OPEN JUSTICE PRINCIPLE APPLIED IN THE HIGH COURT
IN ACCORDANCE WITH PRINCIPLE OF OPEN JUSTICE THE HIGH COURT HAS GRANTED A NON-PARTY MEDIA COMPANY ACCESS TO FOUR WITNESS STATEMENTS WHICH HAD BEEN FILED IN AN APPLICATION FOR A SCHEME OF ARRANGEMENT.
This decision shows the willingness of courts to grant access to non-parties to documents filed at court. Parties to proceedings should operate from the default position that access to their evidence and other court documents may be granted to non-parties such as media outlets.
The court noted that it had not been contended that the witness statements contained information which could have an adverse effect on any parties. A court would consider such potential adverse consequences in any application under CPR 5.4C (2)) alongside the principle of open justice.
Global Ports Holdings Limited was the parent company of a group (the Group), which operated as a leading global cruise port operator. The Group operated cruise ports throughout Europe, Asia and the Caribbean. Due to the impact of the Covid-19 pandemic, the Group suffered significant financial losses, with global revenue declining by 52% compared to the previous year. Port Finance Investment Limited (Port Finance) was part of the Group. The court considered two points simultaneously:
- Whether to convene a meeting of creditors for the purposes of considering a scheme of arrangement;
- and Whether to allow an application by a non-party seeking access to witness statements filed at court for a hearing for a scheme of arrangement.
Whilst this note will focus on the second point, it is important to note that the court did convene a meeting of creditors.
Regarding the second point, the applicant (a business intelligence and media organisation called Reorg Research Inc. (Reorg)) sought to be provided with copies of four witness statements filed on behalf of Port Finance Investments Limited (Port Finance), who were subject to the scheme of arrangement.
Reorg were particularly interested in the fee arrangement which the Group intended to enter into with the financial adviser of a group of noteholders, who together held approximately 47% of the existing notes (the AHG). Under the proposed fee arrangement, the Group would pay the financial adviser US$100,000 per month, and a US$1million success fee, payable if the AHG voted in favour of the scheme of arrangement.
KEY LEGAL POINTS
The application for access to witness statements was made under CPR 5.4C(2), which provides that a 'non-party may, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person'. The key principle cited in the application was the "open justice principle". In Cape Intermediate Holdings Ltd v Dring  UKSC 38 (Dring), Lady Hale explained that the principle serves two purposes:
- To enable public scrutiny of the way in which courts decide cases; and
- To enable the public to understand how the justice system works and why decisions are taken.
In Guardian News and Media Ltd v United States  EWCA Civ 420 (Guardian News), it was established that the default position is that the public should be allowed access, not only to the parties' written submissions, but also to the documents placed before the court and referred to during the hearing.
In reaching its decision, the court concluded that very few media outlets operate on a not-for-profit basis, and that, due to the highly technical nature of scheme of arrangement, that specialists and professionals are required to effectively scrutinise decisions. The court also considered that Reorg's work is essential to help the public understand why decisions are taken. The court found no reason to depart from the default position to allow access, especially where it is sought for a proper journalistic purpose. It granted the application to access the witness statements.
THE PERILS OF FAILING TO CALL RELEVANT WITNESSES AND DELIBERATELY DESTROYING DOCUMENTS
ACTIVE MEDIA SERVICES INC V BURMESTER DUNCKER & JOLY GMBH & CO KG  EWHC 232 (COMM)
THE COMMERCIAL COURT DREW ADVERSE INFERENCES FROM A CLAIMANT'S DELIBERATE DELETION OF EMAILS AND ITS FAILURE TO CALL RELEVANT WITNESSES
This decision shows the importance of ensuring documents are preserved when disputes arise. If documents are destroyed, a court may draw adverse inferences about what they contained. Parties should think carefully before deciding not to call witnesses at trial who may shed light on what happened to them and what they contained.
The claimant (C) was a beneficiary of a Completion Guarantee, under which the Guarantor (D) was obliged to ensure completion and delivery of a film. The film's completion was delayed.
Days before the trial, D's solicitors highlighted emails in the trial bundle sent to the personal email address of an individual at the claimant, (Q), discussing the late delivery of the film. These emails were not disclosed by C.
At about the same time, Q double deleted relevant emails relating to the dispute from his personal email account. Q claimed he searched for emails in the account from an individual, then deleted them all without opening them.
The judge acknowledged several people should have been called as witnesses, including individuals at a business who brought C the investment opportunity in relation to the film. The judge said C's knowledge regarding the delay to the film would no doubt be shown by communications between these individuals.
KEY LEGAL POINTS
C'S FAILURE TO CALL RELEVANT WITNESSES
- "A court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue". However, the court will not do so lightly.
- The party must set out what the inference they are seeking is about, the reason the party thinks the individual would be able to give material evidence on the point and why the party who wants the inference made has provided evidence relating to that point.
- Although the exact nature of the communications between individuals was unknown, the court inferred C had accepted the situation about the delivery of the film.
- Due to C not calling relevant witnesses, this lead to "critical gaps" in the documents C disclosed.
DELIBERATE DESTRUCTION OF THE DOCUMENTS
- Where there has been deliberate destruction of documents and witnesses are not called (whose evidence would likely shed light upon the destroyed documents), the court is entitled (depending on the facts) to draw adverse inferences about:
- What would have been shown by the destroyed documents
- Evidence that witnesses would have likely provided, but that was withheld. This does not require the innocent party to provide other supporting evidence.
- The judge inferred that the destruction of the emails was "calculated". "The only reasonable conclusion" was that Q waited until he was aware of the Guarantor D's knowledge of the emails, before then destroying emails in his personal email account. It was "implausible that Mr. Quinn did not look at or read the destroyed documents".
A CLAIM FORM CAN'T BE SERVED UNTIL IT HAS BEEN SEALED
The court held that serving unsealed amended claim forms was not good service and refused relief under CPR 6.15, 6.16 and 3.10.
This decision is a clear warning that the service (and issuing) of claim forms should not be left to the last minute. This is even more important in cases where the limitation period may be drawing to a close.
This case is made up of 16 claims, all of which were for alleged breaches of competition law by the defendants (Ds). Some of these claims are broadly similar to other cases brought against Ds that have already been litigated in Sainsbury's Supermarkets Ltd v Visa Europe Services LLC  UKSC 24
All the parties had agreed that it was in their best interests for the Sainsbury's case to be decided before proceeding with these claims.
In the time between the Sainsbury's judgement and the deadline to serve the claim forms, the claimants' solicitors amended some of the claim forms. It is these amended claim forms that caused a problem. The parties agreed that the claim forms and particulars of claim could be served electronically on Ds' solicitors.
On the last date for the service of the claim forms, the unsealed amended claim forms were sent electronically to the Ds' solicitors. The sealed amended claim forms were served after the deadline for service had passed. Ds argued that, because the claim forms which had been sent were unsealed, they did not constitute good service.
KEY LEGAL POINTS
- CPR 7.5 specifies that a "claim form" must be served within the time permitted.
- For a document to be considered a "claim form", it must bear an original court seal.
- A claimant's solicitor therefore cannot serve a defendant until they are in possession of a sealed claim form.
- This is the case even if the claim form is sealed retrospectively with the date the unsealed claim form is filed with the court under PD51O (which governs electronic filing).
- The court found that there was no good reason to treat the service of an unsealed claim form as good service, so an order was not made for retrospective service under CPR 6.15 or to dispense with service under CPR 6.16.
- The court also found that the claimants' solicitors' mistake could not be considered an "error of procedure" under CPR 3.10, which could be remedied, as that Rule did not apply to specific rules for the timing and manner of service of claim forms.
REFERENCES TO PRIVILEGED COMMUNICATIONS COULD INADVERTENTLY LEAD TO LOSS OF PRIVILEGE
GUEST SUPPLIES INTL LTD V SOUTH PLACE HOTEL LTD AND ANOTHER  EWHC 307 (QB)
A reference to privileged communications in a witness statement may lead to inadvertent waiver of the privilege in those communications. An attempt to protect privileged communications between a director and a company's legal advisers has failed because the court held it would be unfair for the other parties to the claim not to have the full picture of information that went to the 'heart of the case'.
The decision by Murray J in Guest Supplies and some other recent cases suggest that a judicial consensus has been reached on the approach to inadvertent waiver.
The decision demonstrates that parties to disputes should avoid referring to privileged documents and communications in witness statements in a way that goes beyond a 'passing narrative reference'. They should take care to ensure that there can be no suggestion that they have given the court and opposing party only a partial picture by referring to privileged documents in this way (and that those documents have not been "cherry picked").
This case involved a claim for breach of an exclusivity agreement that formed part of contractual arrangements between the parties in 2016. The claimant referred to a 2019 document recording the alleged exclusivity agreement in its Particulars of Claim. The defendants disputed both that the agreement existed and the authenticity of the document referred to in the Particulars of Claim.
The claimant's sole director filed a witness statement explaining that the written contract created in 2016 had been lost, and that the document had been recreated in 2019 and sent by him to the claimant's former legal advisers to show how the final agreement 'would have looked'. The witness statement explained further that he had filed the statement 'without waiving privilege'.
The defendants applied for specific disclosure of communications between the claimant and its legal advisers that dealt with the creation, provenance and/or authenticity of the 2019 document, arguing that the claimant had waived privilege to the communications by referring to them in the Director's witness statement.
KEY LEGAL POINTS
Murray J held that the claimant's privilege had been waived as the witness statement contained sufficient reference to the communications. It would therefore have been unfair for the defendants not to have the full picture. The judge reiterated the traditional distinction between reliance on a document’s “effects” (which would not waive privilege) and a document’s “contents” (which would), although this “should not be applied mechanistically”. Purpose, not label, was the key.
The 3 key principles for the court to consider were:
- (i) whether any reliance had been placed on the privileged material to which reference has been made;
- (ii) what the purpose of the reliance is; and
- (iii) the particular context of the case in question.
Privilege was held to have been waived in this case because the claimant relied (by the witness statement given by its Director) on the communications with its legal advisers in order to prove the authenticity of the 2019 document.