In Alphasteel Ltd v Shirkhani & Anor  EWCA Civ 1272 (23 October 2013) the England and Wales Court of Appeal considered the implications of Rule 31.22 of the Civil Procedure Rules (CPR) in relation to a settlement agreement precluding the parties from pursuing claims against one another. Rule 31.22 provides that a party can only use disclosed documents for the purpose of the proceedings in which they were disclosed, except in certain limited circumstances.
The judge at first instance did not consider that the respondents were making a "claim" to be entitled to use the documents and therefore the settlement agreement did not prevent the respondents from applying to the court for permission to use, in an intended foreign proceeding, certain documents that had been disclosed by the appellant. On this basis, the respondents were granted permission by the Commercial Court to use these documents.
In overturning this decision, the Court of Appeal noted that the terms of the settlement agreement adopted "deliberately imprecise and all-embracing language" and held that, on their proper construction, the agreement precluded the respondents' application. Lord Justice Tomlinson considered that the appellants continued to have a limited or defeasible right of confidence in their documents, despite their disclosure in the proceeding. In seeking the court's permission to use the documents for separate proceedings, in the face of the appellants' refusal, the claimants were seeking to defeat that right, which effectively amounted to a claim against the appellants, in breach of the settlement agreement.
CPR 31.22 is akin to the New Zealand High Court Rule (HCR) 8.30(4), which provides that a party who obtains a document by way of inspection may use that document only for the purpose of the proceeding and, except for the purposes of the proceedings, must not make it available to any other person (unless it has been read out in open court). While HCR 8.30 does not codify instances when a collateral use may be appropriate, commentary on civil procedure in New Zealand confirms that the rule does in fact incorporate such long standing common law exceptions to the prohibition on collateral use.
Although this decision turned on the interpretation of the particular settlement agreement in question, the terms of settlement were not out of the ordinary. The decision in Alphasteel indicates that when parties covenant not to sue, the terms of the settlement agreement may be taken to preclude an application to use disclosed documents for a collateral purpose. Therefore, when drafting a settlement agreement with a view that documents disclosed may need to be used in subsequent litigation against other parties, clear language should be used in the terms of the settlement agreement to ensure an application to the court to permission can later be made in appropriate circumstances.