On 16 May 2022, Mr Justice Waksman handed down judgment in the joined cases of ENRC v (1) Dechert LLP (2) David Neil Gerrard and ENRC v The Director of the Serious Fraud Office  EWHC 1138 (Comm).
The trial (which was one of The Lawyer’s ‘Top 20 Cases of 2021’), took place over 47 days between May and September 2021, determined questions of liability in relation to ENRC’s claims against Dechert, Mr Gerrard and the SFO.
ENRC’s claims concerned events which took place between 2011 and 2013 and related to ENRC’s internal investigation into certain of its operations in Kazakhstan and Africa and its engagement with the SFO in respect of the investigation.
Dechert and its then-partner, Mr Gerrard, were retained by ENRC to conduct the internal investigation and advise and assist ENRC in relation to its engagement with the SFO. ENRC brought claims against them in negligence, breach of fiduciary duty and breach of contract, alleging that, during Dechert’s retainer, Mr Gerrard acted deliberately, recklessly and/or negligently without ENRC’s authority and plainly against its interests.
ENRC brought claims against the SFO for inducement of Dechert and/or Mr Gerrard’s breaches of contract and/or fiduciary duty and for misfeasance in public office (primarily in relation to the SFO’s engagement with Mr Gerrard).
The Court noted that the claims brought were of the “most serious kind”.
The Court upheld substantially all of ENRC’s claims against Dechert and Mr Gerrard, remarking that some of the allegations ultimately proven were “extraordinary” and “might be thought would be almost unimaginable”. The Court found that “Mr Gerrard was for the most part motivated by a desire to secure as much fee revenue as possible with a secondary motivate, at times, being to ingratiate himself with the SFO”. It held that (i) Mr Gerrard was the instigator of three leaks of ENRC’s confidential information to the press; (ii) Mr Gerrard grossly and recklessly breached his duties to ENRC on over 20 occasions by providing information to the SFO which was plainly against ENRC’s interests and unauthorised; and (iii) Mr Gerrard was negligent (and for the most part reckless) in: failing to record his advice in writing, providing wrong advice to ENRC in relation to its potential criminal liability and engagement with the SFO, unnecessarily expanding the internal investigation, failing to determine the scope of the SFO’s concerns in relation to ENRC, giving wrong advice about bringing documents into this jurisdiction, failing to give proper advice or take steps to protect ENRC’s privilege in connection with its engagement with the SFO, failing to disclose to ENRC his knowledge that ENRC’s then-Head of Compliance had been interviewed by the SFO and sending confidential and privileged documents to the SFO without ENRC’s knowledge or consent; and (iv) there was a “major failure” by Dechert to report its own reckless breaches of duty to ENRC.
The Court rejected Dechert and Mr Gerrard’s defences of contributory negligence, limitation and limitation of liability. The Court held that there was no real contributory negligence by ENRC, that the breaches by Mr Gerrard were deliberately concealed or committed in circumstances where they would not be discovered and that Dechert’s retainer did not limit liability for reckless or deliberate breaches or to recover fees paid.
ENRC’s claims against the SFO were successful in part. The Court held that the SFO was in breach of duty in relation to 15 of Mr Gerrard’s contacts with the SFO, during which Mr Gerrard gave the SFO information which was unauthorised and against ENRC’s interests. The Court held that (subject to proof of causation and loss) the tort of inducement had been established in relation to those contacts. However, the Court rejected ENRC’s claims against the SFO for misfeasance in public office in relation to its engagement with Mr Gerrard, holding that some, but not all of the elements of the tort were established.
The Court also held that ENRC had not established its other allegations of misfeasance against the SFO.
The Court also discussed the circumstances in which a civil court can grant an injunction preventing the use of privileged information in criminal proceedings, concluding that it was bound by previous authority to hold that no such relief could be granted.
Further trials will be held to determine causation and quantum in respect of the claims which have succeeded thus far.