Search Orders - TBD (Owen Holland) Ltd v Simons and Others

Author Mohammed Tawsif Salam Licence CC BY-SA 3.0  Source Wikipedia

Chancery Divison (Mr Justice Marcus Smith) TBD (Owen Holland) Ltd v Simons and others [2020] EWHC 30 (Ch) (17 Jan 2020)

Jane Lambert

In Anton Piller KG v Manufacturing Processes Ltd. and others [1976] Ch 55, [1975] EWCA Civ 12, [1976] 1 All ER 779, Lord Denning MR noted that the judges of the Chancery Division had recently been making orders of a kind not known before whereby the plaintiff and his solicitors were authorized to enter the defendant's premises so as to prevent the loss or destruction of evidence, provided that the defendant gave them permission to enter.  Such orders were then made under the inherent jurisdiction of the court and were not covered by the Rules of the Supreme Court so it fell to the Court of Appeal to consider them on principle. It seemed to Lord Denning that such an order could be made by a judge without notice to a defendant, but it should only be made where it was essential for justice to be done. If the defendant were forewarned, there would be a grave danger that vital evidence would be destroyed, papers burnt, lost, hidden, or taken outside the jurisdiction.

As is often the case with useful new remedies, the exceptional became commonplace with the result that there were some serious abuses of the procedure (see Columbia Picture Industries and Others v Robinson and Others [1986] F.S.R. 367 and Lock International Ltd. v Beswick [1989] 1 WLR 1268). In Universal Thermosensors Limited v Hibben and Others [1992] F.S.R. 361, Sir Donald Nicholls VC imposed the following safeguards which made those orders much more expensive and somewhat more difficult to get and execute:

"(1) Anton Piller orders normally contain a term that before complying with the order, the defendant may obtain legal advice, provided this was done forthwith. If it is to be of use, such a term requires that in general, Anton Piller orders should be permitted to be executed only on working days in office hours, when a solicitor can be expected to be available.
(2) If an Anton Piller order is to be executed at a private house and it is at all likely that a woman may be in the house alone, the solicitor serving the order must be or must be accompanied by, a woman.
(3) In general, Anton Piller orders should expressly provide that, unless it is seriously impracticable, a detailed list of the items being removed should be prepared at the premises before they are removed and the defendant should be given an opportunity to check this list at the time.
(4) One week was too long a time to restrain a party upon whom an Anton Piller order was served from informing others of its existence.
(5) Anton Piller orders should provide that, unless there is good reason for not doing otherwise, the order should not be executed at business premises save in the presence of a responsible officer or representative of the company or trader in question.
(6) When Anton Piller orders are made in this type of case, consideration should be given to devising some means, appropriate to the facts, to ensure that a personal competitor is not given a carte blanche to search through the documents of the defendant.
(7) When making Anton Piller orders, consideration should be given to the desirability of providing
(a) that the order should be served by a solicitor other than a member of the firm of solicitors acting for the party which has obtained the Anton Piller order;
(b) that the solicitor involved should have experience of Anton Piller practice;
(c) that the solicitor involved should prepare a written report of *365 the execution and that a copy of it should be served on the defendant;
(d) that the report should be put to the court, preferably to the judge who made the order, within a few days of execution of the order at an inter parties hearing."

When Parliament replaced the Rules of the Supreme Court and the County Court Rules with the new Civil Procedure Rules, s.7 of the Civil Procedure Act 1997 placed those orders on a statutory basis for the first time.  Now known as "search orders", the practice is set out in CPR 25.1, paragraph 7 of Practice Direction 25A - Interim Injunctions and the Annex to the Practice Direction.

In TBD (Owen Holland) Ltd v Simons and others [2020] EWHC 30 (Ch) (17 Jan 2020), Obcon Solutions Limited, OSL Rail Limited and one John O'Boyle ("Mt O'Boyle") applied to strike out a claim against them by TBD (Owen Holland) Limited on the ground that TBD (Owen Holland) Ltd ("TBD") had breached the terms of a search order that that company had obtained from His Honour Judge Keyser QC against one Andrew Simons ("Mr Simons") and GA2 Ltd ("GA2") on 7 Nov 2018.  The application was heard by Mr Justice Marcus Smith on 28 and 29 Nov 2019.   In his judgment of 17 Jan 2020, his lordship held that there had indeed been a serious breach of the search order but did not consider that it was appropriate to strike out TBC's claim against the applicants at that time though he did grant them other relief.  

The judge found that TBD had breached Judge Keyser's order by:

• inspecting all the materials that had been recovered upon the execution of that order which included items that were privileged and/or confidential, and by 
• using those materials to 
• join the applicants as defendants to a copyright and database right action against Mr Simons and GA2 and 
• launch committal proceedings against Mr Simons and Mr O'Boyle. 

At paragraph [42] of his judgment, Mr Justice Maecus Smith's said:

"The essential purpose of a search order is not to provide early disclosure, but rather to preserve documents necessary for the proper conduct of litigation before these courts."

Search orders sometimes make provision for accelerated disclosure or inspection of recovered material but Judge Keyser's order contained nothing of that sort. It provided for TBD's computer experts to copy the files on GA's computer, to analyse them and deliver certain listed items to TBD's solicitors.  It contained no provision sanctioning anything other than the preservation of listed items.  TBD compounded the breach by failing to seek an order for disclosure or inspection or even mentioning it to Judge Keyser on the return day.

Mr Justice Marcus Smith was in no doubt that he had jurisdiction to strike out TBD's statement of case for its breach of Judge Keyser's search order but he noted that "the striking out of a statement of case is one of the most powerful weapons in the court's case management armoury and should not be deployed unless its consequences can be justified".  He said at paragraph [77] that although he had found TBD's breach of the search order to be flagrant and very serious, he did not consider that it would be appropriate at that point in time to strike out all or any part of its statement of case. He rejected the applicants' contention that TBD's breach prevented their having a fair trial.

Instead of striking out the claim, he sought to order rectification of the breaches of the search order by requiring TBD to:
(1)  provide, in short order, a comprehensive list of the documents comprising the searched material;

(2)  hand over all of the imaged files – that is, all of the search order material – to a third-party firm of solicitors, to carry out a privilege, self-incrimination and relevance review; and

(3)  explain, in detail (but without invading any privilege that may exist) what use it has made of the search material in terms of approaches to third parties.

Until the completion of that process, the proceedings would be stayed in all other respects, and TBD would be enjoined from deploying the search order material and/or the searched material in any way. TBD would pay for those steps since it was responsible for the situation.  The parties would then be at liberty to apply for further directions which might include the striking out of TBD's statement of case.  

Finally, the judge revoked the permission that Judge Keyser had granted to start committal proceedings against Mr Simons and refused permission to start them against Mr O'Boyle.  The costs of those proceedings would be borne by TBD in any event.   By way of security for the applicants' costs,  he directed TBD to pay to the applicants' solicitors (for them to hold to the order of the court in a segregated account) the sum of £100,000 within a short period of the handing down of the judgment and £25,000 each month during the pendency of the proceedings, taking account of any stay until further order of the court or until the conclusion of the proceedings.

This is an important decision and arguably comparable to those of Mr Justice Scott in Columbia Picture Industries and Others v Robinsons, Mr Justice Hoffmann in  Lock International Ltd. v Beswick and Sir Donald Nicholls in Universal Thermosensors Limited v Hibben.  Anyone wishing to discuss this article or search orders generally may call me on 020 7404 5252 during normal office hours or by messaging me through my contact form.