UK: Investigation Agents And The Law*

Last Updated: 7 September 2006
Article by Benjamin Macfarlane

The advice most often given to prospective litigators usually appears in the form of three questions. First, do you have a case? Then, is the claim time barred? And, finally, is the Defendant "good for the money"? It is when lawyers come to address the third element that they frequently resort to investigation agents.

The decision of the High Court this summer in the case of Hughes v Carratu is a warning to investigation agents, and the lawyers that instruct them, that they both need to be very careful about how information concerning defendants is sourced. It is, of course, notoriously difficult as a litigator to obtain accurate financial information about any target, but this decision has highlighted the need for the use of strictly lawful means when obtaining that information.

The decision does not in fact set out any consequences if an investigation agent uses unlawful means to obtain information and it remains to be seen how far the Claimant, Mr Hughes, will take his action. However, the Court while it merely envisaged that there may be remedies where personal and protected information has been unlawfully obtained, did decide that it is legitimate for a Claimant to have discovery of any documents which an investigation agent has obtained about him in circumstances where a part of that information has evidently been obtained illegally. This disclosure may of itself prove embarrasing to those involved.

I. Facts

The Applicant, Hughes, had received a letter from the Information Commissioners Office ("ICO"), stating that some documents had been seized during the execution of a search warrant which related to transactions on his bank account and that the company who had possession of the documents would be prosecuted under the Data Protection Act 1998 ("the Act"). The ICO subsequently informed the Applicant that the subject of the search warrant was an enquiry agent, but the ICO refused to disclose the identity of the agent. The Applicant later inspected some of the documents seized by the ICO, one of which had the Respondent’s name, Carratu International PLC. The Respondent was a corporate investigation consultancy.

The Respondent, who had been instructed by a law firm to conduct an asset search relating to the Applicant, had employed the enquiry agent to carry out the searches. The Respondent refused to disclose the identity of the party or parties on whose behalf and on whose instructions the information concerning the Applicant was gathered.

The Applicant then applied for an order that the Respondent disclose (i) all documents that were currently or previously in its possession or control, (ii) the identity of the party or parties for whom the information was gathered, and (iii) the identity of the party or parties by whom the information was gathered. The Applicant relied on the Civil Procedure Rules ("CPR") 1998 Part 31 Rule 31.161.

The Respondent set out in its evidence that an internal investigation had revealed that it had received an unsolicited fax from its agent containing the bank account details.  The Respondent’s employee, who had received the fax, realised that the information must have been obtained unlawfully and shredded it. The Respondent’s evidence was that the information was not retained by it or passed onto its client, a law firm.

However, in earlier correspondence, the Respondent had not admitted holding material relating to the Applicant and referred to its policy of destroying case files after six months. It stressed that all material passed to its client should have been legally obtained and that the correct approach for the Applicant was to make a request under the Act.

II. Issues

The Respondent argued that there should be no such disclosure. There was no sufficient material before the Court to show that it was likely to be a party to subsequent proceedings, as was required by the Civil Procedure Rules; there was also no sufficient case to be made that any civil or criminal wrongdoing had been done to either the Respondent or the law firm.

The Applicant contended that he planned to sue everyone who had done him a wrong, including the Respondent, alleging possible actions for breach of confidence or privacy under the Act.

III. The Court’s Approach

The Court granted the application. The Court observed that it was clear from the evidence and instructions received by the Applicant’s solicitors about the Applicant’s intentions to sue the Respondent that the Respondent was likely to be a party to the proceedings under CPR 31.16(3) (a). Also, the other conditions under CPR 31.16 were also fulfilled. The Court further observed that the Respondent had admitted to receiving unlawfully obtained information and might not have given a full account of the matter. Therefore, in all those circumstances, the Applicant passed the threshold test of establishing an arguable cause of action against both the Respondent and the law firm instructing it. Accordingly, the Court observed that the Respondent, along with the enquiry agent and the law firm, were "likely to be a party to subsequent proceedings" as required by CPR 31.16.

The Court, applying Norwich Pharmacal and Mitsui & Co Ltd v Nexen Petroleum UK Ltd 2, stated that it was arguable that the Applicant was entitled to an order providing him with the names of the individuals to whom his personal information had been communicated and an explanation as to what, if anything, had been done with the information by way of use or disclosure to a third person.

The Court, relying on Black v Sumitomo3, observed that this was not a case where the Court could simply accept the assertions of the Respondent that neither it nor its client had acted unlawfully.  The Court stated that, based on the information from the ICO, this was a case where there was no reason to believe that there was a serious breach of the criminal law.  The enquiry agent who had supplied the unlawfully obtained information appeared to have been under the impression that the Respondent would not regard it as "unwelcome".  Furthermore, the Court added, that no explanation had been put forward as to why the enquiry agent would have so seriously misunderstood the wishes of the Respondent that all information be obtained lawfully.

The Court did, however, observe that the Applicant might be entitled to some remedy by way of injunction or damages or compensation under the Act.

IV. Conclusion

The decision in this case highlights the need to balance the competing interests of both individuals whose personal data is privacy-protected and commercial organisations for whom surveillance and information gathering are necessary procedures ahead of litigation.

Footnotes

*Hughes v Carratu International PLC [2006] EWHC 1791 (QB) Mr. Justice Tugendhat

1. CPR 31.16"(1) This rule applies where an application is made to the court under any Act for disclosure before proceedings have started. (2) The application must be supported by evidence. (3) The court may make an order under this rule only where— (a) the respondent is likely to be a party to subsequent proceedings; (b) the applicant is also likely to be a party to those proceedings; (c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and (d) disclosure before proceedings have started is desirable in order to— (i) dispose fairly of the anticipated proceedings; (ii) assist the dispute to be resolved without proceedings; or (iii) save costs…."

2. Norwich Pharmacal and Mitsui & Co Ltd v Nexen Petroleum UK Ltd [2005] EWHC 625

3. Black v Sumitomo [2002] 1 WLR 1562

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