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Court of Appeal (Lords Justices David Richards, Newey and Arnold) TBD (Owen Holland) Ltd v Simons and others [2020] EWCA Civ 1182 (8 Sept 2020)
The claimant applied for a search order against the former employees and their company. A search order is an order of the court requiring a property owner or occupier to admit a solicitor appointed to represent the court known as "the supervising solicitor", a small number of the opposing party's lawyers and maybe an expert in searching and recording computer memories or some other specialist. The order usually requires the owner or occupier to allow the search party to look for documents and other evidence that is relevant to the proceedings. If the searchers find relevant information the order permits the team to photocopy or record it in some other way,
The jurisdiction to make such orders lies ar the very extremity of the High Court's powers. They are made very sparingly and are not easy to obtain, A judge has to be persuaded that there is a very acute danger that the evidence will be hidden, removed or destroyed once the person possessing it learns that he or she is being sued or about to be sued. It is not enough to show that such person is a wrongdoer. It is necessary to show that he or she is unscrupulous enough to hide, remove or destroy evidence. For that reason, no warning is given to the property owner or occupier. In many cases, litigation begins with a search order.
Shortly after the issue of proceedings in the present case, the claimant obtained an injunction requiring its former employees to stop infringing its copyrights, to return any of its property that remained in their possession and to conform on affidavit that they had complied with the order. The infringing acts continued and the claimant suspected that the defendants had been holding something back. They applied to Judge Keyser QC for a search order which he granted. The order was executed and the claimant's suspicions proved to be justified. Following the execution of the order, the first defendant filed an affidavit confessing that his previous affidavit had been untrue and exhibiting 9 ring binders of documents some of which he had removed from the claimant's premises. A few weeks later the former employees' company stopped trading and later went into liquidation.
From the point of view of the claimant. this was the high water point of the litigation, Matters started to go awry when the claimant's solicitors and computer experts started to examine the documents that they had taken away from the defendants' premises most of which they were not entitled to see. The solicitors also applied for permission to commit the claimant's former employees to prison for interfering with the administration of justice under Part III of CPR Part 81.
Another of the former employees and several other defendants applied for the claim to be struck out on the ground that the claimant's solicitors and experts had breached the terms of the search order by inspecting documents that they were not entitled to see. They also complained that the claimant had used such evidence in an application for permission to bring the committal proceedings. The application was heard by Mr Justice Marcus Smith who is the Chancery Supervising Judge for Wales. He heard the application on 28 and 29 Nov 2019 and delivered judgment in TBD (Owen Holland) Ltd v Simons and Others [2020] EWHC 30 (Ch) on 17 Jan 2020.
Mr Jsutice Marcus Smith found that the claimant had breached the search order by inspecting the documents that its solicitors had recovered in the search. He held that the purpose of the search order was to preserve evidence. It did not give the claimant any right to rummage through materials that they were not entitled to see. However, the judge did not think it appropriate to strike out the claim at that time. Instead, he ordered the recovered material to be handed over to an independent law firm who would weed out any privileged or self-incriminatory material and identify documents relevant to the proceedings at the claimant's expense. He revoked permission that had already been given to institute committal proceedings against one defendant and refused permission to bring such proceedings against another. He stayed the proceedings and ordered the claimant to give security for the defendants' costs. I blogged about Mr Justice Marcus Smith's decision in Search Orders - TBD (Owen Holland) Ltd v Simons and Others 22 Jan 2020 NIPCl Law.
The claimant appealed against Mr Justice Marcus Smith's judgment to the Court of Appeal. The appeal was heard by Lords Justices David Richards, Newey and Arnold on 22-24 July 2020. They handed down a massive 286 paragraph judgment almost all of which had been written by Lord Justice Arnold. In his powerful and exhaustive lead judgment, the learned Lord Justice traced the history of the litigation, analysed the search order, reviewed the case law and considered carefully Mr Justice Marcus Smith's judgment. He held that search orders exist for preserving evidence and nothing else and that the claimant had been wrong to examine the documents that it had seized. It upheld Mr Justice Marcius Smith's decision with one slight variation. Instead of delivering the documents to independent solicitors, he allowed the defendants' solicitors to carry out the sifting. He did not lift the stay or the requirement to give security for the defendants' costs. He revoked the permission that Judge Keyser had given for committal proceedings. The other Lords Justices delivered short concurring judgments. I discussed the appeal in The Court of Appeal Revisits Search Orders - TBD (Owen Holland) Ltd v Simons and others 10 Sept 2020 NIPC Law.
Lord Justice Arnold noted that the law on search orders developed when most documents were on paper. Nowadays, they were more likely to be in digital form and kept on a computer, tablet, phone or other device or in the cloud. For the last decade or so it has been possible for computer experts to make perfect copies of the content on a computer by a technique known as imaging. Imaging was less intrusive than an old fashioned search order but safeguards were required to protect respondents' privacy and other interests. He suggested that courts that are asked for a search order for the purpose of imaging should consider whether an imaging order should be made instead. He called for the Rules Committee to produce a standard form imaging order on the lines of the standard form search orders and freezing injunctions.
As this is an important case I will deliver a talk on it and some of the other issues that Lord Justice Arnold and Mr Justice Marcus Smith discussed in their judgments by Zoom before the end of the month. Anyone wishing to attend the call or discuss this article is welcome to call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.
