IEHC 467
THE HIGH COURT
[2018 No. 124 COS]
IN THE MATTER OF INDEPENDENT NEWS AND MEDIA PLC
IN THE MATTER OF THE COMPANIES ACT 2014
THE DIRECTOR OF CORPORATE ENFORCEMENT
INDEPENDENT NEWS AND MEDIA PLC
JUDGMENT of Mr. Justice Kelly, President of the High Court delivered on the 27th day of June, 2019
1. Messrs. Karl Brophy and Gavin O’Reilly who have brought this application (“the Applicants”), seek permission to use documents furnished to them in these proceedings for the purpose of pursuing litigation against Independent News and Media plc (“the Respondent”) and possibly other persons for inter alia breach of privacy and breach of data protection rights.
2. The Director of Corporate Enforcement (“the Director”) has no objection to the order sought being granted. The Respondent does object. It did not file any affidavit evidence in support of its objection but relied on legal submissions.
3. In 2018 the Director was granted an order by the court pursuant to the provisions of s.748 of the Companies Act 2014 (“the Act”) appointing inspectors to investigate and report on the affairs of the Respondent. On 4th September, 2018 I appointed Mr. Sean Gillane S.C. and Mr. Richard Fleck CBE to investigate the Respondent in respect of four different matters. This application is concerned with only one of those matters, namely, what was described as the “data interrogation issue”.
4. Voluminous affidavit evidence from the Director and the Respondent was filed in advance of the hearing which led to the appointment of the inspectors.
5. I summarised what was involved in the data protection issue in the course of my judgment of 4th September, 2018. Only a short summary of that summary is required in order to understand the background to this application.
The data interrogation issue
6. In 2014 back-up tapes of computer data were removed from the Respondent’s premises. They were taken to the premises of a company outside the jurisdiction. There that data was interrogated over a period of months. That operation was allegedly directed by the then chairman of the board of the Respondent, Mr. Leslie Buckley. Other members of the board were allegedly not aware of that operation at the time. It has been alleged that Mr. Buckley expressly instructed the company’s head of information technology not to disclose the matter to Mr. Robert Pitt, the then chief executive of the Respondent. During the course of the interrogation, tapes and associated data appear to have been accessible to and accessed by a range of individuals who are external to the company. Those individuals have business links with Mr. Buckley, with each other and appear also to have links with Mr. Denis O’Brien (Mr. O’Brien) who in 2006 acquired an interest in the Respondent and by 2012 had become its largest shareholder. He held 29.9% of the shareholding.
7. This data interrogation exercise was, according to Mr. Buckley, part of a cost reduction exercise in respect of a contract which the Respondent had with a firm of solicitors for the provision of legal services.
8. During the course of the interrogation, data appears to have been searched against the names of 19 individuals. Mr. Brophy, who is the former director of corporate affairs of the Respondent, was one such individual. Mr. Gavin O’Reilly’s name did not appear among the 19 names identified at the time of the Director’s application. However, he has sworn that he believes that it is clear from the material which has been disclosed that he was “personally targeted by the data interrogation”. His personal assistant, Ms. Scott, was among the 19 names identified. He alleges that he has a significant and manifest interest in the outcome of this application and the taking of the intended proceedings. These averments are not controverted by the Respondent.
9. The costs of this data interrogation exercise were not discharged by the Respondent. The bills for it were presented to an entity controlled by Mr. O’Brien and paid for by an Isle of Man company called Blaydon Ltd. Mr. O’Brien is the beneficial owner of that company. Blaydon Ltd. appears to act as a paying agent for Mr. O’Brien and his companies.
10. It is difficult to see what the interrogation of information concerning at least some of the 19 persons had to do with a cost reduction exercise in respect of legal services being provided to the Respondent. For example, two Senior Counsel were amongst those whose data was interrogated. They acted for several years as counsel to the “Inquiry into Payments to Politicians and related matters” presided over by Mr. Justice Moriarty. That tribunal was involved in investigations into allegations relating to the awarding of the second GSM licence to ESAT which is an entity controlled by Mr. O’Brien. In a letter of 30th April, 2018 to Mr. Buckley the Respondent’s solicitors described the names of those searched against as persons who may be regarded as having acted adversely to Mr. O’Brien. The rights and entitlements of some or all of the 19 people may have been transgressed in a most serious way by this activity. So also may have been the rights and entitlements of Mr. Gavin O’Reilly.
11. This data interrogation exercise was carried out without the prior knowledge or consent of the Applicants. They believe that they were affected by it in a number of ways. They have sworn (and it is not controverted) that it is likely that the emails which they sent and received during their time as employees of the Respondent were accessed by parties other than the Respondent. They believe that their personal data contained in those emails was processed without their permission or consent. They say that that exercise had no apparent legitimate commercial purpose. In the case of Mr. Brophy he believes that his personal data included highly sensitive information such as the results of a medical examination which he undertook on joining the Respondent as an employee. His employee records, pension entitlements, salary and banking details were likely accessed. In addition, for most of the time of his employment with the Respondent he worked as a journalist and the data interrogation allegedly touched upon matter which would attract journalistic privilege such as the identity of sources and other confidential material. The unlawful disclosure of that personal data to third parties by the Respondent would obviously, he says, have the potential to cause him enormous damage. Save that he was not employed as a journalist, these concerns also apply in the case of Mr. O’Reilly.
12. Mr. Karl Brophy worked as a journalist with both the Irish Examiner and Independent Newspapers. Between January 2011 and October 2012 he was employed as the Respondent’s Director of Corporate Affairs. In 2013, following the termination of his employment with the Respondent, he founded a company called Red Flag. This is a public relations company based in Dublin and has offices in Europe, Asia, Australia and the United States.
13. Mr. Gavin O’Reilly worked in a number of roles within the Respondent whilst that entity was controlled by his father. He became CEO of the group in 2009 and remained in that position until April 2012. Currently he is the Executive Chairman of Red Flag.
14. In the course of his grounding affidavit Mr. Brophy made uncontroverted averments as to the relationship that existed between him and his fellow Applicant, the Respondent and some of the Respondent’s shareholders. He pointed out that Mr. O’Brien is the largest shareholder in the Respondent and exercises considerable influence over that company. His long term business associate, Mr. Leslie Buckley, was the non-executive Chairman of the Respondent between 2012 and 2018 during which time the acts of alleged wrongdoing against the Applicants occurred. He pointed out that the affidavit of the Director dated 23rd March, 2018 suggested that Mr. Buckley and companies owned by Mr. O’Brien were heavily involved in these acts of alleged wrongdoing.
15. The termination of the Applicants respective employments with the Respondent in 2012 was, it is alleged, the result of a long-running power struggle between the company’s two largest shareholders, Mr. O’Reilly’s family and Mr. O’Brien. Considerable animosity existed between the two shareholders and, because Mr. Brophy was aligned with the O’Reilly family, he believes that the animosity extended to his position within the Respondent. He says that the animosity is ongoing and is evidenced by the fact that proceedings have been taken by Mr. O’Brien against Red Flag, the Applicants and various other employees of Red Flag. These proceedings were commenced in 2015 but have not yet come to trial. He says that in those proceedings Mr. O’Brien alleges various wrongdoings having been committed against him including defamation and the tort of conspiracy. It is said that whilst those proceedings do not have any bearing on this application they provide a context for the background against which intended proceedings will be taken by the Applicants.
16. The commencement of the Director’s proceedings against the Respondent for the appointment of inspectors gave rise to a good deal of publicity. As a result, a number of interested parties including the Applicants sought copies of the affidavits placed before the court. In response to that application the Director and the Respondent reached an agreement on the furnishing of documentation to the requesting parties subject to certain redactions.
17. By order dated 24th April, 2018 the court approved of that agreement which provided for the furnishing of the grounding affidavit of the Director and all twelve replying affidavits which had been filed up to that date. The order also provided for any further affidavits which might be filed in these proceedings being furnished to the interested parties subject to relevant redactions. If any party was dissatisfied with the information supplied or redactions to it, liberty was given to apply on motion to the court in respect of such a complaint. No such application has been made.
18. One important restriction was placed upon the recipients of the said material. They were precluded from using the documentation provided to them for any purpose other than use in these proceedings. Should they wish to use the material disclosed for any other purpose they were required to apply to court for leave to do so. It is as a result of that stricture that this application comes to be made.
The intended proceedings
19. The Applicants wish to bring proceedings against the Respondent and possibly other parties arising from the data interrogation. They intend to allege that their right to privacy and rights under the data protection legislation have been breached. They also intend to allege that various parties engaged in a conspiracy to damage their interests. They will also allege that certain, as yet unspecified, constitutional rights have been infringed and that they have suffered loss and injury.
Use of the material sought
20. The Applicants contend that it is of critical importance to their intended proceedings that they be given liberty by the court to use the material which they have gleaned on foot of the agreement approved of by the court in the order of 24th April, 2018.
21. The Applicants point out that this material has already been opened in court. Thus, it involves documents which cannot now be considered to be either private or confidential. They contend that it would place them in an invidious position if they are prevented from using that information in order to vindicate their rights.
22. They assert that they could be placed in an entirely artificial position of having to construct a case against the Respondent without being permitted to rely on matters known to them by virtue of having received the relevant material pursuant to the court order of 24th April, 2018.
23. The Applicants also point out that prior to the Director seeking the appointment of inspectors he exercised statutory powers of investigation given to him under the Act. This included the making of 14 statutory demands for the production of material. The documents and information obtained by the Director pursuant to these statutory powers would not be easily obtained or perhaps not obtained at all through discovery being sought in the intended proceedings. The Applicants would have no means by which to obtain statements or explanations from the Respondent or other parties in the same manner as the Director.
24. The Applicants also contend that they would be severely prejudiced in their ability to prosecute their intended proceedings if they were forced to engage in lengthy and expensive discovery requests in order to obtain documents which they already have in their possession. This would place a strain on their resources and indeed on the courts and would be wasteful of both time and costs.
25. The Applicants also contend that the Director has procured the cooperation of a large number of parties in providing information to him. Those parties include the Respondent, members of its staff and others. They regard it as being far from certain that those parties would be willing to cooperate with efforts to be made by the Applicants in order to collect evidence for the purpose of prosecuting their intended proceedings. In fact, they say, that it would be unsurprising and indeed understandable for some if not all of those parties to take a hostile stance towards them in respect of that litigation. This is so because of the association of those parties with the Respondent.
26. Finally, the Applicants point out that the Respondent has itself issued proceedings against Mr. Buckley arising from certain matters described in the material which has already been disclosed. They believe it is safe to assume that the Respondent has itself relied directly or indirectly on information and documents obtained by it from the Director during the course of these proceedings. In such circumstances it would be unfair and without justification that the Respondents should now seek to prevent the Applicants from doing likewise.
Collateral use of disclosed material
27. Documents disclosed pursuant to discovery orders are subject to an implied undertaking that they will not be used or be allowed to be used for any purpose other than the proper conduct of the litigation in which they are disclosed. That is clear from the dicta of Finlay C.J. in Ambiorix Ltd. v. Minister for the Environment (No. 1)  1 I.R. 277 where he said:-
28. That view was entirely in keeping with the observations of Lord Diplock in Home Office v. Harman  1 A.C. 280 in which he made reference to:-
“As a matter of general principle, of course, a party obtaining the production of documents by discovery in an action is prohibited by law from making any use of any description of such documents or the information contained in them otherwise than for the purpose of the action. To go outside that proposition is to commit contempt of court.”
29. They were dicta which I cited in my own extempore judgment in Roussel v. Farchepro Ltd.  3 I.R. 567. In Roussel’s case the undertaking precluding the collateral use of discovered documents was sought to be modified so as to permit the use of a small number of the disclosed documents in other litigation. It was argued in that case that there was no jurisdiction to modify the undertaking in any circumstances. I considered that argument in some detail and rejected such an absolutist approach. I took the view that it had little to recommend it either in law, logic or common sense and that it could give rise to injustice. I held that there was a discretion vested in the court to modify or vary the undertaking. I came to that conclusion having considered the case law on the topic and in particular the decision of the House of Lords in Crest Homes plc v. Marks  A.C. 829. I cited in particular an extract from the speech of Lord Oliver where he said:-
“… the implied undertaking given by the solicitor personally to the court (of which he is an officer) that he himself will not use or allow the documents or copies of them to be used for any collateral or ulterior purpose of his own, his client or anyone else; and any breach of that implied undertaking is a contempt of court by the solicitor himself”.
30. I came to the conclusion that there is a discretion vested in the court which falls to be exercised in circumstances which I identified as follows:-
“I do not, for my part, think that it would be helpful to review these authorities for they are no more than examples and they illustrate no general principle beyond this, that the court will not release or modify the implied undertaking given on discovery save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery.”
31. That test has been considered and my views followed by Irish courts on a number of occasions. These include the decision of Gilligan J. in Breslin v. McKenna  IEHC 122 and Keane J. in Waterford Credit Union v. J & E Davy  IEHC 8. In O’Connor v. Commissioner of An Garda Síochána  IEHC 223 Baker J. stated that she would add to those factors:-
“So it seems to me that in the exercise of this discretion, first there has to be a demonstration of special circumstances and secondly, it has to be shown that the making of an order of this type will not occasion injustice to the person giving discovery. But as the matter is one of discretion, it doesn’t appear to me that the exercise of discretion simply stops there.
I am of the view that in deciding whether or not to grant leave, the appropriate approach for the court is to look at all of the circumstances, including, if necessary, the circumstances of the original disclosure, the nature and the strength of the evidence, the type of wrongdoing which is alleged to be involved and the interests of both the applicant and the party providing discovery as well as any public interest which may be involved.”
“… the proposition that as the jurisdiction is discretionary, the guiding principles must be the interests of justice and the court must balance in a proportionate way the competing interests of the parties.”
32. I should point out that, of course, Roussel’s case dealt with documents disclosed on discovery. Documents in the present case have been disclosed to the Applicants by the agreement of the Director and the Respondent. They were, however, disclosed in the context of the current litigation and thus were acquired in a process analogous to discovery. For that reason, I felt it appropriate that they should be subject to the same limitation as is applicable to documents disclosed on foot of the discovery process proper.
The Applicant’s submissions
33. The Applicants contend that the circumstances here justify the making of the order. They say that the conditions identified in Roussel’s case have been met. They accept that those principles apply by analogy to the disclosure which has been made here.
34. They point to a number of features of this case which amount to special circumstances amongst which are the following.
The Respondent’s objections
35. The Respondents delivered written submissions setting out their objections but raised some additional issues during the course of oral argument.
• First, the material has been furnished to the Applicant with the agreement of the Respondent and indeed the Director. The Respondent did not object to the provision of the material in circumstances where the only parties to the proceedings were the Director and the Respondent. The Applicants were never parties to the proceedings in any strict sense.
• Second, they contend that the material disclosed demonstrates prima facie evidence of a wrongdoing of a most unusual and marked kind. It was sufficient to warrant the making of the order appointing inspectors. The Applicants also point out that no replying affidavit has been filed by the Respondent controverting any of the assertions relied upon in the grounding affidavits on this application.
• Third, they point out that the type of wrongdoing which has been demonstrated is very wide involving possible breaches of data protection legislation, privacy and constitutional rights. All of these amount to special circumstances which would warrant the court permitting the use of material provided, of course, that no injustice would result.
• They point out that the material upon which they seek to rely has already been disclosed to them. Therefore, any arguments pertinent to the question of accelerated discovery prior to the close of pleadings is simply irrelevant. They also point out that any arguments which may be made to the effect that they should seek this material by way of discovery in their litigation is entirely artificial and would give rise to an injustice in having to go through that process with all its additional costs and expenditure of time.
• In this context the Applicants also raise an issue of public interest. They say that the public interest is not advanced by court time being expended on needless discovery applications which would be the case if the Respondent’s objections were upheld. They say that it is difficult to see what interest is being advanced by such an approach.
36. The first objection was to the effect that the principal relief sought in the notice of motion was altogether too wide in that it sought permission to use the relevant material without restriction and for entirely unidentified purposes.
37. Second, it was said that the relief sought on paper was radically different to the case made at the hearing. This was an argument made principally by reference to the relief sought at para. no. 1 of the notice of motion which sought an order permitting the Applicants “to use the documents furnished to them pursuant to an order of this honourable court dated 24th April, 2018 for purposes other than the within proceedings”.
38. The third objection, which was made in the course of the hearing but was not contained in the written submissions, was by reference to the provisions of s.790 and 791 of the Act. The contention made was that to accede to this application would amount to a breach of those provisions.
39. The fourth objection was that the Applicants had insufficiently identified any disadvantage to them by being denied the relief sought on this application.
40. The fifth objection was by reference to a body of case law which restricts the entitlement to discovery prior to the close of pleadings to cases involving very exceptional circumstances.
41. The Respondent accepted that there is an inherent jurisdiction to allow a non-party to access documents which have been opened in court but that that jurisdiction fell to be exercised principally by reference to the requirement for the administration of justice in public or what is sometimes called “open justice”. That requirement, it was said, had been fully satisfied here in that the Applicants were given access to the relevant material but should not be permitted any further use of it at least at this stage of the proceedings.
42. Finally, it was alleged that the Applicants are attempting to obtain an improper litigation advantage.
Discussion and decision
43. There are a number of matters which are not in dispute between the parties.
44. First, the Applicants are in possession of copies of the documents in question with the agreement of the Respondent. That was a voluntary arrangement entered into between the Director, the Respondent and the Applicants. The court order of 24th April, 2018 merely approved of that arrangement and provided a mechanism to deal with one of two events. The first was the resolution of any dissatisfaction with the material supplied and the second was an application of the type in suit.
45. It is also not in dispute but that the factors identified in my judgment in Roussel’s case apply to the discretion which I am asked to exercise here.
46. The Respondent’s first objection concerning the breadth or scope of the order sought was made principally by reference to para. no. 1 of the notice of motion the contents of which I have already set forth earlier in this judgment. If that were the only relief sought, then there might be some force in that contention. However, para. no. 2 of the motion seeks:
47. That is the relief which was pursued at the hearing. That was not, in my view a “recalibration”, as it was described, of the case since relief no. 2 was signalled not merely in the notice of motion but also in a letter dated 28th January, 2019 which ante-dated the application. That letter insofar as it is material said:-
“Without prejudice to the generality of the relief sought at para. 1, an order permitting Karl Brophy and Gavin O’Reilly to use the documents furnished to them pursuant to an order of this honourable court dated 24th April, 2018 for the purpose of bringing proceedings against Independent News and Media plc (and possibly others) for, inter alia, breach of privacy and breach of data protection rights”.
48. That letter made it clear that the material was sought to be used in the context of proceedings which were contemplated arising from the data breach.
“Our clients intend to bring proceedings arising from the data breach and they wish to rely on the relevant material as provided pursuant to the President’s direction on 24th April, 2018. In circumstances where the affidavits have been opened before the court, and the proceedings are concluded, we can see no substantive basis for an objection to our clients relying on the relevant material. Our clients wish to avoid the costs of bringing an application for relief to rely on the relevant material and we hereby request you consent to our clients relying on the relevant material. Assuming you do offer your consent, we intend to mention the matter to the President to ask him to dispense with the requirement for our clients to make a formal application on notice. We are writing to the ODCE in similar terms.”
49. Even without that letter, it is not unusual to seek a number of reliefs in a motion and the fact that one over another is concentrated upon at hearing does not amount to a recalibration of a case which is sought to be made.
50. I am unable to agree with the Respondent that the relief which is sought here is unduly wide. The Applicants have identified the particular purpose for which they wish to use the relevant material, namely, the prosecution of claims arising out of the alleged wrongdoing.
51. In the course of the oral submissions reliance was placed on s.790 and s.791 of the Act. The argument ran that to make an order of the type sought would amount to a breach of those provisions. Section 790 precludes the publication or disclosure of any information, book or document relating to a company that has been obtained under certain statutory provisions unless “the company consents to the publication or disclosure”. Section 791 authorises the Director to publish or disclose any information book or document relating to a company that has been obtained under certain statutory provisions without the consent of the company if, in the opinion of the Director, such publication or disclosure is required in the circumstances identified in the section.
52. In my view, neither of these statutory provisions have any relevance to this application. The material that was furnished to the Applicants has been given with the consent of the Respondent. Thus, s.790 can have no application.
53. The giving of this information was not a unilateral action on the part of the Director. Thus, the provisions of s.791 are not triggered at all. In my view, there is no merit in these objections.
54. I am unable to accept the Respondent’s contention that the Applicants failed to sufficiently identify any disadvantage to them should they be denied the relief sought on this application. At a very minimum they will be obliged to seek discovery of the very material that they already have. There is no reason to believe that the Respondent would take any different approach on such a request to that which they have adopted on this one. Thus, it is almost inevitable that discovery applications would have to be made to court. From a public interest point of view that would be wasteful of the scarce time and resources of the court as well as increasing the costs and delaying the litigation in question. Accordingly, I reject this objection of the Respondent.
55. The Respondent also contends that the Applicants will obtain an improper litigation advantage if the order sought is granted. In support of that contention the Respondent relied upon a substantial body of case law all of which deals with the limited circumstances in which it is open to a plaintiff to obtain discovery prior to the close of pleadings. It is well established that such orders are only made in exceptional circumstances. Cases where that topic is considered include Gayle v. Denman Picture Houses Ltd  1 K.B. 588, Law Society of Ireland v. Rawlinson  3 I.R. 592 and Craddock v. RTE  IESC 32.
56. It does not seem to me that this line of argument has much if any relevance to the present case. All of those cases deal with attempts by plaintiffs to obtain as yet unknown documentation in advance of the delivery of pleadings. That is not the position here. The present case deals with prospective plaintiffs who are already in possession of such material. They seek to be able to utilise that material, the contents of which is already known to them. There is here no question of a party seeking to “fish” for information on a speculative basis in order to maintain a cause of action. The documents in question are in the possession of the Applicants courtesy of the Respondent.
57. I am unable to accept the Respondent’s contention that by granting the order sought I am conferring an improper litigation advantage on the Applicants. If there is an advantage to them having the material in question it is one conferred by the Respondent. Having permitted them to have the documents in question it does not appear to me to be wrong in principle or to lead to any injustice that they should be entitled to utilise it for a specific and identified purpose. I do not perceive any injustice or disadvantage to the Respondent by the making of such an order. On the contrary there would be an injustice in refusing to permit the Applicants to utilise the information since they would then be obliged to seek the material on discovery, thus facing increased costs and delay.
58. It should be pointed out in this context that by giving the permission sought, the court is not conferring any special evidential status on the documents in question. If any of them are sought to be introduced in evidence in the contemplated litigation, they will have to be proved in the ordinary way. In that context they are no different to documents disclosed on discovery.
59. I conclude that the Applicants have demonstrated that there are special circumstances here such as were contemplated in my decision in Roussel. I am also satisfied that the making of this order will not occasion injustice to the Respondent. On the contrary, the refusal of the order would result in an injustice to the Applicants for the reasons which I have given.
60. In these circumstances I exercise my discretion in favour of the Applicants and I make an order permitting them to use the documents furnished to them pursuant to the order of this court of 24th April, 2018 for the purpose of bringing proceedings against the Respondent and other persons, if thought appropriate, for breach of privacy breach of data protection rights and breach of constitutional rights.