Dadourian Group International Inc & Ors v Simms & Ors

An injunction made against one party may affect third parties through the law of contempt, but it does not directly compel them to deliver up documents or restrain them as if they were parties to the order. A third party who knowingly uses material in a way that significantly and adversely affects the administration of justice may commit contempt, even though no order was made directly against that party.

The purpose of an order is determined from its terms and is normally the preservation of the parties’ rights pending trial. Where deployment of material may amount to contempt, the proper course is to seek variation of the order or a direct order. The court may refuse deployment pending determination of that issue.

Documents and electronic data removed from Citilegal’s offices by a former finance director, Julie Eagle, were supplied to solicitors acting for the claimants. In separate Queen’s Bench proceedings brought against Ms Eagle, McKinnon J made an interim consent order requiring delivery up of the material and prohibiting its use, disclosure or copying.

The defendants in the present Chancery litigation sought to restrain the claimants and their advisers from deploying the material. The claimants argued that the order against Ms Eagle did not affect them, particularly because the material had been deployed before they knew of the order. The preliminary issue was whether the order could prevent deployment by third parties through the law of contempt.

1. The court held that the consent order had direct effect only on Ms Eagle. Third parties who had received documents or copies before learning of the order were not thereby required to deliver them up. Delivery-up obligations in paragraphs 1 and 2 were directory provisions directed to Ms Eagle.

2. Paragraph 3 prohibited use, disclosure and copying of the relevant documents, data and information. Consistently with Attorney General v Punch Ltd [2003] 1 AC 1046, the relevant question was whether knowing deployment by a third party would intentionally impede or prejudice the purpose of the order and have a significant and adverse effect on the administration of justice in the Queen’s Bench proceedings.

3. The purpose of the order was determined from its terms. Paragraph 3 was intended to preserve the relevant material and prevent its use or disclosure pending trial. The fact that the order was made by consent did not alter that approach. The court nevertheless emphasised the need to draft injunctions narrowly where their practical effect may affect third parties.

4. The court rejected the submission that deployment in the present litigation was outside the order merely because the material had already been exhibited before the claimants knew of it. The judge had not read the material, and the exhibits were not public documents. It was therefore still open to the defendants to rely on the order.

5. Whether deployment would in fact constitute contempt could not finally be decided without examining the documents and determining their relevance to the protected rights. Until the court was satisfied that deployment would not amount to contempt, the claimants were not permitted to deploy the material. The parties could seek variation of the order or a direct restraining order if necessary.