Shlaimoun & Anor v Mining Technologies International Inc

INTRODUCTION

On 9 February 2011, Deputy Master Bard made a Bankers Trust/Norwich Pharmacal orderin favour of the respondent, Mining Technologies International Inc., and against National Westminster Bank PLC. The documents which were provided led to a further order in similar terms, made by Master Kay QC on 4 April 2011, this time against Barclays Bank PLC. The documents which were provided by the two banks formed an important part of the respondent’s claim, subsequently brought by way of court proceedings in Ontario, Canada, for fraudulent misrepresentation, breach of fiduciary duty, conversion and the like against a whole series of defendants, including the two applicants.

By an application made on 31 October 2011, the applicants seek to set aside the orders made in February and April by the two masters, and seek an injunction against the respondent restraining it from relying upon, referring to, disclosing, disseminating or otherwise utilising in the Ontario proceedings (and in related proceedings in California), the documents that were disclosed in accordance with those orders. In essence, it is said on behalf of the applicants that the original Bankers Trust/Norwich Pharmacal proceedings were an abuse of the process because the documents obtained thereby were then used for the purposes of foreign proceedings. In addition, it is said that the respondent’s use of the documents in this way constituted a breach of the collateral undertaking set out in CPR 31.22. The applicants maintain that if either the abuse argument, or the breach of undertaking argument, is successful, the court does not have the power to (and in any event should not) make a retrospective order permitting the respondent to utilise the documentation in the Ontario proceedings.

I set out the chronology in Section 2 below. I then deal with the abuse arguments in Section 3; the arguments in relation to CPR 31.22 in Section 4; and the arguments in relation to the making of a retrospective order in Section 5. There is a short summary of my conclusions at Section 6. I should express my gratitude to counsel for their clear submissions and the considered way in which they explained the differences between them. I am very grateful to both of them.

CHRONOLOGY

The respondent manufactures and supplies large-diameter subsurface drilling tools and other equipment to the mining and construction industries. As part of their perennial search for third party financing, Mr Lipic, the respondent’s CEO, was introduced to a Mr Korakianitis. He explained to Mr Lipic his ability to access large amounts of funds from trades and investments. Mr Lipic alleges that Mr Korakianitis explained how a deposit of $100 million could be traded in the money markets with a return of five times the original investment within a 10-30 day time frame. In 2009 and 2010, there was a tortuous series of meetings and negotiations between the respondent and Mr Korakianitis. Eventually it was agreed that the respondent would provide Infina Fund Limited (the second applicant) with US $2 million for investment purposes. The money was transferred into the second applicant’s bank account with NatWest on 27 May 2010. The money was promptly transferred out of that account and its whereabouts are unknown. It has not been returned to the respondent.

The first applicant is the director and owner of the second applicant company. In the Ontario proceedings the first applicant’s affidavit suggests that he was not aware of the transactions agreed by Mr Korakianitis and that the money was paid out of the second applicant’s bank account on the instructions of Mr Korakianitis. It would be fair to say that the first applicant’s affidavit raises as many questions as it answers.

The attempts to recover the money having failed, the respondent made its first Bankers Trust/Norwich Pharmacal application on 9 February 2011. That application was supported by a lengthy affidavit sworn by Mr Lipic. Paragraph 1 records that the affidavit was sworn in support of the respondent’s application “for disclosure before proceedings start in respect of a transaction on 27 May 2010 whereby MTI sent US $2 million to an account held by a company known as Infina Fund Limited at the National Westminster Bank PLC.” The affidavit then sets out in considerable detail the history of the lengthy dealings with Mr Korakianitis. Those explanations run from paragraph 3 all the way through to paragraph 36. It is necessary to set out the last part of the affidavit in full:

“37.

Since 29 July 2010 I have had contact with Mr Korakianitis and Mr Shlaimoun but it is clear that MTI has been the victim of a fraud and my contact with them has been part of the ongoing investigation into this matter.

38.

I do not believe that it will be possible to recover any funds from the fraudsters. Mr Korakianitis lives in Canada and there is an unsatisfied judgment against him from 25 November 2009 in the sum of Canadian dollars 47,583 in favour of the Canadian bank, CIBC. Mr Shlaimoun is a joint owner with his wife of 21 Glebelands Avenue, South Woodford, London, E18 2AB, a property which they purchased for £250,000 in October 2004. There are two charges and also two unsatisfied judgments from the Bow County Court registered against this property. At pages 21-27 in the exhibit are the most up to date accounts for Infinafund Limited filed with Companies House. They show that at 30 September 2009 the company had total assets of only £5,991.

39.

MTI now wishes to see if it can trace the money that was sent to the NatWest account. We wish to consider what steps the NatWest took to ensure that they were not involved in money laundering. We also want to know if Mr Dawes has been dismissed by NatWest and if so, what were the reasons for his dismissal and whether the NatWest has investigated or is aware of his dealings with the fraudsters.”

Deputy Master Bard made an order on 9 February against NatWest requiring them to disclose the balances in the accounts of the applicants; all correspondence passing between NatWest and the applicants from 27 May 2010 to date concerning the transfer; and statements and internal memoranda relating to any account held by the applicants concerning the transfer. No order was made in relation to the separate application in respect of the involvement of Mr Dawes.

The documents supplied by NatWest demonstrated that between June and September 2010, Mr Korakianitis and the first applicant transferred large sums from the NatWest account to an account at Barclays Bank. Accordingly, on 4 April 2011, Master Kay QC made an order in the same terms against Barclays Bank. Subsequently, Master Rose made no further order in relation to the involvement of Mr Dawes.

On 27 May 2011, the respondent commenced proceedings in Ontario against a total of eighteen defendants in connection with the missing US $2 million. The first named defendant was Mr Korakianitis. Other defendants included both of the applicants in the present case. The addresses for those 18 defendants ranged from the UK to the US, Canada, Barbados, Switzerland and Cyprus. It appears that Ontario was chosen as the venue for the action, not only because it is where the respondent is based, but also because Mr Korakianitis owns a valuable property in that State.

The essence of the claim is the return of the US $2 million, although it is put in a variety of ways, including breach of contract, breach of fiduciary duty, fraudulent misrepresentation, conversion, knowing receipt and unjust enrichment. The first applicant swore an affidavit on 25 August 2011, to which I have already made reference. It appears that the applicants contest the jurisdiction of the Ontario court but are due to provide a defence to the claim without prejudice to their jurisdictional objection.

The application to set aside the orders of the two masters, and the claim for the injunctions restraining the respondent from using the documents, were issued on 31 October 2011. They are supported by a witness statement from Michael Legister, the solicitor acting for the applicants. His witness statement is addressed in the second statement of Mr Jones, dated 8 November 2011.

THE ABUSE ARGUMENT

Setting Aside

Before coming on to deal with the substantive issues raised by the abuse of process argument, it is necessary to make clear at the outset that, whatever findings I reach, it would not be appropriate to set aside the Bankers Trust/Norwich Pharmacal orders. Those orders have been made and they have been complied with in full. The proceedings which gave rise to them have come to an end. It would be entirely redundant now to make any order that modified or set aside those orders.

In WEA Records Limited v Visions Channel 4 Limited [1983] 1 WLR 721, Sir John Donaldson MR refused to consider an appeal from a judge who had made an ex parte order but who had not been given an opportunity of reviewing that order in the light of argument from the defendant. He said, at page 727G:

“In the instant case the Anton Piller order is spent in the sense that it has been executed. However the defendants seek to go back to the beginning of the action saying that regardless of whether the fruits of the order are such as to show that it was abundantly justified, the judge had insufficient material to justify his action at the ex parte stage. They therefore invite us to set the ex parte order aside and to order the return of the affidavits to the two personal defendants and the seized material to the defendants’ solicitors.

I regard this as wholly absurd. The courts are concerned with the administration of justice, not with playing a game of snakes and ladders. If it were now clear that the defendants had suffered any injustice by the making of the order, taking account of all relevant evidence, including the affidavits of the personal defendants and the fruits of the search, the defendants would have their remedy in the counter undertaking as to damages.”

I consider that precisely the same approach must apply here. The applicants are not entitled to set aside orders made against third parties, and with which those third parties have fully complied. The only relief to which the applicants could be entitled, subject to the points addressed in the remainder of this Judgment, is the injunctive relief sought.

The Abuse of Process Issue

On behalf of the applicants, Mr Hanham submitted that it must have been apparent to the respondent, at the time of the applications to the masters, that it would use any disclosed material to start proceedings in Ontario. He submitted that the use of the Bankers Trust/Norwich Pharmacal procedure in relation to a claim in a foreign jurisdiction was abusive because the latter was governed only by statute, and by a framework with which the respondent had not begun to comply. Thus he maintained that the masters had no jurisdictions to make the orders that they made. He also submitted that the material before the master indicated that the likely claim was the proprietary claim (i.e. tracing, with the possibility of linked claims for breach of fiduciary duty) and not personal claims (those for breach of contract, fraudulent misrepresentation and the like). Thus he said that the subsequent use of the documents for personal claims was also an abuse.

On behalf of the respondent, Mr Douthwaite submitted that Mr Lipic’s original affidavit set out in considerable detail the fraud that was perpetrated on the respondent and that the affidavit made plain that personal (as well as proprietary) claims were contemplated. As to the law, he argued that there was clear authority that a Bankers Trust/Norwich Pharmacal application could be made in advance of, and the documents used in, foreign proceedings and that the same case was also authority for the proposition that there was no distinction for this purpose between proprietary and personal claims.

The Law

The Bankers Trust/Norwich Pharmacal principle is clear. It was described by Lord Reid in the latter case ([1974] AC 133) at page 175 B-C as no more than:

“…a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration.”

The power of the court to make Bankers Trust/Norwich Pharmacal orders was expressly preserved by CPR 31.18.

In addition, there can be no doubt that Bankers Trust/Norwich Pharmacal orders can be used in order to obtain documents which are subsequently deployed in claims made in foreign jurisdictions. In Omar v Omar [1995] 1 WLR 1429, Jacob J (as he then was) said at 1435A-B:

“It is accepted that the disclosed documents can be used in foreign proceedings aimed at following and tracing the money. For the same reasons I think they can also be used to establish ultimate liability in those foreign proceedings. This can be done without leave…the whole purpose of permitting tracing discovery would be lost if the money could not be effectively followed once it was abroad. If I were wrong thus far then I would willingly grant leave, a distinction between use of the material for pre-trial remedies but not for trial itself serving no sensible purpose. To remove doubt I think an order granting leave should be made even if not strictly necessary…”

As to any distinction in this context between proprietary claims and personal claims, the judge said at 1435F:

“It is difficult to imagine a situation where there can be a tracing claim in respect of money fraudulently or dishonestly taken and not also a personal claim against those responsible. It is curious that the question of whether Bankers Trust disclosurecan be used to pursue not only the tracing claim but also an intimately related personal claim has not been expressly considered in the 14 years since the Bankers Trust case was decided.”

The judge concluded that “the use of the discovered documents for a personal claim seems to me to be entirely a legitimate purpose – within the ‘broad purpose’ of the original discovery. Such a claim is not in substance collateral at all: the object of the personal claim, as of the proprietary claim, is to see the estate put right. The facts giving rise to both claims are broadly the same.”

In dealing with the power of the UK courts to order evidence in foreign jurisdictions, the leading case is Rio Tinto Zinc Corporation & Others v Westinghouse [1978] AC 547 in which Lord Diplock said at 633A:

“The jurisdiction of English courts to order persons within its jurisdiction to provide oral or documentary evidence in aid of proceedings in foreign courts has always been exclusively statutory. There is no presumption that Parliament, in repealing one statute and substituting another in different terms, intended to make the minimum changes in the previous law that it is possible to reconcile with the actual wording of the new statute, particularly where, as in the instant case, the new statute is passed to give effect to a new international convention.”

The new Act to which he referred was the Evidence (Proceedings in Other Jurisdictions) Act 1975. That Act is supplemented by CPR Part 34. Rule 34.3(2)(b) sets out a procedure to be followed by a party who wishes to have sight of the documents of a non-party before the trial of the substantive issues.

Analysis

The Decision To Commence Proceedings In Ontario

Mr Hanham’s abuse submissions were predicated on the assumption that it must have been apparent to the respondent when they made their applications to the masters in February and early April 2011 that these claims were going to be pursued against the applicants, and others, in Ontario. However, on the evidence before me, I do not accept that such an assumption is well-founded. On the contrary, it seems to me clear that, even at the time of the second application in early April, the respondent remained unsure of what proceedings were going to come out of the Bankers Trust/Norwich Pharmacal applications, or indeed whether any proceedings were even viable. The whole point of the applications was to try and obtain sufficient information to allow the respondent to come to a careful and considered view as to what claims could be made, and where they should be launched. Given the huge range of potential jurisdictions open to the respondent (see paragraph 9 above) it does not seem to have been obvious at all that these proceedings would inevitably be commenced in Ontario. It was a possibility; no more and no less.

Accordingly, this is emphatically not a case in which a Bankers Trust/Norwich Pharmacal application was made for the disclosure of documents which the applicant always knew would not be deployed in proceedings in the UK. I find on the evidence that, at the time of the applications, the respondent did not know what claims were going to be commenced, let alone where they were going to be commenced. Thus, at the time of the making of the applications, they were not and could not be an abuse of process.

No argument was addressed to me by either counsel as to whether, in some way, once the decision had been taken to commence proceedings in Ontario, the Bankers Trust/Norwich Pharmacal applications were retrospectively rendered an abuse. That seems to me to be conceptually difficult, particularly given that, by then, both banks had complied with the orders made by the court. Moreover, it seems to me that this issue – namely whether things changed or should have changed when the respondent knew that it was going to issue its proceedings in Ontario – is best dealt with in Section 4 below, where I deal with the alleged breach of the collateral undertaking not to use documents for other purposes.

Use In Foreign Jurisdictions

There is a second reason why I consider that it was not an abuse on the part of the respondent to obtain documents pursuant to the Bankers Trust/Norwich Pharmacal principle and then use those documents to start proceedings in Ontario. Let us assume that, at the time of the original applications, the respondent was aware that there was at least a possibility that subsequent proceedings would be issued in Ontario. Does that mean that the Bankers Trust/Norwich Pharmacal application should not have been made? In my judgment, it does not. On the contrary, there is clear authority, derived from Omar and the passage of Jacob J’s judgment set out in paragraph 17 above, that a Bankers Trust/Norwich Pharmacal order can be sought in a situation which leads on to a claim in a foreign jurisdiction. Moreover, whilst I accept that an application could have been made under CPR 34.3(2)(b) and the Evidence in Foreign Proceedings Act, I do not accept that this was a clear and obvious course, particularly in circumstances where it was unclear as to what claims, if any, were open to the respondent. On any view, the 1975 Act is much more focused on the problems of oral evidence in ongoing foreign proceedings.

I take the view that, depending on the facts, there is no reason why a Bankers Trust/Norwich Pharmacal application should not be made in circumstances where there is the possibility that the ultimate proceedings would be commenced in a foreign jurisdiction. I consider that Lord Diplock’s dicta is dealing principally with proceedings in foreign jurisdictions which are up and running by the time of any possible crossover with the powers of the UK courts. That was emphatically not the case here. The Bankers Trust/Norwich Pharmacal procedure is a stand-alone remedy which should not, unless absolutely necessary, be constrained by the more cumbersome process in CPR Part 34.

Nature of the Prospective Claims

Finally in respect of the abuse arguments, it is necessary to deal with Mr Hanham’s contention that this was an abuse because the only prospective claims outlined before the masters were in relation to tracing, whereas the actual claims brought in Canada included a whole range of personal claims as well. It seems to me that that submission, although thoughtfully made, fails for two reasons, one of law and one of fact.

As a matter of law, I consider that that submission is contrary to Jacob J’s approach in Omar. He carefully explained how and why, in a case of this sort, there would almost inevitably be an overlap between the proprietary claims and the personal claims, and that – at least in this context - no artificial distinction should be made between the two (see the passage at paragraph 18 above). I consider that that reasoning is not only persuasive but provides clear guidance on the necessary approach to this application. For the same reasons, I would not be prepared to find an abuse of process in this case based on the same purported distinction.

As to the facts, I consider that, when taken as a whole, Mr Lipic’s affidavit clearly envisaged the possibility of making both tracing claims and personal claims for fraudulent misrepresentation, breach of contract and the like. At the outset of his affidavit, there was an express reference to the application being made “before proceedings start”. And whilst the subject matter of those proceedings plainly included the proprietary claim (because tracing is referred to in terms in paragraph 39), the possibility of personal claims is inherent in Mr Lipic’s lengthy and detailed description of how the fraud was set up and perpetrated. Allegations of fraud are expressly made (for example at paragraph 37, referred to above). And whilst paragraph 38 of the affidavit is something of a lament as to the apparent absence of any assets on the part of the applicants and Mr Korakianitis, it seems to me that these difficulties could only have been relevant at all because of the possibility of bringing personal claims against the alleged fraudsters.

Accordingly, for all those reasons, I have concluded that, whilst the affidavit might have been clearer, on any fair reading it amounted to a warning that the proceedings that were soon to start may include both proprietary and personal claims.

Summary

For the reasons which I have endeavoured to explain, the abuse of process argument must fail. This is not a case in which the respondent sought a Bankers Trust/Norwich Pharmacal order when they knew or could reasonably have been expected to know that the subsequent proceedings would be commenced in Ontario. That was only one of a number of possibilities and was going to depend, at least in part, upon the information contained in the documents disclosed under the Bankers Trust/Norwich Pharmacal orders themselves. In any event, the law is clear that the documents disclosed under this process can be used in foreign jurisdictions. The likelihood of such use is increased in situations, such as the present case, where the claims being postulated are both proprietary and personal.

For those reasons, despite Mr Hanham’s eloquent and clear submissions, I reject the abuse of process argument.

THE APPLICATION OF CPR 31.22

The Issues

The applicants submit that the respondent was bound by the collateral undertaking in CPR 31.22 as to the subsequent use of documents disclosed, and was not entitled to use the documents in the later proceedings in Ontario because none of the exceptions stated in that rule applied. The respondent suggested, first, that the collateral undertaking at r 31.22 did not apply because the documents had not technically been disclosed under r 31.2 but that, in any event, there was no breach of the collateral undertaking because the court had impliedly given permission for the use of the documents in the Ontario proceedings.

The Law

CPR 31.2 provides that “a party discloses a document by stating that the document exists or has existed.” The collateral undertaking at r31.22, which is central to this part of the argument, is in the following terms:

“(1)

A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, except where –

(a)

the document has been read to or by the court, or referred to, at a hearing which has been held in public;

(b)

the court gives permission; or

(c)

the party who disclosed the document and the person to whom the document belongs agrees.”

There is no reported case dealing with the interaction between the collateral undertaking and the use in subsequent proceedings of documents obtained under a Bankers Trust/Norwich Pharmacal order. Instead the authors of the textbooks dealing with documentary evidence express a range of mildly divergent views. Thus, in Documentary Evidence by Charles Hollander QC(Sweet and Maxwell, 10^th edition), at paragraph 21-20, the learned author says:

“As with documents produced pursuant to search orders or asset freezing disclosure orders, these documents and information should be treated as disclosed under r31.2. Thus it will be necessary to apply for leave although where this is consistent with the purpose of the original order, leave should readily be granted.”

Because the same editor writes chapter 27 of Phipson on Evidence (17^th edition), the last part of paragraph 27-11 of that work, which deals with the same point, is in precisely the same form.

In Disclosure by Matthews and Malek (Sweet and Maxwell, 3^rd edition) the learned editors, at paragraph 15.04, refer back to their earlier section dealing with the undertakings arising in relation to Norwich Pharmacal orders. At paragraph 3.25 they express this view:

“Whilst it is arguable that the CPR r31.22 applies to any documents disclosed, this may not necessarily be the case, hence the need to deal with any restriction in the order. Often the wording of the order will follow the provisions of CPR r31.22 suitably modified to fit the circumstances as to the purposes to which the material may be used.”

In Commercial Injunctions by Stephen Gee QC (Sweet and Maxwell, 5^th edition) the learned editor writes at paragraph 24.024:

“For the purpose of CPR r31.22 it is considered that where an order is made by the court under either jurisdiction, then in the absence of an express undertaking restricting the use of the information obtained as a result of the order, the court is to be regarded as having consented to a use of the information within the scope of the purpose which the court had in making the order.”

In essence, therefore, Hollander inclines to the view that express permission for any subsequent use is required; Matthews and Malek say that any restriction on the use of the documents should be addressed in the order (so that, presumably, the absence of any restriction would normally allow unrestricted use, as long as it was consistent with the underlying purpose of the order); and Gee is of the view that, in the absence of express restrictions, there is an implied consent in the order as to the use of the information “within the scope of the purpose which the court had in making the order.”

Analysis

As to the issue of whether documents provided pursuant to a Bankers Trust/Norwich Pharmacal order can be said to have been ‘disclosed’ for the purposes of CPR Part 31, I am in no doubt that the answer is that they have been ‘disclosed’. Rule 31.2 should not be construed so narrowly that it excludes from the definition of disclosure the provision by a bank, or some other third party, of copy documents pursuant to a Bankers Trust/Norwich Pharmacal order. It seems to me plain that the provision of such documents constitutes disclosure in accordance with CPR 34. There is no distinction in Part 34 between documents disclosed in a list of documents and documents disclosed in any other way. Similarly there is no distinction between documents obtained from third parties and documents obtained from parties in litigation. Authority for both these propositions can be found in paragraph 29 of the judgment of Aldous LJ in Smithkline Beecham PLC v Generics (UK) Limited [2004] 1 WLR 1479.

Accordingly, on the basis of Aldous LJ’s analysis, I am no doubt that, in principle, r31.22 applies to documents disclosed as a result of Bankers Trust/Norwich Pharmacal orders. There is, however, a difficulty in practice, as the debate in the textbooks (paragraphs 33-35 above) makes clear. Rule 31.22 states that a document can only be used ‘for the purpose of the proceedings in which it is disclosed’. But in this type of case, the only proceedings were the Bankers Trust/Norwich Pharmacal applications themselves. Taken to its logical conclusion, therefore, on a strict reading of r31.22, it could be said that a successful applicant for a Bankers Trust/Norwich Pharmacal order is always in breach of the collateral undertaking when he uses the documentation in subsequent litigation, unless he fell within one of the three exceptions. In my view, that would be a slightly curious result, given that, as here, applications for a Bankers Trust/Norwich Pharmacal order will almost invariably envisage at least the possibility of subsequent proceedings.

I consider that the answer to this potential conundrum is straightforward. Where an application is made for a Bankers Trust/Norwich Pharmacal order, on the express basis that subsequent proceedings are likely, then, in making the order, the court is implicitly giving permission to the applicant to use the documents in those subsequent proceedings. Put another way, as Stephen Gee QC describes it at paragraph 24.024 of his book (paragraph 34 above), in making the order “the court is to be regarded as having consented to the use of the information within the scope of the purpose which the court had in making the order”.

I consider that this result makes commercial common sense. It is consistent not only with Gee, but also with the approach in Matthews and Malek, because in most Bankers Trust/Norwich Pharmacal cases, just as occurred here, there will be no express restrictions as to the use of the documentation. In my view, the absence of express restrictions equates to implied consent on the part of the court to the subsequent use of the documents, provided that they are used for the purpose which the court intended in making the order in the first place. This avoids what seems to me to be the unnecessary (and potentially complicating) exercise of requiring a court, before it makes a Bankers Trust/Norwich Pharmacal order, to go through a long list of hypothetical purposes, which may never eventuate, to see which ones should be allowed and which excluded. In the ordinary case, that would be a waste of both time and costs.

Summary

For the reasons which I have given, I conclude that documents provided pursuant to a Bankers Trust/Norwich Pharmacal order are documents which are disclosed within the meaning of r31.2. I consider that the complete code in relation to the disclosure of documents, provided for in CPR Part 31, applies to those documents. That would include the collateral undertaking at r31.22. However, the nature of that undertaking needs to be considered in the context of a Bankers Trust/Norwich Pharmacal order, which almost always signals the end of one set of proceedings but heralds the possibility of subsequent proceedings involving other parties. Thus, where the court making the original order is alerted to the possibility of such subsequent proceedings, the court must be taken to have impliedly consented to the use of any documents obtained under the order in those subsequent proceedings.

In the present case, the fact that there might well be subsequent proceedings was made plain in Mr Lipic’s affidavit. For the reasons set out in Section 3, I consider that it was reasonably clear that those proceedings were likely to embrace both proprietary and personal claims. Accordingly, in the present case, I consider that the respondent’s use of the documents in the Ontario proceedings was not a breach of the collateral undertaking because the exception at r31.22(1)(b) – “the court gives permission” – applies. That is also a complete answer to the suggestion that the Bankers Trust/Norwich Pharmacal applications were rendered an abuse when the decision was taken to start the proceedings in Ontario (paragraph 22 above). Accordingly, the second submission of the applicants must also fail.

MAKING A RETROSPECTIVE ORDER

The Issue

As a result of my findings that there was no abuse of process (Section 3) and no breach of the collateral undertaking (Section 4), the application must fail. Strictly, therefore, there is no need for me to address the remaining issue, which was, if there was abuse of process or a breach of the undertaking, whether the court could retrospectively grant permission for the use of the documents in the Ontario proceedings. However, because careful submissions were made on this issue, and I have formed a clear view as to the answer, it is sensible for me to set out, in brief terms, my conclusions.

Mr Hanham submitted that the granting of permission retrospectively would only be appropriate in rare cases. The suggestion was that there was no reported case in which that had happened. Mr Douthwaite, by contrast, argued that, if it were necessary, the court should readily give such retrospective permission in the present case, given that any breach by the respondent was unintentional; that Mr Lipic’s affidavit contemplated both proprietary and personal claims; and that no prejudice had been suffered by the applicants in any event.

The Law

The principal authority on this aspect of the law is Miller and Another v Scorey and Others [1996] 1 WLR 1123. In that case, disclosure in ongoing proceedings, which had been started in 1993, suggested that the defendants may have taken a bribe. Concerned about the limitation position, the claimants issued fresh proceedings in connection with the alleged bribe, in 1995. Those fresh proceedings were struck out as a breach of the implied undertaking which prohibited the claimants from using the documents in question otherwise than for the purposes of the action in which they were disclosed. In the passage in his judgment starting at page 1133C, Rimer J (as he then was) made clear that his conclusion on this part of the case was obiter. He said:

“It may be that the court does have some such jurisdiction but, if so, it seems to me that the circumstances in which it would be proper to exercise it would be rare. It is one thing to release a party from an undertaking to the court so as to permit him to do in the future that which he has been prevented from doing in the past. It is another thing for the court to find, as I have, that a party has abused the process of the court by his breaches of an undertaking to it and for it then to give that party a retrospective release from the undertaking so as to wipe away the abuse of the process which he has committed.”

On the face of it, that passage appears to provide a clear, negative answer on the issue of retrospective permission. But at letter F on the same page, the learned judge explains the particular problem that existed in that case:

“If, in principle, I considered it just to allow the plaintiffs to use the discovered documents for the purposes of a separate action raising the same claim as the 1995 action, then, absent any special considerations pointing in a different direction, there would in my view be much to be said for declining to strike out that action and for giving leave to the plaintiff to make use of the documents for its further prosecution. Such an order would, no doubt, amount to a de facto validation of what had happened to date, although the court could perhaps reflect its disapproval of that by the making of appropriate costs orders.”

At letter H, the judge indicated that this – the granting of retrospective permission - was his favoured alternative. However, he did not make that order in Miller because he concluded that, if the 1995 action remained in being, the defendants were arguably deprived of a limitation defence. If, on the other hand, the second action was struck out, the limitation position could be argued by way of amendment in the existing proceedings. The judge concluded that this was the fairer course. Thus it was the prejudice to the defendants in Millerwhich was the only reason why the judge did not grant retrospective permission to the claimants to use the documents disclosed in the earlier action.

The Analysis

If I had concluded that the respondent had, in some way, abused the Bankers Trust/Norwich Pharmacal process, and/or was in breach of the r31.22 collateral undertaking, I would, on balance, have granted retrospective permission to the respondent to use the documents in the Ontario proceedings. The relevant balancing exercise produces the following analysis:

For those reasons, therefore, it seems to me that, had it been relevant, I would have granted retrospective permission. However, for the reasons given in Sections 3 and 4 above, no such retrospective permission was required because I considered that such permission had already impliedly been given.

CONCLUSIONS

For the reasons set out in Section 3 above, I reject the abuse of process argument. There was no abuse of the process here. The respondent was entitled to utilise the documents obtained as a result of the Bankers Trust/Norwich Pharmacal orders in the Ontario proceedings for both proprietary and personal relief.

For the reasons set out in Section 4 above, I consider that there was no breach of the collateral undertaking in r31.22. In granting the application for a Bankers Trust/Norwich Pharmacal order in this case, the court must be taken to have impliedly consented to the utilisation of the documents in subsequent proceedings. The possibility or likelihood of such proceedings was explained in the material before the court, and so the making of the order (and/or the lack of any restrictions on use) was sufficient evidence of permission. There was no requirement for the court to set out in laborious detail the particular subsequent purposes for which the documents could or could not be used.

For the reasons set out in Section 5 above, I consider that, if I were wrong either to reject the abuse argument and/or to conclude that there was no breach of the collateral undertaking, I would in any event have granted retrospective permission to the respondent to utilise the documents obtained from the banks in the subsequent proceedings in Canada. On any balancing exercise, the analysis overwhelmingly favours the retrospective granting of such permission.