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28 January 2020
Where a party has covertly obtained confidential information, any dispute as to the information's confidentiality must be resolved before it can be deployed in civil proceedings. The Court of Appeal recently confirmed this point in DSM SFG Group Holdings Ltd v Kelly.(1)
Mr Kelly (the respondent) sold an interest in various businesses to the appellants for approximately £23 million. When he later became concerned that something was wrong with the transaction, he entered the appellants' premises and placed recording devices in the office of their in-house solicitor. Kelly recorded approximately 40 hours of conversations, all of which were confidential and many of which were privileged, including conversations with the appellants' external solicitor.
The appellants discovered the recording device and began proceedings for harassment and breach of confidence. In the course of the proceedings, Kelly undertook not to make use of the recordings except for the purpose of defending the claims against him.
The parties also agreed to appoint independent counsel to review the recordings in which the appellants asserted privilege.
Kelly subsequently applied to be released from some of his undertakings so that he could use the recordings to support counterclaims against the appellants and claims against third parties relating to the sale of the businesses.
The High Court permitted Kelly to be released from certain undertakings and enter into modified undertakings in their place, so as to enable him to use the recordings to bring a counterclaim or a related claim, on the basis that:
Protection of confidential material
The Court of Appeal overturned the judge's decision and reinstated the original undertakings, finding that while Kelly had had the right to use the recordings (to the extent that they were not privileged) to defend himself against the appellants' harassment and breach of confidence claim, the High Court had been wrong to allow him access to the recordings to use them to advance separate claims against the appellants and others before he had established the right to use them for such purposes.
The Court of Appeal considered the Australian case British American Tobacco Australia Ltd v Peter Gordon,(2) in which it had been found that because of the significance of the order in which the issues were determined, the issue of the confidentiality of documents had to be resolved before they were deployed, and not at the same time or afterwards. The Court of Appeal found that the effect of the High Court's decision was the reverse: Kelly would have been enabled to deploy the confidential information before he had established the right to do so.
Use of case management to secure confidential information
The Court of Appeal described the original undertakings as a "thoroughly sensible and practical way of holding the ring pending the anticipated expedited trial" and held that leaving confidentiality to be addressed through case management at trial would "potentially have been a nightmare".
Where a party has covertly obtained material and wishes to use it in civil proceedings, any dispute as to the material's confidentiality must be resolved before it can be deployed. Taking this approach preserves the confidentiality of the material and upholds the broad equitable principle that a person who has received information in confidence should not be permitted to take unfair advantage of it. It also avoids any practical case management difficulties which would undoubtedly be caused by failing to deal with questions of confidentiality as a priority.
For further information on this topic please contact Eliot Henderson or Andy McGregor at RPC by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
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