Neutral Citation Number: [2010] EWHC 1107 (Ch)
Case No: HC09C02105
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 18/05/2010
Before :
MR JUSTICE PETER SMITH
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Between :

	(1) Cadogan Petroleum Plc
(2) Cadogan Petroleum Holdings Ltd
(3) LLC Astroinvest-Ukraine
(4) US Enco Ukraine
(5) LLC Cadogan Ukraine
(6) Colby Petroleum Ltd
(7) LLC Gazvydobuvannia
(8) LLC Astronivest-Energy
(9) JV Kolomiyska Nafto Gazova Kompaniya
(10) OJSC Agtonaftogasterchservice	

Claimants	
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	(1) Mark Tolley
(2) Marksman International Ltd
(3) Natural Resource Ltd
(4) Vasyl Vivcharyk
(5) VPV Oil Investments LLC
(6) Smith Eurasia Ltd
(7) Vladimir Shlimak
(8) SonicGauge Inc
(9) Global Process Systems LLC
(10) Global Process Systems Inc
(11) Clint Elgar
(12) Anthony Wright
(13) Wayne Goranson
(14) AOE Energy Inc
(15) Philip March
(16) Olga Konoshchuk
(17) Rebelant Ltd
(18) Vitaliy Podolyaka
(19) Bohai Energy Services Ltd
(20) SC Invest Point Consulting Grup SRL	

Defendants 	
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Iain Pester (instructed by Needleman Treon and Gates and Partners) for the First, Second, Fourth and Fifth Defendants 
Paul Girolami QC & Benjamin John (instructed by Peters & Peters) for the former Ninth, Tenth, Eleventh and Twelfth Defendants

Hearing dates:  28 April 2010
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Judgment

Peter Smith J: 
INTRODUCTION
1.	This hearing arises out of my judgment delivered on 16th December 2009.  That judgment addressed an issue in these proceedings which had arisen because the Claimants (Cadogan) had entered in to a Settlement Agreement (“the Settlement Agreement”) against the former 9th, 10th, 11th and 12th Defendants.  The First and Second Defendants had issued an application on 19th November 2009 seeking specific disclosure of the Settlement Agreement.  That was supported by a second application in substantially the same form issued by the Fourth and Fifth Defendants.
2.	As I set out in paragraph 5 of that earlier judgment the Claimants do not oppose the disclosure of the Settlement Agreement.  However the former Defendants (“the former GPS Defendants”) objected to it.  
3.	There is a confidentiality clause in the Settlement Agreement.  
SUMMARY OF PRINCIPLES
4.	I refer to the earlier judgment and in particular the section headed “DISCLOSURE GENERALLY – PRINCIPLES”.  
5.	In paragraph 25 I said :- 
“Relevance is not sufficient but the guiding principle is one of justice as regards the trial.  If without the material the Applicants have a reasonable apprehension that they might not have a fair trial that should outweigh any questions of confidentiality.  The confidentiality could be preserved by appropriate means but ultimately if that was not effective then the disclosure must nevertheless be ordered.  It is difficult to believe that a system of confidentiality could not be put in place - see for example the regime put in place (for similar but different reasons) in the case of The Attorney General of Zambia v Meer Care & Desai & Ors [2007] EWHC 952.  A method of proceeding at the second stage was recently set out by Ramsey J in Atos Consulting Ltd v Avis PLC 2 [2007] EWHC 323 at paragraph 37”.
6.	Pursuant to that hearing, I ordered partial disclosure (of those parts of the Settlement Agreement that had been referred to in the evidence relied on by the GPS Defendants in opposition to the application in open court).  As to the balance, I directed that the Applicant Defendants instruct an independent Counsel who could make submissions on their behalf with sight of the Settlement Agreement.  That would then preserve the confidentiality of the former GPS Defendants if I determined that the other Defendants were not entitled to disclosure of the document.
7.	Mr Ian Pester was appointed as the special Counsel and he dealt with this difficult procedure with skill and determination.  It is fair to say that he felt handicapped in the process because he was unable to discuss the Settlement Agreement with his clients and was concerned that he might not be fully aware of all the issues sufficiently to be able to argue fully in respect of each paragraph.  
DISCLOSURE
8.	Further to my order dated 16 December 2009, the Applicants have been provided with clauses 1, 2, the larger part of 4, 5, 9-12, part of 14, 17, 19, 21, part of 22, 31-33, 38 and 52.
9.	A fuller version was provided to Mr Pester and ultimately he was provided with a full copy.  I too had a full copy.
BASIS FOR DISCLOSURE
10.	The basis for disclosure can only be that the Settlement Agreement is relevant to the outstanding issues in the proceedings.  The Applicants face claims from the Claimants arising out of the sale of products by the former GPS Defendants to the Claimants.  It seems to me that the liability (in quantum terms) of the Applicants will have to take into account ultimately, if liability is established, what recoveries have been made against the other Defendants (including the former GPS Defendants).  That will be determined in two ways.  First the Claimants will have to give credit for any recoveries from the other Defendants so that there is not double recovery.  Less significantly, given the allegations of dishonesty that are made, there is a possibility that the Applicants might make contribution proceedings against the former GPS Defendants.  
11.	The other area where in my view the Settlement Agreement might be relevant is in relation to the trial and the availability of witnesses for trial.  
12.	What is not relevant are any provisions which have no relation to the subject matter of the proceedings.
13.	Mr Pester summarised those in paragraph 10 of his skeleton argument and identified 4 reasons as to why the Settlement Agreement was relevant:-
1)	The Claimants recoverable loss against the Applicants.
2)	Whether the Claimants have properly mitigated the alleged losses.
3)	Possible waiver or release of the Applicants by reason of the Settlement Agreement.
4)	Issues as to possible claims for contribution against the former GPS Defendants.
14.	As I have said I think the fourth of those is of doubtful relevance but I cannot exclude it as a possibility.
15.	What is significant however is that heads 1-3 are matters which are aimed at the Claimants. Yet the Claimants as I have said do not oppose disclosure of the Settlement Agreement in full.  That carries great weight.  If they are not concerned it makes it difficult for the former GPS Defendants to claim to be more concerned.
DISCUSSION
16.	The best way to deal with this in my judgment is to go through the Settlement Agreement and identify the clauses which I determine are to be disclosed and giving brief reasons therefore.  Where I refuse disclosure I will also give brief reasons but I shall avoid in both aspects giving reference to any provisions expressly and in case there is a challenge to my decision.
SETTLEMENT OF PROCEEDINGS
17.	It seems to me that the Applicants are entitled to know in full the terms of the settlement of the claims brought against the former GPS Defendants by the Claimants.  It seems to me therefore that they are entitled to all parts of the Settlement Agreement save where the settlement extends beyond the subject matter of the action.  Therefore it seems to me appropriate that they should have the entirety of clauses grouped under this heading (i.e. clauses 1-8) except for 4 (e) and (f) and clause 8.  It seems to me that those provisions are in respect of additional agreements made between the Claimants and the former GPS Defendants which have no relevance to the claims brought against the Applicants.  
18.	In addition to the reasons above for the disclosure it seems to me as a matter of public policy clauses 6 and 7 are relevant because they deal with provisions whereby the parties attempt to restrict disclosure and the giving of evidence.  Mr Girolami QC who appears for the former GPS Defendants quite property acknowledged that those provisions could not fetter the court in the regulation of the proceedings and trial under the provisions of CPR.  However they do present difficulties to the Applicants because in reality the only way in which the Applicants can obtain documents and evidence from the former GPS Defendants is by seeking orders from the court.  It seems to me that the terms of the Settlement Agreement are relevant to the court for example in considering whether to make such orders if they are applied for and also possibly explaining why people are not participating in the trial.  If the Applicants (and more importantly the trial Judge) are not aware of the reasons why the former GPS Defendants have not provided information or not made themselves available it might be misleading at trial.
DISPOSAL OF GAS PLANTS
19.	This is covered by clauses 9 through to 22.  It comprises terms for the re-sale of the Gas Plants which are the subject matter of the major part of the litigation against the Applicants.  It seems to me that the disclosure of all of these provisions is important because they might be relevant when it comes to evaluating the allegations that the Claimants make as to the true worth of the Gas Plants.  It seems to me that the compromise in these terms would be material which is relevant to any challenge the Applicants might make to the Claimants’ contentions as to the true worth of the Gas Plants.
CLAUSES 23-30
20.	I do not accept that clauses 23-30 have any relevance to the subject matter of the litigation.  They relate to extraneous matters in my view.  I will therefore not order disclosure of those paragraphs.  However as the litigation develops it is possible (and this should not be misinterpreted by the Applicants) that those clauses might somehow become relevant.  Neither Mr Pester nor I (or even Mr Girolami QC) can predict that.  It seems to me that the Claimants should be served with a copy of this judgment and it should be drawn to their attention expressly that if in their continuing duty to provide disclosure they believe that these provisions ought to be disclosed to the Applicants they should notify the former GPS Defendants of their intention so to do.  If they object to that disclosure then they should apply to me on a minimum of 2 business day’s notice under the liberty to apply provisions in this action in order to reconsider that.  They should also notify the Applicants of that intention so that they can reinstruct Mr Pester or some other independent Counsel again.  I appreciate this puts pressure on Mr Pester and causes difficulties but I do not see any other way of resolving that impasse in relation to those paragraphs.
PUBLIC STATEMENT AND CONFIDENTIALITY
21.	For my part I can see no objection to disclosing paragraphs 31-52 as they are relatively normal provisions that one would expect in a settlement of this nature.  They reflect the terms of the overall Settlement Agreement.  However it is difficult in my view to see any particular relevance in the pleadings as presently formulated.  I would therefore add these provisions to the matters to be drawn to the attention of the Claimants for consideration whether disclosure ought to be made in the future.
22.	I will hear submissions orally or in writing as the parties wish as to the extent to which this judgment can be made public.  My provisional view is that there is nothing in the judgment which needs a privacy order but I will direct that the Settlement Agreement should not be available for public inspection.  If the parties cannot agree the way forward I will determine it at the hand down.