Sita UK GROUP Holdings Ltd v Serruys & Ors

The implied undertaking governing documents and information disclosed in civil proceedings may be relaxed only where there are special circumstances and release will not cause injustice to the person who disclosed them. The public interest in investigating serious tax irregularities or fraud may outweigh confidentiality. The court must assess the particular need and circumstances carefully. Permission to use information derived from disclosure may be justified even where permission to release the documents themselves is unnecessary or premature. A party may therefore be permitted to answer relevant questions from HMRC by reference to disclosed material, while any later request for production of documents can be considered separately.

SITA brought deceit and warranty proceedings arising from the purchase of a metal-recycling business. SITA alleged that the defendants had concealed dishonest practices involving skimming, unrecorded cash payments and adulteration of metal. Documents had been seized from, and disclosed by, one defendant subject to undertakings restricting collateral use.

HMRC began investigating possible tax consequences and invited SITA to answer questions under Code of Practice 9. SITA applied under CPR 31.22 for permission to disclose litigation documents and information to HMRC, and to be released from its undertakings. The immediate issue was whether SITA could rely on information derived from the documents when answering HMRC’s questions, and whether the documents themselves should be released.

1. Principle governing collateral use. The implied undertaking applies both to disclosed documents and to information derived from them. Under CPR 31.22, the court should permit collateral use only after careful examination of the circumstances and need. The release must be properly justified, involve special circumstances and cause no injustice to the person who gave disclosure. This was the principle identified in Crest Holmes plc v Marks [1987] AC 829.
2. Public interest. The public interest in investigating serious fraud or tax irregularities may prevail over the general interest in preserving confidentiality. The authorities, including Marlwood Commercial Inc v Kozeny [2005] 1 WLR 104, supported that approach. The assessment remained fact-sensitive and did not justify an unrestricted release of documents.
3. Application. HMRC did not presently seek documents. It was unnecessary to authorise their release at this stage. However, SITA could answer HMRC’s relevant questions by using knowledge derived from the statements of case, the seized documents and the disclosure. HMRC knew that SITA’s allegations were disputed and would have the relevant defence. Any resulting HMRC investigation would not constitute injustice to the defendant.
4. Statements of case could in any event be obtained by a non-party under CPR 5.4C. The court declined at this stage to determine ownership of the seized documents. Permission was therefore granted for the limited use of information in answering HMRC’s questions, while document disclosure was not authorised and the balance of the application was adjourned.

First-instance application in two related High Court actions. No appellate history is stated in the judgment.