I DON’T WANT YOUR SOLICITORS TO ACT FOR YOU: CLAIMANT’S APPLICATION FOR AN INJUNCTION REFUSED

In Glencairn IP Holdings Ltd & Anor v Product Specialities Inc (t/a Final Touch) & Anor [2019] EWHC 1733 (IPEC) HHJ Hacon dismissed the claimant’s application for an injunction to prevent the defendants’ solicitors acting for them.

THE CASE

The claimant was bringing an action against the defendant for infringement of registered design rights in relation to a whisky glass. The defendant’s solicitors had represented a different defendant on a similar issue. That first action had settled following a mediation and a Tomlin order was drafted.

The defendant’s solicitors set up a “Chinese wall” within its offices so that people involved in the first action were not involved in the current action. The claimant’s case was that the “wall” was inadequate and sought an injunction to prevent the solicitors continuing to act.

THE UNUSUAL NATURE OF THE APPLICATION

Most cases of this kind relate to risks posed to a former client.   The judge considered the case law in detail.

THE TWO CLASSES OF CASE

The judge identified two classes of case:

Classes of case
    1. At least two classes of case can be discerned from the authorities. The first consists of actions like Bolkiah in which a former client seeks to restrain a solicitor (or equivalent professional advisor) from acting for a party with an interest adverse to the former client. In these circumstances there is a continuing fiduciary duty owed by the solicitor to the former client and a risk of disclosure of information which is both confidential to the former client and privileged. Lord Millett explained the policy behind the strict restrictions imposed on the solicitor in such circumstances (Bolkiah at 236F-H)
“It is … difficult to discern any justification in principle for a rule which exposes a former client without his consent to any avoidable risk, however slight, that information which he has imparted in confidence in the course of a fiduciary relationship may come into the possession of a third party and be used to his disadvantage. Where in addition the information in question is not only confidential but also privileged, the case for a strict approach is unanswerable. Anything less fails to give effect to the policy on which legal professional privilege is based. It is of overriding importance for the proper administration of justice that a client should be able to have complete confidence that what he tells his lawyer will remain secret. This is a matter of perception as well as substance. It is of the highest importance to the administration of justice that a solicitor or other person in possession of confidential and privileged information should not act in any way that might appear to put that information at risk of coming into the hands of someone with an adverse interest.”
    1. In the second class, information confidential to a party has come into the possession of solicitors who are acting for another party with an adverse interest to the first party. The solicitors have never acted for the first party and therefore owe him no fiduciary duty. An example of such a case was Stiedl v Enyo Law LLP [2011] EWHC; [2012] PNLR 4 in which Beatson J drew the distinction between the two classes:
“[39] … I accept Mr Smith’s submission that a distinction is to be made between two classes of case. The first class consists of cases in which there has been a previous relationship of solicitor and client in which confidential or privileged information is acquired by the solicitor and that solicitor now acts or wishes to act for another person who is in dispute with the former client. The second class consists of cases where, without any such previous relationship, a solicitor becomes possessed of confidential or privileged information belonging to the other party to the dispute. The distinction operates at the level of remedy: see Solicitors, Re [1997] Ch. 1; [1995] 3 All E.R. 482 at p.492 of the latter report. In that case, Lightman J. stated that in a ‘previous relationship’ case, in the ordinary course a court will grant an injunction restraining the solicitor acting, as it did in the earlier case with the same name; Solicitors (A Firm), Re [1992] Q.B. 959. In cases where there has been no previous solicitor-client relationship, however, ‘in the ordinary course the court will merely grant an injunction restraining the solicitor making use of that information’, as it did in English and American Insurance Co Ltd v Herbert Smith [1998] F.S.R. 232 and Goddard v Nationwide Building Society [1987] Q.B. 670.”

 

THE THIRD CATEGORY OF CASE

The judge found that this was a third, intermediate, category.

  1. Mr Barclay submitted that Bolkiah and the cases with similar facts provided the guiding light to the assessment of whether there should be an order restraining Virtuoso from acting. Ms Wickenden argued that I should follow the approach in Stiedl.
  2. In my view the correct approach lies somewhere between the two. The present case, along with Adex International, Carter Holt and Worth Recycling belongs to a third, intermediate class of cases.
  3. I would add that while it is convenient to divide cases into classes for the purpose of explaining why the relief in one class would not be proportionate if granted in relation to another class, it may be that the simpler and more accurate point is that each case must turn on its facts and the proportionate approach to granting relief is liable to vary accordingly.
  4. For the foregoing reasons, in my view the Bolkiah approach should not be applied with full force to the present case. Equally, I do not believe that the relief can in no circumstances go further than an injunction restraining the solicitor from making use of the confidential information (as in Stiedl). Neither of those two approaches would be proportionate. In effect, therefore, I must decide which aspects of Bolkiah should be applied to the present case.

THE DECISION

The judge rejected the claimant’s application.

Conclusion
  1. Taking all the foregoing matters into account, I have reached the conclusion that I should not grant an order restraining Virtuoso from acting as the solicitors for Final Touch. The likelihood of any confidential information at all being passed to Final Touch is very low. It may also be that any prejudice caused to Glencairn would only be significant if the entirety of the Settlement Agreement were disclosed and I believe that to be extremely unlikely, to the point of being fanciful.
  2. As against that, there would without doubt be prejudice to Final Touch if an injunction were granted. The prejudice may not be great but would be of some financial substance and the working relationship with Virtuoso would be lost.
  3. In my view the balance of justice is favour of refusing the order sought. The application is dismissed.