On 31 October 2014, the Court of Appeal dismissed an appeal by Robert Tchenguiz (RT) to overturn an earlier decision of the Commercial Court, refusing permission to hand over 22 documents for use in proceedings in Guernsey.

This appeal stems from refusal of an application in July 2014 to permit RT to provide to a Swiss company, Rawlinson and Hunter Trustees S.A. (RHT) (of which RT was a main beneficiary) a number of documents disclosed in proceedings in London so that they could be used in further proceedings in Guernsey under CPR 31.22. 

CPR 31.22 prohibits the use of documents disclosed in proceedings for any purpose other than that for which it was disclosed unless: (i) they have been read or referred to in open court; (ii) the court gives permission; or (iii) the parties agree.  This is otherwise known as the collateral purpose principle. 

See our previous law-now “Using disclosed documents in other proceedings: balancing public interest” for an explanation of the original application and basis on which it was refused.  The documents in question related to inquiries made by the Serious Fraud Office (SFO) in Guernsey concerning an investigation into suspected fraud and related offences.  The judge at first instance decided that while there was a strong public interest in establishing the truth in the Guernsey proceedings, this was outweighed by the need to protect the confidentiality of the methods used by the SFO and its interactions with the Guernsey authorities.  If he permitted the application, the judge was concerned that this may jeopardise the willingness of foreign authorities to co-operate in future investigations.  Therefore, on the balance of public interest, the application was refused.

RT appealed on the following grounds:

  • The judge failed to properly explain why there was a strong public interest in protecting these documents from wider use and their use would not prejudice the SFO or Guernsey authorities.
  • The judge applied too stringent a test for the grant of permission under CPR 31.22 by stating that documents would have to be “crucial or decisive” to the Guernsey proceedings.
  • The judge should have dealt with the documents individually.
  • The judge failed properly to carry out the balancing exercise.
  • The judge was wrong to have regard to potential unfairness to other parties in the Guernsey proceedings.
  • The judge failed to take into account that the Guernsey action could take place in a closed session.

The Court of Appeal rejected the appeal on all of the above grounds.  Having considering the authorities, the Court of Appeal concluded that the decisions reached were “highly fact sensitive”, before confirming the following general principles:

  • The so called collateral purpose rule exists for sound and long-standing policy reasons and, as such, the court will only permit collateral use where there are “special circumstances which constitute a cogent reason” for doing so.
  • There is a strong public interest in facilitating the just resolution of civil litigation, but there is also a strong public interest in preserving the integrity of criminal investigations and protecting those who provide information from any wider dissemination of that information.
  • The Court of Appeal will only intervene if the judge at first instance erred in law or failed to take proper account of the conflicting interests in play.

In this instance, Jackson LJ concluded that:

  • The documents, if released, would be of limited value to RHT, as RHT already had enough evidence to support its claims.  Primarily, the documents went to the issue of credibility of certain witnesses, which was not an issue on which the Guernsey proceedings turned.
  • Communications between the SFO and overseas authorities are “inherently confidential” and there is a high public interest in maintaining co-operation of foreign states in investigations of offences with overseas elements.
  • The first instance judge did not apply a test that the documents had to be “crucial or decisive” in order to permit collateral use.  This would have been too strict a test, but in this instance the judge was merely rejecting a claim in RT’s witness evidence about the importance of the documents.
  • The first instance judge correctly identified the conflicting public interest issues at play and gave sufficient reasons for his decision.
  • It is for the English court, not the Guernsey court, to deal with whether permission for collateral use should be granted.

Comment

As explained in our previous law-now, this case demonstrates the difficulties of persuading a court to permit collateral use of documents in contested applications under CPR 31.22 and the high thresholds that have to be met.  There is little new ground broken in Jackson LJ’s judgment.  However, his comment that a test of the documents being “crucial or decisive” would be “too stringent” in an application for collateral use provides welcome reassurance that there is no higher threshold required to be met than that codified in the CPR.  It also, no doubt, provides reassurance to the SFO and its foreign counterparts that an applicant will need to formulate compelling public interest reasons before their otherwise confidential communications can be used in secondary proceedings.