High Court orders Tesco to disclose SFO documents in s.90A FSMA shareholder class action

The High Court has ordered Tesco to disclose, in civil proceedings brought by its shareholders under s.90A of the Financial Services and Markets Act 2000 (“FSMA”), documents that the SFO had provided in confidence to Tesco’s legal representatives in the course of negotiating a deferred prosecution agreement: Omers Administration Corporation & Ors v Tesco plc [2019] EWHC 109 (Ch).

The material in question comprised documents, interview transcripts and witness statements that the SFO had obtained from third parties using its powers to compel the production of information/documents under s.2 of the Criminal Justice Act 1987. Accordingly, the decision highlights the possibility that material provided to the SFO (and potentially other regulatory or enforcement bodies) may become disclosable in subsequent civil proceedings.

More generally, the decision provides an illustration of how the court will deal with a request that a party disclose documents which are subject to third party confidentiality obligations. Confidentiality is not, in itself, a bar to disclosure, but it is a factor the court will take into account in considering whether to order disclosure. The decision emphasises that the court must approach the matter by reference to all the circumstances of the case and without any presumptions one way or the other. In general, however, where the documents are relevant, the balance is very likely to favour production, unless the same information is available from another source without disproportionate difficulty – but the court will seek to impose appropriate measures to protect that confidentiality, insofar as compatible with the needs of justice.

For more information, please see our Banking litigation ebulletin on the decision.

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Court of Appeal gives guidance on how to apply jurisdiction test laid down by Supreme Court

The Court of Appeal has considered how the test for establishing English jurisdiction should be applied where there is a dispute over the facts relevant to jurisdiction: Kaefer Aislamientos SA de CV v AMS Mexico SA de CV [2019] EWCA Civ 10.

Where a claimant needs permission to serve proceedings out of the jurisdiction, the claimant has to establish that a relevant jurisdiction gateway applies, eg on the basis that the defendant has committed a breach of contract within the jurisdiction. The same is true where the claimant asserts an entitlement to serve out of the jurisdiction without the court’s permission under an article of the recast Brussels Regulation, eg on the basis of a jurisdiction clause in favour of the English courts.

The test has in the past been expressed as the need to establish a “good arguable case” as to the application of the relevant gateway/article. This test was intended to be straightforward, but has become, in the Court of Appeal’s words, “befuddled by ‘glosses’, glosses upon glosses, ‘explications’ and ‘reformulations’.”

The Supreme Court, in two cases in 2018, sought to clarify the test. However, how it applies in practice has not been entirely clear. The Court of Appeal in the present case has sought to interpret each limb of the test. It has, in particular, given its view that the court must consider the relative merits of the parties’ arguments, rather than merely requiring the claimant to surmount a set evidential threshold. There remains however plenty of scope for further debate on the Supreme Court’s formulation and how it applies in any particular case. Continue reading

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Court of Appeal confirms defendants not obliged to make enquiries of third parties before pleading non-admissions

The Court of Appeal has rejected an argument that a defendant must make reasonable enquiries of third parties before pleading in its defence that it is unable to either admit or deny an allegation and requires the claimant to prove it: SPI North Ltd v Swiss Post International (UK) Ltd and Asendia UK Ltd [2019] EWCA Civ 7.

A defendant is under a positive duty to admit or deny an allegation where it is able to do so, and may only put the claimant to proof of a fact which it is unable to admit or deny. This decision confirms that a defendant may properly plead that it is unable to admit or deny an allegation where the truth or falsity of the allegation was neither within its actual knowledge (including attributed knowledge in the case of a corporation) nor capable of being easily ascertained from documents or other information at the defendant’s ready disposal. It is not required to undertake investigations beyond that level, including consulting with any third parties.

This is not surprising but is nevertheless a welcome confirmation. A contrary conclusion could have given rise to significant practical difficulties, given the short period allowed by the rules for filing a defence. Continue reading

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High Court upholds claim to privilege in respect of underlying instructions to law firm relating to escrow monies

The High Court has rejected an application for disclosure of documents containing the underlying instructions to a law firm acting for a party funding a transaction, in circumstances where the law firm provided a confirmation to the seller as to the nature of its irrevocable instructions regarding escrow monies: Raiffeisen Bank International AG v Asia Coal Energy Ventures Ltd [2019] EWHC 3 (Comm).

The court rejected an argument that the instructions were not confidential, or that privilege had been waived, because the client had authorised the law firm to state what instructions it had been given. The judge emphasised that underlying instructions do not cease to be confidential just because the client authorises the solicitor to divulge information it has received in confidential communications from the client. The question is whether the client has given the solicitor authority to disclose the underlying communications.

Caution is needed however. It may be difficult to distinguish between cases where the client has given the solicitor authority to disclose the underlying communications and cases where it has merely authorised the solicitor to divulge information received from the client without disclosing the underlying communications. Particular care should also be taken where a party is considering referring to lawyer/client communications in the context of legal proceedings. If the court finds that the underlying privileged material is being deployed in the proceedings it may order those communications to be disclosed along with any other documents relevant to that issue, under the principle of collateral waiver or the “cherry picking rule”.

The decision also illustrates the broad protection which can be afforded to lawyer/client communications under the head of legal advice privilege. The privilege is not limited to requests for legal advice or the provision of advice, but will include the entire continuum of communications between solicitor and client relating to a transaction in which the solicitor has been instructed, provided that they are directly related to the solicitor’s performance of his professional duty as legal adviser. Here that principle meant that instructions regarding the holding and transfer of escrow monies were privileged, even if they did not contain advice on matters of law. Continue reading

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Filed under Confidentiality, Privilege

Court of Appeal finds interim contract incorporated terms and conditions including limitation of liability

In a recent judgment, the Court of Appeal has overturned a High Court decision which found that the defendant had undertaken preliminary work for a building project under an interim contract which did not incorporate any terms and conditions. The Court of Appeal found that terms and conditions had in fact been incorporated by reference, so that the defendant’s liability was limited: Arcadis Consulting (UK) Ltd v AMEC (BCS) Ltd [2018] EWCA Civ 2222.

The decision suggests that (whilst there are clearly risks in commencing work without a clear written agreement as to the terms that will apply on an interim basis) the court may be reluctant to conclude that a party has assumed an unlimited liability for works carried out under an interim contract pending negotiation of a final agreement, when it never would have assumed such liability under that final agreement. Each case will, however, turn on its facts and parties would be well advised to ensure there is no room for argument as to the terms that apply at any stage.
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Know when to apply for permission to appeal to the Court of Appeal: time runs from when judgment is handed down, not when the lower court refuses permission

A recent Court of Appeal decision clarifies the rules on applying for permission to appeal to the Court of Appeal – which, the court noted, are often not properly understood by would-be appellants: McDonald v Rose [2019] EWCA Civ 4.

The decision underlines the important practical point that the 21 day time limit for applying for permission runs from the date of the decision to be appealed – which, in the case of a reserved judgment, is the date it was formally handed down. Time does not run from the date the lower court’s order is sealed or (where the party has first applied to the lower court for permission, as is usual) the date the lower court refuses permission to appeal.

If a party wants more time to file its application with the Court of Appeal, it must seek an extension of time from the trial judge, either when the judgment is handed down or when requesting an adjournment of the hand-down hearing (so as to give it more time to apply to the lower court for permission). An adjournment in itself will not extend time.

It is possible to apply to the Court of Appeal to extend time retrospectively, but this is treated as an application for relief from sanctions and therefore the three-stage test from Denton v TH White Ltd [2014] EWCA Civ 906 (considered here) will apply. Continue reading

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Article published – No-deal Brexit and disputes: what do parties need to know?

If the UK leaves the EU without a deal on 29 March, what impact will that have on court proceedings? Different questions arise depending on the stage reached in the disputes process.

Anna Pertoldi has published a post on Practical Law’s Dispute Resolution blog which considers what a no-deal Brexit would mean for disputes and what questions businesses should be asking their lawyers to advise on. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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Filed under Choice of law, Enforcement, Jurisdiction

Application of the Brussels regime post-Brexit

The government has published a draft statutory instrument addressing, among other things, the question of how the UK courts will, post-Brexit, treat questions of jurisdiction involving EU member states and the enforcement of judgments given by EU member state courts, assuming that the UK leaves the EU without a withdrawal agreement. The European Commission has also published a notice to stakeholders addressing the position of EU member state courts on these questions. The key provisions are summarised below. Continue reading

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Conflicting first instance decisions on whether default judgment can be granted where acknowledgement of service filed late

In a recent judgment, the High Court rejected an application for default judgment on the basis that the defendant’s acknowledgement of service, though late, had been filed shortly before the application: Cunico Resources NV v Daskalakis [2018] EWHC 3382 (Comm).

The decision turned on the interpretation of CPR 12.3(1), which sets out the conditions to be satisfied before a claimant may obtain judgment in default of an acknowledgement of service. This provision has been the subject of conflicting first instance decisions and we understand it is under review by the Civil Procedure Rules Committee.

In the present case, the judge rejected the submission that default judgment may be granted where an acknowledgement was filed late, even though it was filed before judgment was entered or even before the application for default judgment was made. This contrasts with the most recent decision on the point, in McDonald & McDonald v D&F Contracts Ltd [2018] EWHC 1600 (TCC), which supports the opposite conclusion.

In the present case it was not necessary for the judge to decide whether default judgment could have been entered if the acknowledgement was filed after the application but before judgment. The judge said his own view was that it could not, but he would have decided otherwise in light of the preponderance of views in the prior case law.

In practice, given the unsettled state of the law in this area, and pending clarification by the Rules Committee or a Court of Appeal judgment, defendants should take care to file timely acknowledgements of service and claimants seeking default judgment should act quickly. Where default judgment is entered, a defendant can apply to have it set aside, but the burden of proof will be on the defendant to show that it has a real prospect of successfully defending the claim, or that there is some other good reason why the judgment should be set aside.

Francesca Ruddy, an associate in our dispute resolution team, considers the decision further below. Continue reading

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Filed under Judgments/Orders, Statements of case

Article published – Discussing settlement options: minding the gap between litigation privilege and the without prejudice rule

The recent Court of Appeal decision in WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652 (outlined here) found that litigation privilege applies only to documents created for the dominant purpose of obtaining advice or information/evidence in relation to litigation, and not the conduct of litigation more broadly. As a result, the privilege did not apply to emails between a company’s Board members which had been prepared to discuss a commercial proposal for the settlement of a dispute.

The decision causes real practical difficulties for commercial parties, exposing an awkward gap in the protection afforded to documents prepared for the purpose of settling a dispute.

Maura McIntosh has published a post on Practical Law’s Dispute Resolution blog which considers the decision and its implications. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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Filed under Privilege