July 5, 2020

Volume X, Number 187

July 03, 2020

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Court of Appeal confirms that Bolkiah principle does not apply to former opponent cases

The Court of Appeal has recently confirmed in Glencairn IP Holdings Ltd and another v Product Specialities Inc and others [2020] EWCA Civ 609 that the Bolkiah principle will only apply where a former client of a firm of solicitors alleges that a new client has an adverse interest to it. Therefore, a firm of solicitors (“Firm“) could act for unrelated defendants, in successive similar actions brought by the same claimant (“Glencairn“).

Background

In 2018, Glencairn filed a claim against Product Specialities Inc (“PSI“) for trade mark and registered design infringement. (“Action 2“)

However, the Firm was also acting for a different defendant against Glencairn, in litigation that was similar (“Action 1“). Initially, a solicitor based in the Firm’s London office headed up the defence teams in Action 1 and Action 2. Following mediation, Action 1 was settled by way of a confidential settlement agreement. An information barrier was implemented by the Firm to prevent confidential information from the mediation being disclosed to the team defending PSI in Action 2. The solicitor heading up the defence team in Action 2 was also replaced with a solicitor based in the Firm’s Leeds office.

Glencairn asserted that, during the mediation in Action 1, the Firm became aware of information regarding Glencairn’s strategy and that the Firm might disclose that information to PSI during Action 2. Glencairn therefore applied for an injunction to prevent the Firm from continuing to act for PSI in Action 2.

Intellectual Property Enterprise Court (“IPEC”) Decision

Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 is the leading authority on when a firm of solicitors will be restrained from acting for a new client where a former client alleges the new client has an interest adverse to that of the former client. Distinguishing Bolkiah, the IPEC judge held that the likelihood of disclosure of confidential information to PSI was low and the risk of prejudice to Glencairn was “extremely unlikely, to the point of being fanciful“. Glencairn appealed the decision, asserting that IPEC had erred in not applying Bolkiah and in concluding that the balance of justice was in favour of dismissing the application for an injunction.

Court of Appeal

The Court of Appeal upheld IPEC’s decision, finding that the Bolkiah principle was inapplicable to former opponent cases. Unlike Bolkiah, the solicitors in the instant case had no fiduciary relationship with Glencairn. Under Bolkiah, where there is a fiduciary relationship the burden of proof would be on the solicitor to show that there is no risk of disclosure of the confidential information. Although the Firm owed Glencairn a duty of confidence, as the Bolkiah principle did not apply, the burden of proof was on Glencairn to show that the information barrier had not worked and there was a risk of misuse of confidential information and prejudice to Glencairn. Glencairn had failed to discharge that burden. Further, as with any other breach of confidence allegation (where Bolkiah did not apply) a balancing exercise should be undertaken to take account of the prejudice to the opposing party if the injunction was granted. It was clear to the Court that the balance of justice was against the grant of the injunction.

Comment

This decision provides useful guidance on when the Bolkiah principle will apply. It is clear that the Court is reluctant to extend the strict approach in Bolkiah to circumstances where there is a duty of confidence rather than a fiduciary client-solicitor relationship. In former opponent cases, the burden of proof therefore remains with the applicant, rather than switching to the firm of solicitors as would be the case in former client cases, where the Bolkiah principle applies.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 140

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About this Author

Garon Anthony Litigation Attorney Squire Patton Boggs Birmingham, UK
Partner

Garon is a partner in the Litigation Practice Group. He advises clients across the full range of commercial dispute issues, including cyber liability/data breach, professional negligence, banking, pensions and insurance.

Garon regularly acts for clients who are subject to investigations or disciplinary proceedings by national and international regulators, including most recently the Financial Conduct Authority, the Financial Reporting Council and the Dubai Financial Services Authority.

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Sarah Neill Associate   Birmingham Commercial Litigation
Associate

Sarah Neill qualified into the Commercial Litigation team in September 2019 after completing her training contract with the firm. During her time in the team, Sarah has assisted on a wide variety of disputes, including breach of warranty, product liability, debt recovery and breach of contract. Sarah acts for a diverse client base, from individuals to PLCs.

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