DSM SFG Group Holdings Ltd v John Thomas Kelly
| Jurisdiction | England & Wales |
| Judge | Lord Justice Simon,Lord Justice Davis |
| Judgment Date | 19 December 2019 |
| Neutral Citation | [2019] EWCA Civ 2256 |
| Docket Number | Case No: A2/2019/1878 |
| Date | 19 December 2019 |
| Court | Court of Appeal (Civil Division) |
[2019] EWCA Civ 2256
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT
QUEEN'S BENCH DIVISION
The Hon Mr Justice Murray
[2019] EWHC 2082 (QB)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Davis
and
Lord Justice Simon
Case No: A2/2019/1878
Adam Speker (instructed by Pinsent Masons LLP) for the Appellants
David Sherborne and Greg Callus (instructed by Tenet Compliance & Litigation) for the Respondent
Hearing date: 11 December 2019
Approved Judgment
Introduction
The main issue that arises on this appeal is the extent to which it is permissible for a litigant to rely on confidential information, obtained by covert recording of another's premises, to support a legal claim before that litigant has established the right to use that information.
It arises on an appeal from a decision of Murray J made on 16 July 2019.
Background
The respondent (the defendant in the action) is one of four family members who sold their interest in various businesses to the appellants (the claimants in the action). The transaction took place in 2017 and the respondent received approximately £23 million from the sale. Subsequently, he became concerned that there was something wrong with what had occurred. In late 2018, he entered the claimants' premises and placed recording devices in the office of Adrian Kennedy, the first appellant's in-house solicitor.
From late October 2018 to 22 December 2018 the respondent recorded approximately 40 hours of conversations, all of which were confidential and many of which were privileged and confidential, involving conversations with the appellants' solicitor, Stuart McNeill of Pinsent Masons who was, and remains, instructed to advise the appellants in relation to the respondent's complaints.
The appellants discovered the recording device, and issued an application for injunctive relief against the respondent: first, under section 3A of the Protection from Harassment Act 1997 in respect of both the recordings and other alleged acts of harassment carried out by the respondent against their employees; and second, in respect of breaches of confidence. The application was supported by Mr McNeill's 1st witness statement (dated 29 January 2019) in which he set out the matters of complaint and the grounds for an injunction. A Claim Form was also issued on 29 January.
The appellants' evidence was answered by a witness statement on behalf of the respondent. In his 1st witness statement (dated 4 February 2019), Arun Chauhan, a partner of Tenet Compliance and Litigation Ltd, among other matters, expressly denied that his client was responsible for putting the bugging device in the appellants' offices. Nevertheless, at §66, he set out the respondent's contention that:
… there should be directions for an expedited trial to decide the central question whether the material which [the appellants] assert is confidential/privileged has that character; and he is prepared to offer sensible undertakings to ‘hold the ring’ pending that trial. But that process must enable [the respondent] properly to defend these proceedings by contending that the materials are not privileged/confidential.
This was consistent with the skeleton argument settled by the respondent's then counsel.
On 5 February 2019, the appellants' application came before May J, who approved a consent order between the parties to which a penal notice was attached (‘the February order’). This included directions for a speedy trial: Particulars of Claim to be served by 8 March and a Defence by 22 March, a hearing for directions in the week commencing 13 May and a trial in July. The respondent was required to provide a copy of the recordings to Pinsent Masons by 6.00 pm on 11 February 2019. The respondent also gave various undertakings in respect of both the harassment claim and the breach of confidence claim. Schedule A to the February order contained the respondent's undertakings in relation to the PHA 1997 claim and schedule B contained his undertakings in respect of the appellants' breach of confidence claim.
Schedule B included the respondent's undertaking that:
2(1) until trial [or] further Order, he will not make any use of the Recordings except for the purpose of defending the Claim;
and,
2(4) he will retain solicitors and counsel to defend the Claim who are not instructed by him, or by any company he owns or controls, on any other matter concerning or related to or arising from the affairs of Corbally and/or any one or more of the Claimants, save that solicitors and counsel will not listen to the contents of the Recordings until Pinsent Masons have indicated whether or not they will apply for a variation of the directions as identified in the second sentence of paragraph 16 above.
Paragraph 16 of the February order provided:
There will be liberty to apply. In particular, the [appellants] have liberty to apply without any need to show a change of position to seek to vary the directions to allow them to assert a claim for legal professional privilege once they are in receipt of, and have listened to, the Recordings, notice of any such application to be given by the defendant by 4.00 pm on Friday 8 March 2019.
On 11 February, the respondent made a witness statement in which he answered specific questions posed by Pinsent Masons according to an undertaking in paragraph 2(5) of Schedule B. These included:
(iv) the identification, so far as he is able, of the precise location(s) of all and any voice recording devices placed at the Premises or which were otherwise intended to capture voice recordings of the Associated Parties.
The respondent's answer, endorsed with a statement of truth, was both emphatic and untruthful:
8. I confirm that I have no knowledge whatsoever as to where any voice recording device(s) were placed in the Premises.
The appellants served their Particulars of Claim on 8 March, as required by the February order. In summary, the claim alleged harassment and breach of confidence on the basis of the covert recordings made by the respondent at the appellants' premises which he then sought to use so as to put illegitimate pressure on the appellants and their employees.
On the same day they issued an application seeking orders: (1) to prevent the respondent's legal team from reviewing the recordings (as defined in the February order) until any privileged material had been redacted; (2) for a confidentiality ring to be established, confining disclosure of and access to the remaining recordings to the respondent's legal team only; and (3) a Norwich Pharmacal order, see Norwich Pharmacal Co v. Customs & Excise Commissioners [1974] AC 133, requiring the respondent to provide the identity of a whistle-blower whom, he contended, had provided him with details of a particular piece of confidential information.
That application was due to be heard on Wednesday 8 May. However, two events occurred prior to the hearing.
First, on 27 March, the respondent made a new witness statement in which he admitted lying in his first witness statement:
7. The correct position is that I instructed and was assisted (by allowing the individual access to the Premises) a retired police officer … to place a recording device in the [appellants'] offices, in particular the office of Mr Kennedy. Therefor there was no whistle-blower and I was fully aware of the location of the recording device …
The second event was the respondent's application (issued on Friday 3 May) seeking to be relieved of some of the undertakings that he had given in the February order in return for new undertakings. The basis of this application was that he wished to use material in the recordings to support broader claims relating to the sale of the business.
It is to be noted that the respondent did not serve a Defence as required by the February order. Perhaps more striking, in view of the basis on which Mr Sherborne advanced arguments before the Judge, they have still not done so.
The applications came before Mr Anthony Metzer QC (acting as a deputy High Court Judge). By an order dated 8 May, the (‘the 8 May order’), the parties agreed some parts of the appellants' application; and further directions were given for the disposal of other parts, including part of the Norwich Pharmacal application.
Among the orders agreed were:
3.c. By 4.00 pm on 21 May, the parties agree to appoint Independent Counsel who shall review the Recordings and/or portions of the Recordings in which the [appellants] assert privilege …
By the terms of paragraph 4, recordings and portions of recordings in respect of which the appellants did not assert privilege were to be disclosed into a confidentiality ring, established so as to restrict disclosure and access of the recordings to the parties' legal teams.
Shortly after the 8 May hearing, the trial window was vacated for the first time by agreement.
On 5 July, independent counsel appointed under the terms of paragraph 3(c) of the 8 May order identified material which was privileged, and which should be excluded from the material made available to the respondent.
The Judge's order and reasons
It was the matters that had been left outstanding from the 8 May order that the Judge dealt with at the hearing on 16 July. Among the orders he made was a Norwich Pharmacal order, in terms which do not require further consideration.
So far as the respondent's application was concerned, he made an order allowing him to give revised undertakings, in terms which give rise to this appeal.
In place of paragraph 2(1) of schedule B of the February order, see [8] above, the Judge allowed...
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Court Of Appeal Overturns Order Permitting Use Of Covert Recordings To Support Claims In Civil Litigation Before Breach Of Confidence Claim Determined
...party can rely on the material in support of separate claims, not at the same time or afterwards: DSM SFG Group Holdings Ltd v Kelly [2019] EWCA Civ 2256. The court overturned a High Court decision which would have released the defendant from undertakings not to use covertly recorded materi......