Summary

The court retained a power to direct that prior references in the course of the preceding hearings in open court did not release an implied undertaking. There was nothing in RSC O.24 which made such an approach inappropriate.

Facts

Application for the release of implied undertakings to which the plaintiffs were subject, in relation to certain documents which were disclosed by the defendant on discovery. The action came before the judge as part of a long and bitter dispute between members of a family centred on an expensive piece of property in central London. The plaintiffs sought to be released from implied undertakings which affected a number of documents so as to allow their use in support of a bankruptcy petition under ss.264 and 276 Insolvency Act 1986 and in support of applications under ss.262 and 263(3) of the Act. The defendant fell into financial difficulties and entered into a individual voluntary arrangement ('IVA') with the majority of his creditors. Modifications were agreed at the creditors' meeting, at which a creditors' committee ('the committee') was established. The defendant relied in the making of this arrangement on the fact that a number of charges existed on the property in question. In fact these charges were a sham and a misrepresentation was perpetrated which allowed the voluntary arrangement to be brought to an end and a petition to be presented for the defendant's bankruptcy. The documents forming the object of the present motion before the judge proved conclusively that the misrepresentation occurred. There were therefore three issues before the judge. (1) Whether the implied undertaking had already been released by virtue of the fact that the documents had been referred to in open court. (2) Whether the plaintiffs, as creditors bound by the voluntary arrangement, had an independent right to use the documents by virtue of their release to the supervisor. (3) In the event that no release had yet occurred and no independent right to use the documents existed, whether the undertaking should be released.

Held

(1) By the provision of RSC O.24 r.14A, any undertaking (whether express or implied) not to use a document was released after it had been read to or by the court, unless the court had ordered otherwise for special reasons on an application by the person or party to whom the document belonged. The documents in question were read to or by the court. This did not however mean that the documents were in the "public domain" and could be released. The judge retained a power in the context of the motion presently presented to direct that prior references in the course of the three preceding hearings did not release the undertaking. There was nothing in RSC O.24 which made such an approach to the issue inappropriate. It was clearly appropriate that the court dealing with the motion would be able to address the issue at any time at which it may be raised. The committee was clearly entitled to see relevant documents under modification 14 where the undertaking was released (see Re Bulmer (1937) Ch 499). There was no absolute right for the creditor bound by the agreement to see those documents and there may be reason in any circumstance which would make such disclosure undesirable. (3) The principles on which the court should act in relation to the release of undertakings could be found in Crest Homes plc v Marks (1987) AC 829. Whether the undertaking was to be released would depend on the action in which discovery was given, ie the nature and extent of and the reason for the discovery and the nature of the proposed new use. In the present circumstances the plaintiffs were aware of the possible misrepresentation and should not be able to rely on the disclosure of the documents in the present matter.

Motion dismissed with costs.