Reference:  EWCA Civ 2256
Court: Court of Appeal
Judge: Lord Justice Davis; Lord Justice Simon
Date of judgment: 19 Dec 2019
Summary: Breach of Confidence - Harassment - Discharge of Undertakings to the Court - The extent, if at all, that 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
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Appearances: Adam Speker KC (Appellant) David Sherborne (Respondent) Greg Callus (Respondent)
Instructing Solicitors: Pinsent Masons LLP for the Appellants; Tenet Compliance & Litigation for the Respondents
The Respondent is one of four family members who sold their interest in various businesses to the Appellants in 2017. He claimed to have become concerned that there was something wrong with the deal and, in late 2018, he entered the Appellants’ premises and placed recording devices in the office of the Appellants’ 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 and included conversations with the Appellants’ external solicitor.
The Appellants sought interim injunctive relief and, on 4 February, the Respondent offered undertakings in lieu. They included undertakings not to make any use of the recordings except for the purpose of defending the claim and to instruct solicitors and Counsel to defend the claim who were not instructed by him on any other matter concerning or relating to or arising out of the affairs of the Appellants.
On 3 May the Respondent applied to vary the undertakings he had given to allow him to use the recordings to being any counterclaim and/or any related action in his own name and/or the name of any company he owns or controls and to allow the solicitors instructed in this matter to advise him in other matters relating to the Appellants.
The matter came before Mr Justice Murray on 16 July 2019 who, having found for the Appellants on a separate and unconnected application, then acceded to the Respondent’s application.
The Appellants appealed. Permission to appeal was granted by Lord Justice Leggatt on 18 September 2019.
- Whether the Judge erred in principle in permitting the Respondent to be released from the original undertakings in exchange for the revised undertakings.
- Whether the Judge was wrong to find that the appointment of independent counsel which had resulted in the identification of privileged matters constituted a change of circumstances that justified releasing the Respondent from his original undertakings.
- Whether the Judge was wrong to release the Respondent from his original undertakings on the basis that overall fairness could be secured by appropriate case management directions.
allowing the appeal on all three grounds.
- The Judge erred in principle in allowing the Respondent to be able to vary the undertakings he had offered. It was wrong to allow him to deploy the confidential information he had obtained before he had established the right to do so: Lord Ashburton v Pape  2 Ch 479, D v L  EMLR 1, Seager v Copydex Ltd  1 WLR 923 applied; British American Tobacco Australia Ltd v Peter Gordon  NSWSC 230 followed.
- A discretion to vary undertakings given to the court was not a discretion at large but to be exercised only in a situation where circumstances had subsequently arisen which, by reason of their type or gravity, were not circumstances intended to be covered or which ought to have been foreseen at the time the undertaking was given: Di Placito v Slater  1 WLR 1065, Birch v Birch  1 WLR 2959 followed. The Judge was plainly wrong to have held that there had been a material change of circumstances. A review by independent counsel was or should have been foreseen in light of the fact that the recordings included communications between lawyers.
- The Judge was plainly wrong to have concluded that the Appellants’ position could be preserved by proper case management.
A useful decision by the Court of Appeal in which both Judges gave judgments holding that a party that has obtained confidential information cannot use it until he has established a right to do so.