PROVING THINGS 245: DEFENDANTS FLOORED: THEY FAILED TO ESTABLISH THAT DISCLOSURE GIVEN INADVERTENTLY “ON THIS QUESTION, THE EVIDENCE BEFORE ME FROM THE DEFENDANTS IS LIMITED AND UNSATISFACTORY”

In Flowcrete UK Ltd & Ors v Vebro Polymers UK Ltd & Ors [2023] EWHC 22 (Comm) Mr Nigel Cooper KC (sitting as a High Court Judge) refused the defendants’ application to prevent the claimant from using certain documents that the defendant had disclosed.  The key point here is that the defendants failed on the very basic issue of establishing that the documents in question had been disclosed “inadvertently”.

 

“On this question, the evidence before me from the Defendants is limited and unsatisfactory.”

THE CASE

The case relates to the alleged misappropriation of confidential information by former employees of the claimant involved in the polymer flooring industry.  The defendants are counterclaiming for losses said to arise from an injunction obtained by the claimant.

DISCLOSURE

The defendant gave disclosure during the course of proceedings. After receiving disclosure the claimant’s solicitors wrote to the defendant setting out its concerns that disclosure was inadequate.  The defendant had disclosed two pds documents which were both compilations of other documents and totalled 800 pages.

THE DEFENDANTS’ CLAIM FOR PRIVILEGE

A month later the defendants replied claiming privilege in relation to the two pdf documents.

JMW responded to Kennedys almost a month later on 17 August 2022 asserting in relation to documents JMW3546 and JMW3547 that both documents were subject to legal advice privilege and litigation privilege. The Claimants say, and I find, that JMW provided no proper explanation in their letter of 17 August 2022 as to the bases for the claims to privilege or how the documents came to be inadvertently disclosed. JMW also asserted that all otherwise relevant documents within JMW3546 and JMW3547 had been disclosed elsewhere although the Defendants now accept that this assertion was incorrect. In their letter of 17 August, JMW asked that the Claimants delete JMW3546 and JMW3547 and that any reference to their contents should be redacted from any correspondence placed before the Court

THE DEFENDANTS’ APPLICATION

The claimant issued an application in relation to the defendants’ disclosure.  The defendants issued an application to prevent the claimant relying on certain documents within the pdf bundles. This was narrowed down to specific documents within the bundles.

THE PRINCIPLES RELATING TO INADVERTENT DISCLOSURE

The judge considered the principles relating to inadvertent disclosure.

Inadvertent Disclosure
    1. I am concerned on this application with the situation where a receiving party reads documents without being told that the documents are or are alleged to be privileged and inadvertently disclosed.
    1. The action is one to which paragraph 19 of CPR PD57AD, Disclosure in the Business and Property Courts, applies in place of CPR Rule 31.20. However, I do not understand that paragraph 19 of CPR PD57AD to change the position, which applied in relation to CPR Rule 31.20; see the discussion in Hollander on Documentary Evidence at paragraphs 25-02 and 25-03.
    1. The principles governing inadvertent disclosure in circumstances where a receiving party has read the documents without being told that the documents are or are alleged to be privileged and have been inadvertently disclosed are those set out in Al Fayed v Commissioner of the Police of the Metropolis [2002] EWCA Civ 780. The decision of the Court of Appeal in Al-Fayed was reached having considered the effect of CPR Rule 31.20 and the Court observed that no-one suggested that different principles apply to the operation of that rule from those applicable to the question of what, if any, injunction should be granted. Neither party before me submitted that a different approach applies in respect of PD57AD, paragraph 19. On the contrary, both parties relied on the principles in Al Fayed. The relevant principles are as follows (at [16]):
“[…] iii) A solicitor considering documents made available by the other party to litigation owes no duty of care to that party and is in general entitled to assume that any privilege which might otherwise have been claimed for such documents has been waived.
iv)  In these circumstances, where a party has given inspection of documents, including privileged documents which he has allowed the other party to inspect by mistake, it will in general be too late for him to claim privilege in order to attempt to correct the mistake by obtaining injunctive relief.
v)  However, the court has jurisdiction to intervene to prevent the use of documents made available for inspection by mistake where justice requires, as for example in the case of inspection procured by fraud.
vi)  In the absence of fraud, all will depend upon the circumstances, but the court may grant an injunction if the documents have been made available for inspection as a result of an obvious mistake.
vii)  A mistake is likely to be held to be obvious and an injunction granted where the documents are received by a solicitor and:

a)  the solicitor appreciates that a mistake has been made before making some use of the documents; or

b)  it would be obvious to a reasonable solicitor in his position that a mistake has been made;

and, in either case, there are no other circumstances which would make it unjust or inequitable to grant relief.
viii)  Where a solicitor gives detailed consideration to the question whether the documents have been made available for inspection by mistake and honestly concludes that they have not, that fact will be a relevant (and in many cases an important) pointer to the conclusion that it would not be obvious to the reasonable solicitor that a mistake had been made, but is not conclusive; the decision remains a matter for the court.
ix)  In both the cases identified in vii) a) and b) above there are many circumstances in which it may nevertheless be held to be inequitable or unjust to grant relief, but all will depend upon the particular circumstances.
x)  Since the court is exercising an equitable jurisdiction, there are no rigid rules.” (emphasis added)
    1. In applying the principles laid down in Al Fayed, the Court must distinguish between two points: first, whether the document was privileged and, second, whether even if privileged the document has obviously been disclosed by mistake. It is only if the court is satisfied of the latter that it will consider whether to prevent the use of the document in the litigation; see Rawlinson v. SFO [2014] EWCA Civ 1129 at [15].
  1. In other words, the relevant question is not whether it was obvious that the documents in question were privileged. Rather, the question is whether a reasonable solicitor would have realised that an obvious mistake had been made in disclosing the documents. On the question of whether the mistake is obvious, the court will apply the two-limbed test set out in Al Fayed at [16(vii)].

FAILING AT FIRST BASE

The key point here is that the defendant failed to provide evidence to satisfy the court of the first, and most basic issue.  The judge was not satisfied that the documents had been inadvertently disclosed.

Discussion

    1. The burden is on the Defendants to establish that the Disputed Documents were inadvertently disclosed.

 

    1. On this question, the evidence before me from the Defendants is limited and unsatisfactory.

 

    1. I have no evidence from Ms. Jones, who apparently created the compilations JMW3546 and JMW3547 as to why the Defendants included the individual disputed documents within the compilations. Ms. Brown does address the question of inadvertent disclosure in her second witness statement but there is a tension within her evidence as to the purpose for which the two compilation documents were produced. In paragraph 14 of her second witness statement, Ms. Brown gives evidence that the compilations were created in order to assist JMW (and to the extent later relevant, counsel) in the conduct of the ligation and the provision of advice. On first reading, this might be thought to suggest that the purpose of the compilations was to assist with the conduct of the litigation generally. However, each document within the compilation bears the heading ‘disclosurexercise1@outlook.com’, suggesting that the compilations were in fact compiled for the purposes of the disclosure exercise, which the Defendants were required to carry out. On instructions, Mr. Bradley informed me that the advice being sought was advice as to whether the documents in the compilations should be disclosed. However, this is not what Ms. Brown’s statement says and would seem inconsistent with paragraph 15 of her witness statement which is to the effect that she was instructed by Ms. Jones that all constituent correspondence or documentation within the pdf compilations had been made independently available to JMW for the purposes of assessing which documents ought ultimately to be disclosed. There is no evidence before me as to whether Ms. Brown or one of her colleagues reviewed JMW3546 and JMW3547 to see whether those documents contained within them individual documents which were privileged or to explain more generally how JMW3546 and JMW3547 came to be disclosed.

 

    1. Ms. Brown also says that it was not intended that the pdf compilations themselves be disclosed within Extended Disclosure and refers to the Defendants’ Disclosure Certificate, which she says asserts privilege in documentation of this nature. Ms. Brown’s evidence is clearly referring to JMW3546 and JMW3547 as compilations. I cannot accept her evidence in this regard for three reasons:

 

i) The Defendants did disclose other non-native documents, for which they have not claimed privilege or inadvertent disclosure;

ii) It is now accepted by the Defendants, and clear from a brief perusal of JMW3546 and JMW3547, that the majority of the documents within those compilations are not privileged. Nor are the compilations, ones which show the trend of legal advice being given to or sought by the Defendants such that the compilations would independently attract legal privilege.

iii) There is nothing in the wording of the Defendants’ disclosure certificate which can be read as specifically identifying an intention not to disclose JMW3546 or JMW3547 or compilations of the same type.

    1. Overall, I have no good evidence as to why the Defendants and Ms. Jones originally included the Disputed Documents within JMW3546 or as to why the compilations were disclosed in circumstances where the Defendants cannot properly say that JMW3546 was privileged as a compilation.

 

  1. Accordingly, I find that the Defendants have not established that the Disputed Documents found within JMW3546 were inadvertently disclosed.

THE DEFENDANTS ALSO FAILED ON THE QUESTION OF WHETHER THIS WAS AN “OBVIOUS MISTAKE”

The defendants difficulties went beyond that.  The judge held that the disclosure was not an obvious mistake that the claimant’s lawyers should have noted.

    1. Even if I had been satisfied that the Disputed Documents had been inadvertently disclosed, I would still refuse the Defendants the injunctive relief sought both because (i) I do not regard the inadvertent disclosure as having been an obvious mistake and (ii) because I consider it would be unjust and inequitable to grant the relief sought.
    1. On the question of obvious mistake, I do not agree with the submissions of the Defendants that this is a case where just looking at either JMW3546 and JMW3547 would raise a red flag. While one might expect to receive native e-mails and associated attachments in a disclosure exercise, I do not consider that provision of a pdf compilation would be a sufficient reason to put the Claimants on notice that privileged material might be contained within those documents and have been disclosed by mistake.
    1. Nor do I consider that the reference to ‘disclosureexercise1@outlook.com’ indicates that the documents were potentially privileged and in a format unintended for the final stage of inspection. The reference is equally consistent with an intention that the documents should be disclosed.
    1. There is more force to the Defendants’ submission that the nature of the Disputed Documents relating to the formation of the Defendants’ response to matters in the injunction and in the counterclaim and to preparation of Mr. Watson’s witness statement would have suggested that the documents were disclosed by mistake. However, I do not consider that this factor alone was sufficient to put the Claimants or their solicitors on notice that there had been an obvious mistake. The documents were included within a compilation of obviously non-privileged documents and I accept the submission made on behalf of the Claimants that there are reasons why a party may choose to disclose documents that are otherwise privileged and that it is not for a recipient to second guess why disclosure has been made unless an obvious mistake has been made. Such reasons may include an attempt to evidence a point that is not otherwise supported, an attempt at openness or to show consistency or a result of taking a broad approach to disclosure to reduce time and costs on the disclosure review process.
    1. I also accept that the question of whether a mistake had been made that was obvious both to the solicitors actually reviewing the disclosure and to a reasonable solicitor needs to be reviewed in context. In this regard, it is relevant that:
i) The review was of 3,700 documents (and many more pages) for their relevance and not whether they had been disclosed by mistake.
ii) The Disputed Documents were to be found at various places in JMW3546 and JMW3547 with no indication that the compilations or documents within them were privileged.
iii) None of the documents were marked privileged or without prejudice or were of a type that was obviously privileged and unintended for disclosure.
iv) The documents were internal Vebro documents and no lawyers were copied in on the correspondence.
    1. It is also relevant when addressing the question of obviousness that the Defendants did not immediately raise the question of privilege and inadvertent disclosure when Kennedys wrote to JMW on 19 July 2022. Privilege was only raised nearly a month later and then only with an assertion of legal advice privilege and litigation privilege made in respect of JMW3546 and JMW3547 generally rather than in relation to the Disputed Documents. Specific documents for which privilege was claimed were only identified for the first time on 26 September 2022. In other words, it took the Defendants and their solicitors some time to identify that a mistake had been made and the potential basis of the mistake.
    1. It also appears that one of the documents within JMW3547 for which the Defendants claim privilege was also disclosed by the Defendants separately in its native form. In other words, it had been reviewed twice. Although no longer a document in issue (because the Claimants have agreed not to refer to it before the court), it is relevant to the question of obviousness that documents which the Defendants allege were inadvertently disclosed were reviewed twice and still disclosed.
    1. Despite the criticisms made by the Defendants of the evidence of Mr. Steel, I accept his evidence that he and his colleagues undertaking the review of the Defendants’ disclosure were unaware that the Disputed Documents had been inadvertently disclosed.
  1. It follows that I find that there was no obvious mistake justifying injunctive relief in respect of the Disputed Documents