UK: Using Documents For A Collateral Purpose: Permitted Or Prohibited?

Last Updated: 8 February 2018
Article by Thomas Leyland, Felicity Ewing and Tanya Alfillé

Over the past year, there has been a spate of cases concerned with the prohibition on the collateral use of documents in litigation. These decisions, a number of which have arisen out of the long-running Tchenguiz litigation, have helpfully clarified both what might constitute collateral use of a disclosed document and the circumstances in which a court will permit such use.

Why is collateral use of disclosed documents generally prohibited?

Under the Civil Procedure Rules (the Rules) a party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it was disclosed (CPR 31.22 (1)). The Rules effectively codify the common law position.

This prohibition is subject to exceptions where:

  • the document has been read to or by the court, or referred to, at a hearing held in public (CPR 31.22 (1)(a));
  • the court gives permission (CPR 31.22 (1)(b)); or
  • the party who disclosed the document and the person to whom it belongs agree (CPR 31.22 (1)(c)).

The protections imposed by CPR 31.22 recognise that the obligation to give disclosure is an invasion of a litigant's right to privacy and confidentiality. Such an intrusion is justified only because there is a public interest in ensuring that all relevant evidence is provided to the court in litigation. Therefore the use of those documents should be confined to that litigation. The prohibition also promotes compliance with the disclosure obligation1.

What constitutes collateral use?

This question was considered in one of the many decisions in the Tchenguiz litigation, which arose out of criminal investigations by the Serious Fraud Office (SFO) following the collapse of the Icelandic bank, Kaupthing, in 2008 (Tchenguiz & anr v Grant Thornton & others [2017] EWHC 310 (Comm)). After the SFO's investigation into the activities of the Tchenguiz brothers was discontinued, and no charges brought, they, in turn, brought proceedings against the SFO for malicious prosecution and misfeasance in public office. Those proceedings were settled and the Tchenguiz subsequently brought proceedings against Grant Thornton, Kaupthing's administrators, alleging a conspiracy that had provoked and prolonged the SFO investigation.

Reviewing a disclosed document to assess its relevance for disclosure in separate proceedings

In Tchenguiz v. Grant Thornton one or more of the defendants were in possession of documents disclosed in earlier Kaupthing-related litigation, which were potentially relevant in the proceedings brought against them by the Tchenguiz brothers. The court was therefore asked to consider whether it was a collateral use (1) for the defendants to review those documents to assess their relevance (and subsequent disclosure) in the instant proceedings and (2) for all parties to review such disclosure with a view to assessing whether they wished to rely on or use any document in the current proceedings.

The court held that these steps would constitute collateral use (but went on to grant permission for such collateral use). Knowles J suggested that the Rules allowed a wide meaning for the word "use", which accords with the meaning given it in IG Index v. Cloete2, where "use" extended to reading a document, copying it, showing it to someone and using the information contained in it.

Knowles J accepted that the Rules themselves envisaged some limited use of a document for the purpose of assessing whether it has been read to or by the court, or referred to, at a hearing held in public under CPR 31.22(1)(a); seeking permission under CPR 31.22(1)(b); and seeking agreement from the relevant parties under CPR 31.22(1)(c). However, such implied permission was limited and did not extend to reviewing documents to decide whether to rely on or otherwise make use of them in other proceedings.

In reaching his decision, the judge drew a distinction between the purposes for reviewing the documents:

  • where the purpose was to advise on whether other proceedings would be possible, this would constitute a use for a collateral purpose; and
  • where the purpose was to advise on the instant litigation, but in doing so it came to light that other proceedings would be possible, this would not be use for a collateral purpose.

Raising new causes of action on the basis of disclosed documents

In Grosvenor Chemicals Ltd & others v. UPL Europe Ltd & others [2017] EWHC 1893 (Ch), Grosvenor applied for permission to bring committal proceedings against UPL and its solicitors for interference with the administration of justice by using documents for a collateral purpose, contrary to CPR 31.22.

The documents in question had originally been disclosed in proceedings UPL had brought for trademark infringement and passing off against a number of parties, including Grosvenor. Some time after disclosure, UPL realised the significance of some of the disclosed documents and, on the basis of those documents, its solicitors wrote:

  • to the defendants' solicitors alleging a further cause of action for breach of confidence; and
  • to a third party alleging breach of confidence and threatening to issue proceedings against him.

Birss J considered whether any of the steps UPL and its solicitors had taken amounted to a collateral use and concluded as follows:

  • the review of the disclosed documents was not for a collateral purpose as there was no reason to suggest that it was undertaken for anything other than orthodox reasons in the course of the existing litigation and, as such, fell within Knowles J's second limb in Tchenguiz v. Grant Thornton.
  • the letter notifying Grosvenor of a further claim did not amount to use of the documents for a purpose other than the purpose of the proceedings in which they were disclosed. That is because a party is entitled to use documents disclosed in proceedings to raise new causes of action which relate to the same proceedings without breaching CPR 31.223. Had the letter raised matters that were "entirely separate and distinct" from the existing proceedings so that the issues could not have properly been brought in the same proceedings, that would have constituted a "truly collateral case", for which UPL would need to seek permission.
  • the position is the same where the new cause of action involves a third party who could properly be joined as a co-defendant.
  • the letter to the third party threatening fresh proceedings on the basis of the documents did constitute use of documents for a purpose other than the proceedings in which they had been disclosed, and was therefore a breach of CPR 31.22.

The judge held, however, that it was not in the public interest to allow contempt proceedings in relation to breach of that rule.

When will the court permit collateral use?

Under the exceptions to the general rule, a party may be permitted to use disclosed documents for a purpose other than the purpose of the proceedings in which they were disclosed if they obtain the court's permission (CPR 31.22(1)(b)). The court will only grant permission if there are "special circumstances" that constitute a cogent reason for permitting collateral use, and this would not cause injustice to the person giving disclosure4. The circumstances in which a court might give permission have also been considered in the recent case law.

No permission where the integrity of criminal investigations might be compromised

An earlier decision in the Tchenguiz litigation considered whether that test had been met in the context of documents disclosed to the Tchenguiz parties in their proceedings against the SFO: Rawlinson & Hunter Trustees SA v. SFO [2015] EWHC 266. The trustees of the Tchenguiz Discretionary Trust applied for permission to use documents (and extracts of witness statements) in proceedings in Guernsey (the Guernsey proceedings) that had been disclosed in the unrelated English proceedings against the SFO (the English proceedings).

The trustees also sought a declaration that the exception in CPR 31.22(1)(a) (where a document has been read to or by the court, or referred to, at a hearing held in public) applied to some of the documents already in the public domain. The SFO counter-applied for an order under CPR 31.22(2), which provides that the court may restrict or prohibit the use of a document that has been disclosed, even where the document has been read to or by the court, or referred to, at a hearing which has been heard in public. If granted, this would have had the effect of re-imposing protection over those documents.

The court refused the trustees' applications and allowed the SFO's application:

  • The trustees had failed to show special circumstances amounting to a cogent reason for permitting the collateral use of the documents. In its reasoning, the court cited a number of factors, including the fact that the documents formed part of the SFO's criminal investigations, the other parties involved in the English proceedings did not consent to their use, and permitting such use would risk substantial unfairness to the SFO in the Guernsey proceedings (to which it was not a party). The public interest in preserving the integrity of criminal investigations also protected those, such as Grant Thornton, who had provided information to the SFO, so that their confidential records concerning the investigation could not be used outside the English proceedings.
  • As to the documents that had been read or referred to in public hearings, the court restored the protection afforded by CPR 31.22(1) on the basis that the SFO had shown that there were "very good reasons" to override the principles of open justice and transparency. All the documents related to a criminal investigation and so engaged the strong public interest against their collateral use. It was also relevant to assess the significance of the documents in the context of the proceedings in which they were referred to and the circumstances in which they had been produced5. In this instance, they had not been referred to at trial and the references had been only marginal in the context of the proceedings as a whole.

The decision demonstrates that preserving the integrity of criminal investigations and protecting those who provide information to prosecuting authorities from any wider dissemination of that information will be strong factors in favour of preventing the collateral use of documents.

But, possibly, if the parties can offer safeguarding arrangements

Similar issues were considered in a more recent, unreported decision in the Tchenguiz proceedings, where both parties sought permission to use in those proceedings documents (and extracts from witness statements) that had been disclosed by the SFO in separate proceedings brought by the Tchenguiz brothers against the SFO: Tchenguiz v. Grant Thornton [24 May 2017] (unreported).

Given the Rawlinson decision6, it might have been expected that this application would fail on public interest grounds in preserving the integrity of criminal investigations. However, Knowles J granted permission on the basis that the parties had been able sensibly to narrow the scope of the application and to agree to safeguarding arrangements and redactions of the documents. Relevant factors included the fact that, had the SFO proceedings gone to trial, the documents would have been in the public domain, and the trial judge would in any event retain discretion in relation to the use of the documents.

What constitutes "special circumstances"?

In a recent decision (outside the Tchenguiz litigation) the court gave careful consideration to what might constitute the "special circumstances" required for the court to permit collateral use of documents: Libyan Investment Authority v. Société Générale SA & others [2017] EWHC 2631 (Comm).

The Libyan Investment Authority (LIA) sought permission to review documents disclosed in proceedings against Société Générale (and two individual defendants), which had been settled. The purpose of the review was to investigate whether to seek permission to use those documents for separate proceedings it might wish to pursue against other financial institutions (and the two individual defendants) in relation to separate transactions it had identified. Such a review would fall within the prohibition on collateral use, unless permitted by the court7.

Teare J refused permission on the basis that the receiver bringing the application on behalf of the LIA lacked power to make the application. However, he went on to consider whether the application would have been granted if the receiver had such power. This involved considering the test set out in Crest Homes v. Marks, permitting a party to litigation to be released from the prohibition on collateral use where there are special circumstances that justify that release and no injustice would be caused to the other party.

Special circumstances will typically arise where there are conflicting public interests, for example between the public interest in enforcing the collateral use restriction so as to encourage disclosure of documents in civil and criminal proceedings, and the public interest in facilitating the investigation or prosecution of criminal offences.

The court was clear that the LIA could not rely on the proposition established in Marlwood v. Kozeny8, that the public interest in the investigation and prosecution of fraud as a criminal offence will usually take precedence over the public interest in enforcing the collateral use restriction, since the LIA is not a public body charged with investigation and prosecution of fraud as a criminal offence. However, it accepted that in principle there was a strong public interest in facilitating the just resolution of civil litigation9. The LIA's purpose in seeking to use the documents engaged that public interest. Whether that amounted to special circumstances required careful examination of all the circumstances of the case. The court considered a number of factors in the exercise of its discretion and concluded that the requisite "special circumstances" had been shown. There was also no reason to consider that the review of the documents would cause the individuals harm in circumstances where it was to be conducted by those who already had access to the documents.

On that basis, Teare J determined (obiter) that he would have granted the application if the receiver had the power to make it. Although his findings were made obiter, the judge indicated that he would hear argument as to whether the issue of the receiver's power could be overcome. If that should be the ultimate outcome, it is possible that his obiter findings could become decisive of the case10.

The approach to take

The recent case law has provided welcome clarification on some of the issues faced by those assessing whether they are able to make use of disclosed documents and in what circumstances such use will be prohibited or permitted. However, this remains a difficult area where competing public interests have to be finely balanced. It is worth bearing in mind the following practical points:

  • if there is any doubt as to whether the intended use could breach the prohibition on the collateral use of disclosed documents, the safest route is to apply for permission under CPR 31.22(1)(b);
  • not doing so could risk you being in contempt of court, although the breach would have to be deliberate or reckless;
  • the chances of obtaining the court's permission to use documents for a collateral purpose will be enhanced if applicants take a pragmatic approach and put forward safeguarding measures.

Footnotes

1. As set out in Tchenguiz v. Director of the Serious Fraud Office & others [2014] EWCA 1409 at [56].

2. [2014] EWCA Civ 1128 at [40].

3. Miller v. Scorey [1996] 1 WLR 1122.

4. Crest Homes v. Marks [1987] AC 829, cited in Tchenguiz v. Director of the Serious Fraud Office & others [2014] EWCA Civ 1409 at [57] and [66(i)].

5. Lily Icos Ltd v. Pfizer Lts (No 2) [2002] EWCA Civ 2.

6. [2015] EWHC 266.

7. Tchenguiz v. Grant Thornton [2017] EWHC 210 (Comm) at [29].

8. [2004] EWCA Civ 798.

9. See Tchenguiz v. Director of the Serious Fraud Office & others [2014] EWCA Civ 1409 at [66(iii)].

10. A subsequent application to amend the receivership order, thereby conferring power on the receivers to apply for permission to make collateral use of the documents, has been allowed: Shaw & others v. Breish & others [2017] EWHC 2972 (Comm). The outcome of the adjourned application for permission to make collateral use of the documents is awaited.

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