In The Matter Of Watchstone Group Plc Sub Nom Slater & Gordon (UK) 1 Ltd v Watchstone Group Plc (2017)
In determining whether to allow the disclosure of documents concerning a capital reduction hearing to a non-party, the court followed the open justice principle expounded in R. (on the application of Guardian News and Media Ltd) v City of Westminster Magistrates' Court  EWCA Civ 420, where the default position was to grant access to documents that had been placed before a judge and referred to in proceedings, subject to any countervailing reasons to deny full disclosure. That approach was preferred to the principles set out in Pfizer Health AB v Schwarz Pharma AG  EWHC 3236 (Pat), which did not appear to support the default position.
The applicant company applied for disclosure of documents pertaining to a capital reduction hearing in respect of the respondent company.
The applicant had acquired the respondent's professional services division under a share purchase agreement. Some six months later, the respondent issued a Part 8 claim seeking confirmation of a reduction in its capital. The applicant was not a party to the hearing. The capital reduction was confirmed in December 2015 and some £412 million was returned to shareholders. In June 2017, the applicant issued a claim for £637 million in the Commercial Court, alleging that the respondent had fraudulently represented its accounts when the applicant purchased its division. It then issued the instant application on the basis that the capital reduction decision was made in error and it might have a claim in respect of the resultant £412 million distribution.
The applicant submitted that disclosure should be permitted pursuant to the open justice principle expounded in R. (on the application of Guardian News and Media Ltd) v City of Westminster Magistrates' Court  EWCA Civ 420. The respondent argued that, according to Pfizer Health AB v Schwarz Pharma AG  EWHC 3236 (Pat), the open justice principle was not automatic, particularly where there had been a delay between the original hearing and the application, and the applicant needed to show a legitimate interest for obtaining the documents.
The Pfizer principles- The instant judge had a number of reservations about the principles set out in Pfizer. First, Barings Plc (In Liquidation) v Coopers & Lybrand (No.1)  1 W.L.R. 2353 had not been cited to the judge in Pfizer. In Barings, the Court of Appeal had allowed the disclosure of interview transcripts attached to affidavit evidence, commenting that had they been read in open court they would have been in the public domain, and if they were read by the judge in or out of court as part of his responsibility for determining what order to make, they should be regarded as being in the public domain, subject to any particular circumstance that meant that to do so would not be in the interests of justice. Second, the judge in Pfizer was provided with a very limited citation of authority: Dian AO v Davis Frankel & Mead (A Firm)  EWHC 2662 (Comm) and possibly one other, Dian considered. Third, he had mistakenly referred to Dian as being Court of Appeal authority when it was a High Court decision. Fourth, one of the principles did not accurately derive from the paragraph the judge had cited from Dian. Fifth, two of the principles conflicted with Barings, Barings followed, Pfizer not followed (see paras 33-34 of judgment).
The Guardian approach - The instant judge preferred the open justice principle expounded in Guardian, in which the default position was that access to documents that had been placed before a judge and referred to in the course of proceedings should be permitted on the open justice principle, Guardian followed. Although Guardian had not cited Pfizer or Dian, it had a wide citation of authority from across jurisdictions in the UK and abroad, and nothing in Pfizer or Dian indicated that the comprehensive Court of Appeal conclusion in Guardian was vulnerable. Further, it was consistent with the Court of Appeal's decision in Barings. The default position was the first stage of the Guardian approach. The concern raised by the respondent about the applicant's purpose in seeking access, and any delay in making the application, were matters for the second stage, where consideration was given to any countervailing reasons to deny full disclosure (paras 35, 39-40, 42-43).
Applying the Guardian approach - As the applicant was not seeking documents beyond those considered by the judges of the previous proceedings, the default position was established. As to the second stage and the applicant's motive, the applicant was affected directly by the capital reduction. If its Commercial Court claim was successful, its potential recoveries against the respondent would be limited by the substantial return of capital to the respondent's shareholders. It would be perverse to suggest that it should not see the documents, referred to in open court, that had led to the capital reduction decision. Moreover, there was a public interest element beyond the pure promotion of open justice. Release of the documents would enable the applicant to assess its chances of having the decision set aside, and would therefore enable it to consider the merits of continuing with the Commercial Court claim that was involving both parties in very substantial expense and would occupy many weeks or months of court time if it went to trial. Further, there had been no undue or prejudicial delay in making the application (paras 43-46, 48).