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.

Background

This case involved an application for permission to bring proceedings for committal for interference with the administration of justice. The interference relied on was the use of documents disclosed in an action for a collateral purpose in breach of CPR 31.22, which provides that:

"A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where—

(a)    the document has been read to or by the court, or referred to, at a hearing which has been held in public;

(b)   the court gives permission; or

(c)    the party who disclosed the document and the person to whom the document belongs agree."

The underlying action in which the documents were disclosed involved a claim brought by UPL Europe Ltd and UPL Deutschland GmbH (singly or together, "UPL"), producers of industrial chemicals, against a number of parties that UPL alleged manufactured or sold counterfeit versions of products produced by UPL (the "underlying defendants"). The claims were for infringement of UPL's trade marks and wrongful competition under German law (or passing off under English law), as well as a conspiracy to use unlawful means to injure UPL.

After several months UPL realised the significance of a number of emails that had been disclosed by the underlying defendants. These were between employees of the underlying defendants and Dr Affi, a former employee of UPL, which seemed to indicate that the product complained of was indeed formulated in order to be a match to the UPL product.  There followed the exchange of correspondence which gave rise to the application considered in this case.

UPL's solicitors, Mishcon de Reya ("Mishcon") wrote:

1. to Gordon Dadds (acting for the underlying defendants), alleging breach of confidence (misuse of confidential information) on the basis of the disclosed documents and seeking disclosure in relation to that allegation; and
2. to Dr Affi, alleging breach of confidence and breach of contract in respect of Dr Affi's alleged misappropriation of UPL's confidential data.  The letter sought disclosure from Dr Affi, absent which Mishcon "are instructed to issue proceedings against you without further delay".

Gordon Dadds replied to Mishcon, contending that the alleged breach of confidence had nothing to do with the existing causes of action in the proceedings, and that separate proceedings would need to be brought to deal with the allegations. UPL / Mishcon were therefore seeking to use the disclosed documents for a purpose other than the proceedings in which they were disclosed, contrary to CPR 31.22. They were required to seek the permission of the court, which they had not done, and had therefore "seriously breached" CPR 31.22.

Mishcon replied, attaching draft amended particulars of claim which contained the new claims and added Dr Affi as a sixth defendant.  The letter set out factors that, Mishcon contended, showed that it would be appropriate to add the allegations of breach of confidence to the existing proceedings, and to add Dr Affi to those proceedings.  Mishcon accepted that if separate proceedings were required for the new allegations, UPL would need the court's permission to rely on the disclosed documents, and in that scenario undertook not to rely on them without the consent of the underlying defendants or the permission of the court.

Following further correspondence, the underlying defendants issued a Part 8 claim against UPL and Mishcon for permission to bring proceedings for committal for interference with the due administration of justice.

Decision

The court (Mr Justice Birss) dismissed the application. In reaching this decision, the court considered: (i) whether there was a strong prima facie case of contempt of court; (ii) whether any breach of CPR 31.22 was deliberate; and (iii) whether it was in the public interest and proportionate to bring contempt proceedings.

Prima facie case?

In respect of the first letter to Gordon Dadds, the court found that there had been no breach of CPR 31.22.  It is "commonplace" for a party to reformulate its case as a result of documents received by way of disclosure, including by raising new causes of action relating to those same proceedings, and joining as a co-defendant any third party in relation to those new causes of action. That is not a breach of CPR 31.22. If the new claim had been "entirely separate and distinct from the existing proceedings", so that it could not sensibly or properly be brought in the same proceedings  (what the judge referred to as a "truly collateral case"), it would have been necessary to seek consent.

In respect of the letter to Dr Affi, the court found that there had been a breach of CPR 31.22 because of the threat that it contained to issue new proceedings.  If the letter had instead threatened an application to add a new breach of confidence claim and join him as a co-defendant in the existing proceedings, there would have been no breach.

In respect of the further correspondence, the court found that there had been no breach of CPR 31.22. Mishcon had confirmed that, absent consent from the underlying defendants, UPL would not use the disclosed documents for any other purpose than the proceedings in which they were disclosed.  As for the draft amended particulars of claim, these demonstrated the close relationship between the new allegations and the existing proceedings. Further, Mishcon had subsequently offered an unreserved apology in the event that the letter to Dr Affi had (contrary to their view) been in breach of CPR 31.22.

Deliberate breach?

The court found that, in the case of the letter to Dr Affi, which did amount to a breach of CPR 31.22, there was no strong prima facie case of deliberate or reckless breach of the CPR. There was nothing inherently implausible about Mishcon's evidence as to its belief that there had been no breach of CPR 31.22, and the court saw no evidence to suggest that there had been "some sort of deliberate or cynical approach to attempt to flout the rules".

Public interest and proportionality

The court found that, if there had been clear evidence of a deliberate attempt to breach the CPR, it might well have been appropriate in the public interest to bring contempt proceedings. However, the case did not come close to that on the facts.  As soon as Gordon Dadds raised the potential breach of CPR 31.22, Mishcon provided an undertaking not to make further use of the disclosed documents for any purpose other than the proceedings in which they were disclosed.  Further, in subsequent correspondence, Mishcon offered an unreserved apology in the event they had breached CPR 31.22.  Finally, no prejudice to the underlying defendants resulting from the letter to Dr Affi had been identified.  Overall, committal proceedings would be a "costly and major distraction" and could not be justified.