Koch Shipping Inc. v Richards Butler (A Firm)

JurisdictionEngland & Wales
JudgeLORD JUSTICE WARD,Lord Justice Clarke,LORD JUSTICE CLARKE,LORD JUSTICE TUCKEY
Judgment Date22 July 2002
Neutral Citation[2002] EWCA Civ 1280
Date22 July 2002
CourtCourt of Appeal (Civil Division)
Koch Shipping Inc
Claimant/Respondent
and
Richards Butler (A Firm)
Defendants/Appellants

[2002] EWCA Civ 1280

Before

Lord Justice Ward

Lord Justice Tuckey and

Lord Justice Clarke

IN THE SUPREME COURT OF JUDICATURE A3/2001/2278

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

(Mr Justice Andrew Smith)

Mr J Hirst QC and Ms C Ambrose (instructed by Messrs Richards Butler, London EC3) appeared on behalf of the Appellant Defendants.

Mr A Glennie QC and Mr M Jarvis (instructed by Messrs Jackson Parton, London E1) appeared on behalf of the Respondent Claimant.

LORD JUSTICE WARD
1

I will ask Lord Justice Clarke to give the first judgment.

LORD JUSTICE CLARKE

Introduction

2

On 5th October 2001 Mr Justice Andrew Smith granted an injunction against Richards Butler restraining them from continuing to act for Ariadne Maritime Limited ("Ariadne") in a London arbitration against Koch Shipping Inc ("Koch"). The injunction was granted on the ground that there was a real risk of disclosure of confidential information relevant to the arbitration by Koch's former solicitor, Ms Jane Peaston.

3

Koch's solicitors in the arbitration are Jackson Parton. Ms Peaston was a partner at Jackson Parton and acted as Koch's solicitor in the arbitration from April 2000 until leaving Jackson Parton on 5th April 2001. Since 2nd July 2001 she has worked for Richards Butler as a consultant. She is employed to work for three days each week.

4

The judge would have refused an injunction if Richards Butler and Ms Peaston had offered an undertaking that Ms Peaston would work from home or somewhere other than Richards Butler's London premises at Beaufort House in the City.

5

The judge refused Richards Butler permission to appeal, but permission was subsequently granted by Lord Justice Rix, who observed that in one sense the ground of the judge's decision was narrow but that in another sense it had wide implications. Lord Justice Rix ordered expedition, but that is now not necessary because, as I understand it, Richards Butler no longer act for Ariadne in the arbitration. They nevertheless pursue the appeal.

6

The ground of appeal is that the judge was wrong in concluding that there was a real risk of disclosure by Ms Peaston of the confidential information in issue.

The arbitration proceedings

7

I take this account of the arbitration proceedings largely from the judgment, which is reported at [2002] 3 Lloyd's Rep PN 201.

8

The arbitration proceeding were brought by Ariadne as owners of the vessel Atlas M against Koch as charterers under a charterparty in the Asbatankvoy form dated 10th August 1999 for the carriage of a cargo of naphtha from one safe port in the Turkish sea off Marmara to one or two safe ports in the eastern Mediterranean. In August 1999 the vessel was loading at the Turkish refinery of Tutunciflik when there was a major earthquake in the region. Loading was disrupted and when the vessel did sail for Lavera, the nominated discharge port, she was carrying less than 20,000 mt of naphtha, which was the minimum amount stipulated in the charterparty. According to Mr George Arghyrakis, a partner in Richards Butler acting for Ariadne, she also sailed without loadport documentation, including any bill of lading. Ariadne claim deadfreight amounting to $82,747.70 and demurrage or damages for detention amounting to $54,008.40. Koch deny that the vessel was detained and that demurrage was incurred, and they deny liability for deadfreight on the grounds that the earthquake was an act of God and so an exception under the charterparty.

9

Ariadne engaged Richards Butler, and specifically Mr Arghyrakis, in August 1999. Mr Arghyrakis has received a substantial number of instructions over the last eight years or so from Styga Companie Naviera, the managers of the Atlas M, and companies associated with them, and has developed a close working relationship with them. Mr Arghyrakis has been assisted in relation to the arbitration proceedings, first, by Mr Charalambos Zografakis and, since June 2001, by Mr Michael Harakis, a non-practising barrister employed by Richards Butler.

10

In August 1999 Koch instructed Mr David Myers, a partner at Jackson Parton, in relation to the dispute. In March or April 2000 Mr Myers retired from practice to become a judge in Trinidad and Tobago, and upon his retirement the supervision and handling of the case was passed to Ms Peaston. Both Mr Myers and Ms Peaston were assisted by an employed solicitor, Mr Jonathan Clyne, who is still handling the case.

11

The judge considered how long the arbitration proceedings might last and said that they might last as much as two or three years.

Richards Butler

12

The judge described Richards Butler in some detail. They are a well-known firm of solicitors in the City of London with a long-established reputation in relation to shipping matters. They have offices in a number of countries, but they only have one office in the United Kingdom, which is at Beaufort House in London EC3. They occupy offices on the ninth, tenth, eleventh and twelfth floors of Beaufort House. They have some 260 lawyers in all, including partners.

13

The Shipping Group in London comprises 25 partners, an admiralty manager, three consultants (including Ms Peaston) and some 35 other lawyers, including paralegals and trainees. Lawyers who are not partners are assigned to a particular partner and work principally for him or her. The Shipping Group occupies offices on the tenth and eleventh floors of Beaufort House. There are 12 partners on the tenth floor and 13 partners on the eleventh floor.

14

The Shipping Group is not, however, divided into formal sections. Partners normally generate their own client contacts and areas of practice. There is no special system for allocating work, although a database is used to ensure that the firm avoids conflicts of interest. The partners hold formal shipping partners' meetings every other week. There are informal shipping partners' lunches on Thursdays and from time to time there are Shipping Group "know how" lunches at which there are speakers.

Jane Peaston

15

The judge described Ms Peaston's previous history in some detail. She had in fact worked for Richards Butler before. Having left Jackson Parton on 5th April 2001, she returned to Richards Butler on 2nd July 2001. She then went away on holiday from 16th July to 1st August. Between 8th August and the hearing she had been working at home. Since rejoining Richards Butler, therefore, she had spent only some 12 days at their offices or at court representing the firm.

Charles Weller

16

Having planned to leave Jackson Parton at the same time as Ms Peaston, he joined Richards Butler on 6th April 2001 and is now a partner in the firm.

17

After Mr Myers' departure, Mr Weller became Koch's main contact at Jackson Parton. He handled a number of pieces of litigation for them and their associated companies and, when he moved firms, the Koch companies requested that he continue to handle at Richards Butler six of their cases that were live.

18

Thus one of the ironies of the case is that Koch were willing to instruct Richards Butler in some of their cases. However that may be, Mr Weller has not been involved with the Atlas M dispute between Koch and Ariadne during his time at either Jackson Parton or Richards Butler. I should note that Koch are not relying in support of their case upon any information that Mr Weller might have or has had. Their only concern was about information which Ms Peaston had. It is important to note that the purpose of the injunction was to ensure that none of that information was disclosed to those at Richards Butler who were acting for Ariadne against Koch.

19

Before considering the facts further, it is convenient to refer briefly to the relevant legal principles, which are not in dispute.

Legal principles

20

In Prince Jefri Bolkiah v KPMG [1999] 2 AC 222, the claimant was a former client of the accountancy firm KPMG which had been retained by him to provide forensic accounting services and litigation support. The litigation was settled in March 1998. In the course of that work KPMG were given access to confidential information. The project upon which they were working when they were working for Prince Jefri was, I think, called Project Lucy. KPMG were subsequently retained as auditors by a Government of Brunei investment agency of which the claimant had previously been chairman. The agency retained KPMG to investigate the whereabouts of certain assets which were said to have been used by the claimant for his own benefit. The claimant commenced proceedings for breach of confidence and sought an injunction restraining KPMG from acting for the agency.

21

Pumfrey J granted the injunction, holding that, although the defendants had an honest intention not to disclose confidential information, the barrier established by them was inadequate to deal with inadvertent disclosure. The Court of Appeal discharged the injunction on the grounds that there was no evidence that the claimant would suffer real prejudice unless there was an injunction and that a continuation of the injunction would set an unrealistic standard in the protection of confidential information. The House of Lords restored the injunction.

22

Although the instant case is not a case in which the claimant is seeking an injunction against his former solicitors, it was common ground before the judge, and is common ground before us, that the same principles apply where a claimant is seeking an injunction restraining a firm of solicitors from acting for a...

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