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In this paper, presented at the recent Blackstone Chambers Employee Competition Seminar, Kerenza Davis addresses the tricky issue of protecting confidential documents when litigating in the areas of employee competition.
1. A common problem for parties to litigation involving employee competition is how to pursue and evidence arguments and comply with obligations under the procedural rules without revealing commercially confidential or private information to other parties or the public at large.
2. The Courts have a raft of powers available to them that can provide protection to parties in this situation. However, there is a hefty body of authority, with contributions from many of the superstars of the last 100 years of common law, emphasising the absolute importance of open justice and the need to carefully scrutinize any proposed departure from this. As a result, judges can be reluctant to exercise the powers available to them. This can be a significant obstacle if you represent the party seeking to protect confidential information, and a real gift if you want to obtain it or frustrate your opponent’s ability to litigate comfortably.
3. This paper’s particular focus is on documents, and what can be done to protect (or expose) these when they contain confidential or private information. The answer varies according to the type of document in question and whether the concern is the document being available to the other parties or to the general public. However, the starting point for all applications and decisions in this area is the principle of open justice, which requires that the parties should have access to all relevant information and that proceedings (and the documents necessary to understand these) are open to the public.
4. A number of more specific “sub-principles” have been developed over the years, which help clarify the practical consequences of the rather lofty “open justice is very important” principle that everyone is careful to emphasis at the outset of any submission or judgment in this area. These sub-principles were helpfully summarised by Maurice Kay LJ in Global Torch Ltd v Apex Global Management Ltd as follows:
4.1. Derogations from the general principle can only be justified in exceptional circumstances, where they are strictly necessary as measures to secure the proper administration of justice.
4.2. Derogations should, where justified, be no more than strictly necessary to achieve their purpose.
4.3. The burden of establishing that it is necessary to depart from the principle of open justice rests firmly on the party seeking it.
4.4. Any departure must be supported by clear and cogent evidence, which will be subjected to careful scrutiny by the Court.
4.5. Three Convention rights can be engaged and require reconciliation in this context: Articles 6, 8 and 10. Neither Article 8 or 10 has precedence over the other, rather, where the values under the two articles are in conflict, an intense focus on the comparative importance of the specific rights being claimed in the individual case is necessary. The justification for interfering with or restricting each right must be taken into account and the proportionality test must be applied to each.
5. It is also worth noting that derogations from open justice cannot be agreed between the parties without the input of a judge, who must take into account the general interest in open justice and weigh this against the interests of the party (or parties). As Leggatt J held in Chodiev v Stein “the principle of open justice does not exist for the benefit of the claimants, or of parties to the litigation; it exists in the public interest”.
6. This does not mean there is no point in agreeing the position with the other side if possible; presenting the judge with an agreed order can be a very fruitful way of obtaining protection for confidential information. But it does mean you need to be ready to make your case, even if the other side are not planning to fight you.
7. The fact that a document contains confidential information is not in itself a justification for refusing to provide it to the other side. It is a matter that the Court can take into account when deciding whether to order production, but this tends to be more relevant to applications for specific disclosure, rather than to the potentially extensive number of confidential documents that may have to be disclosed as part of standard disclosure.
8. As such, in the absence of another reason for refusing to disclose or produce a document for inspection (for example, irrelevance, public interest immunity or privilege), parties needs to look elsewhere for protection.
Prohibition on Collateral Use
9. The starting point in relation to such protection is the restriction on the collateral use of documents disclosed during proceedings. The general rule is that a party may not make use of a document that has been disclosed to it other than for the purposes of the proceedings in which it is disclosed: CPR r 31.22(1). Use of the document covers use of the information contained within it, so where this restriction applies it will mean (in theory at least) the other side will not be able to do anything with any confidential information it obtained from documents disclosed during proceedings.
10. However, CPR 31.22(1) contains a number of exceptions to this general rule, including significantly if the document “has been read to or by the court, or referred to, at a hearing which has been held in public”: CPR r.31.22(1)(a).
11. A document will have been “read to or by the court” if the document or the material parts of it were read aloud in open court, if counsel draws the judge’s attention to it in open court or if it can be assumed to have been “pre-read” by the Court. Not everything that is disclosed or copied in Court bundles falls into this category, it is restricted to documents to which the judge has been specifically alerted, for instance by reference in a skeleton argument or by mention in the “reading guide”. However, there is a real risk that the crucial confidential information your client wants to protect will be contained in one of the documents that is read or assumed to have been read.
12. It may therefore be necessary to make an application under CPR r.31.22(2), which provides that “the Court may make an order restricting or prohibiting the use of a document which has been disclosed, even where the document has been read to or by the court, or referred to, at a hearing which has been held in public”.
13. The default position in relation to such an application will be one of openness, and the open justice principle will be central to the Court’s evaluation, which is not good news if it is your client who is trying to restrict the collateral use of its information. More bad news is that any application under CPR r 31.22(2) will need to be detailed and specific, see Buxton LJ’s comment in Lilly ICOS at §25 that:
“Simple assertions of confidentiality and of the damage that will be done by publication, even if supported by both parties, should not prevail. The court will require specific reasons why a party would be damaged by the publication [or use] of a document”.
and that of Leggatt J in Chodiev at §35:
“Simply saying that the documents are of a kind that the parties to them would generally regard as confidential and private is not…a sufficient reason for the court to impose on the use of the documents a restriction which would not otherwise exist”.
14. This will not present so much of a problem if your client is only concerned about one or two documents, but if it is a document heavy case, this can make succeeding on an application of this kind extremely labour intensive.
15. Even if one of the exceptions does not apply, the restriction on collateral use of documents may not adequately protect a party’s confidential information. There may be a risk that the restriction will be deliberately breached, especially if the other side has a history of misusing confidential information, or the information may be of the kind that once it is in the controlling mind of a competitor company (which in an employee competition case is likely to be one of the other parties), it cannot be unknown and is likely to be used, even if such use is inadvertent. In these circumstances, confidentiality clubs can be helpful.
16. Confidentiality clubs work by imposing restrictions on which individuals at or acting for a party can have access to disclosed documents, how those documents may be copied, where the documents may be viewed and/or the dissemination of the information contained in the documents.
17. The relevant principles were helpfully summarised by Hamblen J in Libyan Investment Authority v Societe General SA as follows:
17.1. The provision of protection by the use of confidentiality clubs in appropriate cases, including confidentiality clubs to which the parties' lawyers alone are admitted is well recognised, at least during the interlocutory stage of litigation.
17.2. The basis for confidentiality club orders is the Court's inherent jurisdiction to regulate its own procedure in the interests of justice.
17.3. The starting point is that each party should be allowed unrestricted access to inspect the other parties' disclosure subject to the implied undertaking that the disclosure will not be used for a collateral purpose.
17.4. It is therefore for the person seeking the imposition of a confidentiality club to justify the departure from the norm.
17.5. In order to do so, the proponent of the confidentiality club must establish that there is a real risk, either deliberate or inadvertent, of a party using his right of inspection for a collateral purpose.
17.6. Where it is demonstrated that there is such a risk, any restriction imposed should go no further than is necessary for the protection of the right in question. The object is that the applicant should have as full a degree of disclosure as will be consistent with the adequate protection of the right the confidentiality club is designed to protect.
17.7. The imposition of a confidentiality club and, if it is ordered, its terms, generally involves a balancing exercise. Factors relevant to the exercise of the Court's discretion are likely to include:
1) The degree and severity of the identified risk and the threat posed by the inclusion or exclusion of particular individuals within the confidentiality club;
2) The inherent desirability of including at least one duly appointed representative of each party within a confidentiality club;
3) The importance of the confidential information to the issues in the case;
4) The nature of the confidential information and whether it needs to be considered by people with access to technical or expert knowledge;
5) Practical considerations, such as the degree of disruption that will be caused if only part of a legal team is entitled to review, discuss and act upon the confidential information.
18. Although it is possible for a confidentiality club to limit disclosure to a party’s legal team, the Court will often conclude that it is necessary for a representative from the party itself to be included to allow instructions to be given on an informed basis.
19. In Mears v Leeds CC (a procurement case) Ramsey J suggested “a director, manager or recently retired person, who would not have been involved in the Procurement, would not be involved in the Procurement and would not disclose any information to others” might be an appropriate person to play such a role. The Claimant in Bombardier v Merseytravel sought to rely on this formulation to justify adding a senior executive who was due to retire in approximately a year to a confidentiality club, but Coulson J concluded she fell just the wrong side of the line to be allowed in.
20. For practical as well as principled reasons, it becomes increasingly difficult to exclude the party itself from a confidentiality club as trial approaches. Indeed it is not entirely clear the Court has the jurisdiction to continue a confidentiality club on these terms at a final hearing. In Re Coroin Ltd David Richards J expressed the view that “at common law the court has no jurisdiction to deny a party access to the evidence at trial” albeit he conceded that the jurisdiction might exist in which case it was “so exceptional as to be of largely theoretical interest only”.
21. The Competition Appeal Tribunal in contrast continues to make use of such orders and apparently has no qualms about its jurisdiction to do so. As Hollander suggests in Documentary Evidence:
“The law badly needs to be clarified… If the law is as David Richards J indicated in [Re Coroin], then the sooner everyone knows the better, because anyone agreeing a confidentiality club at an interlocutory stage will need to do so if full knowledge as to the position if the matter goes to trial. If the confidentiality club can on principle only last through the interlocutory period, then it may become a much less attractive vehicle than has previously been thought to be the case, and thought will need to be given in particular cases whether there should be, or needs to be, disclosure of the confidential material at all”.
22. In the meantime, while clients may not want to allow anyone from the opposing party to view their most confidential documents, it might make sense to agree to add someone relatively palatable to the confidential club at a reasonably early stage, to minimizes the risk of the whole thing being called into question at a later stage.
23. It is apparent from CPR r.31.19(3), which refers to a person who wishes to claim that he has a right or duty to withhold inspection of a document or part of a document, that redactions can be used in appropriate circumstances to withhold inspection of particular pieces of information contained in a document that otherwise has to be disclosed. In order to rely on this provision a party must make clear in its disclosure list (1) that inspection of parts of specified documents is being withheld and (2) the grounds for this: CPR r.31.19(4).
24. Redactions are commonly used to cover up legally privileged information but can also be used on the ground of irrelevance. This latter ground can be used to protect information that is confidential provided it is not relevant to the pleaded issues and, since GE Capital v Bankers Trust, so long as the specific part of the document that has been redacted is in fact irrelevant, the redaction will be permitted; there is no longer a requirement that it relates to a separate subject matter from the rest of the document.
25. Therefore redactions can be used to blank out small but crucial details such as names and numbers, as well as larger chunks of information, such as what the board went on to discuss for the second half of a meeting. This can be very useful in protecting confidential information while still complying with disclosure obligations.
26. However, parties must ensure that redactions are confined to matters that fall within permitted grounds. Hollander gives some salutary advice on this point in Documentary Evidence, at §10-21:
“In substantial litigation, it is common for documents to be blanked out. However, the trend is often to do so unthinkingly, without analysing properly the basis or justification for so doing. When the blanking out is challenged, and the redaction revealed, this can at the least make the lawyers look foolish for having sought to blank out without justification, and worse, can make the client look as though he is trying to hide something…lawyers are increasingly going beyond what is permissible. Large numbers of documents are disclosed with black lines through them in a way which makes it impossible to see what the basis of the redaction is or whether it is appropriate. On examination, too often these documents turn out to have been redacted based on an unjustifiably narrow definition of relevance. Passages redacted turn out to be material after all... In the last couple of years or so, sloppy and unjustified redactions seem to have become increasingly popular. Steps need to be taken to stop this.”
27. If you are faced with a bundle of documents containing more redactions than text, (or even just a small number of redactions you do not think are justified) CPR r 31.19(5) empowers the Court to decide whether a party’s claim that it has the right to withhold inspection should be upheld. It is therefore possible to make an application for inspection of redacted documents. Ramsey J set out the procedure the Court should adopt in relation to such an application in Atos Consulting v Avis Plc as follows:
27.1. The Court has to consider the evidence produced asserting the right to withhold inspection.
27.2. If the Court is satisfied that the right to withhold inspection is established by that evidence and there are no sufficient grounds for challenging the correctness of that asserted right, the Court will uphold the right.
27.3. If the Court is not satisfied that the right to withhold inspection is established because, for instance, the evidence does not establish a legal right to withhold inspection, then the Court will order inspection of the documents.
27.4. If sufficient grounds are shown for challenging the correctness of the asserted right then the Court may order further evidence to be produced on oath or, if there is no other appropriate method of properly deciding whether the right to withhold inspection should be upheld, it may decide to inspect the documents itself but this should be a solution of last resort.
28. Historically, the majority of evidence and submissions were presented orally in open Court so if a member of the press or the public wanted to monitor proceedings they only had to attend and listen.
29. Increasingly, evidence if given by way of written witness statements, which stand as evidence in chief, and are accompanied by voluminous documentary exhibits. Submissions are made, or at least supplemented, by written openings, closings and skeleton arguments. In these circumstances, even if a member of the public or press were to attend an entire trial, which is ostensibly being held in public to allow for the monitoring of proceedings, s/he may be left substantially in the dark about the matters on which the Court based its decision.
30. This discrepancy gives rise to the primary “open justice” justification for allowing the public access to documents; to facilitate the monitoring of proceedings that are increasingly being conducted on paper. This justification often sits behind the rules and presumptions governing applications for non-party access to documents, for example, the distinction that is drawn between documents that have been read by the Court and those that have not (with the former being more likely to be made available to the public since they form part of the Court’s decision making process and are therefore necessary to monitor its processes). Similarly, permission is more likely to be granted to a non-party seeking access to documents if the application is made while the proceedings are continuing, since at that point the decision making process that is under scrutiny is on-going.
31. Awareness of this background can therefore be helpful in formulating submissions in respect of applications in this area.
Statements of Case
32. Non-party access to different types of documents are governed by different rules and presumptions under the CPR.
33. The general rule in respect of statements of case is that once the defendant has filed an acknowledgement of service or defence, the claim has been listed for a hearing, or judgment has been entered, a non-party may obtain a copy of any statement of case (but not any documents filed with or attached to it) from the court records: CPR rr 5.4C(1) and (3).
34. If your client is concerned about this, an application can be made under CPR r 5.4C(4). This requires an application notice in accordance with Part 23 (CPR r. 5.4C(5)) but does not need to be on notice, unless Court directs otherwise: CPR r. 5.4D(2).
35. CPR 5.4C(4) provides that the Court may, on the application of a party or of any person identified in a statement of case:
35.1. Order that a non-party may not obtain a copy of a statement of case;
35.2. Restrict the persons or classes of persons who may obtain a copy of a statement of case;
35.3. Order that persons or classes of persons may only obtain a copy of a statement of case if it is edited in accordance with the directions of the Court; or
35.4. Make such other order as it thinks fit.
36. The important thing to note with this is the range of options available. It can be tempting for an anxious litigant to jump straight to trying to seal the entire court file. But since any derogation from open justice must be kept to the absolute minimum, applicants would be advised to consider precisely what they need to protect their confidential information and tailor their application accordingly. Is the concern specific pieces of information contained in a particular statement of case? Is there a particular person (or group of people) that cannot be allowed to get their hands on that information? If so, make an application to address just those matters. It will be easier to persuade a judge that certain facts or figures ought to be redacted in copies of a Particulars of Claim provided to a particular section of the public, than that no non-party should be able to access any statement of case on the court file.
37. Equally, if it is your opponent making the application under CPR r. 5.4C(4), identifying ways in which what they are seeking goes further than necessary by reference to the options listed in the rule can be an easy way of challenging their approach and undermining their credibility with the Court.
38. Finally, it is worth noting that even if restrictions are put in place on non-party access to the statements of case, this may not be the end of the matter. CPR r 5.4C(6) provides that where an order has been made under CPR r 5.4C(4) a non-party can still make an application for a copy of a statement of case or an unedited copy of a statement of case. However, any such application must be on notice to the person who applied for the restriction on access, so if that was your client, you will have the chance to put your side to the judge before any documents are released.
Other documents filed by a party
39. In relation to “any other document filed by a party, or communication between the Court and a party or another person” the default position is reversed: a non-party cannot obtain copies of these unless the Court gives permission: CPR r 5.2C(2). Moreover, a non-party is not entitled to ask for permission to search the whole of a court file in the hopes of tracking down a juicy document or two; it must identify with some precision the documents or class of documents it wishes to see and set out “the document or class of documents in respect of which permission is sought and the grounds relied upon”: PD5A, §4.3.
40. In order to obtain permission a non-party has to file an application under Part 23: PD5A, §4.3. There is no automatic requirement for this to be on notice, so a party concerned about public access to such documents would be advised to apply for an order under CPR r 5.4D(2) that any such application be made on notice to them. Of course this will not guarantee access is restricted, but at least it gives the concerned party a chance to persuade the judge not to provide copies documents it considers to be confidential. Since Lewison J has cast doubt on a party’s ability pre-emptively to restrict access to documents other than statements of case under CPR r 5.4C(4)(d) (which allows the Court to make “such other order as it thinks fit”), this may be the best protection available.
41. In determining whether to allow a non-party to access other documents filed by a party, a distinction is drawn between those documents that have been referred to in open court and form part of the judge’s decision making process and those that have not. In respect of the former the Court will generally lean in favour of providing access. In respect of the latter, access will generally only be provided if there are strong grounds for thinking this is necessary in the interests of justice.
42. If permission is granted to a non-party to obtain copies of documents, this may be made subject to conditions (pursuant to CPR r.3.1(3)), for example that the copies of the documents be redacted or anonymised as appropriate. If your client is trying to oppose an application by a non-party, it is a good idea to explore this option as it may allow you to control the situation and appear co-operative to the Court at the same time. It may truly be the case that the entire document or class of documents being sought are confidential, but if the judicious use of a black marker pen could protect the confidential matters, a judge might be persuaded to see providing copies of the redacted document you have produced as a sensible compromise.
43. An often overlooked element of CPR r 5.4C(2) is that it only applies to communications with the Court and documents that have been filed by a party. As a result, it will not normally apply to trial witness statements, which are exchanged between the parties, but not usually filed at court (unless the Court exercises its power under CPR r 32(3)(b) to require this). Just to make matters more confusing, witness statements in support of interim applications usually are filed at Court, in which case CPR r 5.4C(2) will apply. These pedantic distinctions are deeply annoying when you are trying to protect confidential information in a variety of different documents, but are often a goldmine for easy shots against an opponent in that situation.
44. The relevant provision in relation to trial witness statements is CPR r 32.13. This provides that a witness statement which “stands as evidence in chief” is “open to inspection during the course of trial unless the court otherwise directs”: CPR r 32.13(1). Again the justification for this rule is that if the evidence in chief was being given orally, those attending Court would be able to follow along as it was given, so they ought to be able to follow along with the relevant document.
45. Thus, while provision is made by CPR r 32.13(2) for any person to “ask for a direction that a witness statement is not open to inspection”, CPR r 32.13(3) provides that the Court will not make such a direction unless it is satisfied this is necessary on the basis of one or more of five listed grounds. These closely resemble the listed factors that can justify a hearing being held in private.
46. Accordingly, if your client is seeking to restrict public access to information contained in a trial witness statement, you will need to justify this by reference to one of the factors listed in CPR r.32.13(3) (most likely the interests of justice (CPR r 32.13(3)(a)) and/or the nature of confidential information in the statement (CPR r 32.13(3)(d)). And if your opponent makes an application to restrict access to their trial witness statements under CPR r.5.4C(2), or without specific reference to one of these factors, you can enjoy pointing out their mistake.
47. CPR r 32.13(4) provides “the Court may exclude from inspection words or passages in the statement”. Again, this offers a less stark option than withholding the entire statement, which may be easier to pursue if you are the one seeking to protect information, and a good provision to point out if your opponent is seeking to withhold an entire witness statement.
48. Since CPR r 32.13(1) only makes reference to witness statements being available for inspection “during the course of the trial” it is arguable that it does not give non-parties the right to obtain copies of witness statements in advance of the trial or after it has concluded. Moreover, the right as expressed in CPR r 32.13 is to inspect rather than take copies of a witness statement. This might appear reassuring to a party with confidential information in a trial witness statement, but these apparent limitations need to be approached with caution. Judges have been known to hold that it would defeat the purpose of the rule to limit it in this way and order that copies of witness statements be provided to non-parties before witnesses go into the witness box, see for example Flaux J in Algosaibi, who held that:
“In the context of a situation where
it is anticipated that the witness will give evidence,… the court would have
had an inherent jurisdiction to say it is appropriate that [a non-party] should
have the witness statements now before the witnesses go into the witness box so
they do not have to be produced on a piecemeal basis”.
49. Three themes to emerge from the labyrinthine set of rules above that appear to be the key for successfully protecting or exposing confidential documents are:
49.1. Be pedantic: find the right rule and refer to it. Check any rule your opponent is relying on. Chances are they have picked the wrong one for at least one category of document.
49.2. Be specific: identify with as much precision as possible what documents, pages or words you are worried about and why.
49.3. Be restrained: asking for less is likely to get you more. Check the relevant rule for any gradations of restriction and pick the most modest one your client can stomach.
  EWCA Civ 819;  1 W.L.R. 2993 at  et seq.
  EWHC 1210 (Comm) at §34.
 SmithKline Beecham Biologicals SA v Connaught Laboratories Inc  4 All ER 498;  FSR1 (in the context of the equivalent RSC Order).
 Lilly ICOS v Pfizer Ltd (No 2)  EWCA Civ 2.
 NAB v Serco Limited  EWHC 1225 (QB).
 See also Cosmetic Warriors Ltd v Amazon.co.uk Ltd  EWHC 1316 (Ch) for the level of scrutiny applied by the Court to a party’s assertion that documents are confidential and should therefore by subject to an order under r.31.22(2).
  EWHC 550 (QB) at §20 et seq.
  EWHC 40 (TCC).
  EWHC 726 (TCC).
  EWHC 1158 (Ch).
 See BMI Healthcare v Competition Commission  CAT 24.
 Sweet & Maxwell, 12th Ed. at §10-16.
 Sovereign Marine and General Insurance Co v Opposing Creditors  EWHC 1781 (Ch).
  1 WLR 172.
  EWHC 323 (TCC);  Bus LR D20 at D24F et seq.
 Albeit the burden is on anyone seeking to argue the judge has not read a particular document to prove this is the case (Baring Plc v Coopers & Lybrand  1 W.L.R. 2353), which can be extremely difficult in practice.
 Defined as a Claim Form, Particulars of Claim, Defence, Part 20 claim, or Reply to Defence, including any further information given in relation to these voluntarily or by court order under CPR r 18.1: CPR r 2.3.
 See also Dian AO v Davis Frankel & Mead  EWHC 2662(Comm).
 ABC Ltd v Y (Practice Note)  EWHC 3176 (Ch).
 See Lewison J’s discussion in ABC Ltd v Y (Practice Note), and Toulson LJ’s comments in R (Guardian News and Media Ltd) v City of Westminster Magistrates’ Court  EWCA Civ 420;  QB 618 (in the context of the equivalent Criminal Procedural Rules) at §85.
 See for example Various Claimants v News Group Newspapers Ltd and another  EWHC 397 (Ch);  1 W.L.R. 2545, where redactions of some documents were ordered before copies would be provided.
 See British Arab Commercial Bank v Algosaibi Trading Services  EWHC 1817 (Comm), where Flaux J held that witness statements did not form part of the Court record or Court file in the Commercial Court, so r 5.4C(2) did not apply to them.
 The position in relation to exhibits is even more complicated and inconclusive, with some authorities suggesting these should be treated as separate from witness statements and thus dealt with either under CPR r 5.4C(2) or not at all, the Court having no inherent jurisdiction to order their disclosure (see Algosaibi) and others assuming that exhibits which are incorporated by reference into witness statements form part of the witness statement for the purposes of CPR r.32.13(1) (see Nab v Serco).
 Phrasing which strongly suggests this provision would not apply to witness statements in support of an interim application, even if this has not been “filed”.
 These are (a) the interests of justice; (b) the public interest; (c) the nature of any expert medical evidence in the statement; (d) the nature of any confidential information (including information relating to personal financial matters) in the statement; or (e) the need to protect the interests of any child or protected party.
 Set out in CPR r 39.2(3).
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