TBD (Owen Holland) Ltd v Simons and others [2020] EWCA Civ 1182]

Background

The First Defendant, Mr Andrew Simons (S), was employed by the Claimant, TBD (Owen Holland) Ltd (TBD). After leaving TBD, S went on to become a director of the Second Defendant, G2A Limited (G2A), a competitor of TBD. 

TBD alleged that S had breached the terms of his employment contract with TBD by disclosing trade secrets or other confidential information to G2A and allowing G2A to use it. TBD also alleged that G2A had procured S's breaches of contract. 

TBD subsequently obtained and executed a search order against S and G2A. During the search order, digital data contained on electronic devices was forensically imaged and subsequently searched without S's or G2A's agreement, or any court order, using keyword searches. S had previously repeatedly objected to TBD's proposed keyword searches on the grounds that the keyword searches would inevitably result in documents being identified which extended well beyond "listed items" as defined in the search order and included his personal and private information. TBD used the searched documents to introduce various claims against additional defendants, including Mr O'Boyle who was a director of G2A (B), to make an application for permission to commence committal proceedings against B and to obtain evidence from third parties.

The application for permission to commence committal proceedings against B was based partly on a transcript of text messages between B and S, exchanged after the proceedings were underway and obtained by TBD as a result of the keyword search of the forensically imaged documents. The text messages discussed TBD, something being "important to the case", obtaining legal advice for the defence of the claim and the advice the lawyers had given (Transcript). During TBD's application hearing in August 2019, Keyser J ruled that the Transcript was not subject to litigation privilege claimed by B. B appealed.

Also in August 2019, seemingly prompted by the decision in A v B [2019] EWHC 2089 (Ch), [2019] 1 WLR, B made an application to strike out TBD's claim on the grounds, among others, that TBD had acted in breach of the search order by searching the forensically imaged documents without the consent of S or G2A, or a court order, and by using the searched documents in the ways as described above. 

The application came before Marcus Smith J, who held that TBD had breached the search order but declined to strike out the claim. He also dismissed TBD's application to bring committal proceedings against B and revoked permission to bring committal proceedings against S. TBD appealed. 

Decision

Search order

The Court of Appeal 

• dismissed TBD's appeal. 
• had considerable concerns as to the appropriateness of the search order as firstly, it combined a traditional search order with an imaging order and secondly, the imaging order did not merely provide for images of the data to be made, but also for those images to be analysed by TBD's computer experts, without imposing any safeguards to protect the defendants. 
• held that the purpose of the search order was the preservation of evidence. Whilst the search order authorised TBD to inspect the documents, it only authorised inspection during the course of the search, not subsequently, and only for the purposes of the search. This meant identifying listed items, copying them where necessary and delivering them into the safekeeping of TBD's solicitors. Safekeeping did not require or permit inspection of the documents.
• concluded that TBD breached the search order by:
  • Inspecting listed items in the searched documents. 
  • Inspecting documents which did not qualify as listed items.
  • Using information obtained as a result such inspection for the purposes of amending the claim form and particulars of claim, supporting the application for committal of S, seeking permission to bring committal proceedings against B and writing to third parties.

Privilege

The Court of Appeal 

• dismissed B's appeal against Keyser J's decision that B had no claim to litigation privilege in respect of the Transcript. 
• considered that B did not have a valid claim to litigation privilege because, at the time that the text messages recorded in the Transcript were exchanged, B was not a defendant and litigation was not reasonably in contemplation against him personally.
• also considered that B could not claim common interest privilege in the Transcript. As litigation was not reasonably in contemplation against B at the relevant time, he could only have been acting in his capacity as a director of G2A. Therefore, he did not have his own interest in obtaining legal advice about TBD's claims, nor was he exchanging advice with G2A. The fact that B was a major shareholder in G2A did not affect this. Even assuming that there may be a common interest between a company and a significant shareholder for the purposes of litigation privilege, there was no evidence to suggest that B was involved in his capacity as a shareholder, rather than in his capacity as a director. 

Comment 

This decision looks in detail at the history of search orders and in doing so identifies three fundamental points:

• The purpose of a search order is to preserve evidence. The purpose of inspecting documents during the course of the search is to identify documents which should be preserved.
• Orders for inspection and disclosure may be justified but they are distinct, require separate justification and have different effects.
• Both types of order must contain proper safeguards. 

The decision notes that the availability of imaging, (the process whereby forensic computer experts take complete copies, referred to as "images" of data contained on electronic devices), had important consequences for search orders. In particular, the court commented that if an imaging order is granted then it should be presumed that a traditional search order is unnecessary. 

Where an imaging order is made, it must include the following appropriate safeguards:

• The images should be kept in the safekeeping of the forensic computer expert, and not searched or inspected by anyone, until the return date.
• On the return date, consideration must be given to the timing and method of disclosure and inspection of documents captured in the images. The presumption should be that it will be for the defendant to give disclosure of such documents in the normal way and there should be no unilateral searching of the images by or on behalf of the claimant. The method of the search must be either agreed between the parties or approved by the court.
• The keywords to be used in keyword searches must be agreed between the parties or determined by the court.

The Court of Appeal commented that in contrast to search orders, no standard form of imaging order had been developed. The court emphasised the urgent need for the Civil Procedure Rules Committee to address this.

Practical advice

This judgment contains useful guidance on the use and purpose of search orders. If a search order is obtained, the search must be undertaken carefully, with appropriate safeguards, and must go no further than the order which has been granted. Otherwise, there is a risk that a court will find the Claimant to have breached the search order and the Defendant may look to have the claim struck out accordingly.  

An order for inspection is distinct, will require separate justifications and must be obtained prior to the inspection of documents found during the search order.  

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