Dadourian Group International Inc & Ors v Simms & Ors [2007] EWHC 2634 (Ch)

[2007] EWHC 2634 (Ch)Case No HC 04C00366
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 14/11/2007
Before
MR JUSTICE WARREN
Between
(1)DADOURIAN GROUP INTERNATIONAL INC.Claimants/ Respondents(2) ALEX DADOURIANRespondent(3) HAIG DADOURIANRespondent(1)PAUL SIMMSDefendants/ Applicants(2) SELIM RAHMANApplicant(3) JACK DADOURIANApplicant(4) HELGA DADOURIANApplicant(5) MICHAEL A CONLONApplicant(6) PAUL S SHAERFApplicant(7) G ANDREW COUCHApplicant(8) MICHAEL A PARKERApplicant(9)GUY W VINCENTApplicant(10) ROBERT A PERRINApplicant(11) ANDREW M SMITHApplicant(12) AZURI LIMITEDApplicant(13) BRINTON ESTABLISHMENT ( formerly known as Wildhorse Establishment)Applicant(14) LIBOURNE INVESTMENTS LIMITEDApplicant(15) ARDALS INVESTMENT LIMITEDApplicant(16) REPUBLIC INVESTMENT COMPANY LIMITEDApplicant
CHARLES SAMEK (instructed by Withers LLP for ClaimantsSTUART CAKEBREAD (instructed by David Wyld & Co) for 3rd and 4th DefendantsJULIETTE LEVY (instructed by Messrs Robert Cook & Co) for Corporate DefendantsHearing Hearing dates: 24th October 2007
JudgmentMr Justice Warren :
[1]Jack, Helga and the 14th to 16th Defendants (“the Corporate Defendants”) seek injunctive relief to restrain the Claimants and their agents (expressly including Wallace LLP and now implicitly their new solicitors Withers LLP) from making any use of certain documents and data and information contained in them or stored in electronic form on computers. The documents, data and information are those which were provided by Julie Eagle (“Ms Eagle”) to Mr Serota of Wallace LLP in the circumstances which I shall come to and which were included in the order of McKinnon J made on 7 June 2007 (“the Order”).[2]As those familiar with this litigation will know, Mr Simms is managing director of Citilegal Consultants Ltd (“CCL”). There are other companies in the same group within the Citilegal umbrella (containing “Citilegal” as part of their full names), all of which are in effect managed by Mr Simms. The use of “Citilegal” throughout the case has been used in relation to these companies without distinguishing which company in the group is being referred to since it has commonly been unnecessary to draw any such distinction.[3]Ms Eagle was finance director of CCL. She may have held office in other Citilegal companies, but I do not know the full position. What is clear is that Ms Eagle fell out with Mr Simms and her relationship with CCL (and all other Citilegal companies) came to an end. It is also clear that she took from her office documentation and computer files which she had copied onto a data storage medium of some sort. Mr Simms’ evidence, which there seems no reason to doubt, is that in addition to the removal of documents and copying of files, she left behind no hard copy of the documents and deleted the electronic information from the files on the computers or servers in the office. CCL (and indeed the whole Citilegal enterprise) was faced with extreme difficulties, therefore, in continuing its business.[4]The actual ownership of the documents and of the intellectual property rights in the data and information is said by Mr Samek (who appears for the Claimants) to be unclear. However, what is clear – or at least is clear enough to me for the purposes of this application – is that Ms Eagle had no authority from CCL, Mr Simms or other Citilegal companies to remove any of the documents or to copy computer files, let alone to delete such files. Further, if it be said that the documents or information belonged to third parties, such as clients of Citilegal (including Jack and Helga) there is absolutely nothing to suggest that she had the authority of such third parties to do what she did.

Proceedings against Ms Eagle

[5]Having discovered what had taken place, CCL brought proceedings in the Queens Bench Division against Ms Eagle. The Particulars of Claim are dated 9 May 2007. It is pleaded that Ms Eagle was a director and finance director of CCL up to 23 February 2007 (“the Termination Date”) and that she was also a director of various Citilegal group companies providing services to clients of CCL, namely Citilegal Management Ltd, Citilegal Secretaries Ltd, Citilegal Directors Ltd and Citilegal Nominees Ltd. It is pleaded that she was responsible for maintenance of all records of CCL and sole signatory of the account of Citilegal Management Ltd and the main signatory of the account of CCL. Duties to act in the best interests of CCL as well as duties of confidence to CCL resting on her as a director and finance director are pleaded.[6]It is alleged that Ms Eagle, unknown to CCL, photocopied a quantity of confidential information relating to CCL, Mr Simms, another director of CCL and various clients of CCL the full extent of which was not known to CCL at the time of the pleading. It is pleaded that she “delivered at least 69 pages of material….to Wallace LLP solicitors acting for Dadourian Group International Inc and Others in litigation against [Mr Simms] and others with the express intention of injuring the prospects of [Mr Simms] in such litigation”.[7]It is pleaded that Ms Eagle deliberately deleted all of the correspondence of CCL conducted by her. This included all correspondence with bankers, the Inland Revenue and other specified persons. Before doing so, it is pleaded that she copied the relevant material. She also removed all personnel records relating to herself and some others. Then it is pleaded (in paragraph 21) the she photocopied confidential information and exploited it to her advantage. She is therefore “liable to deliver up such photocopied material which belongs to [CCL] and to refrain from using such material or any other documents of [CCL] for any purpose whatsoever.”[8]The prayer for relief seeks mandatory injunctions requiring Ms Eagle:a. forthwith to deliver up all documents of CCL or its employees or clients photocopied and removed from CCL’s premises and any original documents and data (in electronic, computer or any other form) of CCL or employees or clients;b. forthwith to deliver up to CCL the copies made by her of the correspondence and other records kept by her on computer during her employment up to the Termination Date;c. not to use any of the material referred to in paragraph (i) and (ii) of this paragraph or to disclose it to third parties or to take copies thereof, whether to the detriment of CCL or its employees or clients or otherwise.[9]On 29 May 2007, an application was issued in those proceedings for judgment in default of acknowledgement of service. I do not know what negotiations or applications took place as a result of that application. What I do know is that McKinnon J made the Order (on 7 June 2007). The Order, so far as material, is as follows:
“UPON reading the documents in the court’s file [I note that by this time, that would have included the Particulars of Claim] and UPON the parties reaching agreement IT IS ORDERED BY CONSENT THAT: UPON the parties reaching agreement IT IS ORDERED BY CONSENT THAT: 1. The Defendant forthwith shall deliver up all documents of the Claimant or its employees or its clients photocopied and removed from the Claimant’s premises and any original documents and data (in electronic, computer or any other form) of the Claimant or its employees or its clients. 2. The Defendant forthwith shall deliver up to the Claimant the copies (in whatever form, documentary, electronic or otherwise) made by her of the correspondence and other records kept by her on computer during her employment with the Claimant up to the termination of the said employment. 3. The Defendant shall not use any of the material referred to in paragraphs 1 and 2 above or to [sic] disclose it to third parties or to [sic] take copies thereof, whether to the detriment of the Claimant or its employees or clients or otherwise. 4. The Claimant shall preserve the documents and data referred to in paragraphs 1 and 2 above when delivered up by the Defendant until determination of the Claim or further order….”

IT IS ORDERED BY CONSENT THAT:

[10]It can be seen that this consent order therefore reflects (almost verbatim) the relief sought in that part of the prayer for relief to which I have already referred. It is an interim order as is apparent from the obligation on the Claimant to preserve the material delivered up to it. I do not know what Ms Eagle’s defence really is (if she has one) but, in theory, she could, I suppose, show that she was entitled to do what she did; but returning to reality, it is not easy to see how she could claim to retain any documents taken from her employer’s office relating to the employer or any client of the employer or copies of those documents or copies of electronic files given that she was acting in apparently clear breach of her duties as a director. The extent to which she can be restrained, at the end of the day, from using the information in those documents or electronic files may be a different matter turning on the extent of their confidentiality. And the extent to which they may be used in the present litigation before me may, in addition, be affected by the extent to which they are privileged.[11]Whatever Ms Eagle’s rights as eventually established (or agreed) are, there can be no doubt that at all times since the Order, she is subject to the terms of that Order and cannot use the documents and data in any way.[12]Nor can there be any real doubt that, as a matter of construction of the Order, Ms Eagle is obliged under paragraph 1, to deliver up copies of the specified documents made by her as well as any originals. Any other construction of paragraph 1 would be absurd, especially as it appears in its terms to draw a distinction between documents copied and original documents. That is confirmed by an examination of paragraph 2 which unarguably requires delivery up of copies of electronic files (whether the copies are hard copies or electronic copies); it would make no sense at all for such copies to be included in the Order but not copies of physical documents.[13]But what about copies of documents over which she no longer had possession or control at the time of the Order– such as those provided to Mr Serota (unless he received them subject to an undertaking to return them to her if requested)? Does the Order include those? It might be said that it would be surprising, if the Court had been deciding the matter itself, rather than making a consent order, to find an order being made which could not be complied with. Rather, it would be up to CCL to obtain direct relief against those persons, such as Mr Serota, whom it knew to have copies.[14]But the Order was made by consent and on its face seems to include all of the copies made by Ms Eagle even though she passed them on to Mr Serota. If that is the correct approach to the Order, as I think it is, it follows that the Order obliges Ms Eagle to deliver up any originals or copies of documents or electronic files which she has supplied to any third party. If she were later to discover that she could not do so, for instance because the third party refuses to return them or because they have been lost or destroyed, that does not mean that the Order is not to be complied with: rather, she should apply to the court to vary it on the basis that she is unable, for good reason, to comply with it. Further, on this basis, CCL was entitled to think that Ms Eagle would in fact be able to comply with the Order to which she had agreed and thus would anticipate the return of all of the material and all copies of the material which had been removed from CCL’s office by Ms Eagle or deleted from the computers at CCL’s offices.[15]On this footing, Ms Levy and Mr Cakebread submit that anyone who now has possession of copies of the documents (including the court, apparently) is obliged to deliver them up as a result of the Order notwithstanding that such persons are not parties to the action against Ms Eagle and notwithstanding that the Order is not made against them directly. I shall deal with this submission in due course.[16]Paragraph 3 of the Order clearly prohibits the use by Ms Eagle of any of the material referred to in paragraphs 1 and 2 (thus including original documents, copies of them and soft or hard copies of electronic files). It also prohibits the disclosure to third parties of such material and the further copying of it. The prohibition on use of the material would also clearly cover, in my view, the use of the information contained in that material (eg the information on a printed page) even if the originals and all copies had been delivered up. Ms Eagle would not be entitled to go home and write down on a piece of paper everything she could remember from the documents and then utilise that piece of paper and the information contained on it.[17]Again, Ms Levy and Mr Cakebread submit that third parties must observe the prohibition on the use of original or copy documents and data and information, at least where the offending material has been obtained through Ms Eagle (which is the only case which needs to be considered since Mr Serota did obtain the material from her). Again, I will deal with that submission in due course. Different considerations apply to paragraphs 1 and 2 (being directory) on the one hand and paragraph 3 (being prohibitory) on the other. Even if third parties are in practice compelled to observe the latter, it does not follow necessarily that they have to obey the former as if it had been an order against them directly.

Provision of documents by Ms Eagle

[18]On 25 April 2007, Mr Serota met with Ms Eagle at her invitation, it having been suggested (according to Mr Serota) to her by Mr Conlon that it would useful for him to meet her. At that meeting, over lunch, she provided Mr Serota with certain documentation including the material which it is now sought to restrain the use of. Mr Serota sets those facts out in his 25th witness statement dated 4 May 2007 and exhibits some of the material provided to him (but none of the documents which are the subject of the current application).[19]That was responded to by a witness statement from Mr Simms dated 9 May 2007 in which he took the strongest possible exception to Mr Serota’s conduct. Included in the exhibit to it was a copy of the Particulars of Claim in the Queen’s Bench action against Ms Eagle. If it was not clear to Mr Serota before, he cannot possibly have failed to understand from that witness statement that Mr Simms claimed that the documents were(a) confidential(b) privileged and(c) removed entirely improperly from CCL’s offices by Ms Eagle.[20]On 19 July 2007, Mr Serota made a further witness statement in which he exhibits the material to which the present application relates. Luckily, I did not read that witness statement or the exhibits at the time when I received them and I have not done so since. Accordingly, no question arises about my having seen material which I should not have seen.[21]Mr Simms has made a further witness statement dated 3 October 2007. He explains that having received documents from Ms Eagle pursuant to the Order, it appeared that some of the documents which Mr Serota had already exhibited were not included in the files handed over. He says that he raised the matter with Ms Eagle who informed him that everything which she had copied off CCL’s computer system had been returned. It then became apparent that Mr Serota had in his possession documents or copies which were not contained in the files which Ms Eagle had returned. Mr Simms accordingly regards her as being in breach of the Order.[22]On 1 August 2007, Mr Simms received a fax from Ms Eagle. In it she says this:
“As far as I am aware I have given all paperwork and anything held on the memory stick back to you. Can you let me know what is held on the memory stick to ensure that I have given you the correct memory stick? There would be no reason why I should keep the information back from you. I have been in contact with Michael [Mr Conlon] who is going to let me know what files he has…… I have read up on the seriousness of being in contempt of court, so I would not intentionally go against it.”
[23]Mr Simms might think that that was a somewhat unsatisfactory response. Quite apart from anything else, if Ms Eagle had relevant information on more than one memory stick, she should have provided all relevant memory sticks to Mr Simms (or at least obtained his agreement to the deletion of duplicate information). But at least she is indicating an intention to abide by the Order and to obtain return of the copies she had supplied to Mr Conlon.[24]On 2 August 2007, Ms Eagle sent a further fax to Mr Simms, which can be seen as a follow up. She writes this:
“I have spoken with Simon Serota this morning and any documentation that I gave to him has been returned to me. I did not make a listing of what I handed over to Wallace LLP.”
I did not make a listing of what I handed over to Wallace LLP.”[25]If Ms Eagle was being truthful and accurate in what she wrote, then the clear meaning of her fax is that she had spoken to Mr Serota that morning and that he had confirmed that everything had been returned to her. She must, therefore, have spoken to him about this, in order to seek its return, before this conversation and in order to enable her to comply with the Order. It is, I suppose, possible that this was the first occasion on which she had sought return, and that Mr Serota simply said that he said he would return everything. However, Ms Eagle refers to the material as material “which has been returned to me” which makes it unlikely that it was the first conversation unless the material was returned during the course of that day. But even if it was returned during the course of that day, Ms Eagle can only have written what she did if she thought that what she had received was everything which she had given Mr Serota and can have believed that only because that is what Mr Serota told her.[26]Mr Serota has not dealt with this material in his evidence or at least not in anything which I have been shown: as I have said, the point is raised only in the witness statement from Mr Simms dated as late as 3 October 2007and there may have been no opportunity to deal with it before Wallace LLP recently ceased to act for the Claimants.[27]However, he does deal generally with his knowledge of the Queen’s Bench proceedings in his 29th witness statement dated 29 September 2007. He says that he knew nothing more about it (after receipt of Mr Simms’ witness statement dated 9 May 2007) until receipt of a letter from David Wyld & Co (Jack and Helga’s solicitors) dated 29 August 2007 referring to an order of McKinnon J (ie the Order). One of the more curious features of this aspect of the case is that none of the Defendants nor CCL at any time informed Mr Serota of the Order, notwithstanding that they knew he had received many documents – the documents had, after all, been exhibited in part to Mr Serota’s witness statement dated 4 May 2007 and as to the remainder (or at least the documents which have given rise to this application) in his witness statement dated 19 July 2007.[28]Mr Cakebread (and I think Ms Levy agrees with him) says that it beggars belief to think that Mr Serota was not told about the Order by Ms Eagle at latest when she asked him for return of the material and thus at the latest by 2 August 2007.[29]Mr Serota himself has given some evidence about his knowledge of the Queen’s Bench proceedings. He accepts – he could hardly do otherwise – that he knew of them following receipt of Mr Simms’ witness statement dated 9 May 2007. But he says he knew nothing more about the progress of those proceedings until 29 August 2007, and in particular did not know about the Order until that date or even that interim relief had been sought. If that is correct, then what Ms Eagle wrote to Mr Simms in her fax of 1 August 2007 is not accurate. I cannot possibly determine the true facts on this application particularly given that to accept Mr Cakebread’s submission would be to find Mr Serota to be lying in his witness statement. So I am afraid that Mr Cakebread must either suspend his disbelief or contemplate the possibility that it was Ms Eagle who was not being full, frank and honest (or at least that her memory was failing her).[30]It follows that, for the purposes of this application, I must proceed on the basis that when Mr Serota deployed the material which he had received from Ms Eagle by exhibiting it to his witness statements in May and July 2007, he did not know of the Order. But clearly he did know when he deployed it that the material was claimed by CLL and Mr Simms to be(a) confidential(b) privileged and(c) removed entirely improperly from CCL’s offices by Ms Eagle. Further, it is quite clear that the Claimants and their solicitors and Counsel know today of the Order. They nonetheless seek to use them in this litigation, taking the view that the Order does not prevent them from doing so. They have not made any properly formulated application, if they are wrong on that, to vary the Order, for instance because they were not parties to the application, although Mr Samek did say that he was making one, but the correct parties were not before the Court.[31]Assuming that they are right on that, they also say that the documents are neither privileged nor confidential and that having in their possession copies of the same, they may deploy them and there is nothing which can be done to prevent it; and that this is so even if they were obtained as a result of a breach of duty by Ms Eagle. This second aspect of the application is for another day. I am asked to rule as a preliminary point on whether the Order has the effect for which Miss Levy and Mr Cakebread contend. If I rule against them, they want another judge to deal with the second aspect because(a) all concerned recognise that I am the most appropriate judge to deal with the application for judgment against the Corporate Defendants and(b) it will almost certainly be appropriate, and possibly necessary, to look at the documents to determine the second aspect and(c) if I do so, it is asserted by them that I would need to recuse myself. Mr Samek says that that conclusion is nonsense and that I can perfectly well look at them and put them out of my mind if I decide that they cannot be relied upon.[32]In the course of writing this judgment, it has become apparent to me that it may not be possible finally to determine even the first issue – the effect of the Order – without looking at the documents, as I explain later. I might well have declined to deal with this application in separate slices if I had appreciated this when agreeing to deal with the effect of Order first. Doing so may, unfortunately, have resulted in delaying yet further the time by which resolution of the claims against the Corporate Defendants will be resolved.

Punch

[33]The decision of the House of Lords in Attorney General v Punch Ltd [2003] 1 AC 1046 (“Punch”) is relied on by Miss Levy and Mr Cakebread in relation to the effect of the Order. In that case, the Attorney General had obtained an injunction against Mr Shayler, a former MI5 officer, on 4 September 1997 expressed to continue until trial or further order restraining him from disclosing to any newspaper or anyone else “any information obtained by him in the course of or by virtue of his employment in and position as a member of the Security Service (whether presented as fact or fiction) which relates to or which may be construed as relating to the Security Service or its membership or activities or to security or intelligence activities generally.”[34]A similar order was made against Associated Newspapers Ltd which had published articles in newspapers which had led to the Attorney-General’s application.[35]The editor, Mr Steen, and publisher, Punch Ltd, of Punch magazine knowing of the injunction published an article by Mr Shayler containing material which breached the injunction. Some of the material published was not already in the public domain. The Attorney-General brought contempt proceedings. It was held by the House of Lords that contempt of courts consisted of the interference with the administration of justice and would arise if there was intentional impedance or prejudice of the purpose of a court order; the purpose of the court in issuing an interlocutory injunction was the preservation of the rights of the parties pending a final determination of the issues between them rather than the litigant’s purpose in seeking to obtain the order; it followed that, in relation to an injunction restraining publication of information pending a decision as to whether it was entitled to protection on the ground of confidentiality, the actus reus of contempt lay in the destruction of the confidentiality of the material which it was the purpose of the injunction to preserve; and that the editor having wilfully published the material which he knew the court had intended by its order to remain confidential, the actus reus and mens rea of contempt had been established.[36]One thing is, I think, clear, namely that no-one, apart possibly from Ms Eagle herself, is in breach of the Order for the very good reason that no order has been made against anyone else. The position was the same in Punch: see Lord Nicholls in paragraph 3 of his opinion, at p1048F-G, underlining that no order was made against Punch Ltd or Mr Steen. Thus the wilful failure to obey the court’s order was not the type of contempt found in Punch. Similarly, in the present case, there is no breach of the Order by Mr Serota or the Claimants.[37]Another type of contempt considered by Lord Nicholls in paragraph 3 was the aiding and abetting, by assisting, in the breach of an order. It is interesting to note, as Lord Nicholls observes, that this was not the case presented against Mr Steen although the case could have been framed in that way. It is not apparent from what Lord Nicholls says precisely why the case was not framed in that way, at least as an alternative, given that by publishing the article Mr Steen was enabling Mr Shayler to do precisely that which had been prohibited.[38]The Attorney-General, instead, put his case in a different way. He presented it solely on the basis that Punch Ltd and the editor deliberately impeded or prejudiced the purpose the court sought to achieve in making its non-disclosure order against Mr Shayler.[39]Lord Nicholls explains, in paragraphs 39ff, what the meaning of “purpose” is in the context of contempt. He made two important preliminary points:a. First, fundamental is the intentional impedance or prejudice of the purpose of the court in making the order, not the purpose of the applicant in obtaining it.b. Secondly, the purpose of the court (see paragraph 40) “means no more than the effect its terms show it was intended to have between the parties to the action in which it was made. Normally there will no difficulty in gleaning this purpose from a reading of the order. The purpose of the order and its terms are co-extensive. It is right this should be so. If thidr parties are bound to respect the purpose of an order made in an action between other persons, it is essential they should be able to perceive this purpose readily from reading the order.”c. Again, in this context, at paragraphs 43 -44, one finds this: “….The purpose the court seeks to achieve by granting the interlocutory injunction is that, pending a decision by the court on the claims in the proceedings, the restrained acts shall not be done. Third parties are in contempt of court if they wilfully interfere with the administration of justice by thwarting the achievement of this purpose in those proceedings. This is so, even if in the particular case, the injunction is drawn in seemingly over-wide terms. The remedy of the third party whose conduct is affected by the order is to apply to the court for the order to be varied. Furthermore, there will be no contempt unless the act done has some significant and adverse effect on the administration of justice in the proceedings. This tempers the rigour of the principle.” [It might be noted that Lord Nicholls shared the concern of Lord Phillips MR about the width of the injunction, concerns which he feared had led Lord Phillips astray: see paragraph 42.][40]Lord Nicholls observes (see paragraph 46) that the discussion he had carried out underlined how important it is for courts to seek to ensure that injunctions are not drawn in wider terms than necessary, an aspect of particular importance when the terms of the injunction may, in practice, affect the conduct of third parties. I venture to add that it is important not to overlook this aspect when an order is made by consent. In such circumstances, it is all too easy to ignore the position of third parties and to draw orders in a way which, whilst acceptable to the parties to the litigation, fails to acknowledge third party rights effectively. I only add that I do not consider that a different approach to the purpose of the order (in the context of contempt) is to be applied depending on whether the order is made by consent or not. The order, is nonetheless, the order of the court and even an interlocutory order for an injunction by consent is to restrain certain acts from taking place, or to order certain acts to be done, pending a decision on the claims. In all cases, the purpose of the order is to be taken to be that described by Lord Nicholls.[41]Lord Hoffmann carried out a similar analysis, concluding at paragraph 7 that the purpose of the order “was therefore, in my opinion, simply to prevent from happening whatever the order said should not happen.” See also Lord Hope at paragraphs 99 and 104.[42]The purpose, as well as the scope, of Hooper J’s order in Punch was seen to be readily identifiable. The purpose was to preserve the confidentiality of the information specified in the order pending the trial so as to enable the court at trial to adjudicate effectively on the disputed issues of confidentiality. This was apparent from merely reading the order.[43]Punch was a case about contempt. The present application is not expressed in terms of preventing a contempt, so that it might be questioned why Punch has been relied on so much by Ms Levy and Mr Cakebread. However, contempt is, it appears to me, at the root of what this part of the application before me is about. As I have said, there is no order directly ordering anyone other than Ms Eagle to do or desist from doing anything. Accordingly, other persons can do what they like although if they act, or fail to act, in certain ways, they risk putting themselves in contempt of court. I can understand, and indeed accept, the proposition that a judge should not allow something to be done, in proceedings before him or her, which amounts to a contempt of an order of another judge. What I do not accept is that a person should be restrained from acting in a certain way as a result solely of an order against another person when to act in that way would not amount to a contempt of court. If that person is to be restrained, an order directly enforceable against him must be obtained.[44]Accordingly, I consider that the Order prevents DGI from deploying the relevant material only if, by doing so, DGI would be in contempt of court. It is for that reason that Punch is of such relevance in the present application. If there would be no contempt in such deployment, it can be prevented only by invoking such rights (if any) as there are to prevent such use by obtaining an order directly against DGI (and to the extent necessary, its advisers).[45]Before turning to the purpose of the Order, there are some points which I should mention.[46]First, the true effect of the Order cannot depend on whether or not the documents and information are, in whole or part, in fact confidential or privileged or both. That is a matter which is in dispute and can only be resolved, if it needs to be resolved, after looking at them. In contrast, if the Order itself does not prevent use by DGI of this material, it may be critical to know whether any of it is confidential or privileged or both before it can be determined (in the light of the not altogether straightforward authorities) whether the use by DGI can be restrained and, if so by, whom.[47]Secondly, it may be the case that equity will restrain only the use of privileged material which is in the hands of DGI and not material which is merely confidential.[48]Thirdly, where a confidential (but not privileged) document has been improperly obtained by a party to litigation, it does not thereby become inadmissible as evidence which can be deployed by that party. Even if a document has to be returned to its owner, it is, at least sometimes, still possible to use the information contained in that document if its contents can be brought in evidence in some other way eg by use of a copy or from the memory of a reader.[49]What, then, is the purpose of the Order? The purpose of paragraph 3 of the Order is clear: it is to prevent the use or disclosure to anyone, pending trial, of the relevant material. It would be a contempt in the face of that Order for a person, knowing of the Order, to publish the material or to use it in any way, with perhaps limited exceptions to which I will come. DGI could not, for instance, publish this material in an article which it chose to publish about Mr Simms.[50]Paragraphs 1 and 2 of the Order stand on a different footing. It seems to me that the purpose of those paragraphs ordering the delivery-up of the material is principally to preserve it, no doubt so as to ensure that Ms Eagle does not destroy it – there is an obligation on the Claimants themselves to preserve the documents pending trial so that, if Ms Eagle asserts that she herself was entitled to retain the documents, or copies which had been delivered up, they could be returned to her if she were successful in that assertion – and to prevent further disclosure of it by her. Quite possibly, a person who had received the material after receiving knowledge of the Order would be acting in contempt of court in doing so and could be compelled to return them.[51]But I do not consider that it would be a contempt of court for a third party who has received the material without knowledge of the Order to refuse to deliver it up once told of the Order, even if the recipient would not be allowed to use or disclose the documents to anyone else once he had learned of the Order (and even if he had already used or disclosed it). Rather, if the Claimant in the Queen’s Bench action consider that it is entitled to the documents or copies which are in the hands of DGI and its advisers, a claim to that effect should be made, and, if it is considered that it is appropriate to obtain delivery-up pending trial, an appropriate application can be made. This is not something which has been done notwithstanding that it has been known since May that some material had been passed to Mr Serota and has been known since July that the material in question had also been passed.[52]Delivery up is, in any case, a slightly irrelevant issue. The application before me, to deliver up the material, was argued only on the basis that the Order already (indirectly) requires it, but there is no any application to commit for contempt for a failure to do so. The real issue is whether DGI can deploy the material in the proceedings against the Corporate Defendants and in further applications which are being made, in particular the application by Jack and Helga for a stay of my orders against them in the main action pending appeal. If they cannot deploy them because to do so would be a contempt of court, then that is sufficient protection pending resolution in some forum, of the entitlement of anyone to delivery up of the material.[53]It is submitted by Mr Samek that the Order does not prevent the use of this material in the present action even if other use might be prevented. I do not think that that is correct. Suppose that Mr Serota had not deployed any of the material until after he had learned of the Order (which itself pre-supposed that the Claimant in the Queen’s Bench action had learned about Ms Eagle’s actions in some way other than through Mr Serota’s witness statement). I do not consider that Mr Serota could then properly have deployed the material without seeking a variation of the Order on behalf of DGI. Whether a variation could be obtained would depend on a number of factors. Thus, if it could be shown on an examination of the documents that they were clearly neither privileged nor confidential, it might be thought that a variation would be readily obtained (but then it would be difficult to imagine why the material would be at all helpful). In contrast, if the whole or parts of the material were clearly privileged, it is not easy to see why a variation would be granted in relation to the privileged material. In any case, such an application might be met with a counter-application for a direct restraining order against DGI. What seems highly likely to me is that the question whether a variation should be allowed is a question which can only be answered after looking at the material, something which I have not done as explained in paragraph 31 above.[54]As a further objection to meet that point, Mr Samek says that it is all too late: the material has already been deployed in Mr Serota’s witness statements and exhibits are already before the court. It was deployed before Mr Serota knew of the Order, so there can be no question of a contempt of court in such deployment (a proposition which is clearly correct). I would see the force of that if the material had already been deployed in court and was known to the court, if not the public. The difficulty with that submission, however, is that the only Judge who might have read the material is me and I have not done so. And the exhibits to the witness statements are not public documents. It is not, I think, too late for the applicants to rely on the Order.[55]Since, as I have explained, the effect of the Order vis a vis third parties is rooted in contempt, it follows that, if there is no contempt, the Order does not prevent deployment of the material and the applicants must find some other way to prevent its use. The question then is whether the use of the material in the present action would be a contempt. In that context, as Lord Nicholls said, there would need to be a significant and adverse effect on the trial of the action against Ms Eagle. Clearly, if the material were now made available to the public by DGI, there would be no scope for the protection of the applicants’ confidential or privileged information; that would be a “significant and adverse effect on the trial”. Similarly, given that the objection of the applicants and Mr Simms to deployment of this material is because of the adverse effect which it might have on their positions in the present case, I consider that such deployment would have a “significant and adverse effect” on the Queen’s Bench action since the purpose of that litigation would, at least in part, be frustrated.[56]The proper course would have been for Mr Serota and DGI, long ago, to have applied to the Court to vary the Order so as to remove the prohibition on its deployment leaving the parties with the same rights as they would have if the Order had not been made, thus, in particular, allowing the applicants to raise such points as are open to them to prevent use of the documents based on their confidential or privileged nature. The applicants have done that now by objecting to the use of the material in this action. What there is not, yet, is a properly formulated application by DGI and others to vary the Order so that it does not prevent them from deploying in this litigation material which they would otherwise have power to deploy.[57]Mr Samek takes some other points.[58]He says that it is, at best, not clear that the confidence and privilege which is now asserted by the applicants before me (ie the Corporate Defendants and Jack and Helga) have any standing to object to its deployment. Such privilege there is, is that of clients of the Citilegal group; there is no evidence to suggest that anyone was a client of CCL in contrast with any other group company and no evidence to show that any of the applicants was such a client.[59]He also points out that once Mr Simms had been struck off the roll, he was no longer a solicitor whose advice attracted legal professional privilege. But for all I know, there may be correspondence with others, such as Maitre Croisier and Dr Marxer, to whose advice legal professional privilege may attach. Further, it needs to be remembered that it is not only legal professional privilege which may be in issue. Some of the material may, one can well imagine, attract litigation privilege or common interest privilege or both. Mr Samek has raised in the skeleton argument bearing his name, a plethora of arguments to show that there is nothing in any of the points which are made against Mr Serota and DGI to prevent deployment of the material. It may be necessary to address those points on another occasion, but it is not something I propose to do in this judgment which is concerned only with the narrow point as to whether the Order precludes further use of the material.[60]In any case, I think that is quite probable that these are points which can only be resolved after seeing the documents and learning who the clients were. Again, it is precisely to avoid the need for me to look at the documents that Ms Levy and Mr Cakebread take the preliminary point that the matter is concluded by the Order.[61]In the light of this discussion I consider that Ms Levy and Mr Cakebread are correct on the narrow point that the Order is capable, in principle, of preventing deployment of the material. Whether it actually does so will depend on whether its development would amount to a significant and adverse effect on the Queen’s Bench action. My conclusions are these:a. The Order does not require third parties actually to deliver up documents or copies received or made by them prior to learning of the Order.b. The Order might have the result that the actual deployment by the third party of the material after learning of the Order would result in a contempt of court.c. Whether such deployment would actually result in a contempt of court cannot be finally resolved without looking at the documents which, at this stage, I am asked by Ms Levy and Mr Cakebread not to do. It is only then that one could see whether there was a significant and adverse effect on the rights of the Claimant in the Queen’s Bench action which it is the purpose of the Order to preserve.d. Whether it would amount to a contempt of court does not depend on who brings the matter to the attention of the court.e. If it would amount to a contempt of court, then it would be right for me to refuse to allow that material to be deployed by DGI. This is so notwithstanding that Mr Serota may have made his witness statements and exhibited the material before he knew of the Order since the court has not read or seen the material.f. In contrast, if it would not amount to a contempt of court, the parties (excluding Ms Eagle) will find themselves in the same position as if the Order had not been made.g. Since Ms Eagle is the only person on whom the Order has direct effect, any third party (such as DGI or Mr Serota) who claims to be entitled now to deploy the material, notwithstanding that it was provided to Mr Serota in the circumstances in which it was provided, was entitled, and may still be entitled, to apply to the court to vary the order (as Lord Nicholls recognised: see Punch at paragraph 44 quoted above).h. There is no such application before me. It may be that such an application would raise identical issues in relation to the question whether, absent the Order, DGI ought to be entitled to deploy the material; certainly the issues would be similar if not identical.[62]All I can say at the moment is that I am not satisfied that there would not be a contempt of court in the deployment of the material by seeking to rely on it in front of me. Unless and until I am, or some other judge is, so satisfied, I do not propose to allow it to be relied upon.[63]I will hear the parties further on what directions I should now make. If DGI decides to call it a day, I can proceed, on a date to be fixed, with the application for judgment against the Corporate Defendants and with an application which I understand Jack and Helga are to make in relation to a stay of my previous orders. If DGI want to take the matter further (either by appealing my decision in this judgment or by making an application to vary the Order) I will hear further submissions about what I should do.[64]DGI might seek to make an application to vary the Order at this stage. If it does make such an application, it would, or so it seems to me at present, be better done in this action rather than in the Queen’s Bench action. It would clearly be appropriate for such an application and the application currently before the court by the Corporate Defendants and Jack and Helga to be heard together. I will want to hear further submissions on whether the matter should be dealt with by a different judge as Ms Levy and Mr Cakebread say it should.[65]In conclusion, the result of this judgment is that DGI is not to be allowed, pending further hearing, to deploy the material to which objection is raised by the Corporate Defendants and Jack and Helga. I have avoided saying anything about the propriety of Mr Serota using the material in the way he did, it having been provided in the circumstances which I have mentioned. It is not easy, at the moment, to see how he could have believed he was receiving the material otherwise than in breach of duty by Ms Eagle, but things are seldom what they might seem in this litigation and there may be an explanation which shows that he was perfectly entitled to act as he did, particularly if it prevents the perpetration of a fraud, whether on the Court or otherwise.

Cited in 1 later judgment