Media Entertainment NV v Karyagdyyev & Anor

This Judgement concerns parts of the Defendants’ applications made by Application Notice date 2 March 2020, the relevant parts being to strike-out all or part of the Amended Particulars of Claim and/or for (reverse) summary judgment.

Essentially, the Defendants contend that the Claimant has failed to state (or, to use the old fashioned terminology and which I will use for convenience throughout, “plead”) sufficient facts to give rise to its asserted claim (being a claim for misuse of what was known to be the Claimant’s confidential information) in law, although they have an alternative argument that the Claimant’s necessary evidence is lacking.

The Defendants’ primary submission, through their counsel Mr Jonathan Cohen QC, is that where a person in their position has been passed confidential information belonging to the Claimant by an employee of the Claimant, even though they know that the information is confidential in nature, they can only be liable for acts amounting to its “misuse”, in the sense of uses for which the employee has not permitted or had no authority from the Claimant to permit, if the Defendants had sufficient knowledge that those acts would be “misuse” (i.e. knowledge that the employee had not permitted or had no authority to permit those acts), and also that this knowledge (or facts said to justify it or its being inferred) must be pleaded, but here there is no pleading of any, let alone sufficient, knowledge.

The Claimant, by its counsel Mr Paul Burton, disputes this as a matter of law, but also asserts that there is sufficient pleading in any event both generally and so as to justify the grant of various particular heads of relief. There is also a further distinct pleading point regarding a statement of fact within Paragraph

Following circulation of my initial draft judgment, I received some further submissions from Mr Cohen (and to which Mr Burton objected). Although conscious that the court should be careful in permitting this (cf. Bonsor v Bio Collectors 2020 EWHC 918 at paragraphs 5 and 6), it seemed appropriate to me to raise some clarificatory questions (which were answered) of counsel, and have taken those submissions and answers into account in this final judgment.

The APC in its initial sections sets out a factual situation and a history which can be summarised for the purposes of this Judgment as follows.

The Claimant is and was a company incorporated under the laws of Curacao which conducts an online gambling business. Its sole registered shareholder (although the APC are silent as to whether it has directors and if so who they are) is and was Leonid Ponkratenko (“Mr Ponkratenko”) but who holds (or held) some of those shares on trust for Mr Sergei Samsonov (“Mr Samsonov”), Mr Egor Osipov, Mr Georgii Smoliar and Mr Sergei Kanaev

A Mr Rustam Gilfanov (“Mr Gilfanov”) was interested in acquiring some

The Defendants directly or indirectly had had some involvement with the Claimant until 2013 or 2015, and, at least in January 2019, a continuing and present involvement with Mr Gilfanov.

The Claimant’s business, being conducted mainly or entirely online, had and has extensive computer systems and which, and the stored information and data, need to be kept secure. Those computer systems included email servers and accounts, and also an account (“the GitHub Account”) with a software development platform known as GitHub and upon which information and data was stored. Each of those system elements had their access protected and controlled by usernames and passwords (together “the Passwords”).

The Claimant had and has Confidential Information comprised, amongst other things, matters set out in the sub-paragraphs to paragraph 23 of the APC as follows:

I note that the Claimant asked the Defendants by a solicitors’ letter of 4 November 2019 to confirm that all those items of information “were confidential to our client”; and, by response letter of 11 November 2019, the Defendants’ solicitors confirmed that “there has never been any dispute that the information was and remains confidential to your client, and our clients… have admitted that”.

In paragraphs 24 to 27 of the APC it is stated that on 11 January 2019 Mr Braitchouk, Mr Jellicoe and Mr Ponkratenko, believing that Mr Gilfanov was wanting to discuss a purchase of shares in the Claimant, met with Mr Gilfanov in Latvia but that Mr Gilfanov had not revealed that he was seeking the support of the Silent Investors against Mr Ponkratenko.

In paragraphs 28 to 31 of the APC it is stated that:

Paragraph 32 of the APC states that “By their actions on 11 January 2019 the

There then follows the words PARTICULARS OF BREACH. However, there

Paragraphs 33 to 37, 34 and 35 of the APC provide that the Defendants took steps to remove all administrator privileges except for Mr Vereschaka, delete other administrator accounts, create two new email accounts (the

“management account” and “the systemp account” and together “the New Accounts”), and to create aliases for certain e-mail accounts. Paragraphs 38 and 39 of the APC state that by this the Defendants took full control of the

Claimant’s infrastructure, prevented the legitimate users of various e-mail accounts accessing or learning about those e-mail accounts, and controlled passwords to or used by third parties providing services to the Claimant, and also ensured that incoming emails would be copied to the management account.

Paragraph 40 of the APC asserts that the Defendants executed a backup script in order to obtain copies of “an unknown quantity of emails” already in or that were subsequently sent to the email accounts, and Paragraph 41 of the APC

Paragraph 44 of the APC states that the First Defendant opened 159 of the emails diverted to the management account; and the Second Defendant opened 51 of the emails diverted to the systemp account.

Paragraphs 45 to 47 of the APC state that the Second Defendant accessed and gained control of and then revoked various existing administrators’ access to

Paragraph 48 of the APC states that the Second Defendant then changed the

There is then a section of the APC headed Relief. Paragraph 49 of the APC states that “In the premises the Claimant is entitled to the following relief.”

Paragraph 50 of the APC claims “A declaration that the Confidential Information is confidential to the Claimant.” Paragraph 51 of the APC claims “A declaration that the Defendants, and each of them, were not entitled to use and/or access the Confidential Information in the way that they did and/or generally” I refer to these as “the Declarations”.

Paragraph 52 of the APC sets out a list of mandatory injunctions claimed.

Paragraph 53 of the APC sets out a list of permanent prohibitory injunctions claimed; being against the Defendants: accessing the Claimant’s systems; changing any Passwords; making any further copies; communicating any of the Confidential Information; and making any further use of the Confidential Information. I refer to these as “the Prohibitory Injunctions”.

Paragraph 54 of the APC claims “An inquiry as to the loss caused by the Defendants’ actions and/or, at the Claimant’s election, an account of any gain made by the Defendants, or each of them, from their actions and/or the

The Claimant (by one or more of Mr Ponkratenko, Mr Braitchouk and Mr Jellicoe) soon learnt what had happened and took steps to regain control of its systems.

Prior to issue of the Claim Form, the Claimant applied on notice to Mrs Justice

The Defendants provided their affirmations dated 13 and 15 March 2019 respectively (“the Affirmations”). Each affirmation rather challenged the assumptions (of the Claimant, and possibly also the Court) underlying the order for the Affirmations. My impression, although I do not find the affirmations very clear as to this, but which I think Mr Cohen QC confirmed

The Claim Form was issued on 22 March 2019, claiming slightly different declarations, injunctions and damages. However, in the “Value” section, the Claim Form was completed to state, “I expect to recover between £5,000 and £10,000.” and which figure has remained unaltered.

The matter came back, with further applications, before His Honour Judge Parkes QC (sitting as a judge of the High Court) on 21 June 2019 who accepted undertakings from the Defendants until trial or further order that they would not (a) attempt to further access the Claimant’s systems, or (b) copy, disclose or use or allow or permit to be used, copied or disclosed any information or data they had obtained. A cross-undertaking as to damages was again given. Costs were again reserved.

These interim hearings, although both were effectively comprised by the proffering and accepting of agreed undertakings pending trial or further order, had generated other substantial witness evidence, being witness statements from Mr Braitchouk, Mr Jellicoe and Mr Vereschaka, and witness statements from both of the Defendants.

In the First Defendant’s witness statement of 29 March 2019: in paragraphs 20 and 27, he stated that he did not consider that what he had done with the assistance of the Claimant’s own administrator, Mr Vereschaka, had been unauthorised, data had not been removed or copied “whether unlawfully or otherwise” and actions had not been taken to disrupt the operational management of the business but rather to safeguard it in the event of an anticipated (but which never occurred, of course) removal from it of Mr Ponkratenko, Mr Braitchouk and Mr Jellicoe; and in paragraph 39 he stated that the Defendants had only changed passwords and created New Accounts under the control of Mr Vereschaka. The Second Defendant stated in his witness statement of 29 March 2019 that he had assumed that someone with the requisite authority had authorised the work to be done, although also at paragraph 38 he denied that he had downloaded or accessed or held any personal or business information, and at paragraph 39 stating that he had acted on the First Defendant’s instructions.

The Claimant responded with the second witness statements of Mr Braitchouk and Mr Jellicoe of 18 April 2019. They dispute that all that the Defendants had done was to change passwords, and in particular by reference to the asserted taking of 5MB of data and opening of 159 emails on the management account and the opening of 51 emails on the systemp account. Mr Braitchouk in his paragraph 20 refuses to accept the Defendants’ statements as to their conduct, and in his paragraphs 40 and 41 refers to expert evidence (to which I refer below) which he says suggest that the Defendants could have stored and retained backup copies of the Claimant’s material, and that further investigations of the Defendants’ devices would be required in order to be sure that they had not copied or communicated material further. Mr Braitchouk in his paragraphs 21 to 35 also challenges both the Defendants’ assertion that they acted under legitimate authority (of Mr Gilfanov and/or Mr Vereschaka) and what he sees as being their assertion that the Defendants did not know of any lack of authority (see, for example, his paragraph 22 and the final sentence of his paragraph 35) giving various reasons for both challenges. They also mention various matters which they say suggest that the First Defendant (at least) was much more involved in and knowledgeable of a scheme by Mr Gilfanov to effect an hostile takeover that the Defendants would accept (see, for example, paragraph 5 of Mr Jellicoe’s second witness statement).

There had also been conducted investigations of at least some of the Claimant’s computer systems by its expert, Mr Coyne (and to whose evidence Mr Braitchouk refers in his witness statement above), and of the Defendants’ computers, devices and internet systems by their expert Mr Heighway. I have not been shown their reports, although Mr Burton asserts that the Claimant and Mr Coyne have not been permitted access to the Defendants’ computers, devices and internet systems. Mr Cohen asserts that the Claimant has not asked for such access, but it does not seem to me that I am able to resolve that dispute at this hearing.

At some point the Claimant served Particulars of Claim (which are not in the Bundle) but the contents of which can be seen by examination of the APC. In its paragraphs 41 and 43 statements were made that the Defendants had copied 1200 Email Accounts amounting to 5,214,642 kilobytes of data and resulting in the copying or obtaining of over 12515 emails. In Paragraph 44 it was stated that 159 emails which had been diverted to the management account had been opened and 51 emails which had been diverted to the systemp account had been opened.

The Defendants served a Defence, which in paragraph 1.10 stated that their case had been set out in their affirmations and witness statements, and that access to the Claimant’s computer systems had been consensual and limited, had caused no damages and that they had not misused any information. In Paragraph 40 the making of a backup was admitted but it was stated that it did not include any copy emails. Paragraph 42 denied that any emails had been downloaded. Paragraph 44 denied that the Defendants had opened either the

The Defendants answered a CPR Part 18 Request from the Claimant on 7 October 2019. In response 1(a) they confirmed that their case as to their access to the Claimant’s computer systems was that it was consensual and authorised, and that the First Defendant had been authorised by Mr Gilfanov, the Silent Investors and Mr Vereschaka, and the Second Defendant had been authorised by the First Defendant. As appears below, it seems to me that, while not expressly stated, that all took this as impliedly asserting that the Claimant was bound by such authorisation. In Response 19 it was admitted that the Second Defendant had created a back-up script. In Response 20 it was admitted that some emails had been opened but stated that this was only to enable certain passwords to be reset. In Request 20b it was asserted that Mr Heighway had found evidence of downloaded emails on the Second

In Request 20c it was asserted that the Second Defendant had admitted to Mr Heighway that he had made a backup of 5MB, contrary to his witness statement, and could make the back-up available; and the Response was that the Second Defendant had forgotten when making his witness statement that he had made this “technical back-up” which was only of email settings and

As far as this Response 20c is concerned, Mr Cohen submits that it does not amount to an admission of the obtaining, or retaining, of anything significant let alone of emails, and that if the Claimant wished to challenge it then the Claimant should have done so in a statement of case. Mr Burton submits (and has confirmed in his recent emailed answers to my clarificatory questions following the initial draft judgment) that the download did involve the obtaining of emails and important data and as alleged in both paragraphs 41

The Claimant answered a CPR Part 18 Request from the Defendant on 16 November 2019. Request 32 sought full particulars of each loss or gain (for which an inquiry or account was sought) and the Response was that “The Claimant is entitled to plead the relief that it has in relation to quantum.” and reference was made to the Defendants’ denial of a right to such relief.

Each side challenged the sufficiency of the other side’s Part 18 Response but either no applications were made or they were not pursued. No applications were made to cross-examine any of the relevant makers upon their affidavits or witness statements.

By the exchange of letters on 4 and 11 November 2019, the Defendants accepted and admitted that what was (and still is) in Paragraph 23 of what is now the APC (“the Confidential Information”) was and still is information

The Claimant then obtained the Defendants’ consent, under CPR17.1(2)(a). to making amendments to the Particulars of Claim so as to give rise to the APC.

The Defendants then served an Amended Defence (“the AD”). In Paragraph 40 it was stated that the execution of the backup script was in order to ensure that the Claimant’s systems could be restored when convenient.

The matter then came before Master Gidden on 16 January 2020. I have not seen any transcript of the hearing or of the parties’ Case Summaries for it, and do not regard it as safe or appropriate to place any weight on what might (or might not) have been said in them. However, it is common ground that:

On 2 March 2020, the Defendants issued their Notice of Application, and which:

The Application goes on to provide details stating that it is based on (1) the Particulars of Claim containing no allegation of equitable fraud or unconscionability or knowledge of misuse of Confidential Information or knowledge of their having been given to them Confidential Information in breach of confidence as against the Defendants (2) the Passwords were given to the Defendants by Mr Vereschaka voluntarily knowing of the purpose for which they were to be used and so there is no reasonable prospect of the

No further evidence has been served by either side. I have, however, had full written and oral submissions from counsel. I have considered all the material carefully in preparing and giving this judgment. If I do not mention all matters specifically, I have still borne them in mind and any omission is due to considerations of time and the constraints due to the present COVID-19 circumstances.

CPR3.4(2) provides that: “The court may strike out a statement of case if it appears to the court- (a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; (b) that the statement of case is an abuse of the court’s process or otherwise likely to obstruct the just disposal of the proceedings; or (c) that there has been a failure to comply with a rule, practice direction or order.”

In principle, on the wording of the rule, the question of whether there is jurisdiction to strike-out under sub-paragraph (a) in circumstances of the nature of those before me involves simply a determination as to whether the wording of the statement of case, assuming the facts stated to be proved, discloses a cause of action in law, being a genuine and serious dispute, which could justify the relief sought – see White Book 3.4.2. Mr Burton has also drawn my attention to a passage in Altimo Holdings v Kyrgyz Mobil 2012 1 WLR 1804 where at paragraph 84 Lord Collins stated that “it is not normally appropriate to strike out (or grant summary judgment) so as to decide a controversial question of law in a developing area, particularly because it is desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts…”

CPR3.4(2) is, however, itself discretionary, being introduced by the word “may”, and which brings into play the overriding objective in CPR1.1. Thus, for example, if a statement of case does not disclose reasonable grounds, the court may often allow an opportunity for amendment, and the court will consider what is the proportionate response in relation to all aspects once one of the jurisdictional conditionals in the three sub-paragraphs of CPR3.4(2) is established.

CPR16.4(a) provides that Particulars of Claim must include “a concise

The Practice Direction to CPR Part 16 (“PD16”) in paragraph 8.2 provides that “a claimant must specifically set out the following matters in his particulars of claim where he wishes to rely upon them in support of his claim: (1) any allegation of fraud… (5) notice or knowledge of a fact.”

CPR24.2 provides that “The court may give summary judgment against a claimant… on the whole of a claim or on a particular issue if- (a) it considers that- (i) the claimant has no real prospect of succeeding on the claim or issue… and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.”

It is common ground that in approaching the CPR24.2(i) test of “no real prospect” the court applies the principles summarised in NCC Skills Ltd v

Mr Cohen’s primary reliance is upon CPR3.4(2)(a) in that he submits that while paragraph 32 of the APC states that the Defendants breached the Claimant’s right to confidentiality in its Confidential Information:

Mr Cohen’s reliance on CPR3.4(2)(c) and non-compliance with rules and practice directions, is based on submissions by him that:

Mr Cohen accepts that the information set out in paragraph 23 of and referred to elsewhere within the APC is information which in its nature is confidential to the Claimant, and, it seems to me, he is bound to do so in view of the

Mr Cohen accepts also that the APC impliedly plead that Mr Vereschaka acted without authorisation from the Claimant in providing the Passwords to the

Mr Cohen does, however, submit that the reality of the Claim is that the

Mr Cohen’s summary judgment application is again based on his assertion that, for a claim to succeed, the Defendants must have had sufficient knowledge not merely that the information was Confidential Information but also that they did not have the Claimant’s authority to use it as they did, and that would require knowledge that Mr Vereschaka was not authorised by the Claimant to engage them to act as they did. He submits that where an information technology employee of the Claimant (Mr Cohen says the senior IT operative, although that is disputed by the Claimant and is not a matter which I think I can determine on the paper evidence) authorises such steps with the apparent support of those who have significant (and Mr Cohen says the majority) beneficial interests in the shareholding of the Claimant, then the Defendants will not have the necessary knowledge of absence of authority, and thus of misuse, and the claim has no real prospect of success.

Mr Cohen submits that the case is even weaker against the Second Defendant who, he says, was simply acting on the First Defendant’s instructions.

In relation to Paragraph 41 of the APC, Mr Cohen submits that it is not a proper pleading. He submits that particulars of claim should plead facts (supported by a statement of truth) and an allegation that “so far as the

Mr Burton takes issue with Mr Cohen’s approach both to pleading and to the constituent elements of a claim regarding misuse of Confidential Information. He reserves his position as to seeking any permissions to amend until after this judgement, but otherwise submits in general as follow.

Mr Burton submits that the APC should, and should legitimately, be seen and construed in all the circumstances, including the witness statements (and expert evidence) adduced by the Claimant. In saying this, he also refers to the fact that paragraph 1.10 of the AD expressly refers to and seeks to incorporate the witness statements (and expert evidence) adduced by the Defendants. Mr Cohen says that this approach is illegitimate.

Mr Burton submits that, while the law requires the Defendants to have sufficient knowledge that the information is Confidential Information i.e. information whose nature is that it is confidential to the Claimant and not to be

Mr Burton submits that the expression “unconscionability” has to be seen in the above context. If the information is known to be Confidential Information then it is unconscionable to use it for purposes which have not been authorised (in a way to as to bind the Claimant, and thus including by way of ostensible authority) by the Claimant. Again, he says that it is for the Defendants to have properly satisfied themselves that they had authority to do what they did. Mr

Mr Burton further submits that the expression “equitable fraud” has a special meaning, referring here to what is unconscionable (in the above sense) rather than fraud in one its various senses of deliberate or reckless (both being subjective) wrongdoing. Mr Cohen responds to say, in effect, that “fraud” means “fraud” and attracts, and has always attracted, special rules owing to its nature.

It seems to me that Mr Burton might also as a variant of the above points be submitting that, even if, which he would dispute as his primary case, absence of knowledge (of whatever nature) on the part of the Defendants of their actions being unauthorised misuse could be an answer to the Claim, it is something which the Defendants would have to allege and prove by way of defence, rather than, as Mr Cohen contends, the Claimant having to allege and prove sufficient knowledge on the part of the Defendants of their actions being unauthorised misuse as part of its cause of action.

Mr Burton’s second line of submission is that if some form of knowledge of unauthorised misuse is required then the contents of the APC contain sufficient statements of particular facts from which the necessary inferences of such knowledge can be drawn. He submits that it is clear from the APC (especially when taken with the witness statements) that it is being said that the Defendants had actual, or at least Nelsonian, and, if not then, constructive knowledge, and that the facts pleaded would justify such inferences or objective conclusions. Mr Cohen responds that the relevant inferences are not pleaded, and that it is wholly unclear what pleaded facts are supposed to justify what inferences and how.

Mr Burton’s third line of submission is that the Defendants in taking the various steps pleaded in paragraphs 33 to 48 of the APC have clearly gone beyond what they were purportedly authorised to do by Mr Vereschaka and accordingly must have had knowledge that they had (at least to that extent) misused the Confidential Information. Mr Cohen’s primary answer is that this is not pleaded, although he also disputes it in whole as well as (even on Mr Burton’s case) in part.

Mr Burton’s alternative and secondary approach is to contend that even if (which he disputes) knowledge of misuse is required to give rise to a financial liability, or that this is a case of accessory conduct and that that requires knowledge (although he does not accept that that is the case), and so that the

Mr Cohen says that such entitlements would still require knowledge of misuse, but that in any event those remedies would not be granted without good reason, and that there is clearly none as the Claimant has all the Confidential Information, the Defendants have destroyed what they had, the Defendants have not retained any Confidential Information themselves (and nothing was

Mr Burton responds to the summary judgment application on similar lines, but also says that the question of Mr Vereschaka’s actual or ostensible authority is a very live issue for the Authorisation Preliminary Issue, including because there was no apparent objective justification for his authorising the directing minds of the Claimant to be locked out of the Claimant’s systems.

Mr Burton submits that the introduction of the “as far as the Claimant may be aware” wording in paragraph 41 of the APC is proper as reflecting the Claimant’s actual belief where there had to be a statement of truth (in the form of “The Claimant believes the facts stated in this statement of truth to be true” under CPR 22 and its Practice Direction), and the Claimant could not be sure that it had full information as to what happened, particularly prior to disclosure and its expert having inspected the Defendants’ devices. He did confirm that paragraph 41 ran onto paragraph 43 which quantified the backup data at 5,215,642 bytes; and eventually confirmed that the Claimant was actually intending to allege that this backup data had actually been obtained notwithstanding the words used.

The parties have taken me to a number of authorities in this area, relevant elements of which I review as follows (and while I have considered their entirety, I have only cited limited elements below due to considerations of time and technology). I deal first with authorities regarding the substantive questions relating to the court’s protection of confidentiality and then authorities dealing with pleading.

Mr Cohen referred me to passages in Section 2 within Part 9 of Snell on Equity: 24^th Edn. In sub-section 9-013 it is said that the doctrine arises from the Claimant’s “reasonable expectation” of confidentiality.

In sub-section 9-014 it is stated that, in the absence of a contractual promise

Sub-section 9-015 deals further with the situation of when B imparts information to C in breach of a duty of confidence owed by B to A (said by Mr Cohen to be the Claimant’s case in relation to Mr Vereschaka’s

In his Reply, Mr Cohen also referred me to passages in Toulson and Phipps on confidentiality in Chapter 3. In its statements of general principle at 3-001, the authors make clear that “(1) the duty… may arise… as an equitable

At sub-section 3-053 the authors say that a third party recipient from someone who has breached their duty of confidence will owe a duty of confidence on the basis of it being equitable fraud to knowingly assist in such a breach. In paragraph 3-054 it is said that a lack of knowledge on receipt may not prevent a duty arising once knowledge is gained by “discovering the true position” except possibly if money or other detriment had been paid or incurred by the recipient in the meantime, although subsequent paragraphs query the existence or extent of such a defence.

I do not find these various sections to be of much assistance on the critical question on these applications as to whether there has to be knowledge of lack of authorisation for the relevant purpose, even though they regard knowledge as a key element of the arising of a relevant duty, unconscionability or equitable fraud. They do, however, make clear that a gaining of knowledge can give rise to a duty etc. even where such did not exist at the time of the original acquisition of the confidential information.

Mr Cohen took me to various cases. The first of these is Re: Smith Kline 1991 FCA 150 a decision of the Federal Court of Australia, and where at paragraph 20 it was said the substantial question there was as to the nature and extent of the confidentiality, and which seems to me to have been mainly directed as to what uses were actually authorised by the person whose confidential information it was.

Later in that judgment at paragraphs 48 to 52 it was said

This does emphasise something of a “reasonable person” approach to the duty of the confidee and that the duty is not to abuse or make unconscientious use, and which might suggest that there needs to be “knowledge of unauthorised purpose”, especially by reference to the words “fraudulently abuse the trust reposed in him” (which use of the word “fraudulently” may suggest a need for knowledge of misuse) as cited in paragraph 49, but the judgement is not directly concerned with the point before me. Instead it seems to have depended upon the confidee not having sufficient knowledge that the information was confidential combined with a failure to limit the purpose for which it was provided as set out in paragraph 52.

Mr Cohen then cited R v Department of Health ex p Source 2001 QB 424 where at paragraphs 24-25 it was said that"24. I have already cited one passage from Megarry J's judgment in Coco . In turning to the other main authorities I propose to be highly selective in citation. I start with the Federal Court of Australia in Smith Kline & French Laboratories (Australia) Limited v Department of Community Services and Health (1991) 99 ALR 679 at 691:

“Megarry J has suggested a broad test to determine whether an obligation of confidence exists. In Coco v A.N. Clarke (Engineers) Limited [1969] RPC 41 , Megarry J said (at 48):

‘It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence.’

However, this test does not give guidance as to the scope of an obligation of confidentiality, where one exists. Sometimes the obligation imposes no restriction on use of the use [ sic ] of the information, as long as the confidee does not reveal it to third parties. In other circumstances, the confidee may not be entitled to use it except for some limited purpose. In considering these problems, and indeed the whole question, it is necessary not to lose sight of the basis of the obligation to respect confidences: ‘it lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained.’ This is quoted from Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 438; 56 ALR 193 at 203 per Deane J, with whom the other members of the court agreed. A similar broad view has been taken in the United States: E.I. Dupont de Nemours Powder Co v

Masland (1917) 244 US 102 …

Similar expressions recur in other cases: Seager v Copydex Ltd [1967]

RPC 349 at 368: ‘The law on this subject … depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it.’

To avoid taking unfair advantage of information does not necessarily mean that the confidee must not use it except for the confider's limited purpose. Whether one adopts the ‘reasonable man’ test suggested by Megarry J or *13 some other, there can be no breach of the equitable obligation unless the court concludes that a confidence reposed has been abused, that unconscientious use has been made of the information.

…

We would add that in our opinion courts exercising equitable jurisdiction should not be too ready to import an equitable obligation of confidence in a marginal case. There is the distinction between use of confidential information in a way of which many people might disapprove, on the one hand, and illegal use on the other. Not only the administration of business and government, but ordinary communication between people, might be unduly obstructed by use of too narrow a test, such as that which the appellants put forward here.”

25.

Many of those same citations had found their way into Bingham LJ's judgment in the Court of Appeal in the Spycatcher case — Attorney General v Guardian Newspapers (No. 2) [1990] 1 AC 109 — in a passage setting out the relevant principles of law, later approved by the House of Lords. As to the duty of confidence generally, Bingham LJ at page 216 said this:

“The cases show that the duty of confidence does not depend on any contract, express or implied, between the parties. If it did, it would follow on ordinary principles that strangers to the contract would not be bound.

But the duty ‘depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it:’ Seager v Copydex Ltd. [1967] 1 WLR 923 , 931, per Lord Denning

MR. ‘The jurisdiction is based not so much on property or on contract as on the duty to be of good faith’: Fraser v Evans [1969] 1 QB 349 , 361, per Lord Denning MR. It accordingly ‘affects the conscience of the person who receives the information with knowledge that it has orginally been communicated in confidence’: per Sir Nicolas Browne-Wilkinson V-C at the interlocutory stage of this case [1987] 1 WLR 1248 , 1265. So it is appropriate that the enforceability of rights of confidence against third parties should be analysed in the traditional terms of equitable rights over property, as Sir Nicolas Browne-Wilkinson V-C did [1987] 1 WLR 1248 ,1264D, and Nourse LJ did at an even earlier stage of this case Attorney-General v Observer Ltd., The Times, 26 July 1986; Court of

Appeal (Civil Division) Transcript No. 696 of 1986 .

*14

The English law on this subject could not, I think, be more clearly or accurately stated than it was by the High Court of Australia in Moorgate

Tobacco Co Ltd v Philip Morris Ltd (No. 2) (1984) 156 CLR 414 , 437– 438:

“It is unnecessary for the purposes of the present appeal, to attempt to define the precise scope of the equitable jurisdiction to grant relief against an actual or threatened abuse of confidential information not involving any tort or any breach of some express or implied contractual provision, some wider fiduciary duty or some copyright or trade mark right. A general equitable jurisdiction to grant such relief has long been asserted and should, in my view, now be accepted: see Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 , 50–52. Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained.’”"

Paragraph 24 essentially adopts the Smith Kline paragraphs which I have already cited. Paragraph 25 cites an element of the Spycatcher 1990 1 AC 109 decision in the Court of Appeal and which stresses the not taking of unfair advantage of what is known to be confidential information. This, however, does not deal with the question of whether it is simply unfair to use it for an unauthorised purpose or whether there needs to be knowledge that such purpose was unauthorised. However, the concluding sentence does stress the importance of the circumstances of obtaining the information in considering the obligation of conscience.

Paragraph 31, however, reads

This Paragraph is somewhat more helpful to Mr Cohen as it stresses that the scope of the duty is to be judged is the conscience of the confidee, and whether a reasonable person in the position of the confidee would have been troubled by the proposed use and consider that unconscientious use was being made. That would seem to have potential to bring in consideration of what was known of the purpose or authorisation of the confidor or person entitled. However, the actual decision depended upon what the confidee would have considered was the legitimate rights of the person entitled in the relevant information rather than any question as to their purpose.

Mr Cohen then cited Vestergaard v Bestnet 2013 1 WLR 1556 and which concerned a claim for damages against a defendant who had formed a company with an ex-employee of the claimant to exploit what turned out to the confidential information of the claimant, but where this defendant only learnt of the fact that it was confidential at a very late stage and possibly at the time of the first instance judgment. The improper exploitation was, of course, by the company and there was no suggestion that the corporate veil could simply be pierced and so some other way had to be sought to render the defendant liable financially.

The main reasoning of the Supreme Court is contained in Paragraphs 20 – 28

However, it is also relevant what was said in relation to the “common design” argument in Paragraphs 32-39

Accessory liability was dealt with in Paragraphs 40-43

In so far as I understand the third way of putting Vestergaard's case,

These two alternative ways of presenting Vestergaard's third ground are quite close in their import, and in a sense they can both be said to involve an attempt to conflate the first and second grounds, albeit in a somewhat incoherent way. In the end they each must fail, essentially because of findings of fact made (or, in many respects, understandably not made) by the Judge.

So far as argument (i) is concerned, it cannot succeed without a finding against Mrs Sig of dishonesty of the sort characterised by Lord Nicholls in Royal Brunei, as discussed in para 26 above. There is no such finding, and it seems to me clear from the conclusions which the Judge did reach, as summarised in para 15 above, that there was no basis for his making any finding of relevant dishonesty on the part of Mrs Sig.

As to argument (ii), it is not enough to render a defendant secondarily liable for misuse of trade secrets by another to establish that she took a risk in acting as she did. The fact that she took a risk might often render it easier to hold that she was dishonest, but, by definition, it is not enough on its own. To revert to the metaphor, if one plays with fire, one is more likely to be burnt, but it does not of itself mean that one is burnt."

Mr Cohen points to various elements of these citations in support of his submission that knowledge of lack of authorisation is required, and Mr Burton to others, including:

I note in particular that:

Mr Cohen took me to Campbell v MGN 2003 QB 633 and paragraphs 66-69 "66. Where a third party receives information that has been disclosed by his informant in breach of confidence owed to the confider, the third party will come under a duty of confidence to the confider if he knows that the information has been obtained in breach of confidence. This principle is derived from the doctrine that it is equitable fraud in a third party knowingly to assist in a breach of trust, confidence or contract by another — see Toulson & Phipps on Confidentiality at 7–02 and the cases there cited.

Paragraphs 68-69 make clear that this decision is of limited application to the case before me. It is some obiter authority for the general proposition that a confidee only comes under a duty “if he knows that the information has been obtained in breach of confidence”, but no distinction is drawn between the situation where the confidee does not know that the information is confidential, and the situation before me where it is common ground that the confidee knew that the information was confidential and the real question is whether they need to know that their use is unauthorised. Nevertheless, there is some force in Mr Cohen’s argument that the dicta say that for accessory liability there has to be knowing assistance in the sense of there being knowledge that what is being done (albeit by the confider) is actually wrongful.

Mr Cohen in reply took me to Thomas v Pearce 2000 FSR 718 which involved an ex-employee taking confidential information to her new employer who then sent out a circular based upon it. A claim against the new employer for knowing assistance failed on the basis that the employer (through other employees) had not acted dishonestly, that having been alleged on the basis of subjective actual or Nelsonian knowledge of the ex-employee having acted in breach of duties owed to the old employer. The decision can be said to support Mr Cohen both in its terms and on its facts which have some similarity to the Claimant’s case before me. However, as set out at pages 719 and 720 that claim seems to have proceeded on the basis that it was common ground that the old employer needed to show that the new employer had knowledge that the ex-employee was passing on the information in breach of duty of confidence. An argument, as in this case from the Claimant, that it was sufficient for the new employer to have received what it knew to be confidential information, and where such receipt was on an unauthorised basis, does not seem to have been advanced.

Mr Burton responded to these authorities in particular by taking me to the Court of Appeal decision in Tchenguiz v Imerman 2010 EWCA Civ 908 and its review of the judicial history of the development of the law of protection of confidential information, and the principles for awarding of injunctive relief, at Paragraphs 54-74:

I note that in many of the cases cited injunctions appear to have been granted simply because the defendant held confidential information without authorisation from the claimant whose confidential information it was; and those injunctions included delivery up or destruction of the material, or material derived from it, and prohibitions of dissemination (see e.g.

I also note that in Paragraph 69 it appears to be held that the claimant should have, as a matter of right, the various injunctions. While Paragraph 69 refers at one point to there being a threat by the defendant to disseminate, Paragraphs 72 and 73 seem to impose no such limitation and proceed on the bases that (i) the information belongs to the claimant and no-one else should have it and (ii) the claimant should not have to face any risk of the defendant, even

Mr Burton also took me to the House of Lords decision in Spycatcher 1990 1

That decision concerned an application for an injunction rather than any question of damages. In those passages Lord Goff queried the general use of the confidor/confidee type of terminology, and referred to the situation of a duty of confidence being imposed in the situation of a simple obtaining of an obviously confidential document without its having been “confided” by anyone. He also expressly refused to engage with the question whether the duty arose from the circumstances themselves giving rise to an obligation of confidence or an analysis based on the claimant having a property in the information (which latter analysis might be said to give some support to Mr Burton’s contention that mere misuse is enough).

In relation to the points based on pleading and the CPR, Mr Cohen took me first to White Book 16.4.6 with its references to the purpose of a Statement of Truth being to avoid cases being pleaded which were unsupported by evidence. That may be one indirect purpose (as a belief would not ordinarily be held without evidence) but in my view, a Statement of Truth is precisely what it purports to be, i.e. a statement that someone believes (even if only on the civil standard of proof i.e. more likely than not) that an asserted fact is actually the case. Lack of evidential support may feed into that question, but

In the context of both the test under CPR3.4(2)(a) “no reasonable grounds” and paragraph 41 of the APC and the pleading of “so far as the Claimant is aware” Mr Cohen drew my attention to Wrightson v Flor and Others 2018

Mr Cohen referred me to Paragraphs 14-15:

Mr Cohen relied on these Paragraphs to submit that the Claimant should by now know what its case is, and in particular after the investigations, affirmations and witness statements from the earlier interim stages of this litigation, and so has no excuse for either not pleading knowledge or pleading only “so far as the Claimant is aware” and submitted that now was the time to

Mr Burton maintained that this litigation had not yet proceeded as far as disclosure, that the Claimant’s case was clear, and should be seen (as per Paragraph 15) not just in the context of the APC but also the witness statements.

Mr Cohen took me to Rolled Steel v British Steel 1986 1 Ch 246 at pages

It seems to me that these passages are authority for the propositions that, even if a pure matter of law does not have to be pleaded (although the modern practice may require it), a matter of mixed fact and law does, in order to give notice to the other party as to what is the case against it.

Mr Cohen then took me to Three Rivers v Governor and Company of the Bank of England (No. 3) 2003 2 AC 1 and paragraphs 183-191.1(3) of the House of

It seems to me that these make clear that:

Both parties referred me to Arab Monetary Fund v Hashim (No. 2) 1990 1 AER 673 at 679-680 where there were some limited particulars of an allegation of knowledge and it was held in that case it was permissible to so plead in general terms and defer particularisation of the case until after discovery. However, Mr Cohen submitted that here there was both no

I have found various of these issues more difficult than others to resolve. However, it does not seem to me that it is right for me to refuse to deal with most of them at this point on the basis set out in the Altimo v Kyrgyz decision. The main questions here are not as to what matters in law may arise from the facts as they eventually turn out to be proved, but rather as to what facts are (properly) alleged and whether, if they are proved (and for the purposes of CPR3.4(2)(a) I am to assume that they will be), then what, if any, consequences in law, and in particular the relief sought by the APC, could follow from them. There is a modification of this in relation to the Injunctions sought as the grant of an injunction is discretionary assuming that the legal basis is shown, and to which I refer below. As far as pleading is concerned, both the CPR and the above decisions make clear that the function of the statement of case is both to alert the other side as to what is being alleged (so

The first question is essentially where (as is common-ground here) a defendant has come into possession of information known to be confidential to the claimant and uses or retains that information, it is necessary, to give rise to a legal remedy in favour of the claimant, for the defendant to have knowledge that that use or retention is not authorised by the claimant.

It seems to me that there is an essential difference here between the various remedies sought and in particular (i) the Damages remedy and (ii) the Injunctions remedies. The Damages remedy is based on the Defendants having committed an actionable wrong in the past and is compensatory (or possibly restitutionary) arising from wrongful conduct. Injunctions do not necessarily require an actionable wrong at least by the defendant (the jurisdiction under section 37 of the Senior Courts Act 1981 is a general one of when “it appears to the court to be just and convenient to do so”), may well look to the future rather than the past, and may be granted, in appropriate circumstances, simply to protect proprietary or quasi-proprietary rights (or against a non-wrongdoer who has been caught up in the wrongs of others under the Norwich Pharmacal principle); although, obviously, there has to be

It is clear in relation to a damages remedy from such cases as Smith Kline, Vestergaard and Valeo Vision that there is an essential knowledge component of the cause of action, and which is required for that remedy to be ordered. That knowledge component is at least that the information is confidential to someone (who may not be known, see for example the situation of the lost diary considered by Lord Goff in Spycatcher). However, none of the cases, it seems to me, deals directly with the precise situation, which Mr Cohen accepts is pleaded, of where a confider (here Mr Vereschaka) provides a confidee (the First Defendant, and through him the Second Defendant) with information which the confidee knows is confidential to the Claimant and for a purpose which the Claimant had not consented to or permitted or authorised (actually or ostensibly) but where (at least on Mr Cohen’s construction of the APC) it is not alleged (and so the court must proceed on the basis) that the confidee does know (whatever is the subjective or objective approach to knowledge in this context) of the absence of authorisation or consent or permission.

Mr Cohen submits that the accessory liability cases (and the text-book commentaries) such as Thomas v Pearce and the analysis of accessory liability in Vestergaard make clear that for a third party confidee to be liable then knowledge of the confidor’s conduct being wrongdoing (i.e. breach of their duty of confidence is required). However, while this points towards the basis of a damages remedy being knowledge, I regard these cases as being potentially distinguishable from this one. Thomas appears to have been

Mr Cohen relies on the references in various of the cases to unconscionability and equitable fraud, and including to knowledge being necessary for unconscionability (for example in Smith Kline and other cases adopting its reasoning such as DoH v Source). Again, this gives him some assistance, but in the context of equity “unconscionability” is very fact-dependent and neither

Mr Cohen does, however, seem to me to gain substantial support from three cases, notwithstanding that they are all distinguishable on their facts.

The first is Smith Kline and its approval of a (USA) judgment requiring

“fraudulent misuse” which tends to suggest some knowledge that the actions are or will be misuse.

The second is Vestergaard, While the decision is distinguishable as the relevant defendant did not act personally, but only set-up a company which acted wrongfully, paragraph 22 does suggest that personal liability requires knowledge of misuse. Although paragraph 24 in its dealing with Seager v Copydex can be said to impose a strict liability, that seems to be where there was knowledge of lack of permission in fact, and it was merely (wrongly) thought that there was no legal duty in the circumstances.

The third is Valeo Vision. Again, the decision is distinguishable on the facts as it was held that the defendant had had no reason to know that the information was confidential to the claimant at all. However, Aldous J’s statement at page 228 lines 14-17 is quite clear that there needs to be knowledge (at least on an objective basis) that the use is wrongful for there to be a damages remedy. He draws a clear distinction in his judgment between what is required for a damages remedy and for there to be jurisdiction for the grant of an injunction.

I do not find the decision itself or the decisions cited in Tchenguiz of assistance here. Those decisions all seem to relate to the question of whether injunctions should be granted, and that seems to involve different considerations from a damages remedy both as matter of principle (as I set out above regarding the consequences of a wrong) and authority (Valveo Vision as above, and which is binding upon me).

It further seems to me to be consistent with principle that in order to be liable in damages, a defendant should have some knowledge of lack of authorisation, and hence misuse, as well as of the information being confidential to the claimant. The law professor’s examples given in Spycatcher are potentially real-life situations and it is difficult to see why a use should give rise to a liability for damages even if the user is, for example, trying to assist (e.g. seeking to return the material to the claimant), in the absence of knowledge that the use is not in accordance with what the claimant wanted.

I have considered Mr Burton’s point that a solution could lie in the concept of actual or ostensible authority, and so that a defendant would have to show that they had such authority, binding upon the claimant, in order to avoid committing a wrong in relation to what they know to be the claimant’s confidential information. That would bring in similar factors to questions of “knowledge” but with the burden being on the defendant to advance and justify a defence.

However, I do not think that that it is the answer, even were I not bound by authority. It is not referred to in any of the cases which proceed on a different “knowledge” basis. It may be consistent with a “property in the confidential information” analysis, as infringements of property rights are generally matters of strict liability, but Lord Goff’s dicta in Spycatcher are obiter and equivocal and none of the other cases cited go down that route but all emphasise the question of “conscience” and which is knowledge (of fact) based, and where the duty is usually upon the claimant to prove that the defendant’s conscience was bound to prevent them lawfully committing the act of which complaint is made. Also, the tests for authority, including ostensible authority, are complex and may not be coterminous with (even objective) knowledge in all situations.

I therefore conclude that it is necessary for there to be a damages remedy for the Defendants to have had sufficient “knowledge” that they lacked authorisation from the Claimant to act as they did. What I am not deciding is whether that knowledge has to be subjective i.e. actual present in their minds or Nelsonian deliberately or recklessly turning a blind eye, or objective i.e. what would have been acquired with the exercise of reasonable care. It seems to be that there is something of a tension between the accessory liability and primary liability cases (of which Valdeo Vision is one), and questions of fact as to upon which side of the line this case falls. The parties have also not

I also think that it is necessary for such knowledge, and the facts upon which it is based or to be inferred, to be pleaded i.e. to be stated in the Particulars of Claim. As a general rule, CPR16.4 provides that the facts relied upon are to be pleaded, and knowledge of absence of authorisation (and hence of misuse) is, I have found, an essential constituent of a cause of action leading to a damages remedy. Paragraph 8.2(5) of the Practice Direction to CPR16 provides that an allegation of notice or knowledge of a fact, and the absence of authorisation is a matter of fact, must be stated. While I do not think (but do not need to decide) that this species of “equitable fraud” is necessarily “fraud”

Mr Burton submits that the APC contains sufficient statements of particular facts from which the necessary inferences of knowledge can be drawn. I do not think that this is a legitimate approach. The rule of pleading is that the essential fact i.e. the knowledge is pleaded, and that is what Paragraph 8.2(5) of PD16 says; that is the first stage and arises before the second stage of whether there are sufficient particulars of such an allegation of essential fact. It is putting the cart before the horse to say that it is sufficient to plead matters which would amount to particulars of an un-pleaded allegation. The matter can be tested simply by asking whether it is apparent from the APC as to whether there is an any allegation of knowledge of absence of authorisation and, if so, then of what knowledge (actual, Nelsonian, objective etc.), and there is not. The fact that some matters in the APC might be said to support an allegation of some form of knowledge is not sufficient to inform the Defendants (or the Court) of what is the case against them where, as here, there is no allegation at all of any knowledge of lack of authorisation or permission.

However, I would add that I am not convinced that there are statements which would amount to sufficient particulars of or so as to give rise to an inference of such knowledge, but that cannot be tested without knowing what is alleged by way of type of knowledge; and, as there is nothing in terms of “knowledge” pleaded, hence nothing in terms of “knowledge”, let alone any particular type of knowledge, is being alleged. I felt that in his oral submissions Mr Burton was accepting of this, although in his written submissions he has contended that the Defendants did know that they were not authorised to have, let along to use, the Confidential Information. However, and in any event, the Claimant

I would also add that there may be cases where it is obvious from pleaded facts that an allegation of known absence of authorisation or permission is made (e.g. perhaps the making use of a complex technical blue-print blown by wind out of a commercial building (to use one of Lord Goff’s examples)), and where it might well not be necessary for such knowledge to be pleaded. However, that is far from this case and the APC, and where the APC refer to the Passwords being communicated to the Defendants by an IT employee of the Claimant with (at least inferentially as paragraphs 28 and 29 of the APC refer to Mr Samsonov’s involvement, although Mr Burton says that this is no part of the Claimant’s case and not accepted) the support of one or more significant beneficial shareholders and without any express allegation of wrongdoing; and Mr Cohen fairly raises the rhetorical question of “why

Mr Burton’s third point was to contend that the Defendants had clearly gone beyond any authorisation which they had been given by Mr Vereschaka. However, not only is the fact of going beyond any authorisation not pleaded (although it might just be inferred from the deemed requiring of proof by CPR 16.7 (in the absence of a Reply) of matters stated in a Defence; although, if so, the absence of a Reply seems unsatisfactory in defining the issues and the case the Defendants have to meet), but there is no allegation that the Defendants

Mr Burton further submits that the APC as a statement of case should be seen in the context of the witness statements etc. and they can be used to supplement the APC and so as to make various allegations of knowledge (as indeed they do). However, this seems to me to confuse (1) statements of case which are to contain facts (and not evidence) and set out a legal claim, and (2) witness statements which are to contain evidence (and not to set out legal claims). The Defendants are supposed to find the legal case against them set out in the statements of case, and, of course, this further demonstrates that the Claimant could have set out claims based on knowledge had it been minded so to do. Even if witness statements may in some circumstances flesh out an allegation, in this case, in the APC, there is no allegation of knowledge at all to be fleshed out, and I do not think that witness statements can be used so as to supply one where none appears in the pleaded case (and where PD16 paragraph 8.2(5) requires precisely that).

Mr Burton further submits that it is too soon, before disclosure, to require a pleading of knowledge while the Claimant cannot be sure of what has happened. I deal with this further below in relation to Paragraph 41 of the

It therefore seems to me that the APC does not disclose reasonable grounds for bringing the claim for the Damages Remedy and that the claim for damages (being paragraph 54 of the APC and paragraph (3) of the Prayer for Relief) should be struck out both under CPR3.4(2)(a) and CPR3.4(2)(c) (failure to plead knowledge as required by PD16 paragraph 8.2(5)). However, this is subject to the usual principle that the Court will consider any application to Re-Amend the Particulars of Claim before finally striking out these elements.

Mr Cohen also seeks reverse summary judgment on the basis that any claim based on knowledge (of any type) has no real prospect of success in the light of the communications by Mr Vereschaka and others. Technically, this does not presently arise as the APC contains no allegation of knowledge and any such question is, presently, hypothetical and speculative especially as the court does not know what the allegation would be.

However, and without having made any decision, I do note at this point that:

I now turn to the claim for the Injunctions which, it seems to me, falls to be treated differently. The first question is whether knowledge of misuse (in the sense of absence of authorisation) is a requirement, either by way of jurisdiction or principled exerise of discretion (for what is a discretionary remedy). As to this, Aldous J in Valveo Vision at pages 227-8 makes clear that Injunctions may be granted, even though in that case they were not granted on its particular facts, even where there is no knowledge but simply to protect the claimant’s rights in and to the confidential information. This is further a theme which runs through the judgment and historical analysis in Tchenguiz from such old cases as Prince Albert v Strange and Moat v Morison and Argyll to Tchniguiz itself. As said in paragraph 72 of Tchenguiz it would be surprising if the Claimant could not stop further use being made of what is the Claimant’s Confidential Information; and that case-law all seems to me to support the existence of a jurisdiction to grant Injunctions even where no cause of action exists for damages.

An alternative way of looking at it, is by reference to what may happen at a trial where, as here, the Defendants have had, and used, the Claimant’s Confidential Information, and, I have to assume for these purposes, on the basis that Mr Vereschaka either did not confer or did not continue to confer authority. I can see no reason why, following Valveo Vision and Tchenguiz, there should not be jurisdiction to grant Injunctions.

Mr Cohen seeks to counter this in various ways, both on a strike-out CPR3.4(2) basis involving just looking at the APC and on his reverse summary judgment application basis under CPR24.3 saying that there is no real prospect that the Injunctions (or some of them) would be granted.

First, Mr Cohen, submits that the claim for Injunctions is not open to the Claimant on the APC as the APC is only concerned with the events of 11 January 2019 and not any future or continuing position.

I do not think that this is correct in fact, as paragraph 41 of the APC alleges the creation of the back-up copy and paragraph 44 the opening of the 159 emails by the First Defendant and the opening of the 51 email by the Second Defendant, and which involve a continuing holding of confidential data and knowledge; and, of course, the Passwords, even if changed, have been obtained and used so as to access the Claimant’s systems and all so as to at least learn of confidential information.

I also do not think that it is correct in law. Once confidential information has been obtained, Tchenguiz (and Valdeo Vision) holds that there is jurisdiction to grant Injunctions, even if only to protect against an entirely unthreatened and inadvertent further use or dissemination (see the end of paragraph 72 of Tchenguiz). Whether an Injunction is to be granted is then a matter of discretion in the light of the evidence but at first sight the Claimant has a right to at least a Prohibitory Injunction (as well as a Mandatory Injunction to compel destruction or delivery up of the confidential information or any confidential (and perhaps other) information derived from it).

What is, perhaps, less clear is whether at first sight the Claimant has a right to further Mandatory Injunctions, effectively to compel the Defendants to reveal what, if anything, they have done with the confidential information (or confidential, and perhaps other, information derived from it), including transmission to others (and possibly ancillary matters such as orders to deliver up devices for inspection). I cannot see as to why in principle, where a serious unauthorised invasion of computer systems has taken place, and all the more so at the behest of others, which is all alleged by the APC, there should not be jurisdiction for the grant of Mandatory Injunctions of this nature. While the point is not specifically considered in Tchenguiz, it seems to me to be consistent with the analysis of the entitlement to protect the confidential information, and if a Prohibitory Injunction (and Mandatory Injunction to deliver/destroy) can be granted then I can see no reason why further or ancillary orders cannot also be granted. As I say above, the grant of Injunctions is discretionary and can generally be triggered by invasion of a proprietary or quasi-proprietary right, and it is then for the court on the evidence to consider what Injunction is appropriate. For all these reasons, I do not regard the APC as disclosing no reasonable grounds for the (potential) grant of that relief.

In any event, this seems to me to an unclear and fact-dependent area of the law, and the Altimo dicta and guidance are to the effect that I should be cautious to strike-out in such circumstances, and I am not prepared to do so.

I add that Mr Cohen has submitted that I am effectively allowing a claim for a quia timet injunction (an injunction granted where there is a real threat of wrongful conduct) to proceed without the relevant threat or grounds for believing there to be a threat being pleaded, and that the claim of the Injunctions should be struck out on that basis. I do not accept this as:

Although, despite my invitation, neither side has made any submissions in relation to the Norwich Pharmacal jurisdiction of injunctions being granted to disclose knowledge of being caught up in the wrongs of others (and so I am not relying on it in this judgment), this conclusion seems consistent with that jurisdiction and the principles underlying it.

Mr Cohen further submits that the claim for some or all of the Injunctions has no real prospect of succeeding as the confidential information remains with, and has been regained, by the Claimant and is no longer held by the Defendants, and has not been transmitted by them to others, and that all this is clear on the evidence. I am not persuaded by this and in particular as:

Mr Cohen also submits that the Second Defendant is in a different position from the First Defendant as acting on his instructions. I cannot see a distinction here in this context, as the underlying questions here are ones of fact and discretion where each has invaded and obtained and used confidential information regarding the Claimant’s computer systems, and it is the Second Defendant who appears to have created the back-up copy and to have opened some emails.

Mr Cohen also submits that there is nothing really left in the litigation as the

Mr Cohen also submits that there is more to this litigation than appears on the surface of conflict between these particular parties. I do have some suspicions that this litigation could possibly, in reality be a “proxy” fight where the real “war” is between Mr Ponkratenko and Mr Gilfanov. However, that it is speculation, can, even if it is the case, only be a factor in discretionary considerations involving many other factors, and is of dubious relevance where the Defendants have actually (and on the assumption that this was unauthorised) invaded the corporate Claimant’s systems. I do not think that I can base anything upon this mere possibility.

Accordingly, I am not going to strike-out or grant reverse summary judgment in relation to the claims for the Injunctions.

I turn next to the Declarations sought. The grant of Declarations is discretionary, and such are only to be granted with care and for good reason.

The first Declaration is that the Confidential Information is confidential to the Claimant (paragraph 49 of the APC). This is, in fact, admitted. Mr Cohen submits that it is simply and obviously unnecessary. I do, however, see force in Mr Burton’s submission that it is of importance to an entity such as the Claimant, and which serves and holds the confidential and private information of its customers in a sensitive and regulated area (of on-line gambling), to achieved a judicial recognition to the world that this information is confidential to it, and especially where the information has been invaded (at least to some extent) by others. I do not see that there is no real prospect of the discretion to grant a Declaration being exercised here, and I refuse to strike it out or to grant reverse summary judgment.

The second Declaration is that “the Defendants, and each of them, were not entitled to use and/or access the Confidential Information in the way that they did and/or generally.” – paragraph 51 of the APC. Mr Cohen submits that it follows from my conclusions on knowledge and strike-out of the damages claim that this Declaration will not be granted. In my view, it has become apparent that the word “entitled” is ambiguous in this context as it could mean either (i) that the Defendants were not actually authorised by the Claimant to act as they did (which remains or possibly (as Mr Cohen disputes that it does) remains a live issue) or (ii) that the Defendants acted wrongfully in law in what they did (which I have held not to be properly alleged in the light of the limited pleaded facts). It seems to me that paragraph 51 should be redrafted to make clear what is sought; but I accept Mr Burton’s submission that the possible importance to the Claimant and its customers and regulations of a judicial determination that what happened was without its authority is such that I do not see that there is no real prospect of the discretion to grant a Declaration being exercised here, and I refuse to strike it out or to grant reverse summary judgment. Mr Cohen has now further submitted that any question of absence of authority is, and would need to be litigated, as between the Claimant and Mr Vereschaka. I have not reached any conclusion as to that, and which can be considered further during the hearing of the remainder of the Applications, although at first sight the submission has an air of unreality where Mr Vereschaka is still working for the Claimant and the Defendants have not (as far as I can tell) admitted that Mr Vereschaka had no authority (actual or ostensible) to authorise them to act as they did on 11 January 2020 (or, as Mr Burton contends, also to retain data later).

I now turn to three particular paragraphs in the APC. The first two are paragraph 32 which says that “... the Defendants, and each of them, breached the Claimant’s right to confidentiality...” and paragraph 33 which refers to particulars of “breaches”. Mr Cohen complains of the use of the word “breached” (and, I think, the word “breaches”) on the basis of my accepting

The third paragraph is paragraph 41 of the APC and the introduction by way of agreed amendment of the words “... and so far as the Claimant is aware...” I can see why Mr Burton may say that it is odd for the Defendants to have consented to the introduction of these words only then to seek to strike out all or some of the paragraph in consequence. However, I do have to ask myself whether or not this is a proper pleading and I do not think that it is.

Particulars of Claim have to state “facts”, see CPR16.4, and the reason for that is a trial is concerned with the Court trying out (a) whether those or some of those facts are proved and if so (b) whether those facts gives rise to a legal consequence of, or of the existence of a discretion to grant, certain remedies.

I do not accept Mr Burton’s submission that this wording merely reflects the rules regarding statements of truth. The purpose of the Statement of Truth is to ensure that a party is only advancing a factual case that it honestly believes to be true (and this has been accentuated by the recent amendments to the form of a Statement of Truth as required by PD22), and where the party must think very carefully about whether it has evidence which can justify that belief (cf. Clarke v Malborough 2002 EWHC 11 cited in White Book 16.4.6). It has been held that a party may believe that one (but at least one) of one or more alternatives is the case, and also that alternative A is more likely that alternative B but that one of them is the case. The belief need only be an honest one, and the belief need only be to the civil standard i.e. that it is more likely than not that the fact is the case (as that is still an honest belief that it is the case). However, while the content of the pleading (such as a plea of alternatives) may condition the form of the Statement of Truth (which can be adapted appropriately – see e.g. Binks v Securicor 2003 1 WLR 2557 cited at White Book 16.4.6), it is not the function of a Statement of Truth to condition the form of the pleading. If the Claimant wishes to allege a fact and the person signing the Statement of Truth is concerned about their belief, then they should consider modifying the Statement of Truth and consider whether the end result still satisfies the above policies such the court would be prepared to allow it. I have doubts whether the court would in this case, but, in any event, the pleading, in my view, contravenes the rule.

In any event, it seems to me that the introduced words are inappropriate. First, because Mr Burton has confirmed (I think in his oral submissions, but certainly in his answers to my clarificatory questions following the initial draft judgment) that the Claimant does actually “allege” the relevant facts as to what has happened. Mr Cohen submits that it is not for counsel to verify a statement of case, and which requires a statement of truth. In view of the existence of paragraph 43 of the APC I am not sure that there is anything in this point, but, if there is, then the next form of the pleading can have a fresh statement of truth (containing any appropriate modification to the standard form) appended to it (and while Mr Cohen submits that the Claimant should have to explain a change of mind, I do not see the inconsistency as a party can “believe” that something has occurred even though it is only “aware” of some facts which support that belief (on the balance of probabilities), and the change is being forced upon the Claimant by the Court). Second, because paragraph 43 of the APC seems to contain such an unequivocal allegation. Third, because the Part 18 Response has, at least, admitted the existence of the back-up copy even though it is disputed that it contained emails or important data. I am going to strike out those words.

Accordingly: