Patrick Mckillen (Petitioner) v Misland (Cyprus) Investments Ltd (a Company Registered in Cyprus) and Others

This judgment concerns an application by the petitioner and claimant in these proceedings (Patrick McKillen) for the continuation during the trial of a confidentiality regime which I imposed for the purposes of pre-trial steps, particularly disclosure.

The proposed confidentiality regime concerns a particular issue and would have two principal features. First, the substantial number of documents covered by it, and the written and oral evidence given in relation to the issues, would not be available to the defendants but only to their solicitors and counsel. Secondly, the part of the trial dealing with the issue, including the oral evidence of witnesses, would be held in private.

It therefore would involve significant departures from the two fundamental common law principles applicable to trials in the civil as well as in the criminal courts, identified by Lord Dyson at paragraphs 10-13 of his judgment in Al Rawi and Others v The Security Service and Others [2011] 3 WLR 388. First, the principle of open justice requires that trials are conducted in public. There are some limited exceptions to this principle. Secondly, the principle of natural justice includes the right of a party to know the case against him and the evidence on which it is based.

The issues at root on this application are whether there are grounds which would justify any departure from the first of these principles (that of open justice) in the particular circumstances of this case and whether any departure from the principle of natural justice is permissible and, if so, whether there are grounds which could justify it in the circumstances of this case.

The summary I have just given reflects the application as made by Mr. McKillen in his application notice, his evidence and the skeleton arguments of his counsel, and as argued on his behalf at the hearing of this application on 23 and 24 April 2012.

At about 11 a.m. yesterday, 25 April 2012, I received a letter from Mr. McKillen's leading counsel informing me that Mr. McKillen no longer sought orders denying the defendants access to the evidence but, instead, invited the court to impose a modified confidentiality regime which would restrict access to individual parties or to name representatives of corporate defendants and to require undertakings to prevent misuse. I will return to the contents of this letter a little later. Mr. McKillen still seeks an order for the relevant part of the trial to be heard in private.

The application is opposed by all the active respondents and defendants. The application for a private hearing of part of the trial is opposed by two groups of media organisations. The publishers of The Times, The Guardian, The Financial Times, The Irish Times and The Irish Independent have instructed counsel, who has made oral and written submissions. A written submission by the legal editor of the Press Association has been lodged on behalf of the Press Association and RTE, the national radio and television broadcaster of the Irish Republic. I am grateful to all parties for their full and helpful submissions.

To set the present application in context, I shall first outline the nature of the proceedings, the issue to which the relevant documents and evidence relate, and the steps so far taken as regards confidentiality.

The proceedings relate to a company called Coroin Limited (the company) which through subsidiaries owns three well known hotels in Central London (Claridge's, The Connaught and The Berkeley). Mr. McKillen owns shares representing 36.8% of the equity of the company. The other significant holdings are those of Misland Cyprus Investment Limited and Mr. Derek Quinlan.

In January 2011, a company ultimately controlled and owned by Sir David and Sir Frederick Barclay (the Barclay brothers) or their family trust acquired Misland from its previous owners (the Green family).

The Barclay brothers make no secret of their desire to obtain control of the company, or the hotels which it owns, and the acquisition of Misland was the first major step in their plan to achieve control. Other steps are alleged by Mr. McKillen to have been taken, but those which are common ground are the purchase of bank loans to Mr. Quinlan secured on his shares and the purchase of the company's bank facilities totalling some £660 million secured on the company's assets.

The present proceedings commenced by Mr. McKillen in October 2011 comprise a petition under section 994 of the Companies Act 2006 alleging that the affairs of the company have been, by reason of various acts or omissions of the Barclay brothers or those associated with them, conducted in a manner unfairly prejudicial to him, and an action for damages alleging a conspiracy to injury by unlawful means based on many of the same allegations.

The respondents and defendants, although not precisely the same in both sets of proceedings, are: first, the Barclay brothers; secondly, companies controlled by them (the Barclay interests); thirdly, three individuals who are executives of companies controlled by the Barclay brothers and who either are or were directors of the company ("the directors"); fourthly, Mr. Quinlan; and, fifthly, the National Asset Management Agency (NAMA), an Irish state entity from which the Barclay interests purchased the company's loan facilities. NAMA is involved only because it is said that the assignment to the Barclay interests was in breach of the facilities agreement with the company.

An important part of Mr. McKillen's case, although not by any means the whole of it, relates to the rights of pre-emption over shares conferred by the Articles of Association of the company and a Shareholders' Agreement. He alleges that arrangements were made by the Barclay brothers, or companies under their control, with Mr. Quinlan in either late 2010 or during 2011 which triggered rights of pre-emption over Mr. Quinlan's shares, entitling Mr. McKillen to acquire a sufficient proportion to give him over 50% of the equity. He also alleges that security granted by Mr. Quinlan over his shares to third party lenders became enforceable, again triggering his pre-emption rights.

Mr. McKillen alleged in his petition that the sale of Misland triggered his pre-emption rights, but on a preliminary issue it was held that it did not do so, a decision affirmed by the Court of Appeal: see [2012] EWCA Civ 179. None the less, Mr. McKillen alleges that by virtue of a contractual duty of good faith in the Shareholders' Agreement, the shares in the company held by Misland should have been offered for sale to the other shareholders.

The respondents have made clear from the start that they regard as a major issue whether if Mr. McKillen had been offered shares on a pre-emption basis he would have been able to afford to purchase them. They say that if he could not have done so, his complaints in this respect, even if well-founded, which they deny, get him nowhere because he suffered neither prejudice nor loss. While Mr. McKillen submits that he can succeed in these proceedings without establishing that he would have been able to purchase the shares if they had been offered to him under the pre-emption provisions, he accepts that his ability to fund a purchase or purchases of shares is an issue in the proceedings.

The present application relates to the...