England and Wales High Court (Chancery Division) Decisions

Mr Justice Mann :

Introduction

The facts of the two cases in brief

A v B

"so that [the search party] can search for, inspect, photograph, electronically copy or photocopy, and deliver into the safekeeping of the Applicants' Solicitors all the documents and articles which are listed in Schedule C to this order ("Listed Items") or which the Supervising Solicitor believes to be Listed Items."

"26. Any copy or image taken of an Electronic Data Storage Device will be handed over by the Independent Computer Specialist to the Supervising Solicitor who will keep it safely in his custody to the order of the court. After the search of the Premises is completed, at the instruction, and according to the directions of the Supervising Solicitor, the Independent Computer Specialist will organise the material on the copies as appropriate in order to expedite the search of their contents. The Applicants' Solicitors… and the Independent Computer Specialist shall then be entitled to search for Listed Items upon such electronic copies on condition that:

(a) the Respondent be given 24 hours written notice of such search by the Applicants' Solicitors;

(b) the search take place under the Supervising Solicitor's supervision;

(c) the Respondent and its legal advisers shall be entitled to be present at such search;

(d) a representative of the Applicants shall be entitled to be present at such search for the purpose of assisting in identifying the Listed Items…; and

(e) the Applicants' solicitors shall be entitled to take copies of any Listed Items found, subject to the Respondent's right to prevent the Applicants' solicitors from taking a copy of any part of a document which the Supervising Solicitor believes to be privileged…"

Hewlett Packard v Manchester Technology Data (Holdings) Ltd

" … so that the [search party] can search for, inspect, photograph, electronically copy or photocopy, and deliver into the safekeeping of the Applicants' Solicitors all the documents and articles which are listed in Schedule C to this order ("Listed Items").

"The Applicants' Solicitors and the Independent Computer Specialist shall then be entitled to search for Listed Items in such Electronic Copies on the following conditions: [ conditions requiring 48 hours notice to the respondents, and for the entitlement of the respondents and their legal advisers to be present at the search and for the search to take place under the Supervising Solicitor's supervision.

(d) the Applicants' Solicitors shall be entitled to take copies of any Listed Items found (any dispute as to whether an item is a Listed Item to be resolved by the Supervising Solicitor), subject to the Respondents' right to prevent the Applicants' solicitors from taking a copy of any part of a document which the Supervising Solicitor believes to be privileged."

The proper approach to the question of who goes first

"In the present case I am satisfied that, if notice were given to the defendant, that would almost certainly result in the immediate destruction of the articles and information to which the plaintiffs are entitled and which they now seek." (p305-6)

Templeman J was satisfied that what he was doing was granting a form of "discovery":

"In essence, the plaintiffs are seeking discovery, but this form of discovery will only be granted where it is vital either to the success of the plaintiffs in the action or vital to the plaintiffs in proving damages …" (p307-8)

And the form of relief was considered to be appropriate because, so far as documents went, it went to the process of discovery:

"That limits the object of the entry to the infringing materials, which belong in any event to the plaintiffs, by virtue of being infringing material, and to the documents which are vital to their case for the purposes of discovery."

In other words, so far as documents were concerned, Templeman J considered that the exercise was justified in order to preserve documents which it was necessary to preserve for the purpose of discovery (now disclosure). I consider that it is important to bear in mind those two underlined features.

"Essential that the plaintiff should have inspection so that justice can be done between the parties: and if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed, that papers will be burnt or lost or hidden, or taken beyond the jurisdiction, and so the ends of justice would be defeated: and when the inspection would do no real harm to the defendant or his case."

"7  Power of courts to make orders for preserving evidence, etc

(1)     The court may make an order under this section for the purpose of securing, in the case of any existing or proposed proceedings in the court—

(a)     the preservation of evidence which is or may be relevant, or

(b)     the preservation of property which is or may be the subject-matter of the proceedings or as to which any question arises or may arise in the proceedings.

(2)     A person who is, or appears to the court likely to be, a party to proceedings in the court may make an application for such an order.

(3)     Such an order may direct any person to permit any person described in the order, or secure that any person so described is permitted—

(a)     to enter premises in England and Wales, and

(b)     while on the premises, to take in accordance with the terms of the order any of the following steps.

(4)     Those steps are—

(a)     to carry out a search for or inspection of anything described in the order, and

(b)     to make or obtain a copy, photograph, sample or other record of anything so described.

(5)     The order may also direct the person concerned—

(a)     to provide any person described in the order, or secure that any person so described is provided, with any information or article described in the order, and

(b)     to allow any person described in the order, or secure that any person so described is allowed, to retain for safe keeping anything described in the order.

(6)     An order under this section is to have effect subject to such conditions as are specified in the order.

Once more, this section makes it clear that the purpose of the jurisdiction is preservation (see subsection (1)), and in order to achieve that it provides for search, inspection and copying. It does not in terms contain any words which expressly deal with the situation which arises in the present case, doubtless because it was not intended to be that specific and the technique of on-site imaging and subsequently inspecting was not widespread (if it existed at all in a practical sense) at that time.

"24. The form of the order sought is not referred to in any precedent (in so far as it provides that the Defendants are not to conduct the e-disclosure exercise themselves). That is not of itself any objection to it. But it does mean that it is necessary to establish what it involves, and on what legal basis, if any, it may be granted."

Then at paragraph 33 he observed:

"33. The present case is one where Turner J did no more than "make an order for delivery up of the plaintiff's documents to his solicitor". It is apparent from Hoffmann J's words (that in many cases this will be sufficient), that it does not necessarily follow, where such an order is made, that there should subsequently be made an order which deprives the Defendants of the opportunity of considering whether or not they shall make any disclosure, contrary to the normal rule on disclosure."

I respectfully agree. And he concluded:

"38. In my judgment, an order which would deprive the Defendants of the opportunity of considering whether or not they shall make any disclosure is (in the words of Hoffmann J) an intrusive order, even if it is made on notice to the defendant. It is contrary to normal principles of justice, and can only be done when there is a paramount need to prevent a denial of justice to the claimant. The need to avoid such a denial of justice may be shown after the defendant has failed to comply with his disclosure obligations, having been given the opportunity to do so (as in Mueller). Or it may be shown before the defendant has had an opportunity to comply with his disclosure obligations. But in the latter case it is not sufficient for a claimant such as the employer in Lock v Beswick, or the Claimant, to show no more than that the defendant has misused confidential information or otherwise broken his employment contract. The position is a fortiori where the claimant has not even shown that much. What a claimant must show is substantial reasons for believing that a defendant is intending to conceal or destroy documents in breach of his obligations of disclosure under the CPR."

(i) The order will have been obtained in the first place on the basis of a strong prima facie case of not only the dishonesty of the defendant but also the propensity of the defendant to cover his or her tracks by destroying evidence. That may mean that the defendant should not necessarily be trusted to carry out the disclosure (inspection) exercise properly, though this factor may be seriously ameliorated by the defendant's solicitors being involved in the process.

(ii) It may be the case that, as a matter of practicality, the relevance of some important documents may be honestly missed by the defendant's solicitors. This is something particularly relied on by the claimant in A v B.

(iii) It may be the case that urgency justifies the claimant's carrying out the search. For example, it might be necessary, as a matter of urgency, to follow property, or to identify other wrongdoers in a supply chain, and it may be the case that having the defendant's solicitor carry out the search will not fulfil that need.

(iv) It may be that the application of search terms can narrow the field to such an extent that the exercise becomes akin to the more familiar one of compelling disclosure of a class of documents, not all of which may be relevant, but which can be searched by the receiving party for relevance.

(v) It may be that the resources available to the claimant are greater than those available to the defendant (particularly in a lot of intellectual property cases where the claimant is likely to be a well-heeled organisation) so that it makes practical sense, in order to further the overriding objective, to allow the claimant to go first, though this must not be allowed to become a charter for the well-heeled to get an advantage over others merely by virtue of being better-heeled.

(vi) On the other side of the argument is the very important factor, which must not be lost sight of, that the whole exercise (including the order itself) is a highly intrusive one, and any digital image of the kind in issue in these cases is likely to contain irrelevant material which is private and confidential (if not privileged) and which should not, if it can be avoided, be seen by the claimant at all. A v B is potentially a very good example of this. The business that the defendants carry on or would like to carry on is in competition with the claimant. Even if they have confidential information of the claimant on their digital devices, or evidence that they have purloined it, there is also likely to be their own confidential information about their own business which they would normally be entitled to keep from the claimants. To allow the claimants to see that at all involves a high degree of intrusion which must be acknowledged in the process.

A v B

HP v Manchester Technologies

(i) His clients need to do it, and to do it now, so that they can seek to investigate what he says are large scale wrongs committed against his clients, possibly going on for a number of years. They want to investigate the scale of the (allegedly) wrongful activities and, in particular, the source of the illegitimate goods which have allegedly been sold by the defendants. His clients do not want to wait until a disclosure process which might get long and drawn-out – see the next point.

(ii) The defendants have in effect said they cannot carry out a proper relevance assessment anyway. In their evidence in answer to the parts of the order requiring disclosure of information as to sources of offending material, they say they cannot identify what material was wrongfully sourced or counterfeit anyway. I find that he is right in saying that they have, in effect, said that.

(iii) It is said there was an agreement at the time of the execution of the search order under which the defendants agreed that the image or images could be searched in order to avoid a search of the paper documents that were present. The claimants are entitled to hold the defendants to that agreement.

(iv) Mr Howe did not oppose the idea (if it was put forward) of a preliminary search by the defendants' solicitors to exclude privileged material.

(i) He said that disclosure should take place at the normal time and in the normal way, though he was not opposed to acceleration of the procedure if it really needed to be done now. His submission on timing was that there did not seem to be an urgent need to carry it out now because the claimants had apparently delayed for some months to mount the application (judging by the period covering all the various test purchases relied on), and the documents go back to 2013.

(ii) The number of items to be searched was very large (500,000 mobile phone items and 2.7m computer items) and some more limited paper material. There was 5.4Tb of backups as well. The cost of the exercise apparently to be carried out by the claimants would, in the hands of the claimants, be likely to be large and the costs were not easily controlled. His clients were at risk of having to pay excessive costs. Under the claimants' search proposals two firms of solicitors and the supervising solicitor were to be involved. If the defendants were to be allowed to do a normal disclosure exercise then only they would be involved, and they would be charging lower Manchester rates (the claimants have London solicitors).

(iii) The defendants have put forward a keyword search regime which involved discussion in advance; the claimants' proposals for keywords were not to be discussed and agreed in advance. Under the defendants' proposals the claimants could make sure their words were included, so were not disadvantaged by the defendants' carrying out the searches and assessing for relevance.

(iv) It was not accepted that the agreement relied on by the claimants was actually reached.

"I agree to not take docs but strictly on bases that can search imaged data"

A note of Ms Hamilton of the claimants' solicitors reads:

"Decision to not review hard copy files on bases that we would review image data (in particular Nvision)"

Mr Howe therefore relied strongly on that agreement.

Conclusions