In Phaestos Ltd v Ho ( EWHC 2756 (QB)), the claimants alleged that their former employees, Mr Ho and Mr Gover, had unlawfully copied and misused the claimants' confidential information in direct competition to the claimants. The claimants applied for various interim orders against the defendants on the basis that use of the information might grant the defendants an unlawful advantage.
A substantial proportion of the claimants' application was agreed by the defendants, including the listing, preservation and delivery up of certain documents and the provision of witness statements. However, the defendants resisted the claimants' request that they:
"Permit[ted] an independent computer expert nominated by the claimants to make disc images of the defendants' computers and electronic storage devices and to search for any 'Relevant code' or evidence of the use or copy or transfer or deletion thereof, and to produce a report on his searches and the results."
At an earlier hearing in July 2011, the judge made an order for the imaging of any relevant computer by an independent computer expert appointed by the defendants in order to preserve the evidence; this was complied with. The issue which subsequently came before the court was the manner in which those images might be inspected.
By the later hearing, counsel for the claimants had refined the argument concerning the application for an order relating to a search for evidence, such that it was not "an application for any kind of search order", but instead an application under one of the various provisions of the Civil Procedure Rules for:
- the preservation (which had now occurred) and inspection of 'relevant property' under Civil Procedure Rules 25.1(i) and (ii);
- specific disclosure and inspection of the computer disks (as documents) under Civil Procedure Rule 31.12;
- inspection of documents mentioned in witness statements under Civil Procedure Rule 31.14; or
- an order pursuant to the court's inherent jurisdiction under Civil Procedure Rule 1.1.
Ultimately, the judge considered that the claimants were entitled to the orders for service of lists of relevant documents, delivery up of the claimants' property and confidential information and the imaging of the relevant disks. All of this had been achieved by his order following the July 2011 hearing. He dismissed the application for a search of the disks by an independent expert.
The claimants' intention in applying for the search order was to ensure that the defendants had fully complied with their delivery up obligations and had disclosed all relevant material. The judge found that to allow for the "policing" of these obligations would pre-empt the procedures for e-disclosure and delivery up, which had not yet taken place. The claimants could make a fresh application for such an order after e-disclosure and the delivery up process concluded.
Insofar as the application was made under Civil Procedure Rule 31.12 for specific disclosure and inspection, this was misplaced or premature, as the defendants had not yet given full disclosure.
The application could not be shoe-horned into Civil Procedure Rule 31.14 retrospectively. It had not originally been made on this ground; moreover, the witness statements referring to the documents which the claimants sought had not been served at the time that the application was made.
In any case, even if Civil Procedure Rule 31.12 or Rule 31.14 did apply, the court would still have to be satisfied on the grounds of necessity and proportionality that the breadth of the inspection being sought was "currently justified". The judge did not consider that the application for a search order was justified in relation to the pleaded case.
The pleaded causes of action were limited. The principal claim was for delivery up and there was no express claim for damages for misuse of the claimants' property.
The judge concluded that the claimants had hoped to obtain evidence of the unauthorised disclosure of their confidential information and software to third parties and use of that information in the defendants' new competing business. Alternatively, the claimants were attempting to support an as-yet unpleaded claim relating to the alleged misuse of the claimants' property. As such, the judge held that the application was nothing more than "an unjustified fishing expedition".
This decision suggests that parties should carefully consider the appropriateness of interim relief with regard to documents and the manner in which it is sought. Several factors should be considered:
- Is the timing right? The court is unlikely to grant an application for specific disclosure until disclosure or other procedures, such as delivery up, are complete.
- Is the application founded on the correct legal basis? The application here was not issued on the basis of Civil Procedure Rule 31.14 and the attempt to bring it within that provision relied on a later interpretation of served documents.
- Is the application justified in relation to the pleaded case? If the application relates to an unpleaded issue, it is likely to be considered a 'fishing expedition'.
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