When can a party to litigation use a document disclosed by mistake?

In Flowcrete UK Ltd v Vebro Polymers UK Ltd [2023] EWHC 22 (Comm), the High Court considered when it would be just and equitable to grant an injunction to restrain the use of privileged documents which had been disclosed by mistake. The judgment gives some useful guidance on when the court will refuse to help the disclosing party.

Background

The Claimants brought proceedings against a number of former employees who had set up a competing business. Disclosure took place and the Claimants alleged that the Defendants’ disclosure was deficient. This was partly due to the disclosure of two PDF documents which appeared to be compilations of other documents that had not been disclosed elsewhere in the Defendants’ disclosure. The Defendants responded that these two PDF documents were privileged and had been inadvertently disclosed. The Defendants applied for an injunction to prevent the Claimants using these documents.

The court’s discretion

The Civil Procedure Rules provide that where a party inadvertently allows a privileged document to be inspected, the recipient may use it only with the court’s permission. Additional wording has been added to this provision in para 19 of PD 57AD (which contains the newer rules on disclosure in the Business and Property Courts). However, in this judgment, the court confirmed that this additional wording has not changed the existing position. The principles governing inadvertent disclosure in circumstances where a receiving party has read the documents without being told they are privileged and been disclosed by mistake remain those set out in Al Fayed & Ors v Commissioner of Police of the Metropolis & Ors [2002] EWCA Civ 780.

In summary, these principles provide that it is generally too late for the disclosing party to claim privilege in order to correct the mistake of inadvertent disclosure. However, the court can use its equitable jurisdiction and intervene to prevent use of privileged documents that were mistakenly disclosed in two situations:

1. where ‘justice requires it’, such as where inspection has been procured by fraud; and
2. where documents have been made available for inspection as a result of an ‘obvious mistake’. An ‘obvious mistake’ is where documents are received by a solicitor and  it would have been obvious to a reasonable solicitor that they were mistakenly disclosed.

In either situation, there must be no other circumstances which would make it unjust or inequitable to grant the relief.

Decision

The High Court dismissed the Defendants’ application for injunctive relief. Two interesting points come out of the judgment.

First, the Judge noted that the burden of establishing inadvertent disclosure is on the disclosing party, and held that the Defendants in this case had not discharged that burden. A party making this type of application must ensure they provide evidence that a mistake was made. On the facts, there was a lack of explanation as to why some of the disputed documents came to be in the PDF compilation or how they came to be disclosed, and there was nothing in the disclosure certificate that suggested the Defendants were intending to withhold documents of that type.

Second, the court noted that even where this is an obvious mistake, the court still has to consider whether ultimately it is just and equitable to prevent the use of the material (for example, if there has been delay in making the application, a lack of clean hands on the part of the applicant). The Judge referred to the earlier case of Pickett v Balkind [2022] EWHC 2226 (TCC), in which the court held that where the disclosed documents reveal some wrongdoing by the disclosing party, the relevant test is whether it would be unconscionable for the recipient to seek to rely on the document to protect its interests. The Defendants argued that the test of unconscionability set the bar too low and was inconsistent with other authorities. However, the Judge considered that the approach laid down in Pickett was correct as a matter of principle.

In Pickett, the disclosed documents revealed that the claimant’s counsel had been involved in the drafting of the experts’ joint statement which was a serious breach of the court guide. The court refused to grant an injunction. In the current case, the Judge held that even if he had been satisfied that the disputed documents had been inadvertently disclosed and the mistake was obvious, he would have refused an injunction because it would have been unjust and inequitable to grant the relief. The disclosed documents raised questions as to the conduct of the Defendants, in particular, the extent to which the Defendants’ witness evidence had been influenced by certain of the Defendants.

Key takeaways

This decision serves as a reminder that if a party to litigation inadvertently discloses privileged documents, they cannot assume that the court will intervene to prevent their use. The court will consider if the documents were procured fraudulently, or if the mistaken disclosure was an ‘obvious mistake’. To increase chances of success, the disclosing party should act promptly in raising the issue when they realise a mistake has been made and fully particularise their position. Even if one of grounds for relief is established, the court may still refuse to grant an injunction where the disputed documents suggest some sort of wrongdoing on the part of the disclosing party.

With thanks to Laura Lonsdale for her assistance in preparing this post.