Lord Wilberforce said, at p. 903, that the question is:
"whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the 'acquirer' of the property, would expect the 'owner' acting honestly and responsibly, if he claimed any title in the property, to take steps to make that claim known . . ."
Making due allowance for the proprietary context in which Lord Wilberforce spoke, the observation is helpful as indicating the general principle underlying estoppel by acquiescence."
"85 I am more than content to adopt Lord Justice Carnwath's solution in terms of estoppel by convention. However, I also consider that the same solution can be found in the doctrine of promissory estoppel, and is supported by a duty to speak. This should not perhaps come as a surprise since what we are concerned with is an estoppel which alters the effect of a contract by preventing a party from making an assertion or claim contrary to a position adopted mutually between its parties. Although a shared assumption may be lacking from many situations, a representation which is relied upon to the detriment of the representee includes many of the critical aspects of the doctrine of estoppel by convention. Moreover, in a situation in which it is plain that, internally, ING did not share the assumption concerning transaction costs which externally and objectively , it affected and purported to share, there is, to my mind, good sense in considering the matter through the eyes of an estoppel by representation."
"100 As for the representation in question, I have dealt with this above. It seems to me that the agreement on 4 million necessarily meant that ING's fee would not be charged at a rate which involved the use of EBITDA 2006. On any view, that was sufficiently certain, for otherwise ING's fee alone would have exceeded 7 million. I agree with Carnwath LJ that, when the terms of a representation can be found, its meaning and effect is for the court, even though it is possible to argue about that, as in the case of so many a contractual provision. The requirement of sufficient certainty, or, as is often said of representations in general, that they should be clear and unequivocal, is that the corpus of the representation should partake of that requirement. Here the parties were agreed, or appeared to each other to be, that the estimate of 4 million covered all the transactional costs. It does not matter whether that agreement was intended to be precise or approximate, conservative or otherwise: it could not accommodate what ING intended to charge, what ING was entitled to charge under the contract as I would construe it. It was necessarily inconsistent with ING's construction (and, as it turns out, albeit not in the opinion of the judge, what is in my judgment the true construction). That was sufficient for present purposes. Mr Phillips was constrained to accept in the course of argument that the agreed figure was inconsistent with ING invoicing and recovering its 7.3 million figure (Day 3.35)."
(1) Estoppel by convention requires communications to pass across the line (which I understand to mean between the relevant parties), but such communication can be effected by conduct of one party, known to the other.
(2) The true meaning, or content of the relevant assumption is to be determined by the Court.
(3) The relevant assumption or understanding can relate to future events; see Carnwath LJ in ING Bank at [64(i)].
(4) The relevant assumption or understanding is not precluded from arising because the case is one where the parties have forgotten the relevant contractual rights; see Blindley Health Investments Ltd v Bass  EWCA Civ 1023, where Hildyard J. said this, at .
"79 It may be that most cases of estoppel by convention arise from a mistake made by the parties or a mistake made by one party and acquiesced in by the other. But the authorities do not suggest that the principle is confined to cases of mistake. Moreover, a mistaken recollection is not, to our minds, legally different from a state of forgetfulness. The essence of the principle is that the parties have conducted themselves on a conventional basis which is, wittingly or unwittingly, different from the true basis. Whether the true state of things has been misappreciated, misremembered or forgotten should make no difference to whether the parties have in the event mutually adopted a common assumption."
(5) Depending upon the facts of the case, a so called duty to speak can arise, on the part of the party who subsequently seeks to enforce the contractual rights which are said to be the subject of the relevant assumption or understanding which founds the estoppel in respect of those contractual rights. As Blair J. explained, in Starbev GP v Interview Central European Holdings BV  EWHC 1311 (Comm) at -, the duty arises in the following circumstances.
"128 A duty to speak may arise where the relationship between the parties is one of good faith, as in the insurance context, or by way of a contractual term, express or implied. Neither of these is relied on by Starbev. It relies on authority which shows that a duty to speak may also arise where, having regard to the situation in which the transaction occurred as known to both parties, a reasonable person would expect the other party, acting honestly and responsibly, if he had a claim, to take steps to make that claim known. The reasonable person for these purposes is a person in the position of the party who seeks to rely on the estoppel. This is the test in the dissenting speech of Lord Wilberforce in Moorgate Mercantile , as cited in The Indian Endurance , and effectively approved in Ros Roca (ibid, at , and -).
129 In such a case, the duty to speak arises because "a reasonable man would expect the person against whom the estoppel is raised, acting honestly and responsibly, to bring the true facts to the attention of the other party known by him to be under a mistake as to their respective rights and obligations" (The Lutetian  2 Lloyd's Rep 140 , 157, Bingham J; Ros Roca , ibid, at -, Rix LJ)."
(6) In the case of an estoppel by convention, at least, detrimental reliance is not necessarily required before it can become unjust or unconscionable for one party to resile from the relevant assumption or understanding. This was explained by Akenhead J. in the following terms, in Mears v Shoreline Housing Partnership Limited  EWHC 1396, at [51(d)].
"(d) A key element of an effective estoppel by convention will be unconscionability or unjustness on the part of the person said to be estopped to assert the true legal or factual position. I am not convinced that "detrimental reliance" represents an exhaustive or limiting requirement of estoppel by convention although it will almost invariably be the case that where there is detrimental reliance by the party claiming the benefit of the convention it will be unconscionable and unjust on the other party to seek to go behind the convention. In my view, it is enough that the party claiming benefit of the convention has been materially influenced by the convention; in that context, Goff J at first instance in the Texas Bank case described that this is what is needed and Lord Denning talks in these terms."
"Throughout the period from mid-2016 to the start of 2017, Harcus Sinclair were patently proceeding on the assumption that there was nothing to prevent them from acting for their own clients in the VW Litigation. In other words, Harcus Sinclair conducted their affairs on the basis that they were entitled to recruit for and act on behalf of their own clients in the VW Litigation."
(1) A shared assumption between the parties, in their dealings together during the relevant period, that the Claimants or either of them would be free to act for their own group of claimants in the proposed group claim, in the absence of a collaboration agreement between the parties and without the express permission of the Defendant.
(2) Circumstances in which, having regard to the dealings between the parties, a reasonable man in the position of Mr. Parker would have expected Mr. Johal, acting honestly and responsibly, to point out to Mr. Parker that the Claimants were not free to act for their own group of claimants in the proposed group claim, in the absence of a collaboration agreement between the parties and without the express permission of the Defendant.
(XX) Did the First Claimant use any information that was confidential to the Defendant for a purpose other than provided for in Sentence 1, without first obtaining the written agreement of the Defendant?
"I start with one sentence in the judgment of Lord Greene M.R. in Saltman Engineering Co. v. Campbell Engineering Co . 2 :
"If a defendant is proved to have used confidential information, directly or indirectly obtained from the plaintiff, without the consent, express or implied, of the plaintiff, he will be guilty of an infringement of the plaintiff's rights."
To this I add a sentence from the judgment of Roxburgh J. in Terrapin Ltd. v. Builders' Supply Co. (Hayes) Ltd.3 which was quoted and adopted as correct by Roskill J. in Cranleigh Precision Engineering Ltd. v. Bryant 4 :
"As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a spring-board for activities detrimental to the person who made the confidential communication, and spring-board it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public."
The law on this subject does not depend on any implied contract. It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it to the prejudice of him who gave it without obtaining his consent."
"I think that I shall not be stating the principle wrongly if I say this with regard to the use of confidential information. The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, it must not be something which is public property and public knowledge. On the other hand, it is perfectly possible to have a confidential document, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker upon materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process.
What the Defendants did in this case was to dispense in certain material respects with the necessity of going through the process which had been gone through in compiling these drawings, and thereby to save themselves a great deal of labour and calculation and careful draughtsmanship. No doubt, if they had taken the finished article, namely the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence."
(1) The carrying out of this exercise involves the consideration of acutely sensitive material. In my view it is not desirable, or necessary to set out the details of the exercise itself in this Judgment.
redacted] The critical question seems to me to be whether the information in the Confidential Documents, or any of it did or did not act as a springboard for the case now being pursued on behalf of the HS Group.
(1) Did the First Claimant pass the Confidential Documents to any other party, in breach of its non-contractual duty of confidence? In my view the simple passing of the Confidential Documents to a third party, as opposed to their use, would not have constituted a breach of the user restriction in Sentence 1.
(2) Has the Second Claimant made use of the information in the Confidential Documents in breach of a non-contractual duty of confidence which it owed to the Defendant, or in such a manner as to place the First Claimant in breach of the Implied Term?
(1) The letter of retainer to Ms. Gabrel, dated 2nd June 2017, was sent by the Second Claimant.
(2) The letter of claim on behalf of the Parkes was sent by the Second Claimant, on 1st September 2016.
(3) The letter of 27th September 2017, which explains the relationship between the Claimants and the circumstances of the transfer of the conduct of the claim on behalf of the HS Group, and the attachments to that letter demonstrate that, as early as late August 2016, the Claimants were considering whether the proposed group claim should be conducted by the Second Claimant. Those considerations continued thereafter and, as the letter explains, the decision to transfer conduct had effectively been taken by 25th November 2016.
(1) The First Claimant did not breach the user restriction in Sentence 1.
(2) The Second Claimant did not breach the user restriction in Sentence 1, and could not have done so because it was not bound by the NDA.
(3) The First Claimant breached its non-contractual duty of confidence in (i) providing Mr. Goodhead's third draft Particulars of Claim to S and G on 9th November 2016, and (ii) providing, at least from June 2016, the information in the Confidential Documents to the Second Claimant.
(4) The Second Claimant has not breached its non-contractual duty of confidence; not having made use of the confidential information provided to it in breach of confidence by the First Claimant. The Second Claimant has not made use of the Confidential Documents in such a way as to place the First Claimant in breach of the Implied Term.
(XXI) What relief should be granted?
(1) It has been established that the undertaking in Sentence 2 is not subject to the supervisory jurisdiction of the Court, although not for the reason identified in paragraph 7.1 of the Claimants' Details of Claim. Subject to receiving submissions from the parties on the question of what declarations I should make, it seems to me to be sensible that there should be a declaration that the undertaking in Sentence 2, as an undertaking given by the First Claimant and not (as I have found) by Mr. Parker in his personal capacity, is not subject to the supervisory jurisdiction of the Court.
(2) So far as the claim for a declaration in paragraph 7.2 of the Claimants' Details of Claim is concerned, this seems to me to have become redundant by the trial date. If the supervisory jurisdiction had been available, as against the First Claimant and/or Mr. Parker, there could have been no objection to its exercise following the full Part 7 trial which has taken place.
(1) At the hearing before me on 24th August 2017, written Outline Submissions on behalf of the Claimants were put before me, prepared by Mr. Phillips QC, the leading counsel who represented the Claimants at that hearing. In paragraph 10(2) of those submissions it was stated that if the Court was to decide that Sentence 2 was a solicitor's undertaking, and if the Court was to decide that it should direct that Harcus Sinclair should cease acting, then Harcus Sinclair would be in a position to go to its clients, inform them of what had happened, and cease acting once alternative representation had been found.
(2) Such alternative, or more accurately existing representation is available. In paragraph 13 of her witness statement Ms. Young confirmed that S and G were "fully willing and able to continue acting for our joint clients [the HS Group] alone", although I should add that Ms. Young also made it very clear, in the same paragraph, that she did not believe this to be in the best interests of the HS Group. This was confirmed by Ms. Young's oral evidence, in which she confirmed that if Harcus Sinclair were prevented from acting, S and G would continue to act in the best interests of their clients (the HS Group) in compliance with SRA principle 4 and SRA principle 5 [2/364:11-365:7].
(3) I have seen two recent letters from the Second Claimant. The first is dated 6th September 2017 and was sent to the Defendant. The second is dated 11th September 2017 and was sent to Freshfields. Both letters were written in connection with the GLO Application. In the first letter the Second Claimant made it quite clear that if it was prevented from acting, it would be perfectly possible for S and G to act alone. The points were made that S and G had the requisite experience and expertise to pursue the claims, and that third party funding would still be available. The letter to Freshfields said much the same thing.
(4) I have seen joint terms of business of the Second Claimant and S and G, relating to the terms and conditions on which the two firms would be acting for their joint clients (the claimants in the HS Group). Those joint terms of business contain provisions which make it clear that the Second Claimant could stop acting for a client at any time.
"My Lords, if there had been a negative covenant, I apprehend, according to well-settled practice, a Court of Equity would have had no discretion to exercise. If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injuryit is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves."
"33 The crucial section of the judge's judgment begins with a recitation of paragraphs 21-051 and 21052 of Treitel on the Law of Contract (12th edition, 2007). The judge accepted these paragraphs as accurate and he derived the following four propositions from them:
"1. First, where there is a negative stipulation, breach may be restrained by injunction, as a matter of course, to restrain future breaches. It applies only to prohibitory injunctions; and that is this case.
2. Secondly, the balance of convenience test applies to applications for interim injunctions, except where there is a clear or uncontested breach of a covenant not to do a particular thing. In my judgment, that also applies here.
3. Third, where the granting of the injunction amounts in substance to a final determination at the interim stage, the court will take into account the strengths and weaknesses of the respective cases, and the likelihood of the claimant's eventual success at trial. I interpolate that is in effect something I have already done, in examining Mr Fallon's evidence.
4. Fourth, this is all subject to discretion, an injunction being an equitable remedy. Although, I emphasise the basic rule that an injunction in the circumstances described will be normally granted as a matter of course. But injunctive relief may be refused if it is oppressive to the defendant or cause him particular hardship, although it would not be oppressive merely because burdensome or little prejudice to the claimant."
"39 I would therefore accept the judge's formulation of the four relevant principles, subject to one qualification which emerges from authorities not cited to the judge. Where the defendant is proposing to act in clear breach of a negative covenant, in other words to do something which he has promised not to do, there must be special circumstances (e.g. restraint of trade contrary to public policy) before the court will exercise its discretion to refuse an injunction."
"42 I shall use the phrase "adequate remedy" as that is a convenient shorthand. Nevertheless, as is pointed out in chapter 27 of Chitty on Contracts (30th edition, 2008), that phrase is not entirely appropriate. The real question is whether it is just in all the circumstances that the claimant should be confined to his remedy in damages."
"70 So the question becomes whether the injunction should be granted following a trial. There were two reasons relied upon by the judge why it should not. First, he considered that damages would be an adequate remedy. However, that is not generally a relevant consideration when the injunction restrains the breach of a negative covenant. The court is by granting the injunction simply enforcing what the parties have agreed: see the discussion in Chitty on Contracts, 30th Edition, para 27-060. Exceptionally an injunction may be refused if it would be oppressive to the defendant to grant it, but it can hardly be said to be oppressive to prevent Mr Fallon from acting in cynical disregard of the obligations he has voluntarily undertaken."
(1) The undertaking in Sentence 2 did take effect as a solicitor's undertaking given by the First Claimant. As the supervisory jurisdiction of the Court is agreed not to be available against the First Claimant, this conclusion does not assist the Defendant, as against the First Claimant. It follows that the claim for compensation against the First Claimant, pursuant to the Court's supervisory jurisdiction, falls away.
(2) The undertaking in Sentence 2 did not take effect as a solicitor's undertaking given by the Second Claimant, independent of the point that the supervisory jurisdiction of the Court would not have been available against the Second Claimant in any event.
(3) So far as Mr. Parker is concerned, the supervisory jurisdiction of the Court is not available against Mr. Parker, in his personal capacity, in respect of what I have found to be the solicitor's undertaking in Sentence 2. The reason for this is that Mr. Parker gave the undertaking in Sentence 2 expressly on behalf of the First Claimant. It follows that the claim for compensation against Mr. Parker, pursuant to the Court's supervisory jurisdiction, falls away.
(4) My conclusions on the construction issues, including the particular issues identified in the relevant section of the agreed list of issues, are as follows.
(i) Sentence 2 precludes the First Claimant from accepting instructions from or acting for the group of claimants for whom the First Claimant has acted in the Emissions Litigation (the HS Group), or for any other group of claimants in the Emissions Litigation save for the Defendant's group, without the express permission of the Defendant.
(ii) The NDA is subject to the Implied Term.
(iii) The restriction in Sentence 2 is not unenforceable as being in restraint of trade.
(iv) Sentence 2 does not bind the Second Claimant as a matter of contract.
(v) It is common ground that Sentence 2 does not bind Mr. Parker, as a matter of contract.
(vi) By virtue of the Implied Term, the First Claimant undertakes that the Second Claimant will not do anything that, if done by the First Claimant, would be a breach of the undertakings in the NDA. The First Claimant is therefore precluded from procuring, facilitating or permitting the Second Claimant to do anything which, if done by the First Claimant, would amount to a breach of Sentence 2 by the First Claimant.
(5) Sentence 2 did not cease to have effect as a result of the discussion between the parties at the April Meeting.
(6) The Defendant did not give express permission to the Claimants, or either of them, to act for the group of claimants for whom they act in the Emissions Litigation (the HS Group). No such permission can be deemed to have been given.
(7) In terms of breach, and subject to the questions which I have left open for determination at the quantum hearing, my conclusions are as follows.
(i) The First Claimant has been and remains in breach of Sentence 2 and in breach of the Implied Term.
(ii) The Second Claimant is not, itself, in breach of Sentence 2 or the Implied Term because it is not directly bound by the restriction in Sentence 2 or by the Implied Term.
(8) The Defendant has not lost the right to enforce Sentence 2, or the Implied Term, or any other restriction in the NDA, as a result of acquiescence, waiver or estoppel.
(9) In relation to the claims for breach of confidence my conclusions are as follows.
(i) The First Claimant did not breach the user restriction in Sentence 1.
(ii) The Second Claimant did not breach the user restriction in Sentence 1, and could not have done so because it was not bound by the NDA.
(iii) The First Claimant breached its non-contractual duty of confidence in (i) providing Mr. Goodhead's third draft Particulars of Claim to S and G on 9th November 2016, and (ii) providing, at least from June 2016, the information in the Confidential Documents to the Second Claimant.
(iv) The Second Claimant has not breached its non-contractual duty of confidence; not having made use of the confidential information provided to it in breach of confidence by the First Claimant. The Second Claimant has not made use of the Confidential Documents in such a way as to place the First Claimant in breach of the Implied Term.
(10) The Defendant is entitled to the grant of injunctive relief, (i) requiring the First Claimant to cease acting, by its members and employees, for the HS Group in the Emissions Litigation, and (ii) requiring the First Claimant to procure that the Second Claimant cease acting for the HS Group in the Emissions Litigation, and (iii) ensuring compliance with the restrictions in Sentence 2 and the Implied Term for the future. Such injunctive relief should run for the period of six years specified in the NDA. The precise terms of the required order or orders, if they cannot be agreed, are a matter on which I will hear the parties.
(1) The Claim succeeds, to a limited extent.
(i) It has been established that the undertaking in Sentence 2 is not subject to the supervisory jurisdiction of the Court, although not for the reason identified in paragraph 7.1 of the Claimants' Details of Claim.
(ii) So far as the claim for a declaration in paragraph 7.2 of the Claimants' Details of Claim is concerned, this seems to me to have become redundant by the trial date. If the supervisory jurisdiction had been available, as against the First Claimant and/or Mr. Parker, there could have been no objection to its exercise following the full Part 7 trial which has taken place.
(2) The Counterclaim succeeds in the following respects.
(i) The Defendant has established that the First Claimant was, and remains in breach of Sentence 2 and in breach of the Implied Term.
(ii) The Defendant has established a right to the grant of an appropriate order or orders to restrain these breaches.
(iii) The Defendant has established the right to damages in respect of these breaches, for the period during which these breaches have continued, if and in so far as such damages can be proved at a quantum hearing.
(iv) The Defendant has established breaches of the non-contractual duty of confidence owed to the Defendant by the First Claimant, in that the First Claimant provided confidential information, in breach of this duty, to Ms. Young of S and G and to the Second Claimant. In theory, there is a right to financial relief in respect of these breaches of confidence. Given that I have not found any misuse of confidential information, but only the wrongful provision of confidential information to S and G and the Second Claimant, I do not know whether any loss, or unauthorised profit could be demonstrated in respect of these breaches. I do not decide this point. This will be a matter for the quantum hearing.
(v) So far as the grant of injunctive relief, in respect of the breach of confidence claim, is concerned, the Defendant has established that it is entitled to be granted the injunctive relief sought in respect of the breach of confidence claim. That entitlement derives however principally from the breaches of Sentence 2 and the Implied Term which the Defendant has established, in respect of which the same injunctive relief has been sought.
(3) The Additional Claim fails, and falls to be dismissed.