Risks of mentioning confidential documents in pleadings (Aqua Global v Fiserv)

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The Chancery Division has ordered the disclosure of a confidential document referred to in the defendant’s defence under CPR 31.14. In doing so, it considered the meaning of ‘mentioned in’ a statement of case, applying the Court of Appeal’s decision in Rubin v Expandable and distinguishing this case from the Patent Court’s decision in Danisco v Novozymes.

Having ordered the disclosure of the document, but being aware of the confidential nature of the document and the third party’s interests in seeking to maintain that confidentiality, the court also addressed the extent to which the document should be redacted, the formation of a confidentiality ring, protecting the documents from subsequent use under CPR 31.22(2) and restricting non-parties from being able to access the document from the court file without a court order pursuant to CPR 5.4C. This judgment is interesting to practitioners on the potential risks in referring to documents in statements of case and ways in which confidential information can be protected in the context of disclosure.

Practical implications

Practical implications arising from Aqua Global Solutions Ltd v Fiserv (Europe) Ltd [2016] EWHC 1627 (Ch) include:

  • careful consideration should be given to referring to documents, most particular confidential documents, in your statements of case
  • pay careful attention to your opponent's pleadings and think carefully about whether there might be scope to require the disclosure and inspection of documents mentioned in them under CPR 31.14 and CPR 31.15 respectively
  • where you are obliged to permit inspection of confidential documents, consider ways in which you might seek to protect such confidentiality—see further
  • think carefully about who should be included within the confidentiality ring—here, the court observed the claimant's expert would almost certainly need to be admitted
  • consider whether it might be appropriate to request such matters concerning confidentiality be heard in private. However, where the court does not agree to this, ensure steps are taken to ensure that submissions are made in such a way that the confidentiality is maintained. Here, the court observed that it had been possible to conduct the hearing publicly due to the degree of care exercised by counsel where referring to the document, 'so that sections from it which are agreed to be confidential were not read out loud' (para [35]). For further guidance, see Practice Note: Public and private hearings
  • when thinking about redacting, bear in mind the purpose of redaction and whether it is appropriate—where it might not be, consider deploying some other form of protection, for example the creation of a confidentiality club—see below for further detail in relation to both

The application—background facts

The claimant applied under CPR 31.14 and CPR 31.15 and/or CPR 31.12 to inspect an unredacted copy of a confidential agreement between the defendant and a third party, Tesco (the document), which had been referred to in the defence.

The defendant had previously supplied a 'very heavily' redacted version of the document, justifying the redactions on grounds the majority of the document was irrelevant to the issues in dispute between the parties and that the document contained confidential and commercially sensitive information which the defendant owed a duty to Tesco to protect.

There had, subsequently, been various discussions which had sought to resolve this issue and which had resulted in a draft consent order which included, among its terms, the creation of a confidentiality ring. However, ultimately the issue came before the court.

Summary of key findings

The court directed the full, unredacted, document be disclosed, albeit subject to the terms of a confidentiality ring.

It also made orders under:

In coming to its decision, the Chancery Division considered the following key issues:

  • the extent to which documents 'mentioned in' statements of case fall to be disclosed under CPR 31.14, and
  • ways in which the confidentiality in this document could be maintained

Both are dealt with in more detail below.

Obligation to disclose documents 'mentioned in' a statement of case—CPR 31.14

Chief Master March found the claimant had the right to inspect the document as the defendant had not demonstrated there were 'good grounds for limiting the right of inspection on the grounds of confidentiality or irrelevance'—the document was 'directly relevant to issues which will have to be resolved at the trial of this claim' and the court was satisfied that Tesco's interests could be 'adequately protected in the course of this litigation so far as disclosure into the public domain of confidential information is concerned' (paras [34] and [35]).

In ordering the disclosure of the document, the court had to ensure the interests of the parties were 'balanced so as to ensure that the Claimant is able to conduct this litigation without undue restrictions whilst preventing confidential information being misused or leaking'.

Although it accepted the claimant was a potential competitor of the defendant and had 'shown an interest in entering into a commercial relationship directly with Tesco' it did not think the balance could be properly maintained without disclosure of the document, albeit 'subject to confidentiality provisions in the form of undertakings provided to them and an express restriction preventing them, and the Claimant, from using information obtained from inspection of the document' (para [37]).

In doing so, the court:

applied the Court of Appeal's reasoning in Rubin, namely that, generally, a party's mentioning of a document in its pleadings is a form of disclosure and, as such, the other party ought to be entitled to inspect it (para [19])

  • distinguished the Patent Court's decision in Danisco v Novozymes (No 2) (namely that a court has the inherent jurisdiction to prevent, in its entirety, inspection where inspection was not necessary for the fair disposal of the action) where, among other things:
    • those comments were obiter and made following limited submissions on the point—for example, the court had not even been directed to the Court of Appeal's decision in Rubin
    • the decision was made in a patent case in which a modified disclosure regime applies
    • there is a difference between referring to a voluminous dossier of documents in a witness statement and referring, directly, to a single document, in this case a commercial agreement, in a statement of case
  • made a number of observations, including:
    • the court does have the power to decline to make an order for disclosure of documents falling with CPR 31.14 for example where:
      • the document is privileged
      • proper restrictions are not in place to prevent a confidential document from being inadvertently leaked and/or used for improper purposes
      • such an order would not be proportionate and necessary for example where a very large volume of documents were referred to in the statement of case
    • however
      • '... where a document is mentioned in one of the qualifying documents in CPR 31.14, the onus will be on the respondent to the application to justify why an order should not be made. Furthermore, it does not necessarily follow that the same considerations will apply to a document mentioned in a statement of case as to a document mentioned in a witness statement. Where a document is not just mentioned in a statement of case but is directly relevant to some of the issues in the claim, the grounds for opposing an order for the document being produced need to be particularly cogent because the document is obviously not peripheral to the claim'

For further guidance on inspecting documents referred to in statements of case, etc see Practice Note: Disclosure—inspection — Inspection under Rule 31.14—documents referred to in statements of case, witness statements, etc.

Protecting confidentiality in the disclosed document

Redaction

The court found that, although there were elements in the document which were of 'marginal' relevance to the issues in dispute, there were (as was accepted by the parties) parts of the agreement which were relevant to the claim and, therefore, it was not 'necessary or desirable' to redact parts of the document—'it is axiomatic that the meaning of a document must be derived from a consideration of the whole document'. The court here considered this was not a case where it was obvious that there were different subject matters as might, for example, be the case in board minutes (see below).

GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 2 All ER 993, [1995] 1 WLR 172

In coming to this decision, the court referred to Charles Hollander QC's suggestions, made in response to the Court of Appeal's observations in GE Capital v Bankers Trust that a party is entitled to redact parts of a document it considers irrelevant, that:

  • where documents are irrelevant and not confidential—it is simpler to disclose them with the protection of the collateral undertaking
  • where documents are disclosable and confidential—the possibility of redaction arises:
    • where the document contains one or two distinct subject matters, only one of which is relevant and there is no problem in dividing up the relevant from the irrelevant content (eg in board minutes, names and addresses of individuals whose identity is irrelevant, etc)—there is no reason the other side should see confidential matter which has nothing to do with the litigation
    • where the document does not deal with separate matters, blanking out is still permissible for example where the identity of individuals referred to in the document is confidential and irrelevant. However, whereas it will usually be obvious to the other parties when and why names have been redacted, this may not be the case where a part of a document has been blanked out and, in such circumstances, the other party will not have the basis of a challenge to that redaction. As such, 'it is the solicitor's obligation not to blank out in such circumstances unless satisfied that there is an entitlement to redact' (para [30])

For further guidance on redaction, see Practice Note: Disclosure—confidential information — Redaction.

Confidentiality rings

As above, the court ordered the document be disclosed subject to the terms of a confidentiality ring. Although it had not considered the terms of the order or the undertakings to be given, it did indicate that members of the confidentiality club were likely to have to include the claimant's legal advisers, the claimant's in-house legal adviser, two named directors of the claimant and the claimant's expert.

The court also referred to the unsatisfactory nature of confidentiality rings where legal advisers are in possession of information they are unable to obtain instructions from their client on.

For further guidance on confidentiality rings, see Practice Note: Disclosure—confidential information—Confidentiality rings.

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