A commercial deal has gone wrong.  Not only has this caused contractual issues but regulatory authorities are now investigating.  Crucial information which would help you is in the hands of someone who used to work for your company, in his own personal e-mail account and not on your e-mail servers, but in e-mails which he sent and received whilst acting in a senior position at your company.  You want that information.

This is the dilemma which faced the claimant in Fairstar Heavy Transport NV v Adkins [2012] EWHC 2952 (TCC) (Edwards-Stuart J), where the court held that there is no property right in the contents of an e-mail. An application for permission to appeal against the court’s decision is due to be heard in early 2013. Subject to any such appeal, the decision illustrates the importance of having robust contractual provisions which provide for access to e-mails sent or received on behalf of a company by a third party. Simon Clarke and Anna FitzHerbert comment on the case.  

Background

Mr Adkins had been acting CEO of Fairstar (as a contractor through his service company rather than a direct employee). Following a hostile takeover, his services were terminated. In the preceding months, Mr Adkins had been centrally involved, for Fairstar, in a commercial deal involving the construction of vessels at a Chinese shipyard. Following his departure, a dispute arose concerning a memorandum of agreement signed by Mr Adkins on behalf of Fairstar, which left it exposed to a large potential liability. Mr Adkins maintained that the memorandum of agreement was not enforceable because it was subject to conditions set out in a side agreement.

In Mr Adkins’s time at Fairstar, incoming e-mails to his Fairstar e-mail address were automatically forwarded by Fairstar’s server to Mr Adkins’s private e-mail address and (Fairstair said) were automatically deleted from Fairstar’s server. Mr Adkins’s outgoing e-mails were sent directly from his personal e-mail account, so unless copied to Fairstar, they never touched Fairstar’s server.

Fairstar argued that it needed access to the e-mails in Mr Adkins’s possession to understand its position in relation to the shipyard and also to respond properly to an investigation launched by stock exchange authorities in Norway, where its shares were listed, into whether it had properly disclosed its liabilities.

The parties’ arguments

For jurisdictional reasons (not detailed in the judgment) the court could only deal with an application based on Fairstar’s alleged property right in the contents of the e-mails, in circumstances where they had been sent or received in Mr Adkins’s capacity as CEO for Fairstar. Fairstar did not seek relief on any other basis.

Fairstar’s case rested on the contention that the contents of the e-mails could be regarded as property. If that was right then, since Mr Adkins had been acting as agent for Fairstar, applying the normal rules of an agent-principal relationship, they belonged to Fairstar.

Mr Adkins’s response was that the content of an e-mail is information and information is not property (leaving aside claims to copyright, which were not relevant to this case).

The High Court’s decision

The court agreed with the submissions made on behalf of Mr Adkins, that the “preponderance of authority points strongly against there being any proprietary right in the content of information, and this must apply to the content of an e-mail”.  In particular, the court relied on the majority view expressed by the House of Lords (albeit obiter) in Boardman v Phipps [1967] 2 AC 46 that information is not property.

Having reviewed the authorities, the court considered that there was no binding authority to support Fairstar’s case.  However, the court refused to go so far as to say that the law was settled on this issue, noting that two of the speeches in Boardman v Phipps expressed the contrasting view that information and knowledge can be property.

The court regarded as forceful Fairstar’s submission that logic and the circumstances of the modern world should encourage the court to hold that the content of an e-mail is a form of property.  Nevertheless, the court considered that this submission did not translate easily into practice:

  • If title to content were to remain with the creator, in principle a creator could assert his or her title to that content against the entire world and require any recipient to delete it.  The court regarded such a consequence as strange and far-reaching.
  • If title were to pass from the creator to the recipient upon sending, the creator would lose all rights from the moment of sending.  The owner would end up as being the last recipient, who could reject any request to delete it.  If there were multiple recipients, some of whom had forwarded the chain to others, the issue of title would become, in the court’s words, “hopelessly confused”.
  • If title were to be shared between sender and recipient, this would have all sorts of repercussions in terms of rights being asserted all over the place, such as rights between e-mailing parties to demand access to the other’s server in order to see to whom their e-mails had been forwarded.  Such ramifications would, in the court’s view, be considerable and not beneficial.
  • Two further scenarios considered were: (1) title remaining with the creator, with the recipient gaining a licence to use it for any legitimate purpose consistent with the circumstances in which it was sent; and (2) title passing to the recipient, with the sender having a licence to retain the content and to use it for any legitimate purpose.   The court considered that either of these scenarios could be workable, but their result would be to deprive the proprietary interest in the content of the e-mail of any value.  There was no compelling need to adopt either scenario.

In conclusion, the court’s view was that to the extent that people require protection against the misuse of information in e-mails, there is already satisfactory protection under English law, either by the equitable jurisdiction to restrain the misuse of confidential information, or by the law of copyright (where applicable).

Discussion

In practical terms, the decision illustrates the importance of having robust contractual provisions which provide for access to e-mails sent or received on behalf of a company by a third party. It is also an illustration of the issues which can arise when the English court’s jurisdiction is limited. For example, it is unclear from the decision whether, had the court had full jurisdiction, Fairstar might have been able to pursue a contractual right of access to the e-mails. In addition, Fairstar might have been able to obtain pre-action disclosure under the Civil Procedure Rules (if Mr Adkins was likely to be a party to subsequent proceedings) (CPR 31.16) or otherwise non-party disclosure once proceedings were on foot (CPR 31.17), although in both cases this would be subject to the restriction on subsequent use of disclosed documents contained in CPR 31.22.

In finding that there was no property right in the contents of an e-mail, the court rejected the idea that the law was out of line with 21st century technology. At first glance, considering the consequences of this decision for Fairstar, this could be regarded as a striking conclusion. However, the court’s analysis of the different scenarios for potential ownership demonstrates the difficulties which would be inherent in recognising a property right to the contents of e-mails.

That this is probably the correct – albeit not the most immediately intuitive – result can be seen by comparing the position under criminal law. It was established in Oxford v Moss [1979] Crim LR 119 that information is not property which can be stolen, notwithstanding how badly a defendant has acted. In Oxford v Moss, the defendant university student had taken an examination paper, which he returned after he had read its contents. His university pursued him for theft of the information in the paper (he could not be pursued for taking the paper itself as he had no intention to steal that). The magistrate found that, while he had gravely interfered with the university’s rights over the paper, he had not permanently deprived the university of any property and therefore could not be guilty of theft.  This finding was appealed to the Divisional Court, which decided that the information was not property, thereby upholding the magistrate’s finding.

It does not necessarily follow from the position under the criminal law that information should not be capable of being property in the civil law context.  However, there is the telling point, common to both contexts, that a significant problem with the idea of information being property is that it lacks intrinsic characteristics of property, such as the notion that the owner can assert rights to the exclusion of everyone else and the concept of permanent deprivation