CANDEY successful in preventing lawyers breaching their duties of confidentiality
CANDEY successful in preventing lawyers breaching their duties of confidentiality. Law Firm forced by Court Order to cease acting and pay CANDEY’s client’s costs
Summary
6 January 2025 - His Honour Judge Pearce (“HHJ Pearce”) (sitting in the High Court, Kings Bench Division, Manchester Circuit Commercial Court) determined that the Defendant met the threshold for demonstrating that ARMA solicitors possessed relevant confidential information. HHJ Pearce also found that there was more than a fanciful risk of confidential information being misused by the solicitors.
HHJ Pearce granted the order to bar ARMA from acting for the Claimants in the underlying proceedings, and ordered their clients to pay CANDEY’s clients costs.
More Detail
CANDEY acted on behalf of the Defendant in an application seeking to bar ARMA Litigation (“ARMA”) from acting for the Claimants with regard to a fraud claim and a worldwide freezing order.
Prior to acting for the Claimants, ARMA had acted for the Defendant and various related companies for a three-year period from 2021. In July 2024, several business days after ceasing to act for the Defendant, ARMA commenced acting for the Claimant and issued a fraud claim and a worldwide freezing order application against the Defendant on behalf of the Claimant.
ARMA’s managing partner was the primary fee earner acting for the Defendant, with the firm consisting of two partners and several paralegals, highlighting the Defendant’s concern as to a conflict of interest, breach of loyalty and the misuse of the Defendant’s privileged and confidential information.
CANDEY was instructed to act for the Defendant in July 2024 and raised concerns about a conflict in ARMA acting for the Claimants and potential misuse of confidential information. After unsuccessful attempts to persuade ARMA to cease acting for the Claimant and to protect the Defendant’s privileged and confidential information, CANDEY filed the barring application in October 2024. The barring application was heard on 4 December 2024 before HHJ Pearce.
CANDEY argued on behalf of the Defendant that ARMA had breached its duties of loyalty, confidentiality and the avoidance of conflicts of interest. CANDEY also submitted that confidential information was at risk of being misused in the course of preparing the Claimants’ proceedings and worldwide freezing order application.
The Claimants argued that there was no relevant confidential information that would prejudice the Defendant.
The key test which the court had to apply was the two-stage test arising from Bolkiah v KPMG [1999] 2. A.C. 222. The two-stage Bolkiah test is used to determine whether a court should grant an injunction to restrain a former solicitor or professional adviser from acting for another client with adverse interests. The test consists of the following stages:
The applicant must establish that the solicitor possesses confidential information belonging to the applicant, to which that applicant has not consented to disclosure. The information is or may be relevant to the new matter where the interests of the other client are or may be adverse to the previous client (applicant).
If the first stage is satisfied, the burden shifts to the solicitor or firm to show that there is no real risk of disclosure of the confidential information.
HHJ Pearce was not satisfied with ARMA’s evidence that it did not possess any relevant confidential information. The judge found that ARMA likely received confidential information relevant to certain allegations. The managing partner’s witness evidence that there was no relevant confidential information was found to be partisan and aggressive. The Claimants did not oppose the barring application under the second stage of the Bolkiah test: ARMA acknowledged that the implementation of information barriers (‘Chinese walls’) would be insufficient. The court rejected arguments that the Defendant had delayed in making his application and made the order sought by the Defendant requiring ARMA to cease acting for the Claimants in the underlying litigation..
The CANDEY team acting for the Defendant were Duncan Henderson (Partner), Leo Nabarro (Partner), William Stewart-Parker (Barrister), James Taylor (Barrister), Andrew Cookson (Pupil), and Damian Remias (Paralegal).
CANDEY instructed Sebastian Kokelaar (Three Stone Chambers) as Counsel. ARMA Litigation acted for the Claimants and instructed Jeremy Lewis KC and Ashley Cukier, both of Littleton Chambers.
