Glencairn IP Holdings Limited v Product Specialities Inc [2009]EWHC 1733 (IPEC): A photo of the English Court. (Photo credits: Sang Tan/AP Photo)

CASE SUMMARY

In an earlier commentary on 15 April 2020 titled “High Threshold For An Adverse Party To Restrain A Law Firm From Acting Against It”, we discussed the decision of the Court of Appeal (“the CA”) in LVM Law Chambers LLC v Wan Hoe Keet [2020] SGCA 29 (“LVM”).

That case concerned the circumstances in which a firm of solicitors can be restrained from acting for a plaintiff where, in earlier similar litigation, the same firm acted for another plaintiff against the same defendant in circumstances where that earlier litigation was settled through a confidential agreement. 

The CA made clear that the burden of proof lies on the party seeking the injunction to establish that there was a real and sensible risk of the firm of solicitors misusing the confidential information obtained from the earlier litigation if the firm is to be restrained from acting in the later litigation. On this, the CA agreed with Justice Hacon in the English High Court decision in Glencairn IP Holdings Limited v Product Specialities Inc [2009] EWHC 1733 (IPEC) (“Glencairn”). 

In that case, Justice Hacon refused to grant the injunction sought by Glencairn. Glencairn appealed to the English Court of Appeal which recently affirmed the High Court’s decision (see Glencairn IP Holdings Limited and another v Product Specialities Inc and another [2020] EWCA Civ 609). The judgment of the English Court of Appeal sheds further light on the topic in question. 

Glencairn’s primary argument on appeal was that Justice Hacon erred in holding that the burden of proof rests on the applicant for the injunction. Instead, the proper test is the 2-stage approach enunciated by Lord Millett in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 (“Bolkiah”)

  • Under the first stage, the burden is on the applicant for the injunction to show that the solicitors are in possession of confidential information belonging to the applicant.
  • Once that is shown, the evidential burden shifts under the second stage to the solicitors to show that there is no risk that the confidential information will cross the information barrier and come into possession of those the solicitors were now acting for.

THE CA’S DECISION

The Court of Appeal rejected the applicability of the Bolkiah test to the case before them. One crucial fact was that Bolkiah concerned an application made by a former client to restrain his former professional advisers from later acting against him in respect of the same subject-matter. This distinction meant 2 things:

  • First, in cases such as Glencairn (and LVM), there was no true fiduciary relationship between the applicant for the injunction and the solicitors, in contrast to a situation of a former client-former solicitor relationship (as in Bolkiah). 
  • Second, there is a distinction between legal professional privilege and without prejudice privilege. In the former, the former client has imparted privileged information to his former solicitor during the course of a true fiduciary relationship. In that scenario, the strict Bolkiah test is amply justified. In the latter, the applicant and his legal advisers would have chosen to share privileged information with his opponent and his opponent’s legal advisers during the course of a mediation of settlement negotiations. The latter did not however receive the information in a fiduciary capacity. 

That said, the Court of Appeal made clear that the absence of a fiduciary relationship did not mean that the solicitors were free to use the confidential information it received for the later litigation: 

  • If there is evidence that the information is being misused in the later litigation (or there is some threat that it will be), then a limited injunction restraining the solicitors from misusing the information is a sufficient remedy (which was exactly what the CA did in LVM). 
  • If wider injunctive relief is sought, for example, to restrain the solicitors from altogether acting in the second litigation, the burden of establishing that such relief is necessary is on the applicant as it would be in the general law of confidentiality.  

As further justification for its position in a non-former client scenario, the English Court of Appeal said that if it were otherwise, that would act “as a disincentive to the mediation of disputes”. 

CONCLUDING REMARKS

This decision, which accords with the CA’s decision in LVM, is most welcome for 2 reasons:

  • First, it demonstrates that the blunt instrument of an injunction restraining lawyers from participating at all in the subsequent litigation is one to be wielded sparingly. 
  • Second, it shows that in most cases, a more circumscribed injunction by way of restraining the solicitors from using the confidential information in the subsequent litigation is adequate to deal with the perceived ill. 

To read the full judgment, click here.