Brady & Anor v PKF (UK) LLP & Ors

INTRODUCTION

The first claimant, Ms Karren Brady, is the vice-chairman of the second claimant, West Ham United. In the early part of this year West Ham were one of two bidders interested in taking over the Olympic Stadium after the London Olympics next year. The Interested Party, Tottenham Hotspur, were the rival bidders. The body dealing with the bids was the Olympic Park Legacy Company (“OPLC”). On about 11 February, they announced that West Ham had been successful in that competition, although the decision to award them the stadium was subsequently the subject of a judicial review application by Tottenham Hotspur. Thereafter, the entire bidding scheme was abandoned and, in the medium term, the stadium will remain a base for UK athletics, at least until after the World Athletics Championships in 2017, which will also be hosted in London.

On 3 July 2011, the Sunday Times reported that West Ham had paid a member of staff at the OPLC for consultancy services. They said that this had been discovered through the use of “bank and telephone records…obtained by corporate investigators hired by Tottenham Hotspur, the Premier League Club that was the loser in the contest for the stadium.” The article set Ms Brady and her advisors on a train of enquiry which eventually led to the defendants, PKF, the accountants and ‘corporate investigators’ who had been engaged by Tottenham Hotspur in connection with the Olympic Stadium bids. On 26 October 2011, Ms Brady issued a claim for Norwich Pharmacal relief against PKF and the relevant partner, Mr Hill. That application was heard on 17 November 2011. Very shortly before the hearing, PKF admitted that they had copies of Ms Brady’s telephone records. They served no evidence to defend the Norwich Pharmacal claim and agreed to a limited order being made against them. They claimed that they could not go further because Tottenham Hotspur were refusing to waive their right to client confidentiality.

At the hearing on 17 November 2011, I made various orders and gave brief reasons for those orders. In particular, I made a Norwich Pharmacal in wider terms than PKF had agreed, and I adjourned the debate about other elements of the proposed order until 23 November, in order to allow Tottenham Hotspur time to put in evidence to deal with those parts of the order which were of particular concern to them. I said that I would provide more detailed reasons for the rulings that I made on that occasion, and this judgment contains those detailed reasons. Subsequently, at the hearing on 23 November, notwithstanding a good deal of further agreement between the parties, I made further orders, again giving brief reasons, and I repeated that more detailed reasons would follow. A record of events is also necessary for the purposes of the possible costs debate. This judgment is therefore a composite of the reasons for the decisions that I made at those two hearings. I am grateful to all three counsel for their assistance.

BACKGROUND

In early 2011, West Ham had made a bid to the OPLC for the Olympic Stadium following the London Olympics. Tottenham Hotspur, who were and are engaged in a long-standing dispute with the London Borough of Haringey over plans to redevelop their current home at White Hart Lane, also made a bid for the Olympic Stadium. On 11 February 2011, West Ham were chosen by OPLC as the preferred bidder.

It appears that, at about this time, Tottenham Hotspur engaged PKF to carry out services for them in connection with their bid for the Olympic Stadium. The precise nature of the instructions given to PKF remains something of a mystery, because neither PKF nor Tottenham Hotspur have provided any detailed evidence about the precise nature of PKF’s role. No documents evidencing their instructions have been disclosed. Given the issues that have been raised in this case, I consider that this omission reflects no credit on either PKF or Tottenham Hotspur. The second defendant, Mr Hill, is a non-accountant partner of PKF.

On 15 February 2011, someone claiming to be called ‘Thomas Brady’ contacted Vodaphone’s customer services department by telephone and somehow persuaded them to email copies of Ms Brady’s itemised phone bills to an email address titled ‘westhamunited151@london.com’. Although ‘Thomas Brady’ said that he was authorised by Ms Brady to obtain that information, he was not. The email address was a webmail account supplied by an internet company in the USA. The obtaining of Ms Brady’s mobile phone records by subterfuge in this way may well have been a criminal offence. In addition, it arguably gave rise to a number of claims for breach of confidence, breach of Article 8, and breach of section 13 of the Data Protection Act 1998.

It appears that Ms Brady always believed that the telephone records had been obtained on the instructions of Tottenham Hotspur. The first indication that this was anything other than mere suspicion on her part came from the Sunday Times article in July 2011, to which I have previously referred. That was the first time that it had been revealed that corporate investigators had been hired by Tottenham Hotspur in February, in connection with the bids for the Olympic Stadium, and the article said, in terms, that those investigators had “obtained” the telephone records. A further article, making other allegations based on the records, appeared in the Sunday Times on 10 July.

Ms Brady’s solicitors then embarked on a long chain of correspondence, first with Tottenham Hotspur, and subsequently with PKF, in an attempt to find out what had happened. It is unnecessary for me to provide anything other than edited highlights of that correspondence: suffice to say that, as I described it to counsel at the hearing on 17 November, it appears that Ms Brady was given the traditional run-around by both principal and agents, in a series of letters that were long on words but short on information.

The correspondence started on 2 July 2011. The first meaningful response came from one of the two firms acting as Tottenham Hotspur’s solicitors on 15 July 2011:

“We can confirm that our client did instruct a firm of accountants to assist with investigations into the bidding process for the Olympic Stadium. Beyond that, and pending further investigations, our client is not prepared to be drawn into further comment.”

This unhelpful attitude can also be seen in the letter of 3 August, when Olswang, the other firm acting as Tottenham Hotspur’s solicitors, said this:

“You also refer to the engagement by our client of a private investigator. This engagement is of no relevance to the Judicial Review claims and our client will not provide any further details regarding the engagement in the context of the Judicial Review claims save to say that:

1)

The investigator is a partner at a reputable firm of accountants;

2)

Our client never solicited or authorised the investigator:

a)

To undertake any unlawful activity; and

b)

To provide any information or make any allegations concerning your client or otherwise to any journalists.”

Unsurprisingly, perhaps, Ms Brady’s solicitors thought that this information raised many more questions than it answered, and wrote a lengthy letter on 4 August 2011. That was answered on 10 August 2011. The relevant part of the reply was in these terms:

“1.

In relation to concerns our client had that details of its bid for the Olympic Stadium might have been leaked, it instructed the partner within the forensic services team PKF, a top ten UK accountancy firm, to carry out an investigation in relation to any apparent leak of information. The partner at PKF who was responsible for conducting the investigation was Howard Hill, who worked out of the London and Manchester Offices of PKF.

2.

Out client unequivocally confirms that it did not, via any of its directors, offices or otherwise, either expressly or implicitly instruct Mr Hill, or any other employee of PKF (or indeed any other company or individual) to carry out any illegal or illegitimate activity.

3.

Equally our client did not provide any information or make any allegations concerning your clients to any journalist nor did it instruct Mr Hill, PKF or any other company or individual to do so.

As regards the allegations made by your clients, we suggest that you direct any queries in relation to the obtaining of information regarding you clients and/or the publishing of the articles in the Sunday Times direct to Mr Hill, PKF and the Sunday Times. It is inappropriate to threaten our clients with wholly speculative claims, purely on the basis of two articles in a newspaper.”

Essentially, after that, no further assistance of any sort was provided by Tottenham Hotspur until the commencement of these proceedings. As they had been advised to do, Ms Brady and West Ham then took up the matter with PKF. Unfortunately, they were unable to make any headway here either. PKF wrote a number of holding letters until, on 12 September 2011, they wrote to say:

“Having thoroughly considered the matter we are firmly of the opinion that we cannot respond to the detail of your questions as to do so would amount to a breach of client confidentiality.”

So Tottenham Hotspur had told the claimants to go to PKF, and PKF had said that the matters were protected by Tottenham Hotspur’s right to client confidentiality, which they had refused to waive. Despite this stonewalling, and in response to a threatened claim for Norwich Pharmacal relief, PKF maintained, on 11 October 2011, that such an application would be “misconceived”. In those circumstances, it seems to me that a Norwich Pharmacal application was inevitable.

These proceedings commenced on 26 October 2011. They named PKF only and were not served on Tottenham Hotspur. Following service of the claim form, PKF appeared, rather rapidly, to change their position. They agreed to the making of a limited Norwich Pharmacal order. They finally admitted that they did have copies of the wrongfully-obtained telephone records. They did not put in any evidence, so they did not provide any explanation as to how those records came into their possession (Footnote: ¹). Tottenham Hotspur also provided new information for the purposes of the hearing on 17 November. Amongst other things, they said that they “did not believe” that anyone at the club had the telephone records at the time and that, although they now had a copy of those records, those had been obtained only after the commencement of these proceedings. I was told that they were in a safe at the Club.

THE HEARING ON 17 NOVEMBER

The Basic Facts

Accordingly, at the hearing on 17 November 2011, despite the unhelpful attitude adopted by both PKF and Tottenham Hotspur, the following basic facts had been established:

Hearing In Private

At the hearing on 17 November, Ms den Besten, on behalf of PKF and Mr Hill, made an application that the hearing should be heard in private. Whilst she accepted that it was necessary to show exceptional circumstances in order to justify such an order, she said that PKF were concerned about the reporting of their involvement in the case and wished to limit any damage that might arise from inaccurate reporting and unjustified slurs on their reputation. On behalf of Tottenham Hotspur, Mr Nicklin was neutral on the issue as to whether the hearing should be heard in public or private, although he was keen to ensure that Ms Brady’s witness statement, and Mr Jaffey’s skeleton argument, were not put into the public domain until Tottenham Hotspur had had the opportunity of putting in their own evidence. He had already provided his own skeleton argument.

On behalf of Ms Brady and West Ham, Mr Jaffey opposed the application. His skeleton set out in some detail the test that exceptional circumstances were required to exclude the public, and he argued that PKF had not been able to demonstrate that this was a case which should be heard in private. He went on to argue that there was an element of hypocrisy in PKF’s application. Mr Hill had admitted that the telephone records had been handed over to the Sunday Times, so it appeared that PKF were quite happy to use the Press if they considered that that might help them or their clients. In those circumstances, they could hardly now try to exclude the Press just because they could no longer control the story. It was a forceful point, albeit one rather better aimed at a jury, not a judge.

As to the law, the relevant test was set out by Lord Wolfe MR in R v Legal Aid Board ex parte Kaim Todner [1999] QB 966. He said that justice had to be done in public because:

“It is necessary because the public nature of proceedings deters inappropriate behaviour on the part of the court. It also maintains the public’s confidence in the administration of justice. It enables the public to know that justice is being administered impartially. It can result in evidence becoming available which would not become available if the proceedings were conducted behind closed doors or with one or more of the parties’ or witnesses’ identity concealed. It makes uninformed and inaccurate comment about the proceedings less likely. If secrecy is restricted to those situations where justice would be frustrated if the cloak of anonymity is not provided, this reduces the risk of the sanction of contempt having to be invoked, with the expense and the interference with the administration of justice which this can involve.”

In the more recent case of R (Binyam Mohammad) v SSFCA [2011] QB 218, Lord Judge, the Lord Chief Justice, said:

“Justice must be done between the parties. The public must be able to enter any court to see that justice is being done in that court, by a tribunal conscientiously doing its best to do justice according to law. For that reason, every judge sitting in judgment is on trial. So it should be, and any exceptions to the principle must be closely limited. In reality very few citizens can scrutinise the judicial process: that scrutiny is performed by the media, whether newspapers or television, acting on behalf of the body of citizens. Without the commitment of an independent media, the operation of the principle of open justice would be irredeemably diminished.”

It is noteworthy that Binyam Mohammad was itself a Norwich Pharmacal case.

In my view, PKF did not get anywhere close to being able to demonstrate that the necessary test for a private hearing had been made out. These were not wholly exceptional circumstances. There was no strict necessity for hearing these matters in private, and justice would not have been frustrated by hearing these matters in public. The risk of mis-reporting was no higher than in any other case. Although the application was made with care and was never overstated, it was difficult not to conclude that it was rooted in PKF’s desire to minimise the embarrassment that their involvement in these events will undoubtedly have created.

For these reasons, I refused the application for the hearing to be heard in private. I did however agree that it was sensible for all of the written material (that is to say, all the witness statements and counsel’s skeleton arguments) to be put into the public domain together. Because, for the reasons explained below, I allowed a short adjournment to permit Tottenham Hotspur to put in their own evidence, to deal with those aspects of the proposed order that directly affected them, it was appropriate to ensure that all of the material was put into the public domain at the same time, at the end of the subsequent hearing on 23 November.

The Norwich Pharmacal Order

CPR 31.18 preserves the court’s power to make orders by which a person, who becomes mixed up in the wrongdoing of another, is required to assist the victim of that wrongdoing by, amongst other things, providing such information as he has about the identity of potential defendants and other related matters. The original identification of this principle is to be found in Lord Reid’s speech in Norwich Pharmacal v Commissioners for Customs and Excise [1974] AC 133 at 175a-b. The principle was recently restated by the House of Lords in Ashworth Hospital [2002] 1 WLR 2033.

What is therefore required is evidence of wrongdoing; the involvement of the defendant, whether unwittingly or otherwise; the necessity of making an order; and the utility of such an order. All four elements are made out in the present case. Ms Brady and West Ham have been the victims of wrongdoing. PKF and Mr Hill are plainly mixed up in that, albeit that the extent and nature of their involvement is, at least so far, unclear. On the limited material before me on 17 November, I could not say that their involvement was innocent or unwitting. The making of an order was necessary in order to assist Ms Brady and West Ham and would clearly be of real use to them.

Prior to the hearing on 17 November, PKF agreed (in Appendix 1 of the draft order) that they would provide full information of the identifying details, addresses and contact details of any persons whom they knew or believed or had reason to suspect:

“(a)

obtained, procured or were involved in or assisted in obtaining or procuring the transmission of the telephone bills by Vodaphone to the email address westhamunited151@london.com in or about February 2011;

(b)

obtained, procured or were involved in or assisted in obtaining or procuring copies of the telephone bills in any way howsoever;…

(e)

disclosed the telephone bills or their contents to the Sunday Times or procured or assisted in or were involved in such disclosure.”

In addition, it was agreed at paragraph 4 of the order itself, that they would deliver up all copies of the telephone records “and all documents containing any information derived from such telephone bills as are within their possession, custody and control…”

In addition, having heard argument, it seemed to me that the claimants’ entitlement to other parts of the draft order, particularly other parts of the draft Appendix 1, which were aimed solely at PKF, had also been made out. Ms den Besten did not, I think, ultimately argue to the contrary. Accordingly, full information as to identity was also ordered in respect of those whom PKF knew or believed or had reason to suspect:

“(c)

had or ever had direct or indirect possession, custody or control of the telephone bills or ever handled them;

(d)

ever had any of the contents of the telephone bills disclosed to them (other than through their publication in the Sunday Times);…

(k)

were persons to who copies of the telephone bills were supplied by the respondents, their agents, employees or representatives.”

In addition, it was agreed by Mr Jaffey on behalf of Ms Brady and West Ham that two further paragraphs of the draft Appendix 1, namely subparagraphs (f) and (h), were repetitive and unnecessary. No order was made in respect of them. That left outstanding the remaining parts of paragraph 1 of Appendix 1, and all of part 2 of Appendix 1, and the documents referred to in Appendix 2. Many of those provisions expressly named Tottenham Hotspur.

The Position of Tottenham Hotspur

At the hearing on 17 November, Tottenham Hotspur sought an adjournment of the entire application. I explained to Mr Nicklin that I was not willing to make such an order, given the measure of agreement between the claimants and the defendants, and the fact that much of the agreed Norwich Pharmacal order did not directly relate to Tottenham Hotspur. He then limited his application to adjourn to those parts of the order, noted in paragraph 23 above, which directly related to Tottenham Hotspur. He wanted time to put in evidence to answer that of Ms Brady and time to prepare to argue about the disputed elements of the order. The application to adjourn was opposed.

The first issue was whether or not the claim form should have been served on Tottenham Hotspur or whether, at the very least, notification of such proceedings should have been provided.

I have some sympathy with Ms Brady and West Ham in the decision not to serve the proceedings on Tottenham Hotspur. Tottenham Hotspur had, after all, been unhelpful in the inter-solicitor correspondence in July and August and repeatedly said that all questions about the telephone records should be directed to PKF, and not to them. In those circumstances, the decision just to serve the application on PKF and Mr Hill was understandable. On the other hand, both Frankson v Home Office [2003] 1 WLR 1952 and Flood v Times Newspapers Limited (Berezovsky intervening) [2009] EMLR 18, are authority for the proposition that a third party, whose interests are obviously affected by an application such as this, should be served or at least notified of the claim and/or the hearing. It was not satisfactory that, in the present case, Tottenham Hotspur learnt of the application through the media.

Accordingly, because some parts of the proposed order expressly named Tottenham Hotspur, I have concluded that notification of the application and the hearing should have formally been provided to Tottenham Hotspur. It was said that the consequence of the failure to serve them was that, although they had had sufficient time to allow Mr Nicklin to prepare a detailed skeleton argument, they had not had the time required to put in any evidence of their own. In those circumstances, it seemed to me appropriate to adjourn the hearing on the contested parts of the Norwich Pharmacal order for 6 days, until Wednesday 23 November, in order to allow Tottenham Hotspur time to put in their own evidence and make any further points that they wanted at that adjourned hearing.

SUBSEQUENT EVENTS

In a letter dated 21 November 2011, PKF’s solicitors provided information to Ms Brady’s solicitors in relation to the information required by the order of 17 November. Their letter revealed, amongst other things, that Mr Hill used a “business alias” (or false name, as it should more properly be called), Graham Benson. The letter stated that:

“Ms Brady’s phone records were delivered unsolicited to PKF marked for Mr Hill’s attention in late February/early March 2011.”

As already noted, no further information was provided as to the circumstances in which these records were “delivered”.

The letter also said:

“At a meeting on 4 March 2011 a copy of the telephone records was handed to Dan Tench and Michaela Sterling of Messrs Olswang, 90 High Holborn London WC1V SXX …in their capacity as the legal advisors to Tottenham Hotspur Football Club.”

The letter admitted that the telephone records were disclosed to the Sunday Times by the second defendant, Howard Hill, “on the basis that such disclosure was in the public interest”. How and why a man who used a false name and relied on stolen records could be a reliable judge of what was or was not “in the public interest” was not explained.

On the following day, 22 November, PKF’s solicitors wrote again, enclosing further documentation. These included two pages from a report prepared for Tottenham Hotspur by Mr Hill in April 2011 concerning the Olympic Stadium bid. This report referred to and expressly relied on what were called “the unsolicited telephone records.” In a passage which appears to contradict the suggestion that the records were provided to Mr Hill at PKF, the report at page 11 suggests that the telephone records had been sent anonymously, directly to Tottenham Hotspur, not to him.

Also on 22 November 2011, Tottenham Hotspur served a witness statement from Mr Matthew Collecott, an executive director. The following matters emerge from his statement:

b) Knowledge of the Telephone Records

c) The Article in the Sunday Times

One other matter which was not addressed, either in Mr Collecott’s statement, or in the various letters from PKF’s solicitors, is the view which they (and Tottenham Hotspur) formed - or ought to have formed - at the time, as to how the telephone records had been obtained, and whether or not they could or should rely on them. Assume for this purpose that the telephone records had been anonymously delivered, either to Mr Hill or to Tottenham Hotspur. It must have occurred to one or both of them, and/or to Olswang, Tottenham Hotspur’s legal advisors, that Ms Brady’s telephone records had probably been obtained illegally or, at the very least, without her consent. What view did they form about that? What thought did they give to notifying Ms Brady, or contacting the police? There appears to be an unspoken assumption in the material that I have seen that, because it is said that the telephone records were delivered to them anonymously, neither PKF nor Tottenham Hotspur had any obligation to inform the authorities or Ms Brady, nor any reason not to use and rely on them for their own purposes. In my judgment, such an assumption was manifestly incorrect.

THE HEARING ON 23 NOVEMBER 2011

The Scope of the Order of 17 November

At the start of the hearing on 23 November, there was an issue as to the precise scope of the original order. In a letter dated 22 November, PKF’s solicitors expressed concern that paragraph 4 of the order (paragraph 21 above), to which they had consented, may require PKF:

“…to deliver all copies of documents (even if such documents were the property of another client and were being used for that client’s affairs) which contained so much as one item of information confidential to Ms Brady, however peripheral that information might be to the rest of that document). On this reading the order would require that every copy of such documents be delivered to West Ham even though West Ham would have no legitimate interest in client confidential material contained in such reports.

In this particular case, Ms Brady’s phone records are mentioned in one draft, in April 2011, of a wide-ranging report into the conduct of the bid for the Olympic Stadiums. This report contains information relating to a number of third parties and we do not imagine His Lordship intended that our client should be required to deliver up all copies of such a document, unredacted, to West Ham.”

At the hearing, I made plain that copies of any document which contained any reference to the information confidential to Ms Brady had to be provided. The information was obtained by subterfuge and should not have been utilised for any purpose at all by PKF/Mr Hill or Tottenham Hotspur. Since it was plain that the information had been used, the documents evidencing such reliance, no matter how slight, required to be disclosed. Indeed, the report in relation to the Olympic Stadium is a good example of why the material must be provided. Ms Brady is entitled to see the extent to which that confidential information has been relied on by PKF, and others.

PKF’s repeated concerns about client confidentiality and the need for wholesale redactions, of which this was just the latest example, grew a little wearisome, particularly given that they freely provided copies of the wrongfully-obtained telephone records to the Sunday Times when, they now say, they did not have the permission of Tottenham Hotspur, much less Ms Brady, so to do. Of course, there is an option to redact passages unrelated to the telephone records in copy documents that are being provided, if there is a legitimate concern about commercially sensitive information. But I warned both PKF, and Tottenham Hotspur, at the hearing on 23 November that, given the unhappy history of this matter to date, the court is likely to be very suspicious of widespread redactions.

Accordingly, subject to PKF being permitted to keep one copy of those documents (like the Report) which they have created, I confirmed that copies of all documents in which the telephone records have been referred to or relied on should be provided to Ms Brady.

The Other Parts of the Order

By the time of the second hearing on 23 November, Tottenham Hotspur’s objections to the remaining parts of the order had fallen away. Although they did not formally consent to an order being made in the additional terms agreed between PKF and the claimants, they did not object to it. The additional information to be provided was set out in Appendix 1 to the new order in the following terms:

“1.

Full information of the identifying details, addresses and contact details (as defined above) of any persons whom the respondents know or believe or have reason to suspect:

a)

were retained, employed or in any way procured by the Respondents or by Tottenham Hotspur whether by way of employment, contract, sub-contract or otherwise howsoever to investigate the bid for the Olympic stadium made by West Ham and the London Borough of Newham or to investigate individuals connected with that bid;

b)

supplied/disclosed copies of the telephone bills or any of their contents to the Respondents or Tottenham Hotspur or to their employees, agents or representatives; and

c)

were employees, agents or representatives of the Respondents or Tottenham Hotspur who received/had disclosed to them copies of the telephone bills or any of their contents;

in each case stating the basis for such knowledge, belief or suspicion.

2.

Full information as to:

a)

what has become of the telephone bills;

b)

what fees or other consideration (other than fees paid by Tottenham Hotspur to the Respondents, which are excluded) were paid by or on behalf of the Respondents or Tottenham Hotspur to persons instructed to investigate the Applicants/the West Ham bid for the Olympic Stadium, with full details as to the amount and date and method of each payment and the identifying details, address and contact details of each payee;

c)

who on behalf of the Respondents or Tottenham Hotspur gave instructions to the persons who obtained/supplied the telephone bills to investigate the Applicants/the West Ham bid for the Olympic Stadium and the substance of those instructions; and

d)

who gave the Respondents instructions (whether formal, informal or tacit) to disclose the telephone bills to The Sunday Times, or was aware that disclosure of the bills was intended, proposed or contemplated.”

Accordingly, I made an order in those agreed terms at the hearing on 23 November. It was agreed that costs should be reserved but that, if there was a dispute about costs, I would deal with it as soon as possible following compliance with the second order, and in any event prior to the Christmas vacation.