CL-2025-000062 - [2025] EWHC 1506 (Comm)

The first question is therefore whether there was any breach of the collateral use restriction – whether the use was always for the purpose of the proceedings. I conclude that it cannot fall within that definition.

At the time of the provision of the Documents the Bondholders were not parties to the proceedings, and there was no application to make them so. They were strangers to the litigation. Therefore the authorities relied upon by the Bondholders are not apt: those were cases in which documents were used by a party already within the proceedings to add a party to the proceedings, without providing them with the documents in question first. In terms of the cases relied upon:

The battle was more fiercely joined on the Vardy case. It is hard to see how the present case can be other than a fortiori the Vardy case in one sense. That concerned a Part 20 claim made by a party to the litigation. This use must be seen as one step more distinct and thus more overtly collateral. At the same time there is force in the point made by the Bondholders that in another sense this case was further from the “truly collateral case”; the nature of the claim to be made there was probably more distinct in nature (misuse of private information/GDPR claim) than the claim which the Bondholders were encouraged to consider here, which as I have indicated, has a considerable overlap.

There is a sense of a distinction between the situation of joinder and separate proceedings. That is reflected in the apparent tension between the dictum of Birss J in Grosvenor at [160] where he says: “To use documents disclosed in proceedings to write a letter before joinder to a third party (aside from a truly collateral case) is not a breach of r31.22” and [60] of my own judgment in Lakatamia where I said (by reference to [162] of Grosvenor) “it seems to be quite clear (were it not self-evident) that using information and/or documents from one set of proceedings to threaten a third party falls squarely within the scope of the restriction on collateral use.”

However as the judgment of Steyn J in Vardy makes clear, it seems that any such distinction is not a bright line one - if parties may be joined based on truly distinct causes of action it is (as it was there) artificial to regard use for a distinct claim - albeit one to be brought in the same proceedings - as use for the purposes of the proceedings. There is also an uncomfortable element of retrospectivity in the line suggested at [150] in Grosvenor - based on whether the claim would fall foul of a Henderson v Henderson analysis if brought separately.

The boundary of “the proceedings” and “truly collateral” is therefore unclear, and is likely to give rise to future debate. That reinforces a point which I made in Lakatamia that “what constitutes “use” of a document for the purpose of CPR 31.22 is very broad - perhaps more so than most litigators might think.” Caution on the part of those thinking of providing litigation documents to others is imperative.

However the indicia in the present case are:

Accordingly wherever exactly the line may fall as to content and “the proceedings” (and this case was certainly at least near the borderline) this use was not for the proceedings. The provision to the Bondholders of the Documents and their use by the Bondholders were each a breach of the collateral use rule.

That then brings into question whether retrospective permission should be granted. While retrospective permission is, as Coulson J said in Shlaimoun, to be granted rarely, it remains a general discretion to be exercised in the interests of justice and having regard to all the circumstances.

In the present case it is appropriate on balance to grant this retrospective permission. In that regard:

Permission is therefore granted (both as to the provision (Elara) and use (Bondholders)). However, it should not be thought that this conclusion in any way detracts from the principles noted above. This is an unusual case and the decision arises as a matter of balancing various case specific factors.

On one level (given the result) it might have been expected that Eraaya would not contest permission; however in my judgment it was entirely right to do so. Where there has been a breach of the collateral use rule it is important that the question of permission is referred to the Court so that the restriction is properly maintained and policed. It remains the case that the restrictions in CPR 31.22 and 31.12 are important and very seriously regarded by the Court. In many cases – even potentially where another party is neutral about the application - breaches will not result in retrospective permission being given.

Having said this it is not the case that Eraaya’s approach to this issue was beyond criticism. Eraaya was (in the result) right to say that there had been a breach and to ensure the appropriate considerations were drawn to the Court’s attention. It was of course also entirely proper to contest retrospective permission against a background where the authorities make clear that it is rarely granted.

However the ferocity and emphasis devoted to this point (in conjunction with the listing debates) was not appropriate – and does tend to suggest that Elara’s contention that the issue was being weaponized to attempt to get the issues determined without full evidence and full argument from interested parties, had some truth in it. Part of the approach which must be deprecated was the way in which Eraaya’s evidence not only (as noted above) strayed considerably beyond evidence of fact and into argument but also made serious allegations of impropriety against the Bondholders’ solicitors. Thus Mr McDonald alleged that the sworn evidence of the Bondholders’ solicitors was “disingenuous” as to the approach to notice not having been given to Bondholders. In fact, as noted above, the substance of the point as to other interests (and the related point of delay) is one which should really have been made clear at the outset. In relation to the Bondholders’ solicitors’ answers as to collateral use he contended that their sworn evidence was “implausible” in saying that the legal advisers had only considered the documents in the context of the injunction application, “not credible” (as to limited use of the documents), “lacks any credibility” and “is simply untrue” (as to stopping use of the documents once the collateral use point had been raised).

These latter comments in particular amount to a fairly unambiguous contention that the Bondholders’ solicitors (officers of the Court) had lied in sworn evidence to the Court. That is a very serious allegation indeed and is not one which should have been made without a proper factual basis. It is notable that Mr Head in his submissions explicitly refused to adopt this line of argument, making it clear that he in no way sought to impugn the honesty of the Bondholders’ solicitors.