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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ball v Druces & Attlee (A Firm) [2002] EWCA Civ 157 (8 February 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/157.html Cite as: [2002] EWCA Civ 157

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Mr Justice Burton)

		Royal Courts of Justice Strand London WC2 Friday, 8th February 2002

Friday, 8th February 2002

1. LORD JUSTICE BROOKE: I will ask Sedley LJ to give the first judgment.
2. LORD JUSTICE SEDLEY: The present applicant, Messrs & Druces Attlee, were solicitors for the Eden Project and the Eden Trust. They still are, in the sense that they are instructed and desire to continue to act in proceedings in the Chancery Division in which they are being sued by the intended respondent in this application, Mr Ball, for payment for work done by Mr Ball in 1994-1997 for the Eden Project Ltd and the Eden Trust, the two Chancery defendants.
3. The Project is now a hugely successful development of a once derelict site in Cornwall into an ecological site. It was started in 1994 by Mr Ball and Mr Tim Smit. Shortly after its opening in the middle of the year 2000 Mr Ball was removed from his directorship of the Project company, and within four months had begun the Chancery action.
4. Just over a year after that he began these separate proceedings in the Queen's Bench Division, claiming damages against Druces & Attlee for negligent failure to give him sound advice in the earlier period. In these proceedings he moved for an order to restrain Druces & Attlee from continuing to act in the Chancery proceedings because, he asserted, they held confidential information from and about him which there was a risk of their misusing. Burton J on 12th December 2001 granted the injunction that was sought. Against this injunction Mr Hugh Evans, on behalf of Druces & Attlee, seeks permission to appeal. On sight of the papers, I refused the permission that was sought and gave brief reasons. We have now reconsidered the application in full, both by re-reading it in its entirety and by listening to the oral argument presented by Mr Evans, who has made, if I may say so, excellent use of the time allotted to him.
5. Burton J's order was made for essentially these reasons.
6. Druces & Attlee have been solicitors to the Trust since it was established in 1996. But up to that point, and possibly beyond it, it is Mr Ball's case that they had advised him and Mr Smit jointly in their personal capacities in relation to the enterprise. His concern was that, in now acting for the Project and Trust in the Chancery Division, Druces & Attlee would be in a position to make use of information in relation to which they owed him, Mr Ball, duties of confidence and trust and in which he possessed legal professional privilege.
7. The two actions are closely related in subject matter, as Burton J was at pains to point out. In essence, Mr Ball says that to the extent that his position vis-a-vis the Project and Trust in the Chancery proceedings is weaker than it ought to be, it is because Druces & Attlee failed to advise him properly in the period 1994-1997. This, in the Queen's Bench proceedings, Druces & Attlee have resisted, contending initially that they were not Mr Ball's personal solicitors at all in that period. On further consideration, however, they admitted by their counsel to Burton J that they had advised both Mr Ball and Mr Smit in their personal capacities. The issue then shifted to the content of the material retainer. The solicitors said that it was confined to setting up the Trust, and did not extend to either man's personal position.
8. Burton J approached the matter, therefore, as one which was not going to be dispositive of Druces & Attlee's ability to act in the Chancery proceedings, but which would fix their position pending the determination of their true retainers in the Queen's Bench proceedings. It may be that timetabling will falsify that anticipation. But, as Mr Evans I think has recognised, whichever way one approaches this case there are going to be timetabling problems. At the relevant point the injunction would, in Burton J's view, fall to be reconsidered. He therefore adopted, without criticism before us, what he called "the ordinary interlocutory principles".
9. He reminded himself that simply having acted as Mr Ball's solicitor was not enough, as the House of Lords had held in Bolkiah v KPMG [1999] 2 AC 222. The essential question is whether their previous retainer now risked placing them in breach of client confidence. The judge cited Lord Millett at page 237 of the report:

"I prefer simply to say that the court should not intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one and not merely fanciful or theoretical, but it need not be substantial..."

10. Previously in his speech Lord Millett had said (and Mr Evans drew our attention to this as well):

"Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a very heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case."

11. The learned judge first expressed himself satisfied that, if the retainer was to advise Mr Ball and also Mr Smit personally about the Project, then it was almost inevitable that the solicitors would possess confidential information relevant to the Chancery proceedings. I will come in a moment to Mr Evans' argument that there was no evidence to support this inference. The solicitors had already accepted that they were making use of the material that they held from their work between 1994 and 1997. Indeed, they asserted it, and for a purpose to which again I will come in a moment.
12. This being so, the judge turned to the question whether the personal retainer on Mr Ball's behalf was arguable. He found in the contemporary documents powerful indicators that Druces & Attlee had been giving both men advice about their personal position. He held in particular at page 16 of the judgment:

"I am entirely satisfied that it is arguable, and if necessary strongly arguable, that there is the retainer to which I have referred, namely an obligation by the Defendant solicitors to advise, and to consider the personal positions of, both Mr. Smit and Mr. Ball; and that they obtained, inevitably, information - much of which will be recorded in attendance notes not yet produced which can be characterised arguably as confidential - relating to that period."

13. Turning to the balance of convenience, the judge first considered and rejected delay as a ground of refusal. He gave detailed and, in my view, unimpeachable reasons for doing so.
14. He next considered the impact of an order on the defendant solictors' clients, that is the Chancery defendants, who would have to find other solicitors if he shut Druces & Attlee out. He held, however, that if he made an order of the kind sought, the cross-undertaking in damages ought to be such as to protect the clients as well as the solicitors, and he was satisfied that a good cross-undertaking was available. He also looked in detail at the work that in-coming solicitors would need to do, and concluded that they would be inheriting a case in good and manageable order. Given then the quantifiability of any damage to the solicitors and to the Chancery defendants on the one hand should the injunction turn out to have been wrongly granted and on the other the unquantifiability of the harm to Mr Ball should it turn out to have been wrongly withheld, the judge found the balance of convenience firmly on the side of granting an injunction.
15. By parity of reasoning, he refused the cross-application for a stay on the Queen's Bench actions to abide the outcome of the Chancery action, save to the extent of freezing the exchange of evidence.
16. Mr Evans has submitted to us today, rightly, that the law requires a judge considering an application of this kind to go through two initial stages. First, he must be satisfied that the solicitor possesses confidential information concerning the claimant. Second, he must be satisfied that the information is at least capable of being relevant to the solicitors' new unchallenged retainer. If both of those things are present, then, absent some such answer as the construction of Chinese walls within the solicitors' firm, the firm will ordinarily be restrained from acting.
17. What Mr Evans argues is that the judge has erroneously shifted the burden from the claimant to the defendant on the first of these issues. It is quite true that at one point the judge speaks not only of the arguability of the existence of the retainer relied on for the establishment of confidential information, but in the alternative of a risk of there being such confidential information. These degrees of proof are problematical, particularly when one is looking on an interlocutory application at the making out not of a concluded but of a sufficient case for relief.
18. The problem, however, in my judgment evaporates when one turns to the judge's conclusions, because the conclusions are quite clearly predicated on the higher and appropriate test required by law and relied on by Mr Evans. I will not read out, in particular, the passage at page twelve of the judgment. But what the judge is, in my view, clearly doing is following the reasoning of by Lord Millet in Bolkiah, and holding that the burden of proof on the first issue is capable of being discharged by simple inference from the established facts. Clearly it is not enough (and the authorities recognise this) for a party seeking an injunction of this kind simply to say "the solicitors against whom I want this injunction in relation to proceedings X acted for me some years ago in some other matter". Until it is shown that there is an identity, or a considerable overlap, in the subject matters of the two sets of instructions (the two retainers), nothing adverse should follow. Here, however, it was manifest that the subject matter of the two issues, that is to say the Chancery issue on the one hand and the consultations over the period 1994 to 1997 with Druces & Attlee on the other, were of a very closely linked character indeed. Druces & Attlee, after prolonged denial that they had ever acted for Mr Ball in his personal capacity, finally admitted that they had done so. The mere identity of the subject matters then carried the judge, in his view (and, if I may say so, in mine), comfortably over the hurdle of an inference capable of satisfying the first limb of the Bolkiah test. What is more, it seems to me that the late admission had thereafter made it practically impossible for Druces & Attlee to say, as often is said in cases such as this, that they had conscientiously made an early appraisal and had satisfied themselves that nothing confidential to Mr Ball would leak into their conduct of the defence in the Chancery action. They had, by the attitude they had adopted earlier, and for far too long, put it beyond their power to make that appraisal. In these circumstances, I can see nothing whatever to criticise in the judge's approach on the facts to these two initial questions, or in his answers to them.
19. Next Mr Evans says that the judge has been entirely unspecific about the content of the confidential information. It is true that the judge does not deal with this in terms. It is true also that the claimant did not deal with it in terms. But the judge's approach was again premised on the close identity of subject matter as between the two actions and, therefore, as between the defendant's retainer by Mr Ball and their retainer by the Chancery defendants.
20. The question for this court at this stage is whether there is a realistic, that is a more than fanciful, prospect of upsetting the judge's decision on the ground that (if I can paraphrase Mr Evans' submission) there is a "black hole" in his reasoning.
21. It seems to me that the judge's reasoning was essentially this. Druces & Attlee have only lately woken up to the fact that they were acting in 1994 and 1997 for Mr Ball personally and for Mr Smit personally in at least some matters relating to the Project. In the passage I have quoted, the judge quite reasonably deduces that Druces & Attlee may well have held confidential information concerning Mr Ball, much of it - and this is why I read out the passage I did -- in attendance notes that had not yet been produced. Mr Evans, however, has relied in particular on correspondence which can be found in the bundle, attempting to tease out what the confidential material was. Druces & Attlee wrote on 1st November 2000:

"Furthermore, please provide details of what `relevant knowledge' it is alleged that this firm acquired whilst it allegedly acted for your client which was exclusive and confidential to your client and not either in the public domain or acquired jointly from your client and Mr Smit when acting for both in their capacity as joint promoters of the project."

22. It can be seen that the question rolls up far too much and makes far too many assumptions in Druces & Attlee's favour. But the answer that came back was this:

"The relevant confidential information relates to Mr Ball as an opponent and his requirements, which could have a significant bearing on your clients' attitude to settlement. That cannot be erased."

23. It seems to me, while I see the initial attractiveness of the criticism, that on inspection it cannot be right. To answer with the very specifics of the confidential information which it is feared may be in Druces & Attlee's possession and may be misused would be to waive or destroy the very subject matter of the application; and one can, without being excessively imaginative, envisage many things, for example as to the relative quantum or value of the input of the two men into the Project, which might have been confided, might be on an attendance note and might very well be material to the settlement of, or possibly cross-examination in, the Chancery action. I do not think fuller proof is necessary. Indeed I can see that fuller proof may very well be destructive of the application itself.
24. So it seems to me that the judge's process of reasoning was defensible and sufficient, at least to the point of casting upon the solicitors the need to show either that nothing confidential and relevant to the Chancery action is in their hands, or that they had a Chinese wall in place to prevent its misuse. Druces & Attlee have done neither. They first denied any retainer and then sought to sit back and challenge Mr Ball to prove the risk of harm. If by a defensible inference the judge has found such a risk, it does not seem to me open to the solicitors to complain about the consequences, particularly because, in relation to the first of the options open to them, they have all the material which is capable of producing the mischief that is feared and are in a better position than Mr Ball to produce it and dispel the fear if that can be done.
25. This deals also, I think, with Mr Evans' remaining arguments. He says that, although laches has been rejected as an answer, the consequence of the lapse of time has been that any harm capable of being done has already been done. This is also addressed by the judge in the passage I have cited, and I see no reason to differ from his view that there may well still be material on the files which is unused, perhaps in the form of attendance notes, capable of doing the feared harm.
26. To the argument that any personal retainer was by Mr Ball and Mr Smit jointly, the short (if not too colloquial) answer is: so what? Mr Smit is not yet a defendant in the Chancery proceedings. It seems to me that it is wrong to argue, as the skeleton argument does, that there is no real difference between the Chancery defendants and Mr Smit. In law and in fact the difference is real.
27. Finally, Mr Evans wants to carry into the Chancery action the principle that privilege is waived by operation of law in any action between ex-client and ex-solicitor. He relates this specifically to two aide-memoires which have been exhibited in the Chancery action. The logic of automatic waiver in the paradigm case of a solicitor/client action is self-evident. It seems to me to have no analogy whatever in a parallel action such as we are concerned with here if that action does not itself concern the incidents of the solicitor/client relationship.
28. Those, briefly though I hope not too brusquely, are the reasons why it seems to me that, well though it has been presented, this is not on any score an argument which has a real prospect of success. For my part, I would refuse permission to appeal.
29. LORD JUSTICE BROOKE: I agree. I was at one time troubled that in the course of a long and clear, well-reasoned ex tempore judgment the judge in his exposition of the relevant law at pages 9-10 of the transcript appeared to be going a little bit off the rails. But, on the other hand, his findings are firmly in accord with the principles which Lord Millett set out in the leading case of Bolkiah. He made robust findings that it was arguable - indeed, strongly arguable - that in the context of the relationship of solicitor and client which he found and which is not disputed now on this application it was bound to be the case that confidential information would have been exchanged. In my judgment, that robust finding, which follows the robust encouragement given by Lord Millett in Bolkiah, obviates any concern that I had that things had gone a little bit off the rails at that stage.
30. Subject to that point, I agree with Sedley LJ's views on the remaining issues. I agree that this application should be dismissed.
Order: Application dismissed. No order for costs.