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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Friis & Anor v Colburn [2009] EWHC 903 (Ch) (01 May 2009) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2009/903.html Cite as: [2009] EWHC 903 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		01/05/2009

Peter Smith J :

INTRODUCTION

1. This is an application by the Defendant (Ms Colburn) pursuant to CPR 11 for an order staying or dismissing these proceedings on the basis that the Court does not have jurisdiction to determine the claim, alternatively, that it should not exercise its discretion to determine it.
2. These kind of hearings are meant to be dealt with quite robustly by the Courts. In this case the hearing attracted 5 lever arch files of documents followed by the (almost traditional) disregard of the vast majority of the documents. Lengthy skeleton arguments were submitted and the hearing lasted a full day. Further the costs (as will appear further in this judgment) can only be described as horrendous. In this case the Claim Form was issued as long ago as 22nd September 2008. The order under challenge that of Master Teverson was made on 29th October 2008. The only activity in the action since then so far as I am aware is the Defendant's application issued on 19th December 2008 to set aside the original order.
3. The Claimants had incurred £300,000 worth of costs apparently before dealing with the present application. Their cost schedule for the present application is £215,280.50. The Defendant's cost schedule is more modest but still a mind boggling £112,699.29.
4. It is costs like this which are driving people out of the Courts. I will be providing details of these costs to Lord Justice Jackson for his Costs Review currently under investigation. Further as appears later in this judgment the size of the Claimants' costs in particular is a factor which has led me to conclude (for other reasons as well) that I should exercise my discretion and not allow the action to proceed in this jurisdiction and set aside the order.
5. Further the case has been strung out by unrealistic stances and unnecessarily prolonged and complicated submissions which seem to achieve nothing other than create fogs of irrelevancy. It is plain that this case should have involved simply one issue only namely whether or not this Court should exercise its discretion on the facts to set aside the order for service out of the jurisdiction. None of the other arguments has any merit but simply raise irrelevancies which simply ought not to have been argued.

BACKGROUND

6. The Claimants are the co-founders of Skype SA ("Skype") a limited liability company registered under the laws of Luxembourg. It is a well known internet telephone company based on peer to peer principles. It has become famous as a result of its ability to permit users free or low cost telephone over the internet.
7. The Claimants are resident in England (although they were remarkably coy about that). First in the statement in support of the application for permission of Gerald Steven Paul Mitchard dated 22nd September 2008 he said somewhat cryptically "I have been informed by both the Claimants that they reside in London England" the address given on the Claim Form turns out to be offices which provide post box services. The Defendant was rightly concerned about this because the Claimants' genuine residence was in my view a factor to be taken into consideration in the Court exercising its discretion. Ultimately on the day of the hearing the Claimants provided true addresses confidentially. I cannot understand the coyness (it cannot be suggested that they were fearful of anything the Defendant might do if she obtained their addresses).
8. The Defendant is an American citizen living in California.
9. The Defendant worked for 2 US companies, Europlay Capital Advisors LLC ("Europlay") and Eurocapital Advisors LLC("Eurocapital"). These companies provided investment banking services to the Claimants. There is no doubt that they provided those services for the purposes of this relevant dispute from September 2005 at the latest. There is a dispute as to the extent of services provided before that but none of that in my view is relevant.
10. The Claimants provided confidential information to the Defendant and this is not disputed. What is in dispute is the terms on which it was provided and the obligations that arose there under.
11. The Claimants contend that the material was provided and at a meeting (ultimately identified by the Claimants as being on 10th October 2005) at the Connaught Hotel they intimated to her that the information provided was to be held by her in strict confidence. They also contend that at that meeting she expressly undertook to them that she would keep the information strictly under confidence and would use it only for the purpose of her role in the transactions. In addition, the Claimants contend it was expressly agreed that the information supplied would be stored solely on servers in Netherlands operated by a company called Herho Holdings BV ("Herho"). That was a Dutch subsidiary of one of the Californian companies Europlay. It was formed for the purpose of acquiring and utilising material provided to it as the Sellers Representative under agreements which arose out of the decision made by the Claimants to sell Skype to Ebay. They also contend that it was expressly agreed that the information would not be kept in the United States. It is said that the reason for that was they did not wish to maintain documents in the United States because of disclosure obligations that might arise in disputes in the United States.
12. There are 3 difficulties about their case which have been seized upon by the Defendant. First the agreement ultimately they said took place on 10th October 2005 yet the vast bulk of the material had been provided from 11th September 2005. I do not think that is a serious difficulty because there is no reason why the Claimants and the Defendant cannot agree on 10th October how documentation that had been received on 11th September 2005 should be held. Second the Defendant points out that a large amount of material was provided by email to her at her Californian based server of Europlay. The Defendant rightly points out in other litigation this supposed importance was not referred to which I accept is somewhat surprising. Third the Defendant points out that Herho was not actually incorporated until 11th October 2005 and did not become operational until December 2005.
13. The Defendant denies she gave any express direct undertaking as to confidentiality. She contends that the documents were received by her confidentially but under the umbrella of the confidentiality arrangements that were in place between the Claimants and Europlay and Eurocapital. Thus it is submitted that the jurisdiction and law is that of California.

BACKGROUND TO THE SALE

14. As I have said above the Claimants were the major shareholders in Skype. In 2005 they and other Skype shareholders negotiated a sale of Skype (or rather its shares) to Ebay. The consideration was divided in to 2 parts (1) an upfront payment comprising cash and Ebay stock and (2) a package of deferred consideration under which certain Skype shareholders ("the Earn-Out Sellers") would be paid for their shares at a future date at a price which reflected Skype's performance. The core documents giving effect to the sale were a Sale and Purchase Agreement entered into by Ebay and Skype shareholders dated 11th September 2005 ("Sale Agreement") and a separate Earn-Out Agreement on the same date.
15. Both those documents provided (although they have not been produced in their entirety for confidentiality reasons) for English law to apply to the agreements and that the jurisdiction for any disputes was to be England and Wales.
16. Of course neither the Defendant nor her employers was a party to either of those agreements but it is the Claimants contend part of the background material to justify the existing issue of the present proceedings.
17. Once the Sale Agreement and Earn Out Agreement had been signed it was necessary to establish a Sellers Representative and an Earn Out Representative. The Second Claimant Mr Zennstrom had been initially appointed to both roles but that was only on a temporary basis. The Claimants discussed the issue of who should be a permanent representative in London with their financial advisors from Europlay which that is a company in Delaware. The advisors included the Defendant. This led to the decision to form Herho. The Defendant became its sole director when it became operational.
18. In my view it is impossible to say that the Claimants have not raised a case that there was a duty of confidence in England assumed directly by the Defendant. This is not the trial. There are difficulties about the Claimants' evidence but at the end of the day when the question as to the issues as to jurisdiction is concerned unless the evidence is capable of being rejected as being incredible along the lines of the well known case of National Westminster Bank Plc v Daniels [1993] 1WLR 1453 I am bound to assume that what the Claimants say in signed witness statements backed by a statement of truth is for the present purposes correct. If the factual background that they set out in those statements is correct it is clear that the Claimants have a good arguable case that the claim falls within one or more of the Gateways under CPR rule 6.36 and the grounds set out in paragraph 31 of the Practice Direction 6B. This is the first criteria set out by Lightman J at paragraph 15 of his judgment in Albon v Naza Motor Trading [2007] 1WLR 248 as follows:-

"To obtain the order permitting service outside the jurisdiction, Mr Albon needed to show: (1) a good arguable case that each claim made fell within the one or more of the Gateways under CPR Rule 6.20 which he relied on as applicable. What a good arguable case means depends on the Gateway concerned and whether the issue can or will be revisited at trial. Generally speaking the applicant for permission must show a strong probability that the claim falls within the letter and spirit of the Gateway, and this requirement is strict if once permission is given that issue will never thereafter be investigated; (2) on the merits that there was a serious issue to be tried, that is to say there is a real question to be tried. This is a lesser hurdle than good arguable case; (3) that England is clearly the appropriate forum, that is to say that England is the forum in which the claim can be tried most suitably for the interest of all parties and the ends of justice; and (4) that the court should in its discretion grant permission."

19. The Claimants' claim is for delivery up of their confidential information and/or injunction preventing the Defendant from further and unauthorised use of the confidential information and/or an account of profits and/or damages for breach of confidence, interest costs and further relief. They submitted successfully before the Master that the claim fell within grounds (2) (a claim for injunction ordering the Defendant to do or refrain from doing an act within the jurisdiction) and (16) (a claim made for restitution where the Defendant's alleged liability arose out of acts committed within the jurisdiction).
20. In applying these principles the Court is concerned with the case pleaded for which permission to serve out was granted on an ex-parte basis and not any modifications to that case later identified by the Claimants (Metall und Rohstoff v Donaldson Lufkin [1990] 1QB 391). In addition as in the case of any ex-parte application a party seeking such an order is under a duty to provide full and frank disclosure (see Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 WLR 1269 at 1301). Any omission of any material facts can justify the Court in setting aside the permission to serve out. I should add that Miss Prevezer QC who appears for the Defendant acknowledged that I could consider all the material before me and was not limited to material provided to Master Teverson.

CLAIMANTS' CONTENTIONS FOR JURISDICTION

21. The Claimants accept that as the Defendant is resident outside the European Union they must establish a good arguable case that the claim against her falls within one of the Gateways identified above. They have relied upon ground (2) and (16) as set out above.
22. The latter of those is a claim for restitution. I am satisfied that there is persuasive authority that a claim for breach of confidence falls within that paragraph: see Douglas & Ors v Hello Ltd (No.3) [2003] EWCA Civ 139 at paragraph 33. Similarly reliance can be made on the case of Nabb Brothers Ltd v Lloyds Bank International (Guernsey) Ltd [2007] EWHC 405 at paragraph 74. The Defendant does not seriously dispute this but reserves the right (if necessary) to argue the point in the Court of Appeal. It is contended by her that for there to be a case within paragraph (16) there must be a good arguable case that there has been a breach of duty of confidence owed by the Defendant which requires the Claimants to show a duty arose, information was provided and she has breached her duty and a good arguable case that these 3 elements occurred substantially in England.
23. I have set out the Claimants' evidence briefly above. It is plain that at the very least the Claimants have a case that a duty occurred and that the information was partially provided to the Defendant within England and that she further breached her duty in England by failing to make delivery up and return of the documentation in England. The latter is somewhat tentative but it does not matter because when one looks at the Particulars of Claim and in particular for these purposes the allegations in paragraph 19 and the breaches at this stage of the action and based on the Claimants' evidence those criteria are in my judgment all satisfied and I do not believe the contrary could have been credibly argued.
24. The same principles apply to the injunction under ground (2).
25. It follows therefore that I am satisfied that the Claimants have established a prima facie right to seek service out of the jurisdiction in respect of Gateway requirements (1) and (2) as set out above in the Albon case.

WHAT THE DEFENDANT DID

26. The Defendant fell out with her employer Europlay. On 22nd January 2007 her employment was terminated. She was also subsequently removed as the officer of Herho. Before she left she copied extensive amounts of the work documents she worked on in her employment. She apparently took more than 90,000 email messages and more than 33,000 other files the bulk of which she copied in the 2 months prior to her departure. These files included substantially all of the files and data provided to her by the Claimants. So far as I can see no justification for the retention or copying of any of the Claimants' confidential documents outside her employment with Europlay can be justified. This is a point which Miss Prevezer QC doggedly refused to accept. However her client is not using the documentation for the purposes of which it was supplied namely to carry out work on behalf of the Claimants. She is using it and seeking to retain it for the purpose of the litigation she has with her former employers. Any confidentiality basis upon which the Claimants might have given documents to her (on their case if the matter is governed by English law) or in reality if provided to Europlay under a doctrine of confidence governed by US law cannot conceivably in my view be said to subsist after her employment is terminated. I accept that I received no evidence as to US law but absent the production of any expert evidence as to US law I am entitled to assume that the law follows that in the United Kingdom and Wales. I pressed Miss Prevezer QC a number of times for her to identify the justification she said her client had to retain documents after the purpose for which she had been given documents in confidence had terminated. She was unable to give a coherent answer.
27. The Defendant did not stop with copying her documents. I refer to paragraph 22 of Mr Mitchard's second witness statement dated 9th February 2009 (The contents of which are not disputed by the Defendant). He referred to the fact that in the subsequent proceedings in the United States brought by Europlay against her (as to which see below) she asserted that she had returned all of Europlay's documents including the documents of the Europlay subsidiary such as Herho. Mr Mitchard asserted that that statement was false.
28. Miss Colburn claimed that she had all of her computers and storage devices imaged shortly after termination. In fact FTI Consulting Inc the forensic examination firm engaged by her never imaged the external hard drive which she showed to Mr Petty around 28th November 2006 nor her USB flash drives or her ipods which were attached at some time to a laptop and desktop computers. The existence of these storage documents is still in dispute. Mr Petty is the Vice President of Europlay. He worked (inter alia) for Miss Colburn. The reference to the external drive being shown to him follows from paragraph 30 of his witness statement.
29. After the FTI images had been taken at her instigation on her computers the Defendant did not return the original electronic versions of the confidential information. She kept all the documents and continued to work and use them and communicate the documents to others. She then wiped the computer drive of the computers required to be returned rather than returning the device and confidential information. Mr Mitchard suggests that she acted in breach of the United States Federal Court order (as to which see below). Therefore between January 2007 and June 2007 (when she wiped all the confidential documents) she had an opportunity for a period of 5 months to copy, modify, save and store the confidential information on alternative devices undisclosed to the Claimants. I should say that the forensic examination of the computer drives returned shows that other USB drives and memory storage devices were connected to it before it was wiped. At present it is impossible to identify what those devices were.
30. Despite the orders of the US Courts requiring her to hand over the material on 1st November 2007 a further 12,000 pages of documents were alleged to have been found which were notified to the Federal Court by her former lawyers Milbank on 5th September 2008.
31. Finally in a declaration filed with the Special Master on 29th January 2007 the Defendant disclosed that she threw out 2 desktop computers.
32. Further if one looks at the allegations of breach of confidence in paragraph 20 of the Particulars of Claim the Defendant admits she copied documents in all the circumstances identified save for that in paragraph 20 (5). She denies however that any of the copying was a breach of confidence as regards the Claimants. I find this unconvincing. As I have said above all of the copying and retention occurred after her employment terminated. Indeed paragraph 103 of the Defendant's skeleton argument rather makes that point namely that all the material was copied and used by her after she left the employ of Europlay/Eurocapital.
33. She justified the erasure of the material as she and her lawyers interpreted the Court order requiring the return of all documents as requiring her to return that which she stole as an order to destroy evidence. Thus it was alleged by her that it was done on legal advice. It is also alleged that an accomplice of hers (Diana Maranon) claimed that the hard drives with the information that the Defendant had taken were soaked in a bathtub overnight and broken into pieces with a screwdriver with the pieces thrown away in garbage cans in different places throughout the city. I have taken that from the letter dated 11th December 2008 sent by Jeffrey Rosenfeld to Mr Garrie. The latter was appointed by the Superior Court of California on 26th November 2008 as a Special Master to hold evidential hearings and take other acts as identified in the order to make a detailed recommendation to the Court as to whether the Court could find that the Defendant had fully complied with orders of 11th July 2008 and 29th August 2008.
34. The purpose of Mr Rosenfeld's letter was to introduce the matter to Mr Garrie on behalf of the Defendant in an action that the Claimant (the Defendant here) had issued in the Superior Court of Los Angeles on 27th August 2007. This action related to Eurocapital and was a claim by the Defendant that Eurocapital was a partnership in which she along with the Defendants was interested and that was akin to a derivative action of the type seen in England and Wales.
35. What this evidence shows is in my view that the Claimants have a justifiably strong suspicion that the Defendant has not complied with the orders in the United States. There can be no innocent or legitimate reason for her to wipe the drives clean and throw away the computers. Those in my view are arguably actions of somebody trying to destroy the audit trail and to suggest that the only documents that she has obtained have been returned after the FTI images had been taken. It is in my view highly suspicious and I can see no legitimate reason for her doing that.
36. The Arbitrator (inter alia) directed her to pay damages of $300,000 to compensate Europlay for her breach of fiduciary duty.

PROCEEDINGS IN THE UNITED STATES

37. After her employment was terminated Europlay demanded the return of the documents. The Defendant did not comply and accordingly on 4th April 2007 Europlay commenced arbitration proceedings against her. These proceedings were concluded when the arbitrator issued an award on 26th February 2008. He found (inter alia) that the Defendant had taken and retained a large quantity of Europlay documents, that her actions were inexcusable and reprehensible and that she had breached her fiduciary duties to Europlay. On 10th March 2008 Europlay submitted a petition to the Los Angeles Superior Court to confirm the arbitration award. It did so on 19th June 2008. No documents were returned as a result of the award.
38. In a second set of proceedings commenced on 26th June 2007 in the Central District of California a Federal preliminary injunction was issued requiring the Defendant to return all documents and other property taken from Europlay. On 12th July 2007 the Californian District Court made a second order finding the Defendant had not complied with its preliminary injunction again ordering the Defendant to return all documents and property taken from Europlay. On 1st November 2007 the Californian District Court confirmed that the first and second orders covered files and data belonging to Europlay subsidiaries.
39. The third set of proceedings were commenced by the Defendant on 27th August 2007 being the derivative type action referred to above.
40. A significant development occurred in those proceedings however on 12th June 2008. The Claimants in this action filed a motion in those proceedings before the Los Angeles Superior Court seeking a protective order preventing the Defendant from seeking discovery of a wide range of documents which contained confidential information. They sought a protective order so as to limit the disclosure of documents in a way that preserved their confidentiality. The Claimants' motion is currently stayed as a result of the Defendant's Counsel being disqualified. On 11th July 2008 the Los Angeles Superior Court ruled on a number of motions submitted by the Defendant including motions alleging misconduct on the part of the Defendant. The Court ruled that the Defendant could continue the litigation only if inter alia her present Counsel and all former Counsel were disqualified.
41. It is noteworthy that in the Claimants' submissions seeking a protective order (see page 9 of the submissions) it was submitted "although [the Defendant] has offered to have any production to be subject to the terms of a protective order which would restrict the use of the information only to this litigation, her cavalier attitude to such Court order protections in the past render such an offer to be a non starter with [the Claimants]".
42. In other words therefore the Claimants were seeking to ensure that the Defendant did not obtain access to any of their confidential information for the purposes of that litigation and were not prepared to even concede a limited restriction. This in my view is significant because I do not accept that the Claimants cannot obtain better protection by litigating in California.

PROCEEDINGS IN HOLLAND

43. After her removal as the Officer of Herho it commenced 2 sets of proceedings against her in Holland. First there was a claim for interim relief commenced on 11th April 2007 and second what are described by Mr Mitchard in his first witness statement as merits proceedings commenced on 21st December 2007. In the former of those Herho sought an order that the Defendant return the laptop and any external hard disks and data carriers containing confidential information regarding Herho and any other company without leaving any copies. The relief sought in the merits action covers that and a wider claim.
44. On 30th May 2007 the Alkmaar District Court gave judgment in the interim proceedings and ordered the Defendant to return all documents. She says she has complied. However it is asserted by the Claimants in this action (on information provided to it by Herho) that originals have not been provided. The Defendant appealed the judgment of the Alkmaar Court but on 25th October 2007 the Amsterdam Court of Appeal gave an interim judgment confirming the Alkmaar ruling in part but declaring the Defendant was free to make and keep copies of Herho's documents and files for personal use (excluding any documents that fall under a confidentiality agreement between Herho and Skype). Leave to appeal against that decision was granted to Herho on 22nd May 2008 and Mr Mitchard in his first witness statement says that hearing would not take place before summer 2009 in the Dutch Supreme Court.
45. The Claimants also intervened in the Dutch proceedings on 14th August 2008. There as yet has not been a final decision on that. They did not intervene in the merits proceedings.

NON DISCLOSURE

46. It is axiomatic that on an ex parte application there needs to be full and complete disclosure of all matters relevant to the dispute (including possible matters that the Defendant might raise: see Konamaneni v Rolls Royce Industrial Power (India) [2002] 1 WLR 1269 at 1301).
47. The Defendant complains that when the Claimants made their ex parte application they failed to disclose that the Claimants were being funded by Herho in this litigation. She referred to a letter from the Claimants' solicitors dated 28th January 2009 to Herho setting out the terms. It is to be noted that by the time of the writing of that letter the Claimants had already apparently incurred £315,000 worth of costs. The letter sets out an understanding in the event that the Claimants could not recover the costs of this action from the Defendant and to the extent they have to pay her costs in these proceedings Herho will reimburse the Claimants.
48. I am of the view that this ought to have been disclosed. However I am not persuaded that I should set aside the order for permission to serve out of the jurisdiction by reason of that non disclosure. It is nevertheless an important factor in my view in considering whether or not the proceedings ought to be allowed to continue in this jurisdiction.
49. A further breach occurred in that the Claimants had provided a copy of Mr Zennstroms' witness statement to the US lawyers for Eurocapital. Further the Defendant complains that there has been a high degree of co-ordination and co-operation between the Claimants and Eurocapital/Europlay in the US and Dutch proceedings. She refers to Mr Mitchard's second witness statement which indicated that he had obtained information from Eurocapital. Further her first statement was referred to by Herho in a pleading filed by it in the Dutch proceedings. That was a breach of the restrictions as to the use of witness statements until referred to in Court. The Claimants accept that error and have apologised.

GATEWAY REQUIREMENTS (3) & (4)

50. As Miss Prevezer QC set out in her skeleton argument it is appropriate to consider these 2 requirements namely appropriate forum and discretion together. From the Claimants' position I draw the following conclusions. First they have arguably provided confidential information and they are entitled to protect its misuse. Second they have a strongly arguable case that the information was provided directly to the Defendant in the United Kingdom and she assumed an express duty of confidence at the meeting of 10th October 2005. Third that confidence extended to all documents supplied to her from 5th September 2005. I am not convinced about the requirement to keep the documents outside the US because it is clear they provided documents within the US. Nevertheless all of that is enough material to justify proceedings in this jurisdiction.
51. I accept that the Claimants have a legitimate interest in protecting their confidence.
52. The Defendant as set out above has in my view not demonstrated any justification for the retention and use of the documents whatsoever. Further as summarised above she has clearly behaved improperly in helping herself to the documentation when her employment was terminated and that has been recognised by orders made against her in the Dutch and (more importantly) the US Courts. In addition there is a strong suspicion that she has not complied with the orders that have been made against her in regards to delivery up of documents and retention of copies. Her position therefore on the merits is untenable.
53. There are a number of further factors in my view which are relevant. First whilst the Claimants have a legitimate interest in protecting their confidential information and whilst that might justify co-ordination with Europlay the degree of co-operation in my view looks oppressive. I cannot see why, if the Claimants wanted to have effective remedy against the Defendant, they did not modify their intervention proceedings both in Holland and the US to include the same kind of relief that they now seek. In reality the intervention proceedings that they initiated in the US in seeking to go beyond the normal rule for protective disclosure shows in reality that they are seeking virtually the same relief.
54. I am concerned however as to the level of co-operation. There have been breaches by the Claimants in failing to disclose the funding arrangements and second in the provision of information provided by the Defendant in these proceedings to other non parties. Third in my view the Claimants are running up costs oppressively. Whatever the merits of the case litigating in 2 proceedings in 2 jurisdictions can be considered in my view potentially to be oppressive but adding a third set of proceedings goes beyond the bounds of acceptability. I can see no reason why the Claimants would institute the present proceedings and incur the large amounts of costs.
55. It must be plain to them that any order that they obtain in this jurisdiction is likely to be useless. I cannot conceive of any circumstances where the Defendant would submit to the jurisdiction. Given the facts as set out above it is almost inevitable that a Court in this jurisdiction on a summary judgment application would make an order for delivery up. She will say that she has already provided delivery up to somebody else. The Claimants (with justified suspicion in my view as set out above) would deny that. I have little doubt then that they would commence committal proceedings against the Defendant to secure delivery up of the documents which they perceive she has still wrongfully retained. I reiterated this in argument. I cannot see that the Defendant would ever submit to the jurisdiction solely for the purpose of having a committal application aimed against her. Further it is not going to be easy to enforce an order obtained in this jurisdiction in the United States.
56. All of this suggests in my view that if the Claimants were primarily interested in protecting their own confidential information they would have either commenced their own proceedings in California or intervened in the existing proceedings to protect their own confidential information. Both procedures appear to be open to them and it is not suggested before me that there are any difficulties about those proceedings. They secure of course an additional advantage to the Claimants in that they are suing the Defendant in the jurisdiction where she resides. As I have set out above in the arbitration proceedings she has already been found guilty of acting wrongfully in relation to the documents. If there is evidence to sustain the proposition that she is still wrongfully retaining documents the Claimants will obtain fairly easy relief in my view in California.
57. The final point to consider is this. There are already orders in 2 other jurisdictions requiring the Defendant to hand over documents. She says she has done so. The parties thereto apparently do not accept that. If the present proceedings are continued there will be a third set of proceedings where the Defendant will be required to deliver up overlapping documents to the Claimants. That seems to me to be an impossible situation and is something that the Court should strain to avoid. If the Claimants intervened in the United States proceedings the Court there would undoubtedly derive a mechanism whereby the documents were handed over without the Defendant being exposed to conflicting orders.
58. For all of those reasons despite the arguable nature of the Claimants' case and despite the lack of an apparent defence on the part of the Defendant I do not think it is appropriate for these proceedings to continue. Accordingly gateway (3) is not satisfied and in any event in exercising my discretion for the above reasons I would also determine that it is not appropriate for the proceedings to continue in this jurisdiction.
59. This does not leave the Claimants without any remedy. Their best remedy in my view has always been in the US Courts. The fact that they have not proceeded down that way was not satisfactorily explained to me and remains inexplicable.
60. For all of those reasons therefore I will set aside the order of Master Teverson dated 29th October 2008.
61. I will hear submissions as to costs when I hand this judgment down.