The office of an in-house solicitor was bugged and confidential conversations with a lawyer from Pinsent Masons were recorded, a Court of Appeal judgment has revealed.

DSM SFG Group Holdings Ltd & Ors v Kelly states that the office of Adrian Kennedy, in-house solicitor at demolition business DSM SFG, was bugged for two months at the end of 2018 and 40 hours of conversations recorded. Many of the conversations were ‘privileged and confidential’ ones between Kennedy and Stuart McNeill of Pinsent Masons.

According to the judgment, litigant John Thomas Kelly admitted in a witness statement to asking a retired police officer to bug the office after he became anxious about a £23m transaction in which he sold interest in various businesses. The litigation concerned whether Kelly could rely on the covert recordings to support a legal claim.

When the appellants discovered the recording device, they issued an application for injunctive relief against Kelly, alleging harassment and breach of confidence on the basis of the covert recordings made by the respondent at the appellants’ premises which he then sought to use so as to put illegitimate pressure on the appellants and their employees.

However, Mr Anthony Metzer QC, acting as deputy High Court judge, allowed Kelly to revise his undertakings so he could use the recordings to ‘bring any counterclaim and/or any related action’ against the appellants.

Metzer J's decision was subsequently reversed by the Court of Appeal. In his judgment, Lord Justice Davis said: ‘In my view, with all respect to the judge, his conclusion was plainly wrong. Release from the undertakings was neither convenient nor just…It would have permitted the respondent to make use of covertly obtained confidential information to his own perceived advantage without his right to do so first having been established.’

Lord Justice Simon concurred, allowing the appeal and restoring the initial undertakings.