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OUTER HOUSE, COURT OF SESSION
[2008] CSOH NUMBER85
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OPINION OF M WISE,
Q.C.
(sitting as a
Temporary Judge)
in the Petition of
SOVEREIGN
DIMENSIONAL SURVEY LIMITED
Petitioners;
for
An order under
section 1 of the Administration of Justice Act 1972
ญญญญญญญญญญญญญญญญญ________________
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Act:
Cowan, Solicitor Advocate;
Simpson & Marwick W.S.
Alt:
E. Robertson; Beveridge &
Kellas
6
June 2008
Introduction
[1] The
Petitioner is a company engaged, inter
alia, in the provision of dimensional control and laser scanning services
to the oil and gas industry. The
Respondent, Martin Robert Cooper was appointed a Director of the Petitioner
with effect from 27 September September 2006. The Petition is directed at the recovery of
certain confidential material relating to the Petitioner's business that it is
alleged the Respondent has removed and retained following his resignation on 15 November November 2007. By interlocutor of 7 December December 2007, an order was
made in terms of the prayer of the Petition, appointing a Commissioner
(Jonathan J Mitchell QC) to search for and take all other steps necessary to
take possession of the documents and property listed in the Second Schedule of
the Petition. The interlocutor of 7 December December also
made the following further orders against the respondent:
"(d) to inform the Commissioner immediately of
the whereabouts of the documents and property listed in the Second Schedule
hereto,
(e) to provide the Commissioner with a list of
the names and addresses of everyone to whom the respondent, his servants or
agents or anyone on his behalf have given any of the documents and property
listed in the Second Schedule hereto."
[2] On
10 December December 2007,
the Commissioner duly attended at the respondent's home in Aberdeen
to conduct a search. His report of that
search is lodged in process. The Commissioner records that he asked the
Respondent questions about a laptop which was not found on the premises, but
for which a despatch note and empty box were found within the Respondent's
property.
[3] The
Petitioner alleges that the Respondent has failed to obtemper the court's
interlocutor of 7 December December 2007,
with particular reference to the laptop about which the Respondent was
questioned by the Commissioner.
[4] The
case came before me for a Procedure Roll discussion on the first and second
pleas in law for the Respondent in his Answers to the Petitioner's Minute
alleging Contempt of Court. Those pleas in law are in the following terms ;:-
"1. The
Petitioner's averments being irrelevant et
separatim lacking in specification, the minute should be dismissed.
2. The
meeting of 10 December December being for the purpose of
negotiating a settlement of the dispute between the parties, anything said is
privileged, and the averments thereanent should not be remitted to probation."
The Respondent's submissions
[5] Counsel for the
Respondent's primary submission was that the Petitioner's Minute failed to give
clear and specific notification of the nature of the alleged contempt. As contempt of court is a serious and quasi
criminal matter, he argued, any alleged breach must be clearly and distinctly
averred (Byrne v Ross 1992 S.C. 498). If the
Petitioner's Minute was allowed to proceed to an evidential hearing without
proper restraints, that would contravene standards of fairness. The narrative in paragraph 8 of the Minute
failed to set out a clear and specific statement that, if proved, would give
rise to a finding of contempt.
[6] The
allegations against the Respondent relate exclusively to the laptop about which
the Respondent was questioned by the Commissioner. It is averred in paragraph 6 of the Minute
that "The laptop, and the information and
documents contained therein, are covered by the Petition." The Petition covers all business activities
carried out or entered into under or using the names Coopsco, RDS, RDS Limited,
Radar Dimensional Survey Limited "... or
any name materially similar thereto." (para para 3(c) of the
Second Schedule to the Petition). ). There
is no averment that the laptop relates to any business carried out under those
names. It is averred that the laptop
relates to 3B Consultancy3B Consultancy
Services Limited. While there is an
averment that prior to 27 November November 2007
3B
Consultancy3B Consultancy
Services Limited was known as Radar DS Limited, there is no reference in the
Petition at all to the business name 3B Consultancy3B Consultancy
Services Limited and any breach would have to relate to a business entity
carried out under or using the names specified
in the Petition. In the absence of a
clear averment about that, the Minute was irrelevant and should be dismissed.
It was emphasised that the process
of recovering material by a section1 Petition is not a wide ranging search, it
is a controlled recovery by a court appointed Commissioner. Reference was made to Dominion Technology Limited v Gardner
Cryogenics Limited ( (No.2) 1993 S.L.T. 832 where it was held that the courts would
not order recovery if that meant that advantage was taken of the unlawful use
of a previous order of the court. In
this case, the court order relates to particular premises and property at
particular premises. Any statements made
by the Respondent to the Commissioner were irrelevant because it is not
contended that there was any laptop on the premises.
[7] Mr Mr Robertson's
secondary submission was that, if I was not prepared to hold that the Minute as
a whole was irrelevant, then I should delete the averments in paragraph 4 of
the Minute on the basis that as a matter of law, the discussions referred to
therein are the subject of privilege. Paragraph
4 avers that shortly after the Commission on 10 December December, the
respondent contacted the petitioner direct and that at his request a meeting
took place at 5.10 pm on 10 December December in the
offices of the respondent's then solicitor. The Respondent and three officers of the
Petitioner were present, but no legal representatives attended. The Petitioner's position, in essence, is that
statements made by the Respondent at that meeting, if proved, amount to
admissions in fact in relation to (i) the material on the laptop the
whereabouts of which the Respondent failed to inform the Commissioner
of, knowing that it fell within the material covered by the order and (ii) the
giving of false information about
the laptop to the Commissioner.. Mr Mr Robertson's argument that those proof
of those averments should not be allowed can be encapsulated as follows:
(1) The meeting of 10 December December 2007 was a
"settlement meeting"
(2) All statements made at a
meeting that has as its purpose settlement negotiations are privileged, if
there is agreement, express or implied, that the communications should not be
admitted
(3) A distinction should be
drawn between statements made at such meetings and correspondence said to be
privileged because it contains the words "without prejudice." With documents that contain both statements
covered by privilege and admissions of fact the court can easily redact the
privileged words. That is not possible
with accounts of a meeting.
(4) In the absence of any
Scottish authority directly in point on the issue of settlement meetings, the
English authorities that effectively treat all communications designed to
achieve extra judicial settlement as privileged should be followed.
The nature of the meeting of 10 December December 2007
[8] Mr Mr Robertson
referred to an Affidavit of John Burgess of the Petitioner, (6/13 of Process)
which was prepared when the allegation of contempt was first made. That Affidavit narrates, with reference to the
meeting, that the Respondent wanted to reach an agreement "to make it all go
away". There are several references to
settlement and in particular the Affidavit suggests that one of the
Petitioner's officers advised the Respondent at the meeting that in order to
achieve settlement he would have to write a full statement.
[9] As
there was a subsequent challenge by Mr Mr Cowan to
reference to this Affidavit at Procedure Roll, Mr Mr Robertson made
further submissions about the position. He
argued that the rule that documents not incorporated in the pleadings cannot be
referred to at Procedure Roll without agreement related to productions and
reports but could not apply to an Affidavit, which was sworn testimony. Affidavits, once lodged in process are
accepted as evidence. No witness
requires to speak to them - Civil Evidence (Scotland)
Act 1988, section 2(1)(b).
[10] He submitted further that in the event that I decided that I
should not have regard to it for this purpose, then even without the Affidavit,
the only reasonable inference that could be drawn from the undisputed facts is
that this was a settlement meeting. It
took place immediately after the Commission and against a background of
litigation. The meeting was arranged at
the Respondent's instigation and it took place at solicitors offices, but
without representatives present as the discussions were between parties only. The subject matter of the discussion was the
issues raised in the litigation.
The scope of privileged communications in English Law
[11] Mr Mr Robertson
argued that there was a clear rule that, as a matter of public policy, parties
to a dispute should be allowed to negotiate freely without fear of the detail
of those negotiations subsequently being founded on by an opponent in the
absence of settlement. Under reference
to Rush & Tompkins Ltd v Greater London Council and Another [1989] AC 1280, an English appeal to the
House of Lords, he stated that the public policy rule there confirmed applied
to oral as well as written negotiations where these were genuinely aimed at
settlement (per Lord Griffiths at at 1299-1300). The
decision in Rush & Tompkins related
to the issue of whether written admissions made in an attempt to reach settlement with one
party were admissible at the issue of another party with whom settlement had
not been achieved. The admissibility of
oral communications was more directly addressed by the Court of Appeal in Unilever plc v Proctor & Gamble [2000] 1 WLR 2436. In that case it was held
that where a meeting was intended to be an occasion for both sides to a dispute
to speak freely then nothing should be pled in relation to what was said at the
meeting either as a threat or a claim of right. Robert Walker L.J., having cited Lord
Griffiths in Rush & Tompkins, supra, opined that, in addition to
public policy, the other foundation for the privilege rule is in "... the express or implied agreement of the
parties themselves that communications in the course of their negotiations
should not be admissible in evidence if, despite the negotiations, a contested
hearing ensues."
While the general rule has some
exceptions, listed in Unilever, none
of those were here present.
The Scottish authorities on privileged communications
[12] Mr Mr Robertson went
on to argue that such Scottish authorities as existed were not directly in
point but were at least not inconsistent with the general rule stated in England.
All of the Scottish cases recognise the
public policy that lay at the root of the Respondent's argument. But all of them address only what he termed
the "speciality" of written admissions.
[13] In Bell v
Lothiansure Limited 1990 S.L.T. 58, Lord McCluskey took a strict view even
in relation to written communications and refused to admit to probation certain
averments about a letter containing an extra judicial offer on the basis that
they were covered by privilege.
[14] On the other hand, the decisions in Watson-Towers Ltd v McPhail 1986
S.L.T. 617, Daks Simpson Group plc v Kuiper 1994 S.L.T. 689, Gordon v East Kilbride Development Corporation 1995 S.L.T. 62 and Richardson v Quercus Ltd 1999 S.L.T. 596 all
supported an exception from the rule protecting privileged communications from
being relied upon where clear admissions or statements of fact were made in the
context of "without prejudice" correspondence and could be easily identified
and separated from any genuinely privileged statements.
[15] Counsel relied on the fact that in Daks v Kuiper the
admission had been made at a meeting, which was then followed up by a letter
and that the argument about admissibility related only to the letter.
[16] In all of the cases referred to above the court was prepared to
look at unequivocal written admissions, but no indication was given as to what
the position would be if the alleged admission was made orally at a settlement
meeting. They were all Outer House
decisions with the exception of Richardson
v Quercus, a decision of an Extra
Division, where the focus was the effect of the words "without prejudice" in
correspondence and the issue of whether the contentious letter should be looked
at in isolation or in the context of other correspondence.
[17] Mr Mr Robertson sought to draw a general
distinction between statements made at meetings, which are fluid and difficult
to examine the context of, and correspondence, where the privileged parts can
be easily redacted. He referred to the
process of Mediation by way of an example of negotiation meetings being
afforded special, confidential status.
[18] In conclusion he argued that if the averments covered by
privilege were deleted and having regard to the strict standards that apply to
pleadings in the context of contempt of court, there would be nothing of
relevance left for the Respondents to prove. The Minute was an attempt to glean material on
matters that lie behind the Petition rather than on issues focused by it and it
should be dismissed as irrelevant and lacking in specification.
The Petitioner's Response
[19] Mr Mr Cowan invited
me to allow a Proof on the Minute and Answers and addressed me on the two
principal issues of the nature of the alleged contempt and the issue of
privilege.
The nature of the alleged contempt
[20] It was accepted that given
the quasi criminal nature of the proceedings the alleged breach requires to be
clearly and distinctly averred, but Mr Mr Cowan sought
to distinguish the present case from the situation that arose in Byrne v Ross, supra, which was an appeal after an evidential hearing where
there were no averments at all on one of the breaches found to have been
established. Given the lack of any prior
notice in the pleadings of those breaches, the findings in respect of them
could not stand.
[21] The Petitioner was not claiming that there was a contempt of
court because the laptop was not recovered, rather it was the false responses
to the Commissioner that constituted the breach. These did not constitute perjury, but contempt
of court.
[22] The Petitioner's position was that the Respondent failed to
obtemper paragraphs (d) and (e) of the interlocutor, which relate to providing
information about the whereabouts of any documents listed in the Second
Schedule of the Petition. Mr Mr Cowan freely
accepted that the extent of the Respondent's obligation was restricted by the
Second Schedule. He argued that the
laptop and its whereabouts fell within the Second Schedule. He accepted that the business 3B
Consultancy3B Consultancy
Services Limited is not named within paragraph 3(c) of the Schedule. But he said that on his averments, documents
relating to the business of 3B Consultancy3B Consultancy
Services Limited would show or tend to show the business of Radar DS Limited,
which was materially similar to the specific names listed in the Petition. He told me that when the Petition was drafted
he did not know about the existence of the name "3B Consultancy3B Consultancy
Services Limited". In conclusion on this point, he said that the laptop may
fall within para para 3(c) of the Second Schedule, as the
short period between the laptop being purchased and 7 December December would
tend to show the business activities of Radar DS Limited.
[23] Mr Mr Cowan's position was that only after
Proof would the court be able to determine whether or not the information in
the laptop fell within the second schedule. I was informed that since proceedings were
raised an offer had been made (without prejudice to the issue of ownership of the
laptop which is in dispute and also to confidentiality) to hand over the laptop
for analysis, but that was described as "too little too late" by Mr Mr Cowan.
[24] Ultimately, Mr Mr Cowan accepted that the only basis
upon which the Petitioner could prove that the laptop fell within the Second
Schedule of the Petition was after Proof of the averments about the meeting
that Mr
Mr Robertson
sought to delete. He acknowledged that
but for those averments being allowed to proceed to Proof the Minute would be
destined to fail.
The Petitioner's position on the meeting of 10 December December 2007
[25] The Petitioner's
stance is to dispute that the meeting was a "settlement meeting". Esto it
was to be regarded as such, then admissions of fact made at settlement meetings
can be relied upon, there being no difference between oral and written
admissions of fact in this context.
[26] Notwithstanding that Mr Mr Burgess' Affidavit
had been referred to without objection during submissions, Mr Mr Cowan argued
that Mr
Mr Robertson
was not entitled to rely on it at a Procedure Roll discussion. It was not incorporated into the pleadings and
accordingly could not be referred to. It
was in the same position as the expert reports in Eadie Cairns v Programmed
Maintenance Painting Limited 1987 S.L.T. 777, where it was held that productions could not be referred to at
Procedure Roll unless there was agreement that they were accurate and
acceptable. Mr Mr Cowan
acknowledged that it may seem incongruous that the Petitioner would not permit
reliance on a document that emanated from his own client, but, he stated, it
was sworn for a particular purpose and it is not longer
accepted as accurate.
[27] Without referring to the Affidavit, he went on, I could draw no inference that it was a
settlement meeting unless that was the only reasonable inference from the admitted facts. The Petitioner's stance was that the meeting
was more of a "confessional" by the Respondent than a negotiation meeting.
The differing positions on privileged communications taken in the two
jurisdictions
[28] If I was prepared to
accept that the meeting of 10 December December was a "settlement meeting", it
was argued that the averments relating to unequivocal admissions of fact made
at that meeting could be relied upon.
[29] The Scottish and English authorities show two different
approaches to this. The English approach is context
based and the Scottish approach is content
based.
In England,
protection is given to all privileged communications. In Scotland,
even if something bears to be "without prejudice", the court will still look at
it if it constitutes an admission of fact. Mr Mr Cowan accepted, as had Mr Mr Robertson,
that the matter of the
admissibility of oral admissions of fact was undecided in this jurisdiction
as it simply had not required to be addressed to date.
[30] In support of his proposition, Mr Mr Cowan relied
upon the Scottish cases already referred to by Mr Mr Robertson - Watson-Towers Ltd v McPhail 1986 S.L.T. 617, Daks
Simpson Group plc v Kuiper 1994 S.L.T.
689, Gordon v East Kilbride Development Corporation 1995 S.L.T. 62 and Richardson v Quercus Ltd 1999 S.L.T. 596. In addition he cited two Sheriff Court
decisions which he said suggested that the approach in Daks v Kuiper had already
been recognised in the lower courts before the issue came before the Court of
Session - Burns v Burns 1964 S.L.T. 21 and
Ware v Edinburgh District Council (1976 SLT 21). However, these decisions
also related to written communications.
[31] Considerable reliance was placed on the approach in Daks v Kuiper, where the statement was made first at a meeting and then in
correspondence. The issue, argued Mr Mr Cowan, had
been whether what was said was a true concession or a statement made for
negotiation purposes. If it was the
former, then it was admissible. The
rationale applied whether the admission or concession is oral or in writing. He accepted that the task of the court is more
difficult when dealing with a meeting rather than with the certainty of
correspondence, but reiterated that it was the nature of the statement that
mattered. In Gordon v East Kilbride
Development Corporation the admission was offered gratuitously and was not
conditional upon any response by the other party. That was the situation averred here.
[32] So far as the position in England
was concerned, Mr Mr Cowan readily acknowledged that there
was no exception from privilege for unequivocal admissions of fact in that
jurisdiction. The law on the point had
developed differently there and it was clear from Unilever v Proctor &
Gamble 2000 1 WLR 2436 that
the list of exceptions to the rule, while not exhaustive, did not include
unequivocal admissions of fact. The
difference in approach between the two jurisdictions was highlighted in the
English case of The Cadle Co v Hearley [2002] 1 Lloyd's Rep. 143,
where the decisions in Daks v Kuiper and Richardson v Quercus on
which one party sought to rely were
specifically disapproved as not representing the current state of English Law.
[33] Insofar as the English position was helpful, he went on, the
decisions in Unilever v Proctor & Gamble and Savings & Investment Bank Ltd (in
liquidation) v Fincken [2004] 1 WLR 667 were cases in which the parties to the meeting
had agreed that it would be conducted on a without prejudice basis. In the absence of express or implied agreement
in this case that that was the basis of the meeting, privilege did not apply. Where parties have a meeting to discuss
settlement, they can (at least in England)
avoid anything said being used against them by expressly agreeing that the
meeting will be conducted on a without prejudice basis.
[34] In conclusion Mr Mr Cowan said that in order to
understand whether or not the Petitioner's position is correct, the court does
have to embark on an exploration in evidence of what took place at the meeting.
Decision
[35] It was common ground
between the parties that conduct alleged to constitute contempt of court should
be clearly and distinctly averred (Byrne v
Ross, supra.) The first issue to be addressed is whether the
Petitioner's Minute will fail even if he proves all of his averments.
[36] The Minute claims that the Respondent failed to obtemper the
court's interlocutor of 7 December December 2007 by failing to inform the
Commissioner immediately of the whereabouts of a laptop which, with the
information and documents contained therein, fell within the scope of the
Petition because it was being used in a business activity referred to in para para 3(c) of the
Second Schedule to the Petition. The
Minute avers that the
despatch note found in the respondent's home and relating to the laptop in
question was dated 20 November November 2007.
This is admitted by the Respondent in
his answers to the Minute. It is averred
that the business now known as 3B Consultancy3B Consultancy
Services Limited was known as Radar DS Limited prior to 27 November November 2007. Radar DS Limited is, it was accepted, a name
materially similar to "RDS Limited" and "Radar Dimensional Survey Limited", two
of the listed names in the Second Schedule. On the face of the averments in the Minute,
the business entity carried out by 3B Consultancy3B Consultancy
Services Limited and Radar DS Limited is the same. Accordingly, if the Minuter is able to prove
that the laptop was used for the business
activity of Radar DS Limited, it may well fall within the terms of the
Second Schedule, certainly for any material relating to the period 20 to 27 November November 2007
and probably also for the period 27 November November to 10 December December 2007,
as the business activity would be the business activity of Radar DS Limited,
albeit using a different name. Accordingly,
at this stage it cannot be said that the averments in the Minute are irrelevant
insofar as they claim that the material in the laptop falls within the Second
Schedule to the Petition.
[37] However, it was accepted on behalf of the Minuter that it would
not be possible to prove the link between 3B Consultancy3B Consultancy
Services and the business activities named in the Petition without the
averments relating to the meeting between the parties on 10 December December. This requires consideration of the law
relating to privileged communications.
[38] So far as the nature of the meeting of 10 December December 2007 is concerned,
I have had regard to the Affidavit of Mr Mr Burgess. Affidavits lodged by the Petitioner, without
any supplementary affidavit having been lodged to clarify or try to withdraw
the statements made therein, can in my view be referred to at debate. They are not in the same position as the
expert reports in Eadie Cairns v
Programmed Maintenance Painting Limited. They represent sworn testimony and need not be
spoken to by a witness. The rule against
referring to productions at Procedure Roll Debate without agreement of parties arises from the nature of productions
as being documents that require to be proved. Affidavits lodged in process do not fall into
that category. They constitute evidence, unlike reports
and other documents lodged as productions, which cannot constitute evidence by
reason only of their having been so lodged. . Questions may arise as to the weight to be
attached to Affidavit evidence, if it remains untested by cross examination. In this case , however, it
is the party against whose favour the Affidavit is sworn that who seeks to rely it
for the purpose of illustrating the nature of the meeting. It is clear from the Affidavit that the
meeting was a "settlement meeting". Even
if I had not been prepared to take it into account, I would have held that the
only reasonable inference that could be drawn from the undisputed facts
surrounding the meeting was that it was a settlement meeting. It took place later in the day of the
Commission of 10 December December, it was
instigated by the Respondent who wanted to meet and it took place at solicitors'
offices. It would be difficult to infer
that the subject matter of the meeting was anything other than the recently
raised litigation.
[39] A more difficult issue is whether or not there was agreement,
express or implied, that the discussions at the meeting were to be treated as
privileged and thus unable to be founded upon in litigation. I accept that without solicitors present it
may be less likely that there would be express agreement on this using the
expression "without prejudice" usually adopted by advisers. However, there would appear to be a dispute in
fact about whether or not this settlement meeting was being conducted on an
open basis or not. Having accepted that it was a settlement
meeting, it may be that
relatively little evidence is required to imply agreement that it was
intended to be privileged. However, tThe
Respondent has an averment that the discussion was to be "off the record" so
far as the parties were concerned. The
Petitioner has a positive averment that there was no such agreement. That dispute has to be resolved. Notwithstanding the terms of the Respondent's
second plea in law , it was accepted by Mr Mr Robertson that settlement meetings would only be
shielded by the cloak of privilege if agreement so to shield them was express
or could be implied from the circumstances. There are two conflicting assertions about
this matter and nothing in the undisputed facts points to the only reasonable
inference being that there was such an agreement. In my view, evidence will be required to
resolve the dispute about this in the present case.
[40] Turning to the question
of whether a distinction can be drawn between oral admissions and written
admissions, it seems to me that the authorities in this jurisdiction have drawn
a distinction between (i) statements or communications made or effected in an
attempt to achieve extra judicial settlement, such as an offer to pay a sum of
money without prejudice to liability and (ii) admissions of fact made within
the context of a privileged communication. Privilege attaches to the first type of
statement but not the second. No distinction appears to have been drawn
between oral admissions of fact and written admission of fact. As it happens, all the decisions have related
to written communications that were stated, on the face of it, to be "without
prejudice."
[41] In Daks Simpson Group plc
v Kuiper, reference was made to the Canadian case of Kirschbaum v "Our Voices"
Publishing Co [1971] 1 O.R. 737, where
it was said that the question to be considered in this context was - "...what was the view and intention of the
party in making the admission; whether
it was to concede a fact hypothetically, in order to effect a settlement, or to
declare a fact really to exist."
Similarly, in Richardson v
Quercus, it was said that the effect of the words "without prejudice" had
to be judged on the facts of each situation. Without enquiry into the factual background of
an allegation that an admission material to the dispute has been made, the
issue of whether privilege can be said to attach to it cannot be properly
addressed. In this case there are too many unresolved
issues surrounding the meeting and the nature of the statements said to have
been made at it. It would be premature
to make a decision on whether and to what extent the alleged admission of fact
can be taken into account before evidence as to whether it was ever agreed that
the meeting would be covered by the cloak of privilege.
[42] But I do not consider that evidence led at the hearing should be restricted to
that matter alone. All evidence of the
facts and circumstances relative to the meeting between the parties should be put
before the court so that the content and nature of any statements proved to
have been made can properly
be determined .
Even if the meeting was agreed to be
subject to privilege, the Minute contends that admissions made by the
Respondent were "clear and unequivocal". That is denied by the Respondent. That issue will require to be resolved . [ Thereafter,
if appropriate, the Respondent's argument could be renewed, but would be
determined against a background of established facts, as suggested in Richardson v
Quercus. .........
[43] In conclusion, I
am not persuaded that I should delete the averments regarding the alleged
admissions made at the meeting of 10 December December 2007
before proof and I will, accordingly , repel the Respondent's second
plea in law, but leave his first plea in law standing .
[44] I shall meantime reserve all questions of expenses.
