Non-party disclosure, and specifically the confidentiality concerns faced by non-party respondents, has been considered recently in the case of Bugsby Property LLC v LGIM Commercial Leasing Ltd and another. In that case, the parties to proceedings made applications for disclosure against five non-party respondents. The applications were made under CPR 31.17 and section 34 of the Senior Courts Act 1981. In partially granting the non-party disclosure application, Henshaw J ordered the disclosure to be subject to a tiered confidentiality club arrangement, limiting the classes of individuals who had access to different categories of disclosed documents.
This case highlights that where documents have been sought from a non-party to proceedings, genuine confidentiality concerns will not in themselves prevent disclosure, but can lead to the court restricting access to the non-party’s documents by way of a confidentiality club arrangement.
A confidentiality club is by no means the default position when non-party disclosure is ordered. The burden is therefore on the non-party respondent and their legal representatives to demonstrate that there is a real risk of the confidential documents or contents of those documents being used outside of the litigation for a collateral purpose (intentionally or inadvertently). The risk of documents being used for a collateral purpose may be strikingly obvious in the circumstances of the litigation; for instance, where the respondent is a competitor of any one of the parties, it follows that disclosure of the confidential documents holds a real risk of being used by the party to gain a competitive advantage and / or put the disclosing respondent at a disadvantage. It is therefore important that the respondent considers and identifies any potential risk of collateral use early on, and likewise, the parties to litigation should consider whether this will be raised by the respondent and if so what evidence or testimony they can provide to dispel that assumption.
The court in approving a confidentiality club arrangement in respect of non-party disclosure will consider the following:
- The degree and severity of the identified risk and the threat posed by the inclusion or exclusion of particular individuals within the confidentiality club.
- The inherent desirability of including at least one duly appointed representative of each party within a confidentiality club.
- The importance of the confidential information to the issues in the case.
- The nature and confidential information and whether it needs to be considered by people with access to technical or expert knowledge.
- Practical considerations, such as the degree of disruption that will be caused if only part of the legal team is entitled to review, discuss and act upon the confidential information.
(Libyan Investment Authority v Société Générale.)
Again, the severity and implications of disclosure of confidential documents may not need to be argued in any great detail because of the context of the parties and the circumstances leading to the non-party disclosure application. This appears more so to be the case where value (commercial or otherwise) can be attached to confidential documents or there is risk that disclosure of the confidential documents would lead to the harm of individuals.
In authorising a confidentiality club, the courts may entirely exclude the lay client(s). In Bugsby, the lay client applicant was excluded from the inner ring, which was limited to experts and lawyers, despite arguments raised that they were entitled to know the case and evidence against them. It is apparent that the court would be more inclined to authorise exclusion of a lay client who is a direct competitor of the non-party respondent.
As a confidentiality club allows for a staged approach to disclosure, it is worth bearing in mind that the scope of those with access to the documents may widen and as such the confidentiality of those documents may not be maintained to the extent initially approved by the court. This is more likely to occur as a trial draws nearer, given that there is no authority to suggest that in cases where a confidentiality club exists a party may be denied access to the evidence used at trial. However, the court acknowledged that it is seldom the case that all documents disclosed are actually utilised at trial, thus there is no certainty that confidential documents will have to be disclosed outside of the parameters originally set.
The Bugsby judgment highlights key considerations for both applicants and respondents where a non-party disclosure application is made and confidentiality concerns are likely to be raised. While the courts will undertake a balancing exercise in handling the applicant’s request for unrestricted access to relevant documents in the name of justice against the respondents desire to prevent or, at the very least, restrict access to their confidential documents, it is evident the court will go no further than is necessary in placing restrictions on disclosure ordered.