The Court of Appeal Revisits Search Orders - TBD (Owen Holland) Ltd v Simons and Others

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Jane Lambert

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)

This was a judgment on two appeals.  The first appeal was brought by John O'Boyle ("Mr O'Boyle") against an order by His Honour Judge Keyser QC permitting TBD (Owen Holland) Ltd, ("TBD") to bring committal proceedings for contempt of court against Mr O'Boyle in TBD (Owen Holland) Ltd v Simons [2019] EWHC 2390.  The second was by TBD against Mr Justice Marcus Smith's order in TBD (Owen Holland) Ltd v Simons and others [2020] EWHC 30 (Ch) which I blogged in Search Orders - TBD (Owen Holland) Ltd v Simons and Others on 22 Jan 2020.   Both appeals arose from the execution of an order for the search of Mr O'Boyle's home and the premises of his former company G2A Limited ("G2A") on 9 Nov 2018.

The Judgment
Lord Justice Arnold, who delivered the lead judgment in TBD (Owen Holland) Ltd v Simons and others [2020] EWCA Civ 1182 (8 Sept 2020), handed down a 284 paragraph long decision. He explained at paragraph [2] that the judgment was so long because the Court of Appeal had investigated the procedural history in more detail than the courts below.  He did so in order to put the issues in the appeal in their proper context. 

He traced the procedural history of the litigation between paragraphs [2] and [126], the development of the law on search orders between [127] and [175], the development of the law on imaging orders between [176] and [193], the appropriateness of a search order in this case at [194], the interpretation of the search order between [194] and [215], Mr Justice Marcus Smith's order for an independent review between [216] and [229],  the law on applications for permission to bring committal proceedings between [230] and [234], the application for permission in this case between [235] and [253], litigation privilege between [254] and [278] and the appropriateness of Mr Justice Marcus Smith's order for security for costs between [279] and [283]. 

At paragraph [284], Lord Justice Arnold allowed Mr O'Boyle's appeal from Judge Keyser's order granting permission for committal proceedings to be launched against him and upheld Mr Justice Marcus Smith's judgment with one slight variation.   He varied Mr Justice Marcus Smith's order to allow a review of the imaged materials to be carried out by the defendant's solicitors rather than by independent solicitors. The other Lord Justices delivered short concurring judgments.

The Facts
TBD makes and sells baggage trolleys, steps and similar equipment for the aviation industry.  In 2018 it learned that G2A had been canvassing its customers using promotional materials which included copies of TBD's photographs and technical material.  TBD suspected that G2A had acquired those materials from one Andrew Simons ("Mr Simons") who had joined G2A after losing his job with TBD. The company's suspicions were well-founded.   Mr Simons filed an affidavit on 16 Nov 2018 disavowing an earlier affidavit made in response to an earlier injunction to deliver up infringing material as false and untrue. He handed over 9 lever arch files of documents, some of which comprised material that Mr Simons had improperly taken from TBD.  Although Lord Justice Arnold criticized the adaptation of paragraph 17 of the precedent in the annex to Practice Direction 25A - Interim Injunctions and queried whether TBD needed a search order at all as opposed to an imaging order at [194] the main problem with the search order was TBD's inspection of documents that it was not entitled to see.  It was to rectify that problem that Mr Justice Marcus Smith ordered an independent review of the imaged materials at TBD's expense.

Mr O'Boyle's Appeal against Judge Keyser's Order
Although Mr Justice Marucs Smith had revoked Judge Keyser QC's permission to bring committal proceedings against Mr O'Boyle, his appeal against the grant of that permission remained unresolved.   One of the grounds upon which Mr O'Boyle had opposed the application for permission was that TBD relied on text messages between himself and Mr Simons which M O'Boyle claimed to be privileged.  Judge Keyser had rejected the claim to privilege and held that a breach of the search order did not justify withholding permission.  He granted permission to bring committal proceedings but adjourned them to the conclusion of the trial.   In the Court of Appeal, Mr O'Boyle argued that TBD's application should have been dismissed because it was premature. Judge Keyser had refused to dismiss the application on the grounds that a new application could be made at trial. Mr O'Boyle argued that that was no reason for not dismissing it altogether.  Lord Justice Arnold agreed.   At paragraph [238] of his judgment, he allowed Mr O'Boyle's appeal against both the grant of permission and adjournment of the committal proceedings. 

TBD's Appeal against Mr Justice Marcus Smith's Order
TBD appealed against Mr Justice Marcus Smith's decision on the following grounds:

• Mr Justice Marcus Smith had been wrong to hold that the search order did not permit TBD to inspect the materials recovered on the search or to use information obtained therefrom in the proceedings and  that TBD had thereby breached the search order;
• the judge had been wrong to order a review of the searched documents by independent solicitors at TBD's expense;
• he had erred in revoking Judge Keyser's permission to bring committal proceedings against Mr O'Boyke;
• he should have allowed committal proceedings to be brought against Mr Simons; and
• it has been unjust to require TBD to give security for costs.

Lord Justice Arnold rejected the claimant's contentions on the construction of the search order.  He concluded that nothing in the order authorized its solicitors to inspect listed items recovered by the computer experts, still, less did it authorize them to inspect documents which did not qualify as listed items or documents which did qualify as listed items but were privileged.  TBD had conceded that, if and to the extent that its solicitors had exceeded what was permitted by the order, then TBD would be in breach of the search order.  Lord Justice Arnold held that TBD had breached the search order by (i) inspecting listed items in the searched documents, (ii) inspecting documents which did not qualify as listed items and (iii) using information obtained as a result of (i), and perhaps (ii), for the purposes of (a) amending the claim form and particulars of claim, (b) supporting the application for committal of Mr Simons, (c) seeking permission to bring committal proceedings against Mr O'Boyle and (d) writing to third parties, including Langtons, Ryanair and the SRA.  In addition, TBD's solicitors had disregarded well-founded objections to the search from Mr O'Boyle, failed to apply on notice for permission to search from the judge and withheld the full facts from Judge Keyser.  His lordship upheld Mr Justice Marcus Smith's decision on this ground.

Although he had found that TBD had breached the search order Mr Justice Marcus Smith did not think it appropriate to strike out its statement of case.  Instead, he ordered an independent review of the recovered materials to be carried out at TBD's expense.   TBD had 9 objections to that remedy none of which impressed Lord Justice Arnold.  The order was within Mr Justice Marcus Smith's discretion and his exercise of it could not be faulted.   However, at TBD's suggestion, he varied the order to allow Mr O'Boyle's solicitors to carry out the review instead of an independent law firm.

Mr Justice Marcus Smith had revoked Judge Keyser's permission to bring committal proceedings against Mr O'Boyke because the application relied on material that had been obtained in breach of the search order, it breached an undertaking not to use the material for separate proceedings and the proceedings would have been oppressive. TBD criticized Mr Justice Marcus Smith's decision on the ground that no application to revoke permission for the committal proceedings had been before the judge. TBD contended that it had insufficient opportunity to dissuade the judge.  Also, Mr Justice Marcus Smith had given insufficient reasons for departing from Judge Keyser's order.  Lord Justice Arnold rejected those objections. The judge was entitled to consider the issue of his own motion and TBD had ample opportunity to make its representations. In Lord Justice Arnold's view, Mr Justice Marcus Smith was entirely correct to conclude that the conduct of TBD and its solicitors demonstrated a fundamental misunderstanding of their role with respect to committal proceedings, and in particular committal proceedings prior to trial.

Mr Justice Marcus Smith had refused permission for committal proceedings against Mr Simons partly because the application to commit would have relied on materials that the claimant should not have seen and partly because it would have been inconsistent with his decision not to allow such proceedings to be brought against Mr O'Boyle. That was particularly the case as Mr O' Boyle was alleged to have been the mastermind of the wrongdoing and Mr Simons was said to be his pawn.  TBD reminded the Court of Appeal of Mr Simons's removal of 9 ring binders of its confidential materials and his untrue affidavit and pointed out that neither Mr Simons nor anyone else had applied for Judge Keyser's order to be revoked.  Lord Justice Arnold said that at first blush these were powerful arguments but he was not persuaded by them. The judge had been entitled to reach the decision that he had taken. There were no grounds for disturbing his decision, 

TBD argued that it had been unjust to order it to give security fr costs on the grounds that the order for two reasons. The first was that it took no account of the conduct of the defendants or the strength of the claim. The second was that it would stifle the claim.  Lord Justice Arnold was unpersuaded.  The decision of whether or not to order a party to give security for costs was within the judge's discretion.  Lord Justice Arnold could see no grounds for interfering with it. 

Litigation Privilege

Had the committal proceedings been launched TBD is likely to have relied on the text messages between Mr Simons and Mr O'Boyle mentioned above.  Each of them contended that those communications were privileged.  Judge Keyser had doubted that they were because they had not been written in contemplation of litigation and Lord Justice Arnold agreed with him. TBD also argued that Mr O'Boyle had waived privilege or that the privilege did not apply because of the iniquity exception.   Lord Justice Arnold could not agree with those contentions.

Effect of Digitization

Lord Justice Arnold observed at paragraph [176] that:

"It will be appreciated that search orders originated in the analogue era when most documents existed solely in paper form. Since then, of course, technology and business have been transformed by digitisation, widespread availability of significant portable computing power and the explosion in both wired and wireless connectivity. The result is that most documentary evidence nowadays exists in digital form stored either in digital devices or in cloud storage. The relevance of this transformation to search orders has been insufficiently appreciated."

He continued at [179]:

 "The availability of imaging has important consequences for search orders which in my experience have frequently been disregarded. The first is that, if what is needed is a remedy to preserve evidence in order to ensure that it cannot be altered, destroyed or hidden, then in many cases an order requiring the respondent to permit imaging of its digital devices and cloud storage ("an imaging order") will be the most effective means of achieving that objective. The second, which follows from the first, is that, if an imaging order is made, then that may well make a traditional search order unnecessary, or at least may enable the scope of the search order to be significantly restricted e.g. to articles as opposed to documents."

It followed that any court faced with an application for a search order and an imaging order should first consider whether to grant an imaging order. If the court is prepared to grant an imaging order, then it should be presumed that a traditional search order is unnecessary. Where an imaging order is made, it should be obvious that appropriate safeguards are required for the protection of respondents.  Unlike search orders, there is no standard form of imaging order.   Both Lord Justice Arnold and Lord Justice David Richards called for a standard form of imaging order in their judgments.

Conclusion

When this action began TBD had a very strong case.  Its copyrights had been infringed and its trade secrets disclosed and used.  The search order resulted in the recovery of 9 ring binders of confidential materials and an abject apology and confession from one of its former employees.  It is unlikely that TBD would have obtained those materials or obtained the confession and apology by any other means.  The litigation may well have prompted a chain of events that resulted in the liquidation of its competitor, G2A.  Yet the victim of this wrongdoing has to pay heavy costs, its action has been stayed  and it has to give security for the defendants' costs if the litigation is to continue.  So how did it all go so disastrously wrong?

The answer is that TBD overplayed its hand.  As Lord Justice Arnold explained at paragraph [175] after his exhaustive review of Anton Piller cases from EMI Ltd v Pandit [1975] 1 WLR 302 to CPR Part 25 and the Part 25A Practice Direction 

"the purpose of a search order is to preserve evidence, whether documentary or real, and/or property in order to prevent the defendant from altering, destroying or hiding such evidence or property if given notice. The purpose of inspecting documents during the course of the search, to the extent permitted by the order, is to identify documents which should be preserved."

There is nothing in the Civil Procedure Rules or the form of most orders that allows a claimant to go further. Once the evidence has been saved it may be examined only with the agreement of parties or the direction of the court.  

TBD also spent a lot of time and money on pursuing Mr O'Boyle and Mr Simons for contempt of court. CPR Part 81 provides for committal proceedings to enforce an injunction or undertaking under Part II for which the court's permission is not required and proceedings for interfering with the administration of justice under Part III for which it is.  At paragraph [246] of his judgment, Lord Justice Arnold endorsed Mr Justice Andrew Baker's dicta in  Navigator Equities Ltd and Another v Deripaska [2020] EWHC 1798 (Comm) (17 July 2020) at [143]. After warning of the danger of pursuing a contempt application to further interests that it is not the function of the contempt jurisdiction to serve, the learned judge said:

"A further consequence is that the claimant/applicant pursues a contempt charge as much as quasi-prosecutor serving the public interest as it does as private litigant pursuing its own interests in the underlying dispute. The claimant/applicant needs to understand that; and if it is legally represented, as here, the legal representatives need to understand that their role as officers of the court is acutely pertinent, even if (to repeat) the process is not to be equated with a private prosecution in a criminal court. Thus, it appears to have struck Teare J as obvious in the long-running Ablyazov litigation that the quasi-prosecutorial role of the claimant/applicant in pursuing a contempt charge means its proper function is to act generally dispassionately, to present the facts fairly and with balance, and then let those facts speak for themselves, assisting the court to make a fair quasi-criminal judgment: JSC BTA Bank v Ablyazov [2012] EWHC 237 (Comm) at [15]."

It is always tempting to put the boot in when your opponent is on the ropes, especially if he has given you grief, but it is a temptation that is best resisted.

Further Information

In my case note on Mr Justice Marcus Smith's judgment, I wrote

"This is an important decision and arguably comparable to those of Mr Justice Scott in Columbia Picture Industries and Others v Robinson, Mr Justice Hoffmann in Lock International Ltd. v Beswick and Sir Donald Nicholls in Universal Thermosensors Limited v Hibben."

Lord Justice Arnold's powerful 284 paragraph judgment has removed the need for the word "arguably".  As this is an important case I shall give a talk on it over Zoom in the next few weeks.   In the talk, I shall discuss imaging orders and how they should be drafted in such a way as to further the litigation while safeguarding the interests of defendants.   Anyone who wants to attend the talk or discuss this case should contact by clerk Stephen on +44 (0)20 7404 5252 or send me a message through my contact form.