Alexis Maitland Hudson v Solicitors Regulation Authority
| Jurisdiction | England & Wales |
| Judge | Chief Master Marsh |
| Judgment Date | 23 May 2017 |
| Neutral Citation | [2017] EWHC 1249 (Ch) |
| Docket Number | Case No: HC-2016-003210 |
| Court | Chancery Division |
| Date | 23 May 2017 |
[2017] EWHC 1249 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Chief Master Marsh
Case No: HC-2016-003210
Jonathan Cohen QC (instructed by Rylatt Chubb LLP) for the Claimant
Edward Levey (instructed by Bevan Brittan LLP) for the Defendant
Hearing dates: 3 rd April 2017
Judgment Approved
Mr Maitland Hudson, who is the claimant, was a member with Mr Peter Dempsey ("Mr Dempsey") of a firm of solicitors named Maitland Hudson & Co LLP ("the Firm"). Mr Dempsey was a member of the Firm from August 2009 until 8 July 2013. He was the firm's Money Laundering Reporting Officer and a Compliance Officer for Finance and Administration ("MLRO" and "COFA"). Prior to his resignation from the Firm, Mr Dempsey became concerned about the manner in which Mr Maitland Hudson was conducting his practice and on about 8 th July 2013 he removed from the Firm and handed to the defendant, the Solicitors Regulation Authority ("SRA") two hard disc drives ("the Drives") and two lever arch files of hard copy documents ("the Documents").
Mr Dempsey's actions led to a claim being instigated against him by Mr Maitland Hudson and the Firm issued on 24 th March 2014. For convenience, I will refer to those proceedings as the "Dempsey Claim". Mr Maitland Hudson instituted this claim against the SRA on 9 th November 2016. He does so on his own account and as assignee of the Firm, which went into creditors voluntary liquidation on 31 st March 2016.
The SRA has not yet served a defence. On 6 th January 2017 the SRA issued an application under CPR 24.2 on the basis that Mr Maitland Hudson has no real prospect of succeeding the whole or a part of the claim and there is no other compelling reason why the claim should be disposed of at a trial. The application for summary judgment is made purely on legal grounds. The SRA says that Mr Maitland Hudson has no real prospect of establishing in relation to any of the three causes of action he relies upon that the alleged breach of duty by the SRA has caused recoverable loss. For the purposes of the application, the SRA accepts the facts as pleaded in the Particulars of Claim. The issue for the court is whether the claim as pleaded gives rise to a viable cause of action, one out of the three will suffice to defeat the application, or whether there is any other compelling reason why this claim should be tried.
The Claim
For the purposes of the application the SRA accepts that the Drives and the Documents were the property of the Firm and that they both incorporated a substantial amount of confidential information belonging to Mr Maitland Hudson and the Firm.
On 1 st April 2014 Lewis Silkin LLP, solicitors acting for Mr Dempsey, wrote to the SRA. They reported that the Dempsey Claim had been commenced and asserted that the proceedings were part of an attempt by Mr Maitland Hudson to gag Mr Dempsey. They requested the SRA to provide them with the Drives and the Documents to assist them in preparing a defence to the claim. Pursuant to that request, the SRA handed over the Drives and the Documents to Lewis Silkin.
Mr Maitland Hudson's case in these proceedings is that the handing over of the Drives and the Documents was a breach of duty by the SRA, an assertion the SRA does not dispute for the purposes of the application, in the following ways:
(1) it amounted to a wrongful interference with the Firm's goods within a meaning of section 1 of the Torts (Interference with Goods) Act 1977 (the claim in conversion).
(2) The SRA breached an equitable duty owed to Mr Maitland Hudson and the Firm not to allow anyone other than Mr Maitland Hudson and the Firm to have access to the confidential information save in furtherance of the SRA's investigative objectives.
(3) The SRA was in breach of a tortious duty to take reasonable care to preserve the confidentiality of the confidential information.
Paragraphs 13 and 14 of the Particulars of Claim put Mr Maitland Hudson's case in the following way:
"13. Discovery by [Mr Maitland Hudson] and [the Firm] that [Mr Dempsey] had obtained possession of the drives and the documents from the SRA caused them to make an interim application for delivery up, which application was successful ("the Application"). The Application would not have been required if the SRA had not acted in breach of duty as alleged herein.
14. As a result [Mr Maitland Hudson] seeks the unrecovered costs of the Application plus interest at such rate and for such period as the court may order."
Two points of note arise from the way in which Mr Maitland Hudson's case is put forward. First, it is alleged the discovery that Mr Dempsey had possession of the Drives and the Documents caused Mr Maitland Hudson and the Firm to make an interim application for delivery up. It is not in dispute that Mr Maitland Hudson is able to establish a causal link between the SRA returning the Drives and Documents to Mr Dempsey and the Application being made. In the strict sense, but for their release by the SRA, the Application would not have been made. The SRA, however, says that "but for" causation does not suffice. Secondly, Mr Maitland Hudson's claim for loss is limited to the unrecovered costs of the Application. He does not seek to recover the costs of the claim as such, or any part of the claim other than the costs of the Application.
At the hearing of the SRA's Part 24 Application there was a very wide-ranging review of the authorities relating to causation in respect of the three causes of action Mr Maitland Hudson relies upon. However, before dealing with those authorities it is necessary to review the core facts of the Dempsey Claim.
The Dempsey Claim
The Dempsey Claim was based upon access by Mr Dempsey to two email accounts. Firstly, an email account used by Mr Maitland Hudson in relation to his practice in Paris under the name Cabinet Maitland Hudson. Secondly, the Firm maintained a personal computer server and email servers for the provision of services to clients. Mr Maitland Hudson's case was that both email accounts were private and both contained client information which was privileged. The claim was based, inter alia, upon breach of confidence, tortious misuse of confidential and private information, conversion and breach of database rights.
Mr Maitland Hudson did not accept an assurance provided by Mr Dempsey's solicitors on 5 th July 2013 that he would deliver up all documents belonging to the LLP and alleged that Mr Dempsey had continued to retain copies of some of the private information. In the claim, Mr Maitland Hudson sought, inter alia, delivery up and destruction, injunctions and damages.
On 7 th May 2014 Warren J heard an application made by Mr Maitland Hudson and the Firm. The Application sought an order that Mr Dempsey should return what is described in the application notice as "the Documents" (otherwise the Drives and the Documents) to Rylatt Chubb, the claimant's solicitors, to be held by them to the order of the court. They also sought an order that Mr Dempsey must instruct his legal representatives not to read any of the Documents. The Application was opposed by Mr Dempsey in part on the basis that he needed the Documents to complete his witness statement in opposition to the application and for that purpose sought an adjournment. It is clear from Warren J's judgment he considered Mr Dempsey's position was misguided and that it was open to Mr Dempsey to apply to obtain the Documents using the provisions of the CPR and also to use his own memory for preparing his witness statement. An order was made to hold the position pending a full hearing of the Application and directions were given permitting Mr Dempsey to serve evidence. An order requiring Mr Dempsey to return the Documents was not made on this occasion. There was, however, an order that Mr Dempsey must not read or use any of the material. The claimants' costs of the Application were reserved to the adjourned hearing, save that Mr Dempsey was ordered to pay the costs of the hearing on 7 th May and ordered to make a payment on account of those costs. It is plain the judge considered the hearing on 7 th May 2014 to have been unnecessary. In other words, Mr Dempsey should have acceded to a request that he should not read or use any of the disputed material.
Prior to the adjourned hearing, the SRA applied to be joined as a party to the claim. The application then came before Mann J on 24 th October 2014. The SRA's interest related to what was perceived to be the possible 'chilling effect' of the proceedings upon the obligations of an MLRO and/or a COFA.
During the intervening period the application had come before Mr Justice Morgan on 4 th June 2014 to deal, amongst other things, with an application on the part of Mr Maitland Hudson and the Firm about a witness statement filed by Mr Coad of Lewis Silkin and for directions as to time. Again, Mr Dempsey was told that he should deal with the claim without access to the relevant information.
By the time of the hearing before Mr Justice Mann on 24 th October 2014 there were five applications listed. These included the Application, Mr Dempsey's application under CPR Part 18, Mr Maitland Hudson's and the Firm's application for summary judgment or to strike out the defence, Mr Dempsey's application seeking order permitting him to refer to particular material and the SRA's application to be joined. Both sides had instructed leading counsel and the proceedings had by then become a battle royal. Mr Dempsey took a position vigorously opposing Mr Maitland Hudson's and the Firm's application for delivery up of the Drives and Documents. However, part way...
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