ADJOIN LTD V FORTYTWO HOUSE SARL [2022] EWHC 2710 (CH)

HEADLINE SUMMARY

It is not uncommon for a party to legal proceedings to attempt to adduce evidence that has arguably been improperly obtained. Where that happens, the court has to decide whether a fair trial is still possible. In this case the claimant (C) had complained that the defendant, Fortytwo House SARL's (D) former solicitors (BCLP), had disclosed confidential information to D's current solicitors (Gowling). C requested a stay of the proceedings to investigate the extent and severity of the breach, suggesting that the court would be obliged to refuse D's amendments to its defence if D's conduct meant that it was no longer possible to have a fair trial. BCLP had denied the disclosure of confidential information and C accepted that "low level inadvertent leakage" of information did not render a fair trial impossible. Consequently, the court refused to stay the proceedings.

COMMENTARY

This decision shows the approach of the English courts towards the admissibility of evidence, demonstrating that except where the litigant's conduct puts a fair trial in jeopardy, the civil courts are generally prepared to allow evidence obtained improperly to be adduced.

FACTUAL BACKGROUND

D made an application to amend its defence to a claim concerning rights to light. D sought to allege that other entities associated with C or its beneficial owners had previously released rights to light for financial compensation, and further claimed that this was relevant to whether or not damages would be an adequate remedy if an injunction were granted.  BCLP had previously acted for members of the Bard family and related entities who were connected to C or beneficial owners in such a way as to be relevant. Counsel for C argued that the Global Head of Real Estate for BCLP, had a material role in providing advice to related entities in relation to strategy in rights to light claims. While rejecting any suggestion of client confidential information being misused, BCLP's client instructed new solicitors (Gowling) to avoid distraction or delay in the proceedings.

C asked for additional time to investigate or wait for BCLP to provide them with answers about what, if any, information, they had shared. C suggested that three outcomes were possible:

1. Former clients of BCLP may take legal action to prevent use of confidential information
2. The court would have discretion as to whether to admit relevant evidence, which could be better determined after an investigation had been conducted
3. Investigations might be very relevant to the determination of D's application for permission to amend the defence

D objected that:

1. C had no standing to raise the point because the allegation was not that BCLP acted for C in rights to light disputes, but for other entities, which had made no complaint
2. Charles Russell Speechly acting for C, had also acted for Sola 7 and Sola 9 and were therefore both aware of earlier correspondence from 2021 and already knew that BCLP had previously acted for Sola 7
3. No confidential information had been used inappropriately
4. Even if confidential information were to have been shared, the court would not refuse to make the requested amendments on that ground
   Even if the application to amend were refused, D would be entitled to disclose the documents.

KEY LEGAL POINTS

The key question was whether, if a stay were granted and relevant evidence disclosed, that evidence had been acquired by D in breach of confidence, and, if so, whether the court would refuse to permit D to amend its defence. Both parties' submissions focused on the admissibility of evidence, not the power of the court to strike out where there has been misconduct.

D relied on Ras Al Khaimah Investment Authority v Azima [2021] EWCA Civ 349 (Azima) as authority for the principle that evidence is admissible and the court is not concerned with how it is obtained: "Cases of evidence procured by torture aside, the general rule of English law is that evidence is admissible if it is relevant to the matters in issue. If it is, it is admissible, and the court is not concerned with how the evidence was obtained". D also cited Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167 (Arrow), citing Millett J in Logicrose Ltd v Southend United Football Club Ltd (1988): the "object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court" and "where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled - indeed, I would hold bound - to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him". There must be a "substantial risk of injustice" in order refuse to allow a litigant to continue or determine the proceedings.

The approaches in Azima and Arrow were held in this case to be compatible: a court should not be concerned with how the evidence had been obtained. C did not argue that it would be impossible to have a fair trial or for the court to do justice if information had been leaked, so granting a stay would serve no purpose. C would not be prejudiced by its refusal. The application to stay was therefore dismissed.

Key Contact

Patrick Lloyd