The perils of using disclosed documents for a collateral purpose

In Grosvenor Chemicals Ltd v UPL Europe Ltd disclosed documents were used by the UPL for a collateral purpose in breach of the Civil Procedure Rules.

This led to an application by Grosvenor to bring committal proceedings, in which the court provided helpful guidance as to the correct approach to the use of documents outside the proceedings in which they are disclosed, as well underlining the difficulty in satisfying the criteria required to bring a successful application for committal proceedings. 

The underlying action

The underlying action in which the documents were disclosed involved a claim brought by UPL Europe Ltd and UPL Deutschland GmbH (the UPL Companies) who produced and sold crop protection products known as plant protection products.  The UPL Companies alleged that various companies and certain of their employees had manufactured and sold counterfeit versions of several of its plant protection products.  The UPL Companies claimed that this was in breach of certain of its trademarks and amounted to wrongful competition under German law (passing off under English law) and conspiracy to use unlawful means to injure.

Before the UPL Companies had issued the proceedings they obtained a pre-action disclosure order against one of the defendant companies requiring that company to disclose various documents.  This order provided that documents disclosed pursuant to the order could be used "for the purposes of [the underlying action] (including adding further Respondents) or commencing civil proceedings in relation to the same or related subject matter to these proceedings or obtaining evidence."  This order was then replaced in the proceedings by a consent order regarding specific disclosure.  However the consent order did not contain any reference to the terms on which the disclosed documents could be used by the UPL Companies.

Pursuant to the consent order for specific disclosure various documents were disclosed including emails between employees of the defendant companies and a former employee of the UPL Companies.  These emails discussed the formulation of the plant protection products in issue and appeared to indicate that the former UPL employee had assisted the defendant companies to match their formula for plant protection products to that used by the UPL Companies. 

The basis for the application for committal

Following the disclosure of these emails the law firm representing the UPL Companies wrote two letters.  One was sent to the law firm representing certain of the defendant companies alleging misuse of confidential information and enclosing draft amended particulars of claim.  The second letter was sent to the former UPL employee again alleging breach of confidence as well as breach of contract in respect of misappropriation of confidential data.  Both letters referred to a number of the disclosed emails.  It is these letters which led the defendant companies to seek permission to bring a committal application.

The defendant companies argued that the alleged misuse of confidential information was not related to the existing causes of action in the proceedings and separate proceedings would be required to deal with this allegation.  As a result the law firm and the UPL Companies were seeking to use the documents disclosed in the proceedings for a purpose other than that for which they were disclosed. The defendant companies argued that this was a breach of CPR 31.22 which provides:

"A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where -

(a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;

(b) the court gives permission; or

(c) the party who disclosed the document and the person to whom the document belongs agree."

The decision

The court found that there had been a breach of CPR 31.22 in one respect but refused the application to bring committal proceedings against the UPL Companies and the law firm.  In coming to this decision the court considered (i) whether there had been a "deliberate or reckless breach" of CPR 31.22; (ii) whether there was evidence of a strong prima facie case of contempt of court; and (iii) whether it was in the public interest and proportionate to bring contempt proceedings.

A "deliberate and reckless breach"

In order for the application to succeed, "there must be a deliberate or reckless breach of CPR31.22".  To establish this it was necessary to show that "the relevant persons must have known that the documents were subject to the rule and known that the acts complained of were a breach of that rule or in either case were reckless" as set out in Berry Pilling Systems v Sheer Products. 

The law firm argued that the UPL Companies had no independent knowledge of the CPR or the relevant authorities and had acted on the advice of their legal representative and were therefore "entirely innocent".  As soon as it had been brought to the law firm's attention that there had been a potential breach of the CPR it provided an undertaking not to make further use of the disclosed documents for any purpose other than the underlying action and it had offered an apology.  In light of this the court found no evidence of a "deliberate and reckless" breach of CPR 31.22.

Evidence of a strong prima facie case

Permission to bring committal proceedings should not be granted unless there is a strong prima facie case.  In making such an assessment it was necessary to consider the strength of the case, the nature of the proceedings in which the documents were disclosed, the nature and value of possible new claims, the likely cost and amount of court time required to deal with the committal proceedings, and the strength of the evidence relied on to show the breach was deliberate or reckless.

In relation to the first letter the court found that it was appropriate to raise the allegation of misuse of confidential information and that it was "commonplace" for a party to amend its claim and seek to add new causes of action and join further defendants following the review of disclosed documents.  The draft amended particulars of claim showed the new allegations were closely connected to, rather than being "entirely separate and distinct" from, the underlying action and it was not necessary to seek the court's permission to use the disclosed documents.  However, the court found that the second letter was in breach of CPR31.22 because it contained a threat to issue new proceedings.  Had the letter threatened to apply to court to add a breach of confidence claim to the underlying action, and to join the Former UPL Employee as a co-defendant, then there would have been no such breach.

Public interest and proportionate

The court must be satisfied that the committal proceedings are in the public interest, proportionate and satisfy the overriding objective. 

The UPL Companies and the law firm argued that the context in which the alleged interference of justice took place was less serious than it may otherwise have been, for example if it had involved witness intimidation.  As a result, it was not necessary to place as much weight on the public interest argument.  The court disagreed and noted that it was "always vital" to consider the public interest.  Nonetheless the court held that there was no clear evidence of a deliberate attempt to breach the CPR and could not see that the defendant companies had been prejudiced in the underlying action by the use of the disclosed documents.  It was therefore neither in the public interest nor proportionate to allow the application.

Comment

This case serves as a reminder of the strict application of CPR 31.22 which provides that disclosed documents cannot be used outside the proceedings in which they are disclosed unless one of the exceptions set out in the rule applies.  These are where the document has been read to or by the court, or referred to, at a public hearing, where the court gives permission, or where the disclosing party and the person to whom the document belongs agree.

The case also provides helpful guidance as to the correct approach to CPR 31.22 where the review of documents disclosed in one set of proceedings identifies the possibility of a claim against a third party.