High Court clarifies scope of CPR 31.22: use of a document only for the purpose of the proceedings in which it is disclosed

The High Court has recently considered what amounts to use of disclosed documents for a collateral purpose contrary to CPR 31.22: Grosvenor Chemicals Ltd v UPL Europe Ltd [2017] EWHC 1893 (Ch). Important takeaways from this decision are as follows:

  • A party receiving disclosure is entitled to use the documents to raise new causes of action in the same proceedings without fear of being in breach of CPR 31.22.
  • The same applies if the new causes of action involve a person who is not currently a party but who could properly be joined as a co-defendant.
  • If however the new causes of action are “entirely separate and distinct” from the existing proceedings,  so that they could not  sensibly or properly be brought in those proceedings, then using the documents to raise those causes of action will engage CPR 31.22.
  • In those circumstances, the party wishing to bring (or threaten) new proceedings on the basis of the disclosed documents will first need to obtain the consent of the party who disclosed the documents or the permission of the court.

Kerrie Barrett, an associate in our disputes team, considers the decision further below. Continue reading

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Upcoming webinar – Litigation update

On Tuesday 10 October (12.30 – 1.30pm BST), Anna Pertoldi, Maura McIntosh and Jan O’Neill will deliver a webinar for Herbert Smith Freehills clients and contacts looking at developments in commercial litigation since our update webinar in March this year. The webinar will focus on lessons learned from decisions in areas such as privilege, settlement, costs and expert evidence.

The webinar is part of our series of HSF webinars, which are designed to update clients and contacts on the latest developments without having to leave their desks. The webinars can be accessed “live”, with a facility to send in questions by e-mail, or can be downloaded as podcasts after the event. If you would like to register for a webinar, or to obtain a link to the archived version, please contact Jane Webber.

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PRC signs up to Hague Convention on Choice of Court Agreements

On 12 September 2017, the People’s Republic of China (PRC) signed the Hague Convention on Choice of Court Agreements. The Convention provides greater certainty in cross-border litigation by increasing the effectiveness of exclusive jurisdiction clauses. In essence, it provides that courts of member states must respect exclusive jurisdiction clauses in favour of the courts of other member states, and must recognise and enforce judgments of the courts of other member states given pursuant to such clauses (subject to certain limited exceptions).

The PRC needs to ratify the Convention before it becomes a member state and is bound its terms. The Convention currently applies as between Mexico and Singapore and the EU member states (other than Denmark), and the UK government has indicated its intention that the UK will sign up to the Convention in its own right post-Brexit. The US and Ukraine have also signed the Convention but have yet to ratify it.

Once the PRC formally joins the Convention, there will be increased opportunities for the recognition of Chinese court judgments internationally and vice versa. For more information, see this post on our Asia Disputes Notes Blog.

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Consumer claims to recover allegedly unlawful charges were validly assigned to claimant company

The High Court has found that a company was able to bring a claim in its own name to recover allegedly unlawful charges paid by third party consumers, where the company had taken an assignment of those claims in return for either an upfront fee or a share of any recoveries: Casehub Ltd v Wolf Cola Ltd [2017] EWHC 1169 (Ch).

The court found that the assignments did not fall foul of the principles of champerty and maintenance (the ancient rules against “trafficking” in litigation). In recent years, it has become clear that those rules will not invalidate an agreement whereby a third party funds litigation in return for a share of the proceeds – unless there is some other feature of the agreement that is contrary to public policy. It had appeared, however, that the rules might be applied more strictly where claims are assigned to a third party to pursue in its own name (as for example in the case of Simpson v Norfolk & Norwich University Hospital NHS Trust [2011] EWCA Civ 1149, outlined here).

But the present decision, together with the decision in JEB Recoveries LLP v Binstock [2015] EWHC 1063 (Ch) (outlined here), suggest that the courts may be increasingly flexible in this context also. Interestingly, the business model pursued by the claimant in this case, which the court described as “a company which builds consumer group actions online”, appears similar to a practice common in some other EU jurisdictions, such as Germany, where claims can be “bundled” in an SPV to be pursued together.

It is not clear, however, that such claims will always be allowed to proceed in this jurisdiction. Each case will turn on its facts, including such factors as whether the claimant is considered to have a legitimate interest in pursuit of the claims and whether there are other elements that render the assignments contrary to public policy.  Continue reading

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Court of Appeal upholds injunction to prevent use of privileged information obtained in breach of confidence

In a recent decision, the Court of Appeal has upheld an injunction against a defendant publisher to prevent it using the claimant’s privileged information that had been provided to the publisher in breach of confidence: Lachaux v Independent Print Limited [2017] EWCA Civ 1327.

The decision does not create new law, but it re-emphasises the courts’ willingness to intervene to protect privilege in appropriate circumstances, including where privileged information has been obtained as a result of a breach of confidence. Continue reading

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Court of Appeal clarifies guidance on “serious harm” requirement under Defamation Act 2013

In an important decision for the law of defamation, the Court of Appeal has clarified the meaning and effect of the requirement to show “serious harm” under the Defamation Act 2013: Lachaux v Independent Print & Ors [2017] EWCA Civ 1334. In doing so, it has departed from the approach adopted at first instance (see here for our post on the High Court decision).

Section 1(1) of the Defamation Act 2013 provides that “[a] statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant”. The High Court found that this required a claimant to show actual or probable harm on the balance of probabilities before a statement was actionable, and so displaced the common law presumption of damage in libel claims.

The Court of Appeal disagreed. It held that section 1(1) raised the threshold of harm that must be proved from “substantial” (as it was under the common law) to “serious”, but that this did not affect the presumption of harm itself or the principle that the cause of action arose upon publication.

As a matter of case management, the Court of Appeal also held that where the “serious harm” requirement is in issue, it should not ordinarily be tried at a separate preliminary hearing (as it was before the High Court).

Alan Watts, partner, Neil Blake, partner, and Angela Liu, associate, in our disputes team consider the decision further below. Continue reading

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Privacy at work: Limits on employers’ ability to monitor private communications

The Grand Chamber of the European Court of Human Rights’ (ECtHR) ruling in Barbulescu v Romania (61496/08) is a timely reminder of the limits of employers’ ability to monitor their employees’ private activity on work IT systems. Although the decision does not substantively alter UK law on employees’ privacy at work, it is notable for:

  • finding that the right to respect for private life under Article 8 of the European Convention on Human Rights applies to communications made from the workplace even when it is questionable whether the employee had a reasonable expectation of privacy; and
  • giving guidance on the factors that domestic courts should consider when deciding whether Article 8 has been breached (involving a balancing of the employee’s right to respect for his private life and the employer’s interests) in cases where private communications have been monitored.

This ruling highlights the broad interpretation that the ECtHR gives to the term “private life” when applying Article 8 to communications. It appears that the content of communications is more important than the context in which they are made. Thus, the fact that a platform is explicitly reserved by an employer for professional communications only does not mean that private communications made on it lose their private status; accessing such communications is a potential breach of employees’ human rights. This was held to be so even when the employee insisted that he had only engaged in professional communications on the employer’s system.

The ECtHR’s guidance to domestic courts is also instructive for employers as to how such monitoring will be viewed by the courts. The ECtHR made it clear that without clear and advance notice warning of the operation of monitoring and detailing its extent and nature, the monitoring is likely to be unlawful. The guidance also indicates that extreme caution should be used when accessing and using the content of employees’ private communications, and that it should be avoided if at all possible.

Whilst decisions of the ECtHR do not automatically become law in the UK, they are (at the moment) required to be taken into account by the domestic courts. Data monitoring activities are, however, already regulated by domestic legislation such as the Data Protection Act 1998 (DPA 1998) (on which the Information Commissioner has published guidance covering the monitoring of employees) and the Regulation of Investigatory Powers Act 2000 and these will remain the primary sources of UK employers’ legal duties in this area.

Alan Watts, Sara Scott and Anna Henderson outline the decision in more detail below. Continue reading

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Recast European Insolvency Regulation introduces new jurisdiction rules for insolvency-related claims

As a result of the Recast European Insolvency Regulation (“REIR”), which applies to insolvency proceedings commenced since 26 June this year, insolvency practitioners in EU Member States have been given more freedom to commence insolvency-related claims in jurisdictions other than the jurisdiction of the insolvency proceedings (ie the court proceedings by which the affairs of the insolvent company are administered – eg liquidation or administration). In certain circumstances, the REIR permits the insolvency practitioner to commence an insolvency-related claim in any Member State in which a defendant is domiciled.

Andrew Cooke, a senior associate in our contentious restructuring, turnarounds and insolvency team, explains in more detail below. Continue reading

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High Court decision illustrates limits of the cherry-picking rule

The High Court has concluded that, where a claimant waived privilege in certain emails to rebut a suggestion of recent fabrication, only a small number of other privileged documents had to be disclosed as a result of the cherry-picking rule: Holyoake v Candy [2017] EWHC 387 (Ch). (The decision dates from February, but a transcript has only recently become available.)

Whenever a party to litigation deploys privileged material to support its case on the merits, the principle of collateral waiver, also known as the “cherry picking” rule, may come into play to result in a wider waiver than intended. In general terms, the court will require disclosure of any further privileged material that forms part of the same “transaction” or “issue”, and any further material required to avoid unfairness or misunderstanding of the material disclosed.

On the facts of the present case, the court found that the relevant “transaction” was relatively narrow; in effect, it was limited to the particular series of emails that had been relied on. It did not extend to later privileged communications on the same topic, and fairness did not require their disclosure.

In practice, however, parties who are considering deploying privileged material to support their case should take a cautious approach. Although the judge in this case indicated that his decision was based on a wish for a consistency and predictability, the courts’ approach to this question is anything but predictable – in particular, because it is highly fact-dependent. Accordingly, a decision to waive privilege should never be taken lightly.

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Supreme Court considers extent to which an appellant’s relationship with a wealthy third party is relevant in considering whether a payment condition will stifle its appeal

A court may impose conditions when granting permission to appeal. These conditions may include a requirement that the appellant pay money into court before an appeal can proceed – most notably in the form of security for costs, or payment of the judgment sum awarded by a lower court.

In a recent decision the Supreme Court has considered the proper approach to imposing such conditions where the appellant has limited financial means, but is closely connected to a wealthy third party who could feasibly pay the required amount on behalf of the appellant. In particular, it has considered whether the third party’s position can be taken into account in determining whether the imposition of conditions will stifle the appeal and therefore breach the appellant’s right to a fair hearing: Goldtrail Travel Limited (in Liquidation) v Onur Air Tașimacilik AȘ [2017] UKSC 57.

The decision establishes that the relationship can be taken into account, but the relevant question is whether the appellant can pay – including by raising the required sum from the relevant third party – not whether the third party can do so.

Nick Chapman from our disputes team considers the decision further below. Continue reading

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