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26 May 2022
Disputes Quick Read – 43 of 93 Insights
Disputes Quick Read: ENRC prevails in claim against former solicitor
- Quick read
Mr Justice Waksman has handed down his 386-page judgment in the claims brought by ENRC against Dechert, former partner Neil Gerrard and the SFO.
What happened?
Mr Gerrard had been retained as ENRC's solicitor in 2011 to advise on an internal investigation which was being conducted by ENRC. The Serious Fraud Office (SFO) wrote to ENRC in August 2011, the day after the publication of an article based on leaked documents. Following advice from Mr Gerrard, ENRC agreed in November 2011 to engage with the SFO as part of a ‘self-reporting’ process.
ENRC’s engagement with the SFO, led by Mr Gerrard, continued until March 2013 when ENRC terminated Dechert’s retainer. ENRC became Dechert’s most lucrative client worldwide, with Dechert’s fees totalling £13 million. In April 2013, the SFO opened a criminal investigation into ENRC, which remains open to this day although neither ENRC or any of its current or former directors or employees have been charged with any offence.
The facts
ENRC began a claim against Mr Gerrard and Dechert, alleging that Mr Gerrard had breached his duties as a solicitor for leaking confidential and / or privileged information to the press and had wrongly advised ENRC on the approach it should take to its engagement with the SFO. ENRC also alleged that Mr Gerrard had sent the SFO a brown envelope of privileged and confidential material relating to ENRC in June 2013, a few months after the termination of Mr Gerrard / Dechert's retainer.
ENRC brought a further claim against the SFO (which was heard at the same time as the claim against Mr Gerrard and Dechert) on the basis that the SFO had actively participated in Mr Gerrard's breaches of duty in the course of a series of 30 unauthorised contacts with the SFO, and should be liable for inducing breach of contract and/or fiduciary duty, and misfeasance in public office.
ENRC prevailed with Mr Justice Waksman finding that Mr Gerrard was the source of three leaks to the press (including the one in August 2011) and had sent the brown envelope to the SFO. It was held that the advice given by Mr Gerrard was wrong, had resulted in an unnecessary expansion of the investigation and that he had acted against his client's interests. The level of misconduct was described in the judgment as "almost unimaginable". The SFO was found to have been in serious breach of its own duties, with liability for inducement to breach contract having been established. There will be a subsequent trial on causation and loss.
Conclusion
The SFO is likely to feel the impact of the judgment for a long time to come. It will be added to the list of recent SFO failures (the Serco trial having collapsed in April 2021 and convictions in the Unaoil case having been quashed as unsafe in December 2021 with a retrial denied) and underscores the importance of the ongoing independent review into the SFO which was commissioned by the Attorney General at the end of last year. The findings of that review were due to be reported at the end of May but it remains to be seen if more time will now be required to understand the impact of Waksman J's judgment.
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