Telesystem Intl Wireless Inc. v CVC/Opportunity Equity Partners LP

• Jurisdiction: Cayman Islands
• Judge: (Sanderson, J.)
• Judgment Date: 14 November 2001
• Court: Grand Court (Cayman Islands)
• Date: 14 November 2001

Grand Court

(Sanderson, J.)

TELESYSTEM INTERNATIONAL WIRELESS INCORPORATED, T.I.W. DO BRASIL LIMITADA and DEMARCO ALMEIDA

and

CVC/OPPORTUNITY EQUITY PARTNERS L.P. and FOUR OTHERS

M.J. Black, Q.C. and S.R. Andrew for the plaintiffs;

A.J. Trace, Q.C. and J.P. Walton for the defendants.

Cases cited:

(1) Ablitt v. Mills & Reeve, [1995] T.L.R. 535.

(2) Ashburton (Lord) v. PapeELR, [1913] 2 Ch. 469; [1911–13] All E.R. Rep. 708; sub nom. Ashburton v. NoctonUNK(1913), 29 T.L.R. 623.

(3) Bank of Montreal v. BattersbyUNK(1974), 48 D.L.R. (3d) 298; [1975] 1 W.W.R. 354.

(4) Calcraft v. Guest, [1898] 1 Q.B. 759; (1899), 67 L.J.Q.B. 505.

(5) Crompton (Alfred) Amusement Machines Ltd. v. Customs & Excise Commrs. (No. 2), [1974] A.C. 405; [1973] 2 All E.R. 1169.

(6) Goddard v. Nationwide Bldg. Socy., [1987] Q.B. 670; [1986] 3 All E.R. 264.

(7) Helliwell v. Piggott-Sims, [1980] F.S.R. 356.

(8) Kuruma v. R., [1955] A.C. 197; [1955] 1 All E.R. 236.

(9) Waugh v. British Rys. Bd., [1974] A.C. 405; [1973] 2 All E.R. 1169, applied.

(10) Webster v. James Chapman & Co. Ltd., [1989] 3 All E.R. 939, applied.

(11) Wisniewski v. Central Manchester Health Auth., [1998] Lloyds Rep. Med. 223; [1998] P.I.Q.R. P324, considered.

Attorneys-at-Law-professional privilege-privileged documents-privileged only if communication between client and legal adviser to obtain legal advice on pending or contemplated litigation, or between client and third party to obtain information for same purpose

Attorneys-at-Law-professional privilege-privileged documents-may prohibit use of stolen document in respect of which privilege lost by unlawful disclosure if document also confidential-use permitted if document never privileged

Evidence-admissions-admissions in pursuance of common design-hearsay statements made in pursuance of conspiracy admissible, even if made by non-parties, if supported by other independent evidence of conspiracy involving parties

The plaintiffs brought proceedings seeking damages and other relief in respect of the unlawful obtaining and use by the defendants of particular documents in litigation.

The first and second plaintiffs, a Canadian company and its Brazilian subsidiary, brought proceedings against the first and second defendants and their owners, claiming damages for breach of an investment agreement. The third plaintiff, a Brazilian businessman, was a defendant in other proceedings brought by the second defendant, a Cayman company, claiming the return of a large sum of money and shares in the company. In a letter to the third plaintiff, the first plaintiff agreed to indemnify him if he failed to receive more than a specified sum in his own litigation (as the value of his company shares), in return for being kept informed of the progress of those proceedings.

In the present proceedings, the third plaintiff alleged that his ex-wife and a former employee of one of his Brazilian companies had stolen a large number of confidential documents from his computer, including e-mails to his lawyers and the letter from the first plaintiff, and had given them to the second defendant and its Cayman lawyers (the fifth defendant) to assist in the claim against him. There was extensive police

evidence of the theft, and evidence from other employees of the means by which the documents had been stolen.

The court (Graham, J.) had refused an earlier application by the defendants in the other proceedings for the removal of the plaintiffs” attorneys and counsel on the ground of conflict of interest, because the letter on which the defendants sought to rely, although no longer privileged, was confidential and had been stolen by agents of the defendants (see 2001 CILR N [14]).

The third plaintiff now applied for orders (a) that the letter be returned and not used in any other proceedings, (b) that the other documents and e-mails be returned and not so used, and (c) that the fifth defendant be removed as the second defendant”s attorneys. He also sought damages for (i) breach of confidence, (ii) procuring or inducing a breach of contract by the employee, (iii) unlawful interference with economic interest, (iv) assisting a breach of fiduciary duty, and (v) conspiracy.

The third plaintiff submitted that (a) the letter from the first plaintiff was irrelevant to the proceedings against him; (b) the letter was privileged, since the indemnity offered by the first plaintiff was analogous to a legal insurance scheme; (c) the court had a discretion to prevent the use of the letter even if it was no longer privileged, since it was confidential; (d) there was reliable and comprehensive evidence of a conspiracy, and reported statements by his ex-wife and the former employee were admissible as admissions made in pursuance of a common purpose or as part of the res gestae; (e) the defendants had called no evidence to rebut the irresistible inference that they had arranged to receive stolen documents and had in fact received documents in addition to the letter; and (f) the legal fees incurred by the plaintiffs in these proceedings constituted losses resulting from the conspiracy.

The defendants submitted that (a) the letter was relevant as evidence of the value of the third plaintiff”s shareholding in the second defendant company and was pertinent to his credibility; (b) the letter was not legally privileged, as it was not a communication for the purpose of obtaining legal advice on pending litigation; (c) the court had no discretion to prevent the use of the letter as a confidential document if it had not been privileged prior to its disclosure; (d) the hearsay evidence adduced by the witnesses could not be admitted in support of the conspiracy claim, either (i) as statements made in pursuance of a common purpose with the defendants, since the statements had been made by non-parties, or (ii) as part of the res gestae; (e) since there was no prima facie evidence of a conspiracy involving the primary defendants or their attorneys, the plaintiffs had not proved their case against them; and (f) in any event, the plaintiffs had suffered no loss resulting from the alleged conspiracy.

Held, dismissing the plaintiffs” claims:

(1) Although, on the evidence, the letter had been stolen and passed to the fifth defendant, it could nevertheless be used, since it was relevant to the proceedings against the third plaintiff (in respect of the size and value

of his shareholding and his credibility) and was not privileged. It was not a communication between a client and his legal adviser or between a client and a third party, for the primary purpose of obtaining legal advice or information for pending or contemplated litigation. Its existence should have been disclosed by discovery and it would have been producible. The court had a discretion to prohibit, on the ground of confidentiality, the use of a document in respect of which legal privilege had been lost when stolen or unlawfully obtained, but clearly the document had first to be privileged. Accordingly, the court would dismiss the application (paras. 6–14).

(2) Even if the document had been privileged, the court would not have exercised its discretion to enjoin its use by the defendants since, on balance, fairness required that they be permitted to rely on it (para. 15).

(3) The court was satisfied on the evidence of the various employees that the third plaintiff”s ex-wife and his former employee had also stolen e-mails from his computer. However, the reported statements by the two culprits, reflecting their intention to use the documents against the third plaintiff or to assist the second defendant in the other proceedings, were inadmissible hearsay. Had there been other, independent, prima facie evidence of conspiracy involving the defendants, the statements could have been admitted as admissions made in pursuance of a common design, even though the two persons in question were not parties to the present proceedings. The court was not persuaded, on balance, that the third plaintiff”s ex-wife had given the further documents to the defendants, although it suspected that she had done so (paras. 24–29).

(4) The hearsay statements could not now be admitted under the res gestae exception. The plaintiffs had raised this argument only after the evidence had been excluded as inadmissible, depriving the court of the opportunity to examine each statement in turn. Moreover, the statements relied on as examples were not contemporaneous with and explanatory of the acts in question (paras. 31–32).

(5) The plaintiffs had failed to show that the defendants had conspired against them, even taking into account the excluded hearsay statements. Although adverse inferences could be drawn from the defendants” failure to adduce evidence, no such inference would sufficiently strengthen the plaintiffs” case against them. Nor had the plaintiffs proved any of the other torts alleged against the defendants (including their...