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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Sectorguard Plc v Dienne Plc [2009] EWHC 2693 (Ch) (03 November 2009) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2009/2693.html Cite as: [2009] EWHC 2693 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		03/11/2009

Mr Justice Briggs :

1. There are before me a number of applications in two vigorously contested and related proceedings, to which I will refer as "the First Claim" and "the Second Claim". Both complain of the misuse of confidential information.
2. In the First Claim, issued on 30^th March 2009, the Claimant Sectorguard plc ("Sectorguard") complains of the misuse by the Defendant Dienne plc ("Dienne") of confidential information consisting primarily of the names and addresses of Sectorguard's customers, and the prices being charged to them. It is alleged that two former consultants to Sectorguard and three of its former employees now manage and/or control Dienne, and, at least by implication, that they were principally responsible for the wrongful obtaining and use by Dienne of Sectorguard's confidential information. The consultants in question were two brothers, John and Paul Hare. It is common ground that John Hare ("Mr Hare") is and has at all material times been a director of Dienne.
3. By the Second Claim, issued on 9^th October 2009, Mr Hare and Dienne allege misuse of the contents of and enclosures to their confidential, including privileged, emails both by Sectorguard (since renamed Legion Group plc), and by a Mr Mark Higgins and a Mr Charles Cleverly, two directors of Sectorguard. In short, the allegation is that, upon his enforced departure from Sectorguard on 30^th October 2008, Mr Hare inadvertently left in operation an automatic email re-direction system by which private emails concerning his own and Dienne's affairs were automatically routed to an email address accessible within Sectorguard, and that, after his departure, and until he had the automatic re-direction cancelled with expert assistance in June 2009, Sectorguard personnel, in particular Mr Higgins and Mr Cleverly, had taken active steps to read those emails, to open attachments to them, and to pass private and confidential information therein contained to third parties. It is alleged in the Second Claim that the private material thus read and used by the Defendants included privileged material, consisting of communications between, on the one hand, Dienne and Mr Hare, and, on the other hand, Dienne's solicitors instructed in the First Claim, Messrs Clintons, including legal advice in connection with the First Claim.
4. The applications before me in the First Claim all arise from an interim order made by Lewison J on 6^th April 2009 ("the April Order"), and from a witness statement dated 3^rd April 2009 made by Mr Hare in response to the interim application pursuant to which the April Order was made.
5. The April Order included the following undertaking by Dienne:

"The Defendant shall within 7 days of the date of this order disclose on oath the identity of all the Claimant's customers it has contacted (whether by its directors, officers, servants or agents) as a result of having misused the Claimant's confidential customer list and/or the Claimant's CASH system and the precise nature of the contact and of any business the Defendant has conducted with such customers."

I shall refer to that undertaking, by reference to its number, as "Undertaking 5".

6. The gist of the relevant part of the 3^rd April witness statement of Mr Hare was that the only allegedly confidential information of Sectorguard of which use had been made by Dienne consisted of the contents of a customer list placed in Mr Hare's car by an employee of Sectorguard, together with other papers, upon his summary ejection from Sectorguard's offices in October 2008, that no other former employee of Sectorguard who had transferred to Dienne had been involved in any breach of confidence or provided any information to Dienne relating to Sectorguard's customers, and that the customer list to which I have referred was used by Dienne for sending a mail shot to approximately 500 customers of Sectorguard.
7. On 18^th May 2009 Sectorguard issued and shortly thereafter served an application notice, addressed to Dienne and Mr Hare seeking, by paragraph (1) the sequestration of Dienne's assets and/or committal to prison of all of its directors for contempt of court in failing to comply with Undertaking 5 and, by paragraph (2), permission pursuant to CPR 32.14 for the making of an application to commit Mr Hare to prison for making false statements in the relevant part of his 3^rd April witness statement. The application notice sought further relief by paragraphs 3 and following, not material to the matters before me. I shall refer to it as the Committal Application.
8. On 3^rd June 2009 Dienne applied for a variation, modification or release of Undertaking 5, and on 10^th June Dienne and Mr Hare applied to strike out paragraph 1 of the Committal Application. In the meantime, on 5^th June, Proudman J directed that Sectorguard's application for permission to commit, Dienne's application to vary Undertaking 5 and Dienne's (then contemplated) strike out application should all be heard together before a judge on the first available date after 22^nd June 2009, with a time estimate of one day, and she gave directions for the completion of any necessary evidence. Those are the three applications in the First Claim now before me.
9. In the Second Claim, Mr Hare and Dienne applied by Application Notice dated 9^th October 2009 for interim injunctive relief. It became common ground that the Application needed to be adjourned to permit the Defendants to file evidence in response. In the meantime I granted interim relief in terms which, to the limited extent that they were opposed, are explained in an extempore judgment given on the second day of the hearing.
10. In his response to the Committal Application, Mr Hare made reference in a second affidavit sworn on 3^rd June 2009, at paragraph 29, to an apprehension that Sectorguard was motivated by personal bad feelings rather than any genuine desire to enforce Undertaking 5 and, as part of what he described in a sub-heading as The Wider Background, he referred at paragraph 26(2) to a belief, referred to in an exhibited email of his, that Mr Higgins had been unlawfully opening and reading his (Mr Hare's) private emails. Most of the evidence served in support of the interim injunction application in the Second Claim sought to prove the truth of that allegation, both in relation to Mr Higgins, Mr Cleverly and Sectorguard generally, and has been relied upon by Mr Hare and Dienne in connection with the applications before me in the First Claim. That evidence was, subject to one exception, all served on the Defendants to the Second Claim on 9^th October. The exception consisted of an expert's report ("the Kroll Report"), which was served only on 13^th October.

ADJOURNMENT

11. At an early stage in the two day hearing before me, which began on 22^nd October, I asked Mr Deacon, who appeared for Sectorguard in the First Claim and for all the Defendants in the Second Claim, whether he sought an adjournment of the strike out application and permission application in the First Claim, to enable Sectorguard to answer the evidence served mainly on 9^th October, in relation to the alleged reading of Mr Hare's private and privileged emails since, for reasons which I shall later explain, it appeared to me that that evidence might be of real relevance to both those applications. Mr Deacon said that he did not seek an adjournment, and was content to deal with both those applications on the evidence as it stood.
12. At the beginning of the second day of the hearing, by which time Mr Deacon was more than half way through his submissions in response to Mr Grant on the strike out application, but before he had opened Sectorguard's permission application, he applied for a substantial adjournment for precisely that purpose, having, as he frankly acknowledged, changed his mind in view of the way in which the hearing had developed, and the central importance placed by Mr Grant on the evidence of misuse of Mr Hare's private and in particular privileged emails.
13. Initially, Mr Deacon's application was for an adjournment of all three applications in the First Claim but, during the course of argument, and after hearing Mr Grant's submissions in opposition, Mr Deacon abandoned his attempt to have the strike out application adjourned. I ruled against any adjournment of the release application, but adjourned the permission application on terms as to costs, stating, in order to save time, that I would give my reasons for those decisions as part of this reserved judgment. This I now do.
14. My reason for declining to adjourn the release application can be shortly stated. It is, simply, that the question whether or not Sectorguard, Mr Higgins and/or Mr Cleverly had been reading and making improper use of the contents of Mr Hare's private emails is of no relevance whatever to that application. Release from, or variation of, Undertaking 5 is sought entirely on the basis that it was, unbeknown to Dienne or Mr Hare when the undertaking was given, impossible of performance, and has remained impossible ever since. Mr Deacon did not realistically suggest that the outcome of the release application could be in any way affected by the contents of any response to the allegation about misuse of private emails.
15. My reasons for permitting the adjournment of the permission application notwithstanding Dienne and Mr Hare's opposition are less straightforward. It is well settled that proceedings for contempt of court for which permission has to be obtained under CPR 32.14(2)(b) are public law proceedings, so that when considering whether to give permission for contempt proceedings to be taken in any particular case the court must have regard to the public interest alone: see KJM Superbikes Ltd v. Hinton [2008] EWCA Civ 1280 per Moore-Bick LJ at paragraphs 9 and 16. The court must consider, without pre-judging the application on its merits, whether the alleged contempt is of sufficient gravity to warrant such punishment, not least because, "If the courts are seen to treat serious examples of false evidence as of little importance, they run the risk of encouraging witnesses to regard the statement of truth as a mere formality": (paragraph 23). Against that, "There is an obvious need to guard carefully against the risk of allowing vindictive litigants to use such proceedings to harass persons against whom they have a grievance, whether justified or not…" (paragraph 17). In that context, the court must bear in mind, in the case of a serious alleged contempt by the making of a false statement, that there is an alternative wholly independent applicant, namely Her Majesty's Attorney General, although it is not to be assumed that the most appropriate course is normally to direct that the matter be referred to her: (paragraph 15).
16. In the present case, it is obvious both from the evidence of the respondents to the application, from Mr Grant's skeleton argument on the application, and from the central thrust of his oral submissions on the related strike out application, that a central plank of the case against permitting Sectorguard to have the conduct of a committal application based upon alleged false statements by Mr Hare will be precisely that, on the strength mainly of the evidence served on 9^th October, the application is being pursued as part of a campaign by Sectorguard and Mr Higgins in particular to get Mr Hare put in prison at any cost, for reasons which are alleged to pre-date the commencement of the First Claim, and which are alleged to be, in part, racially motivated.
17. Furthermore, it is obvious from Mr Grant's written and oral submissions on the strike out application (in which he refers to the probability that Sectorguard's officers had been reading the written legal advice given by Clintons to Mr Hare and Dienne even in relation to the committal proceedings), that Mr Hare will rely upon Sectorguard's use of private and privileged material in his emails as a self-sufficient reason why that company could not be entrusted with the conduct of public interest litigation.
18. Allegations that contempt proceedings, including an application for permission under CPR 32.14, are motivated by a personal vendetta, or racially motivated, and allegations that a party had been making deliberate use of its opponent's legal advice are, plainly, of the utmost gravity. The allegation of racial motivation appeared for the first time in the evidence served on 9^th October. By contrast, the allegation that Mr Hare's private emails were being improperly used was first made by Mr Hare himself in an email to Mr Higgins on 11^th March 2009, repeated (as I have said) in Mr Hare's Second Affidavit on 3^rd June, mentioned in open court before Proudman J on 5^th June, and made the subject of a letter before action (ahead of the Second Claim) on 11^th August.
19. Remarkably to my mind, this serious allegation has yet to be admitted or denied by Sectorguard, Mr Higgins and Mr Cleverly either in correspondence (including emails), in evidence, or even by the giving of instructions to Mr Deacon with which he could respond to my invitation to assist the court as to his clients' case. Most remarkably of all, after having been unable to state, at the end of the first day of the hearing, whether this allegation was admitted or denied, Sectorguard served a witness statement on the second day of the hearing, which condescended to set out some details of Sectorguard's case, (and which Mr Deacon had told me had taken until 4.30 in the morning to prepare) which still remained studiously silent as to whether the allegation of improper use (rather than receipt) of Mr Hare's private emails was admitted or denied.
20. Mr Grant submitted that I should not permit an adjournment of the permission application because I should conclude that Sectorguard's remarkable prevarication about this important issue should lead to the inference that the allegation was true. Even if there were aspects of the evidence served on and after 9^th October which might take time to reply to in detail, Mr Grant submitted that Sectorguard had been given, but decided not to use, a more than fair opportunity to deny that allegation, if it could.
21. There is much force in Mr Grant's submission. If the question whether to permit contempt proceedings to be brought against Mr Hare was a purely private matter between the parties, I might well have concluded that Mr Hare was, as a matter of fairness and justice, entitled to have the permission application decided now, rather than left hanging over his head during a further adjournment. I am just persuaded however, since the question whether to give or refuse permission is a public interest matter, that the court should not refuse permission now without giving an opportunity to Sectorguard to respond, in evidence, to the very serious allegations which, if true, would weigh heavily in the balance against granting permission. It is sufficient for me to say, without in any way pre-judging the outcome of the permission application, let alone the outcome of any committal proceedings brought with permission, that the alleged contempt constituted by the alleged falsehoods of Mr Hare might justify the grant of permission if the serious allegations of vendetta, racial prejudice and misuse of private and privileged information were satisfactorily answered, in such a way as to place the fitness of Sectorguard to be entrusted with the conduct of public interest proceedings beyond realistic doubt.
22. For those reasons, Sectorguard's application for permission stands adjourned, on terms as to the completion of evidence which have, in the event, been arrived at by discussion and agreement.

THE STRIKE OUT APPLICATION

23. Paragraph 5 of the Practice Direction to RSC Order 52 enables the court to strike out a committal application on three alternative grounds, which may be summarised as:

i) no reasonable ground for committal;

ii) abuse of process; and

iii) procedural default.

Dienne and Mr Hare rely upon all three grounds, but have placed their emphasis on the first and second. I will deal with those two grounds for strike out separately in due course, but must first describe the present state of the evidence, and in particular Dienne's case for the submission that compliance with Undertaking 5 was always impossible. The same evidence is of central relevance to the release application.

24. Dienne's and Mr Hare's case may be summarised as follows:

i) At all times until he gave the undertaking on behalf of himself and Dienne on 6^th April 2009, Mr Hare believed that, upon his instructions, all Sectorguard's customers on the customer list which Dienne had obtained had been sent letters in broadly standard form, so that he could comply with Undertaking 5 by stating that every customer named on that list had been contacted.

ii) Two of Dienne's employees, a Mr Price and a Ms Eyles had been given a loose leaf copy of the customer list (with the names and addresses of about a dozen customers on each page) together with a standard pro-forma letter to be sent to each one, with instructions to complete it with the particular names and prices relevant to that customer.

iii) Prior to giving Undertaking 5, Mr Hare instructed Mr Price and Ms Eyles to destroy any copies of the customer list in their possession, not for any improper purpose, but to comply with Sectorguard's demand that there should be no further improper use of it.

iv) Having given Undertaking 5, Mr Hare discovered in further discussion with Mr Price and Ms Eyles that, not only had they not written to all the customers on the list, but also that they had not, as they went along, kept any record of those to whom they had written, either in a separate document for that purpose, or by retaining copies of the letters, or the address labels used on the envelopes. Their operating procedure had been to write to customers named on a particular page of their loose leaf copy of the customer list, and having done so, to throw away that page, keeping only pages containing names and addresses of customers not yet written to, for the purpose of completing their task. Their procedure in relation to address labels was to overwrite new addresses upon old ones, thereby obliterating the latter on their computers. Once instructed to destroy their copies of the customer list, they had neither the means of identifying those to whom they had written, nor those to whom they had not yet written. Thus, by destroying the remaining sheets of their loose leaf copy of the customer list pursuant to Mr Hare's instruction, they inadvertently destroyed Sectorguard's only means (by a process of elimination) of identifying the customers who had by then been written to.

v) By the time the matter had been fully considered, in particular by Mr Price and Ms Eyles, the best they could do, by reference to a rough attempt to recall how far through their non-urgent task they had proceeded before being told to stop, was that about 200 out of some 700 customers on the list had been written to. Because their loose leaf copy of the list was not in alphabetical order, they could not even hazard a guess as to which particular names had been included among that 200.

25. That evidence, provided initially by Mr Hare, but corroborated fully and in considerable detail both by Mr Price and Ms Eyles, would if accepted support two conclusions by way of analysis. First, Undertaking 5 was incapable of being complied with by Dienne or Mr Hare at any time from the moment when it was given. Secondly, the cause of Dienne's giving of an impossible undertaking was carelessness on Mr Hare's part in failing to check in advance whether it could be complied with, compounded by an inadvertent instruction to destroy the only documents (namely the sheets identifying the customers not yet written to) by reference to which the identity of the customers contacted could, by a process of elimination, have been ascertained.
26. Mr Deacon's response to that case, on behalf of Sectorguard, was first that he wished to challenge Dienne's account by cross-examination of Mr Hare, Mr Price and Ms Eyles and secondly, even if that account proved to be true, that the offering of an impossible undertaking without due prior inquiry was itself a contempt of court. Mr Deacon did not suggest either that Mr Hare's instruction to Mr Price and Ms Eyles to destroy their copy of the customer list was for any improper purpose, or that Mr Hare knew that Undertaking 5 was impossible when he authorised it to be given on behalf of Dienne. On the contrary, the Committal Application asserted in terms, in the grounds for committal under paragraph 1, that Dienne must have believed that it was able to comply with Undertaking 5, when given.

No reasonable ground for alleging contempt

27. Paragraph 5(1) of the Committal Practice Direction provides that the court may strike out a committal application if it appears to the court:

"That the committal application and the evidence served in support of it disclose no reasonable ground for alleging that the respondent is guilty of a contempt of court."

28. Mr Grant submitted that paragraph 1 of the Committal Application should be struck out under this ground against both Dienne and Mr Hare, first because Undertaking 5 should be construed only as a best endeavours undertaking, and the Committal Application did not allege a failure to use best endeavours. Secondly and alternatively, he submitted that since Undertaking 5 was impossible of performance, a failure to perform it, although possibly a breach of the undertaking, was not a contempt.
29. Taking those submissions in turn, I am not persuaded that Undertaking 5 was only a best endeavours undertaking. The question is, what would the undertaking be understood to mean by a reasonable addressee with the same awareness of the relevant background as the parties: see Attorney General of Belize v. Belize Telecom Limited [2009] UKPC 10, at paragraphs 16 to 18.
30. Even accepting Mr Grant's submission that any ambiguity in a court order or undertaking should, in connection with a committal application, be resolved in favour of the alleged contemnor, I consider it clear that Undertaking 5 was given in unqualified terms, for the following reasons. First, the difference between an unqualified undertaking and a best endeavours undertaking is very well understood by the legal profession, such that the recipient of an undertaking which does not contain the qualifying words "best endeavours" may reasonably assume that the giver of the undertaking has been advised of the consequence of their omission.
31. Secondly, I reject Mr Grant's submission that no sensible business would give an unqualified undertaking to identify every customer on its competitor's customer list contacted during a specified period, lest an uncertainty about, say, one person in five hundred would render performance impossible. In my judgment it is a reasonable assumption that a competent business organisation will retain reliable records of the persons to whom it has written soliciting business. Thirdly, the immediate context of the giving of Undertaking 5 was that Mr Hare had, only three days previously, made a witness statement on Dienne's behalf in which, at paragraphs 12 to 14, he identified the approximate number of customers who had been contacted, and expressed no uncertainty about their identity.
32. By contrast, I accept the thrust of Mr Grant's second submission that failure to perform an impossible undertaking is not a contempt. The mental element required of a contemnor is not that he either intends to breach or knows that he is breaching the court order or undertaking, but only that he intended the act or omission in question, and knew the facts which made it a breach of the order: see Adam Phones v. Goldschmidt [1999] 4 All ER 486 at 492j to 494j.
33. Nonetheless, even a mental element of that modest quality assumes that the alleged contemnor had some choice whether to commit the relevant act or omission. An omission to do that which is in truth impossible involves no choice at all. Failure to comply with an order to do something, where the doing of it is impossible, may therefore be a breach of the order, but not, in my judgment, a contempt of court.
34. The difficulty with Mr Grant's attempt to rely upon impossibility under this ground for strike out is that it is not something which emerges either from the Committal Application or from the evidence in support. It emerges from Dienne's and Mr Hare's evidence in response. The relevant part of the particulars of the Committal Application are as follows:

"a. The Defendant freely gave, under advice from its legal representatives the undertaking to the court recorded at paragraph 5 of Order which at the time it represented and must have believed it was able to comply with.

b. The defendant has not referred to any change in circumstances occurring between 6^th April 2009 when it gave the undertaking to the Court and 11^th April 2009 when Mr John Hare swore an affidavit on its behalf in which he stated that, "the Defendant cannot specify which persons were contacted as it has not kept this information".

c. The Defendant is therefore in breach of its undertaking to the Court.

d. No application has been made by the Defendant to be released from this undertaking."

35. The evidence in support, consisting of an affidavit of Mr Cleverly sworn on 18^th May 2009 referred, at paragraph 13, to the statement of the defendant quoted in sub-paragraph (b) of the Particulars, and continued, at paragraph 14:

"Nothing of this sort was mentioned previously. Be that as it may the defendant is in breach of its undertaking."

Beyond that, it added or subtracted nothing from the substance of the Particulars in the Committal Application. The use of the phrase "be that as it may" does however suggest an attitude of mind on the part of Sectorguard and its advisers that, for the purposes of establishing a contempt, it mattered not whether performance of Undertaking 5 was impossible. Such an attitude is mistaken, for the reason which I have given.

36. Confirmation that this was, at least until the hearing before me, Sectorguard's attitude is to be found first, from the fact that at no time before Mr Deacon's oral submissions did Sectorguard give any indication that it intended to cross-examine Mr Hare, Mr Price and Ms Eyles as to the truth of their assertion of impossibility, or challenge it by any reply evidence of their own beyond a general assertion that Mr Hare's evidence was generally untrustworthy. Secondly, Sectorguard made no attempt by way of any proposed amendment of the Committal Application to suggest that it might advance the alternative case that the giving of the undertaking, in the absence of proper prior inquiry as to whether it could be complied with, was itself a contempt. The first indication of such an allegation appeared in paragraph 4 of a written summary of the law relating to breach of undertakings submitted by Mr Deacon as a supplement to his skeleton argument for the hearing.
37. Nonetheless Mr Cleverly's affidavit in support did assert that Sectorguard's purpose in seeking compliance with Undertaking 5 by the Committal Application was to enable it to perform its own Data Protection Act obligations to its customers. The implication of that assertion, if accepted at face value, is that Sectorguard did not accept that Undertaking 5 was incapable of performance.
38. In those circumstances I am not persuaded that it would be appropriate to strike out paragraph 1 of the Committal Application on the ground that, taken together with the evidence in support, it discloses no reasonable ground for alleging contempt against Sectorguard. Whether the application has any real prospect of success in the light in particular of Mr Price's and Ms Eyles' evidence is a different question. I will consider it under the heading of abuse of process.
39. I must first consider a separate submission under this first heading, namely that the Committal Application and supporting evidence disclose no reasonable ground for alleging contempt against Mr Hare personally. Mr Grant submitted that, for a director to be liable in contempt for his company's breach of a court order required either proof of aiding and abetting, or proof of his wilful failure to take reasonable steps to ensure that the company obeyed the order in question. Liability for aiding and abetting is an ordinary aspect of the common law. Liability based on a wilful failure to take reasonable steps arises under RSC Ord 45 rule 5(1)(b)(iii), as interpreted by the Court of Appeal in Attorney General for Tuvalu v. Philatelic Distribution Corp Limited [1990] 1 WLR 926, per Woolf LJ at 936E-F, as follows:

"In our view where a company is ordered not to do certain acts or gives an undertaking to like effect and a director of that company is aware of that order or undertaking he is under a duty to take reasonable steps to ensure that the order or undertaking is obeyed, and if he wilfully fails to take those steps and the order or undertaking is breached he can be punished for contempt. We use the word "wilful" to distinguish the situation where the director can reasonably believe some other director or officer is taking those steps."

40. Mr Grant submitted that, since the Committal Application sought, in terms, the committal to prison of all Dienne's directors and made no specific allegation of wilful default against any one or more of them, it was defective as a case against Mr Hare, who is mentioned in the Particulars only as the writer of Dienne's letter referred to in sub-paragraph (b) (quoted above).
41. Relying upon BIBA Limited v. Stratford Investments Limited [1973] Ch 281, Mr Deacon submitted that a committal application relying on a breach of an undertaking by a company automatically disclosed a case to answer against all its directors, however passive their role, so that it was for any director served with the application to show why he should not be regarded as responsible for the contempt under RSC Order 45 rule 5.
42. In my judgment the BIBA case establishes no such principle, although there are dicta which, if taken out of context, might be thought to suggest it. The issue in that case was whether a breach of an undertaking gave rise to the same consequences under RSC Order 45 rule 5 as the breach of an order. I consider that the effect of the Tuvalu case is that an applicant for the committal of a company director who relies upon a breach by the company of an order or an undertaking must disclose in the committal application a case for the establishment of responsibility on the part of that director, either on the grounds of aiding and abetting or wilful failure to take reasonable steps to ensure that the order or undertaking is obeyed.
43. In the present case the Committal Application sufficiently identifies Mr Hare as the person who took it upon himself to procure Dienne's compliance with Undertaking 5, by showing at sub-paragraph (b) of the Particulars that it was he who swore the allegedly offending affidavit on Dienne's behalf. In my judgment that is, whether by accident or design, just a sufficient identification of Mr Hare as a director with relevant responsibility for the alleged contempt by Dienne to avoid a strike out of the application as against him, on the first ground.

Abuse of process

44. It is now well established, in the light of the new culture introduced by the CPR, and in particular with the requirements of proportionality referred to in CPR 1.1(2) as part of the overriding objective, that it is an abuse of process to pursue litigation where the value to the litigant of a successful outcome is so small as to make the exercise pointless, viewed against the expenditure of court time and the parties' time and money engaged by the undertaking: see Jameel v. Dow Jones & Co [2005] QB 946 per Lord Phillips at paragraphs 54, 69 and 70 (conveniently extracted in note 3.4.3.4 on page 73 of the 2009 White Book).
45. The concept that the disproportionate pursuit of pointless litigation is an abuse takes on added force in connection with committal applications. Such proceedings are a typical form of satellite litigation, and not infrequently give rise to a risk of the application of the parties' and the court's time and resources otherwise than for the purpose of the fair, expeditious and economic determination of the underlying dispute, and therefore contrary to the overriding objective as set out in CPR 1.1. The court's case management powers are to be exercised so as to give effect to the overriding objective and, by CPR 1.4(2)(h) the court is required to consider whether the likely benefit of taking a particular step justifies the cost of taking it. Furthermore, paragraph 5 of the Contempt Practice Direction makes express reference to the court's case management powers in the context of applications to strike out committal proceedings.
46. It has long been recognised that the pursuit of committal proceedings which leads merely to the establishment of a purely technical contempt, rather than something of sufficient gravity to justify the imposition of a serious penalty, may lead to the applicant having to pay the respondent's costs: see Adam Phones v. Goldschmidt (supra) per Jacob J at 495 to 6, applying Bhimji v. Chatwani [1991] 1 All ER 705. Jacob J concluded, by reference to that case:

"Since that judgment the Civil Procedure Rules have come into force. Their emphasis on proportionality and on looking at the overall conduct of the parties emphasises the point that applications for committal should not be seen as a way of causing costs when the defendant has honestly tried to obey the court's order."

47. Committal proceedings are an appropriate way, albeit as a last resort, of seeking to obtain the compliance by a party with the court's order (including undertakings contained in orders), and they are also an appropriate means of bringing to the court's attention serious rather than technical, still less involuntary, breaches of them. In my judgment the court should, in the exercise of its case management powers be astute to detect cases in which contempt proceedings are not being pursued for those legitimate ends. Indications that contempt proceedings are not so being pursued include applications relating to purely technical contempt, applications not directed at the obtaining of compliance with the order in question, and applications which, on the face of the documentary evidence, have no real prospect of success. Committal proceedings of that type are properly to be regarded as an abuse of process, and the court should lose no time in putting an end to them, so that the parties may concentrate their time and resources on the resolution of the underlying dispute between them.
48. In my judgment, viewed in that light, the application to commit Dienne and Mr Hare for breach of Undertaking 5 is just such an abuse. My reasons follow. First and foremost, it is apparent from the evidence now served on both sides that the application has no real prospect of success. The application was, for the reasons which I have given, apparently launched on the mistaken assumption that it did not matter whether or not Undertaking 5 was capable of performance, providing that it could be shown (as it obviously could) that it had not been complied with. Thus, when detailed evidence from three witnesses explaining cogently why the undertaking could never have been complied with from the date when it was given was served on Sectorguard, no response in terms of a reasoned basis for rejecting that evidence, or an intention to cross-examination all three witnesses, was forthcoming.
49. The best which Mr Deacon could do on his feet when this point was raised in argument was to say first, that he wished to cross-examine all three witnesses, secondly that in any event there might have been other ways of identifying the customers contacted (although he could not explain what they might be), and thirdly that even if impossibility was proved, it merely demonstrated that a contempt had been committed by the giving of the undertaking in the first place. In relation to that final suggestion, no attempt has been at any stage to amend the Committal Application by the insertion of that new case, or to explain how it could be pursued consistently with the positive averment in sub-paragraph (a) of the Particulars, that the defendant must have believed when giving Undertaking 5 that it was able to comply with it.
50. While there might have been real force in a submission that an uncorroborated assertion by Mr Hare of reasons why Undertaking 5 could not be complied with should be viewed with suspicion (having regard in particular to his admission that other parts of his evidence had been untrue), I was given no explanation at all why I should conclude that Sectorguard had a real prospect of undermining the detailed corroborative evidence of Mr Price and Ms Eyles, the persons most directly concerned in the process of contacting customers on the list, with no apparent motive to do otherwise than tell the truth about their rather disorganised compliance with Mr Hare's instruction to send a mail-shot to all customers. Such a cross-examination would, as it seems to me, be based on nothing more than a Micawberish hope that something helpful might turn up.
51. Nor was Mr Deacon able to provide any explanation why the court might conclude that, having asserted prior to giving the undertaking that Dienne had contacted all customers on the list, the respondents to the application should then untruthfully have asserted an inability to identify the names of a smaller number of customers actually contacted, if the means to do so still existed. It would on the face of it be a motiveless offence, and therefore one most unlikely to be proved to the requisite criminal standard of proof.
52. In this context, I make it clear that my conclusion that the application stands no real prospect of success does not involve any weighing of competing evidence on the same factual issue. That would not be an appropriate task at this stage, any more than it would at the hearing of a summary judgment application. In the present case, the evidence of Mr Hare, Mr Price and Ms Eyles is all to the same effect, namely that Undertaking 5 was incapable of performance from the moment when it was given. The committal application is based purely on Mr Hare's conduct, in first authorising the giving of Undertaking 5, and then in swearing an affidavit stating that it could not be complied with, due to the absence of the necessary records. No documentary or other evidence has been adduced to the contrary. Thus, the evidence is all one way and Sectorguard's hopes of rebutting what is, in effect, a defence of impossibility, rests upon cross-examination, coupled only with the prima facie unlikelihood that a company would give an undertaking with which it could not comply. That prima facie unlikelihood is fully dispelled by the evidence of the three witnesses, and in particular that of Mr Price and Ms Eyles. The conclusion that the application has no real prospect of success therefore involves no weighing of conflicting evidence in relation to any factual issue.
53. My conclusion that the application has no real prospect of success is of itself sufficient to render its further prosecution an abuse. Nonetheless there is a second reason pointing in the same direction. It is that, on the evidence as a whole, I consider it more likely than not that the application is being prosecuted otherwise than for the legitimate motive of seeking enforcement of Undertaking 5, or bringing to the court's attention a serious rather than purely technical contempt. In that context, I bear in mind that as I have described, Sectorguard twice considered whether to seek an adjournment of the strike out application so as to answer the evidence served on 9^th October, and twice decided not to do so. By contrast with the permission application, I have therefore been invited to decide the strike out application on the evidence as it stands.
54. The application to commit for breach of Undertaking 5 was launched without any prior warning or complaint. It followed correspondence from Sectorguard suggesting various other alleged contempts, none of which has at any time been pursued. The impression thereby created was that Sectorguard was searching around for some tenable basis for prosecuting committal proceedings, and alighted upon the breach of Undertaking 5 as a stick with which to beat its opponents, including Mr Hare personally, rather than as a genuine means of enforcing compliance, notwithstanding its protestations to the contrary in Mr Cleverly's affidavit in support.
55. That impression is reinforced first by the pursuit of the contempt proceedings upon the assumption that it did not matter whether compliance with Undertaking 5 had always been, or had become, impossible, and by the failure by Sectorguard, until the matter was raised in argument at the hearing, to address the question how Mr Price and Ms Eyles' evidence was to be undermined.
56. The same impression is powerfully fortified by the evidence served on 9^th October, which includes material from four different sources to the effect that, on different occasions, Mr Higgins and Mr Cleverly had expressed a wish to have Mr Hare put in prison, whether for contempt or for other alleged misconduct, by any means available. While I pay due regard to the fact that this evidence is of comparatively recent origin, no application has been made for an adjournment of the strike out application during which to rebut it by evidence in response.
57. I have considered whether my adjournment of the permission application, so as to give Sectorguard time to answer (among other things) the allegation that its application is part of a racially motivated vendetta against Mr Hare, is inconsistent with a conclusion, on the strike out application, that it is probable that the contempt application based upon Undertaking 5 has been pursued for illegitimate reasons. In my judgment there is a tension between those two outcomes, but not an inconsistency. The application for permission engages the public interest, in circumstances where it has not been shown that committal proceedings based upon Mr Hare's alleged untruths have no real prospect of success. Furthermore, I acceded to an invitation to adjourn the permission application for that purpose, whereas I was invited by Sectorguard to determine the strike out application on the evidence as it stood, rather than to permit an adjournment to answer recent evidence strongly suggestive of an improper motive.
58. If there is such a tension, it is therefore the consequence of the differing bases upon which Sectorguard has invited me to determine the two applications. For the reasons already given I would have concluded that it was probable that Sectorguard was pursuing the Committal Application in relation to Undertaking 5 for illegitimate reasons, even without recourse to the evidence served on 9^th October, because of the obvious improbability that it would succeed, and the manner in which it had been launched. Paragraph 1 of Sectorguard's Notice of Application dated 18^th May 2009 must therefore be struck out as an abuse of process.

THE RELEASE APPLICATION

59. My conclusion that Sectorguard has no real prospect of showing that, contrary to Dienne's evidence, Undertaking 5 was capable of being complied with leads inevitably to the conclusion that it ought to be released. The principle upon which the court acts on an application for a release of an undertaking given to it is to ascertain whether good cause for such a release is shown: see Re Hudson [1966] 1 Ch 209, at 214 C to D, and Arlidge Eady & Smith on Contempt (3^rd edition) page 955 at paragraph 12-188.
60. Mr Deacon submitted that I should not do more at this stage than suspend Undertaking 5, against the possibility that it might be shown in due course that Dienne's impossibility case was wrong. If I had decided to permit the continued prosecution of the Committal Application based upon a breach of Undertaking 5, a suspension might well have been the appropriate course. Since I have however struck out that application, there is no basis merely to suspend rather than to release Undertaking 5, since there are now no pending proceedings in which Dienne's case as to impossibility can successfully be challenged.
61. Impossibility of performance is plainly a good cause for the release of an undertaking. If the court had known that Undertaking 5 was impossible of performance when it was proffered, it would not have accepted it, nor made an order to the same effect. It must therefore now be released, at least in relation to the obligation to identify customers contacted. I will hear argument as to whether the obligation to disclose business done with any customer on the list should remain, since that would not on the face of it be hindered by the impossibility thus far relied upon.