High Court grants interim non-disclosure order to restrain publication of confidential information

The High Court recently granted a hedge fund an interim non-disclosure order to restrain the publication of confidential information which had been provided to potential investors and subsequently leaked to the press: Brevan Howard Asset Management LLP v (1) Reuters Limited, (2) Maiya Keidan, and (3) Person or Persons Unknown (who has/have leaked confidential investment documents belonging to the Claimant) 2017 EWHC 644 (QB).

The court accepted that there was a public interest in publication of the information as hedge funds, their effect on the economy and the identity of their investors are matters of public interest. However, that interest was outweighed by the competing public interest in favour of maintaining confidentiality.

This is a helpful decision for financial services firms or others who disseminate confidential and/or proprietary information for the purposes of seeking investment. The court recognised a strong public interest in ensuring that investors are able to receive full and frank disclosure of key investment information, which may allow such information to be shared with increased confidence in similar circumstances.

In any event, as a practical matter, security measures (eg encryption and passwords) and supporting confidentiality agreements should be put in place when sharing confidential information to minimise the risk of onward dissemination, and the documents should make clear on their face that they contain confidential information so that any recipient (intended or not) will be on notice of their confidential nature.

Alan Watts, Neil Blake and Rebecca Murtha in our disputes team consider the decision further below.

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Court of Appeal clarifies test for setting aside judgment for fraud

The Court of Appeal has clarified the test that must be met when seeking to set aside a judgment on the grounds that it was obtained by fraud: Takhar v Gracefield Developments Ltd and others [2017] EWCA Civ 147.

The decision confirms that the court must be satisfied that evidence of the fraud was not available to the innocent party at the time of trial and could not with reasonable diligence have been uncovered then.

This resolves the uncertainty that had arisen from conflicting lower court authority as to whether the "reasonable diligence" requirement extends to cases involving fraud or whether fraud cases were excepted from the rule on the basis that "fraud unravels all". It confirms that, in this context, the public policy in favour of finality of litigation takes precedence over the desire to do justice in individual cases to the extent that they conflict – at Court of Appeal level at least. While this may operate harshly against innocent parties in some cases, there remains scope for a court to exercise its judgment as to what the standard of "reasonable diligence" requires in any particular case.

As a practical matter, parties to litigation who suspect some element of fraud should be aware of the limitations on re-opening litigation, and should ensure that they take all reasonable steps to investigate their suspicions and raise any such allegations within the proceedings if they wish to pursue them.

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Court of Appeal decision may mean higher awards of interest for claimants who make well-judged Part 36 offers

The Court of Appeal has held that a defendant should have been ordered to pay enhanced interest on both damages and costs at the maximum rate of 10% above base rate where it failed to accept the claimant's Part 36 offer, overturning a High Court decision awarding a lower rate: OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195.

The Court of Appeal's decision gives guidance on how the court should exercise its discretion to award interest at up to 10% above base rate where a claimant beats its own Part 36 offer, disagreeing with suggestions in previous case law that an award of enhanced interest under Part 36 should be purely compensatory. Instead, an award may be pitched at a level designed to incentivise defendants to act reasonably in seeking to settle litigation and to mark the court's disapproval of any unreasonable or improper conduct. 

The judgment makes it clear that the level of interest must be proportionate to the circumstances of the case, and that 10% above base rate should not be regarded as a starting point. However, the recognition that an award of enhanced interest under Part 36 need not be entirely compensatory may mean that the court is prepared to award higher levels of interest than previously where a claimant beats its own Part 36 offer, particularly where the defendant has acted unreasonably. 

The Court of Appeal did however stress that appeals on issues of this kind should in future be rare, as the judge's discretion as to the appropriate rate of enhanced interest is a wide one and the Court of Appeal would not often be persuaded to interfere with it.

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High Court finds option agreement void for uncertainty where it left delivery dates to be agreed

The High Court has found that an option agreement for the purchase of oil tankers was void for uncertainty where it provided that the delivery date for the vessels would be "mutually agreed upon" when the relevant options were exercised: Teekay Tankers Ltd v STX [2017] EWHC 253 (Comm).

Although the parties had intended the agreement to be binding, the court found that it was impossible to imply a term by which the delivery dates were to be determined if the parties were not able to reach agreement. The delivery dates were an essential term of the contract, and so this was merely a non-binding "agreement to agree".  

The Teekay decision shows clearly the difficulties parties may have in enforcing contracts where essential terms are left to be agreed at a later date. Where possible, it is best to agree all important terms in advance. If that is not possible, the agreement should ideally set down some objective standard against which agreement is to be reached, or some other fall back provision to determine the content of the term if there is a deadlock. If the parties wish to retain the freedom to agree, or not, as they see fit, this may result in the agreement being rendered void as a result.

Chris Bushell and Tom Brown, a partner and associate in our disputes team, consider the decision further below. For more on contract formation, and the potential pitfalls, see When do you have a binding contract? It may be more (or less) often than you think, which is part of our series of contract disputes practical guides.

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Survival of the first UK competition class action – at least for the moment

Last Friday (31 March), the Competition Appeal Tribunal (CAT) allowed the first 'class action' brought under the new competition law collective redress regime to continue, at least for now. This is a follow-on claim seeking damages on an opt-out basis on behalf of consumer purchasers of Pride mobility scooters between 2010 and 2012, on the basis that Pride was found to have infringed competition law through a form of resale price maintenance. The class is estimated as comprising 27,000-32,000 people, and the damages as between £2.7 and £3.2 million.

Under the new regime, the CAT must make a collective proceedings order certifying a claim before it can proceed. The CAT must consider whether: it is "just and reasonable" for the putative representative to act on behalf of the class; the claims raise the "same, similar or related" issues of fact or law and are "suitable" to be brought in collective proceedings; and whether the action should be brought on an opt-in or an opt-out basis. 

The present case is one of only two applications made to date for a collective proceedings order under the new regime. The CAT's decision in the second application – brought on behalf of over 46 million UK consumers against MasterCard (in relation to its interchange fees) and seeking around £14 billion in damages – is awaited.

In the present case, the CAT has not made a final decision on the application for a collective proceedings order, instead adjourning the application to allow the claimant representative to reformulate her claim in certain respects. However,  the decision provides some clarification on important aspects of the regime. For more information please see our Competition, regulation and trade e-bulletin on the decision and other developments in the UK's competition landscape.

 

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High Court considers defamation and harassment in context of street protests and online publication by foreign defendants

The High Court recently considered the approach to interpreting a "course of conduct" under the Protection from Harassment Act 1997 and the requirement of "serious harm" under the Defamation Act 2013: Hourani v Thomson and others [2017] EWHC 432 (QB).

This decision provides a vivid example of how concurrent liability can arise in the torts of defamation and harassment in the context of social media campaigning. It also provides instructive guidance on the type of evidence that may be offered to prove publication in this jurisdiction of statements made online by foreign defendants, as well as the type of harm that is considered sufficiently serious to found a defamation claim.

The court also considers the role that the rights to freedom of expression and freedom of assembly (balanced against the right to a private and family life) play in assessing whether a course of conduct amounts to harassment.

Neil Blake and Rebecca Murtha in our disputes team consider the decision further below.

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Cross-border litigation – international perspectives

Herbert Smith Freehills has published the first issue of a new periodic publication "Cross-Border Litigation", designed to highlight legal and practical issues specific to litigation with an international aspect.

The publication will tap into the expertise of the firm's leading commercial litigators across the globe, to give readers the benefit of their hands-on experience conducting cross-border litigation and to flag key developments in this area that should be on commercial parties' radars.

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Supreme Court on contractual interpretation: striking a balance between the language used and the commercial implications

In a judgment handed down yesterday (29 March), the Supreme Court has unanimously dismissed an appeal relating to the construction of an indemnity clause: Wood (Respondent) v Capita Insurance Services Limited (Appellant) [2017] UKSC 24.

The Supreme Court emphasised that it did not seek, once again, to reformulate the guidance to the legal profession, noting that its judgments in Arnold v Britton [2015] AC 1619 (considered here) and Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 (considered here) provide sufficient statements of this nature.

Rainy Sky and Arnold are often seen as pulling in opposite directions, with the former having given a greater role to commercial common sense in interpreting contracts, while the latter re-emphasised the importance of the natural meaning of the words used.

The present judgment, however, emphasises the common ground, commenting that they were in fact saying the same thing – namely that interpretation is a unitary exercise, in which a balance must be struck between the indications given by the language used (in both the clause under scrutiny and the remainder of the contract) and the implications of rival constructions (which is usually thought of as the business common sense approach). Interestingly, Lord Hodge said that in striking a balance between these two tools to construction it does not matter which way round they are used, so long as the court balances the indications given by each.

The decision does however emphasise that the weight to be given to each tool will depend on the circumstances. Some agreements may be successfully interpreted by textual analysis, eg because they have been professionally drafted and their meaning is clear. Others may require a greater emphasis on the commercial background and implications to interpret a disputed provision. It also emphasises, in line with Arnold, that business common sense can only be taken so far, remembering that one side may have agreed to something which with hindsight did not serve his interest. It is not the role of the court to save the parties from a bad bargain.

For more detail on the decision, see our Banking litigation e-bulletin, or for more on contractual interpretation see What does your contract mean? How the courts interpret contracts from our Contract disputes practical guides series.

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Court of Appeal clarifies test for risk of dissipation of assets for notification injunctions

The Court of Appeal has held that a notification injunction (an order requiring a respondent to give notice of any dealings with or disposal of assets or other transactions that fall within the scope of the order) drawn in wide terms is, in effect, a modified version of a conventional freezing order, rather than a distinct type of injunction, such that the same test in relation to the risk of dissipation of assets applies: Candy & Ors v Holyoake & Anor [2017] EWCA Civ 92.

This judgment provides clarity as to the proper classification of notification injunctions, and the risk of dissipation that applicants must demonstrate in order to succeed. A party seeking a notification injunction in wide terms must show a real risk, supported by solid evidence, that a future judgment would not be met because of unjustifiable dissipation.

The position may, however, be different in relation to notification injunctions which are not in wide terms. The judge suggested, albeit only obiter, that where the applicant seeks a simple order requiring notice to be given of a proposed disposition of a specific property, there may be a different test.

James Allsop, a senior associate, and James Leadill, an associate, in our dispute resolution team consider the Court of Appeal's decision further below.

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Article published – Choice of law and jurisdiction post-Brexit: business as usual so far?

Recent reports from Parliament have identified the problems and risks that could arise post-Brexit if the current rules on choice of law and jurisdiction no longer apply, and there are no acceptable replacements negotiated. But are clients turning away from English choice of law and jurisdiction clauses as a result?

Anna Pertoldi has published a post on Practical Law’s Dispute Resolution blog which outlines her impression that Brexit has not, to date, led to a general move away from English choice of law and jurisdiction clauses, and considers why that might be the case. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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