In the opening paragraph of the judgment in Salinas Pliego v Astor Asset Management 3 Ltd, the judge stated: “The litigating parties have presented me with a difficult choice. What should the Court do when someone with an apparently strong and substantial, perhaps unanswerable, claim in fraud seeks summary judgment in light of illicit knowledge obtained by unethical means?”

A spate of recent cases involving litigants obtaining information illicitly and unethically has given the Court cause to consider this question on more occasions that it would like. 

The Claimants claim they are the victims of a sophisticated fraud by the Defendants. In support of their claim, the Claimants had successfully obtained a worldwide freezing order (WFO), which the Defendants tried and failed to discharge at an earlier hearing. 

The Claimants instructed a business intelligence and strategic consultancy firm (BC) who engaged in what the Court described as a “sting operation” to elicit information from the Defendant’s unwitting solicitor, X. BC contacted X and told him that he wanted to interview him with a view to engaging his services for a fictional client. Over a meeting, lunch and dinner, BC lulled X into a false sense of confidence. BC’s aim was to lead X into divulging the Defendants’ privileged and confidential information, which he did, under the impression he was pitching for a new client. BC secretly recorded the meetings with X. 

The Claimants deployed the information that X divulged in bringing a summary judgment application. The Defendants issued a cross-application to strike out or stay the proceedings for abuse of process and/or risk of an unfair trial. 

The Court condemned the Claimants’ conduct stating it was both unethical and anathema to the fundamental norms and values of civil litigation. That behaviour amounted to an abuse of process irrespective of the fact that X also acted in breach of his own professional obligations. 

The Court struck out the Claimants’ summary judgment application and said it was likely to order them to pay the Defendants’ costs on the indemnity basis. However, the Court did not strike out or stay the Claimants’ claim as applied for by the Defendants. In reaching this decision, the Court granted permission to appeal and cross-appeal whilst commenting that “my concern…is that I may have been too lenient on the Claimants in choice of response.”

In addition to an appeal which might yet see the Claimants’ case struck out entirely, the Court ordered that a further hearing be listed as it did not have sufficient time to properly consider what the evidential status of the material obtained from X was. The Claimants contended that the material was not confidential and could not be privileged by reference to the iniquity principle (see our recent piece on the iniquity principle). It was left open to the subsequent hearing as to whether a fair trial is no longer possible because the Claimants’ knowledge of the material is likely to obstruct the just disposal of the proceedings, or otherwise create a substantial risk of an unfair trial. It also left open to the subsequent hearing whether the WFO should be discharged, even though the abusive behaviour occurred after the grant of the WFO. 

Takeaway points

• The Court has a broad discretion to admit evidence, even if it is obtained unlawfully or by unethical means. Even on the extreme facts of this case, it remains possible that the evidence will be admitted.
• The onus is on parties who instruct private investigators to make sure that they do not do anything illegal or unethical. If things go wrong, the instructing party will be criticised. In this case, the Court found that “the Claimants are legally responsible for and complicit in [the] unethical conduct. They bought the process. They own it.”
• Obtaining evidence unlawfully or by unethical means will inevitably have adverse consequences for those involved in its acquisition and deployment. Even if a Court admits the evidence, they will likely find other ways of expressing their disapproval. That may be done by way of an adverse costs order or, as in this case, by refusing an application within the litigation and criticising the conduct in a very public way. A party who obtains evidence in this way is likely to face other repercussions, such as claims for breach of confidence or misuse of private information. Depending on how the Court of Appeal decides the matter, it could yet see the claim struck out. We recently wrote about this issue in our piece.

Intelligence, information gathering and investigation is an important part of complex litigation. However, obtaining evidence illicitly will damage credibility and expose parties (and their advisors) to sanctions, even if the evidence is ultimately admitted. In the most serious cases, it may result in a claim or defence being struck out altogether. Depending on the outcome of the appeal, that may yet be the result in this case.