Cadogan Petroleum Plc & Others v Tolley & Others
| Jurisdiction | England & Wales |
| Judgment Date | 16 December 2009 |
| Neutral Citation | [2009] EWHC 3291 (Ch) |
| Docket Number | Case No: HC09C02105 |
| Court | Chancery Division |
| Date | 16 December 2009 |
[2009] EWHC 3291 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Peter Smith
Case No: HC09C02105
Richard Morgan (instructed by Dewey & LeBoeuf) for the Claimants
Alan Gourgey QC ( instructed by Needleman Treon) for the First, Second and Third Defendants
Tim Penny (instructed by Gates & Parnters) for the Fourth and Fifth Defendants
Paul Girolami QC & Benjamin John (instructed by Peters & Peters) for the former Ninth, Tenth, Eleventh and Twelfth Defendants
Hearing dates: 24 and 25 November 2009
Peter Smith J:
INTRODUCTION
This judgment is in respect of 2 applications which were heard on 24th November 2009. The first issued by the First and Second Defendants on 19th November 2009 seeks specific disclosure and inspection of a Settlement Agreement dated 15th October 2009 entered into between the Claimants and the former Ninth, Tenth, Eleventh and Twelfth Defendants (“the Settlement Agreement”). The second is an application in substantially the same terms also made on 19th November 2009 issued by the Fourth and Fifth Defendants.
Both applications were made pursuant to CPR 31.12 and sought an order requiring the Claimants to disclose the Settlement Agreement. The applications were not addressed to the former Ninth – Twelfth Defendants. They were of course no longer parties to the action it having been dismissed as against them as a result of the terms of settlement.
The Claimants did not oppose the disclosure of the Settlement Agreement but indicated that the former Defendants (“the former GPS Defendants”) would do so.
The former GPS Defendants were served as Additional Respondents to the two applications. This arose out of my dismissal with indemnity costs of the Applicants earlier applications on 17th November 2009 for reasons set out in the judgment I delivered that day.
This ruling is to determine whether or not I should accede to the applications as a matter of principle. If I do so accede the parties have agreed that the mechanism for inspection of the Settlement Agreement will have to be agreed between them or in default result will have to be ordered by the Court. The Settlement Agreement was provided to me during the course of the hearing but it has not been disclosed to the Applicants.
As I said above the Claimants did not oppose the application. Indeed initially the applications were only issued against them and they had indicated that they would provide full disclosure of the Settlement Agreement. The former GPS Defendants did not agree but were not initially made a party to the applications. They were made parties as a result of the determination of the previous applications made by the applicants on 17th November 2009.
BACKGROUND
In order to understand the basis for the applications it is necessary for the nature of the litigation to be summarised briefly.
The Ninth and Tenth Defendants were sued by the Claimants as members of the GPS group of companies which sold two gas processing plants to the Third and Fourth Claimants. It was alleged in the proceedings that the gas processing plants were sold at an excessive price. The Claimants allege that the Ninth and Tenth Defendants paid bribes to the First and Fifth Defendants and contend that the Ninth and Tenth Defendants were liable to account for all such payments as money had and received. They also allege that the Eleventh and Twelfth Defendants dishonestly assisted the First and Fourth Defendants in an alleged breach of fiduciary duty. Finally the Claimants allege that the First to Fifth and Ninth to Twelfth Defendants conspired to defraud the Claimants.
The Ninth Defendant issued a Claim on 8th October 2009 against the Second Claimant claiming the sum of $10,958,560 was due and owing under the Gas Plant Agreements.
SETTLEMENT
The GPS settlement was announced on 15th October 2009. There was a press release issued announcing the resolution of the dispute as against the former GPS Defendants and referring to terms that were said to be part of the Settlement Agreement. To that extent some parts of the settlement had gone into the public domain as the Claimants acknowledged.
As a result of the announcement the Applicants sought disclosure of the entirety of the Settlement Agreement. That was refused. As part of the settlement the action was dismissed as against the former GPS Defendants as I have set out above.
In addition the Claimants have freezing orders against the remaining Defendants.
BASIS FOR APPLICATIONS
First the Applicants assert that the terms of the Settlement Agreement are potentially relevant to the maximum amount of loss allegedly suffered by the Claimants in respect of the purchase of the gas plants from the former GPS Defendants. Second it is asserted the Settlement Agreement is potentially relevant to consideration of whether the Claimants have properly mitigated the alleged losses. Third the Settlement Agreement could in certain cases (see the conspiracy claim) have the effect of releasing joint tortfeasors and finally it is possible that contribution issues might arise between the Defendants who remain in the action. They cannot of course be prevented by the Settlement Agreement from seeking contribution from the former GPS Defendants. At the moment there is no such application and of course the former GPS Defendants are no longer parties to the proceedings.
RESPONSE TO THE APPLICATIONS
As I have said the Claimants do not oppose the application and but for the opposition of the former GPS Defendants would have disclosed the Settlement Agreement as part of their documents in disclosure in the normal way. There is a confidentiality clause in the Settlement Agreement but it is subject to an exception (inter alia) in respect of a need to comply with any legal or regulatory obligations placed upon them.
The former GPS Defendants accept that some of the terms of the Settlement Agreement might well be relevant to the action for the reasons set out by the Applicants. However they contend that that does not entitle the Applicants to inspection of the Settlement Agreement; they only need to be advised of any clauses that are relevant to any aspect of the litigation. To that aim their solicitor Mr Oliver signed a witness statement on 20th November 2009. In that witness statement he confirmed (paragraph 6) the stance of the former GPS Defendants as regards disclosure of matters already in the public domain and matters that are potentially relevant to issues in the proceedings.
He also set out that the former GPS Defendants believe that there is confidential material which is irrelevant to the issues in the ongoing proceedings but if disclosed to the Applicants will give them an opportunity to take advantage of that knowledge where the prohibition of misuse by them of the material may in reality offer no protection. All the Applicants are outside the jurisdiction and are scattered around the world in the Seychelles, Delaware, the Ukraine and Australia. It is also asserted that Mr Tolley the First Defendant and former managing director of the Claimants is actually...
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