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The High Court granted a computer imaging order permitting an independent IT expert to investigate the Defendant’s computer and external hard drive to see if they contained the Claimant’s confidential information.

Instructing IT experts and securing them access to the data they need can be an important and costly business. This is perhaps especially true in claims for misuse of confidential information. In this recent decision, the High Court (HHJ Simpkiss) granted an interim computer imaging order and usefully illustrated the methods by which the costs of the IT expert process can be effectively managed.

Facts

This case concerned the "acrimonious” departure of the Defendant from his position as Managing Director and CEO of the Claimant insurance business (§3). The Defendant was asked to leave the office on 27 April 2017 and subjected to disciplinary action. A week later he resigned alleging constructive dismissal.

At some point before his resignation (the precise timing being a matter of dispute), the Defendant requested his personal assistant to forward him a copy of the list of the Claimant’s business contacts, which he then copied to his external hard drive and took away from the office (§3).

After the Defendant’s resignation, the Claimant discovered what had occurred and sent the Defendant a letter asking him to confirm whether he had used or copied the list (§6). The Defendant initially said that he had deleted the list and not made any copy (§7). But in his witness statement for the hearing of the interim application, the Defendant rowed back from this and confirmed that he had copied the list onto his laptop at home and made a secondary list aimed at demonstrating his professional experience to potential employers (§8).

Computer imaging and inspection: principles and application

The Claimant sought an interim order for an independent IT consultant, instructed by both parties, to carry out an investigation of the Defendant’s external hard drive and his home laptop to determine whether or not he had in fact deleted the list and to establish whether the hard drive or laptop contained other confidential information of the Claimant (§§10, 14).

The starting point (quoted by HHJ Simpkiss at §23) is the following oft-cited statement by Mr Justice Tugendhat in CBS Butler v. Brown & Ors. [2013] EWHC 3944 (QB) at §38:

“[A]n order which would deprive the Defendants of the opportunity of considering whether or not they shall make any disclosure is… an intrusive order, even if it is made on notice to the defendant. It is contrary to normal principles of justice, and can only be done when there is a paramount need to prevent a denial of justice to the claimant. The need to avoid such a denial of justice may be shown after the defendant has failed to comply with his disclosure obligations, having been given the opportunity to do so... Or it may be shown before the defendant has had an opportunity to comply with his disclosure obligations. But in the latter case it is not sufficient for a claimant…to show no more than that the defendant has misused confidential information or otherwise broken his employment contract… What a claimant must show is substantial reasons for believing that a defendant is intending to conceal or destroy documents in breach of his obligations of disclosure under the CPR."

Clearly this is a high threshold to meet. It should, however, be noted that Mr Justice Tugendhat in CBS Butler was dealing with an application for an inspection order that would have denied the defendant any involvement in the inspection process (save for the input of keywords into a ‘blacklist’). It was this feature that made the order particularly intrusive. It may be that the threshold is less stringent where the defendant is afforded an opportunity to supervise which parts of the computer are inspected. For example, a claimant might build into their draft order a provision for the defendant’s solicitors to supervise the expert and make appropriate objections based on legal professional privilege. In those circumstances, the court might ask itself simply whether the order is “necessary and proportionate”: see by analogy M3 Property Limited v Zedhomes Limited [2012] EWHC 780 (TCC) at §11; Phaestos v Ho [2012] EWHC 2756 (QB) at §§26, 33-35, 63, 66.

There is no indication in the judgment of HHJ Simpkiss that the application before him contained safeguards to deal with matters such as legal professional privilege. Perhaps the issue was not practically important for the particular computer hard drive and laptop in question. In any event, HHJ Simpkiss directed himself according to the test set out in CBS Butler and concluded that there were indeed “special circumstances” which justified the “strong order“(§25). In summary:

  • The Defendant not only took the list, but copied it and made a secondary list (§§8, 18).
  • The Defendant “did not put all his cards on the table” when the Claimant first asked him about the list, and only later revealed that he had copied the list (§25).
  • There was circumstantial evidence placing the Defendant in “enormous embarrassment”, in particular an “extremely damaging email” suggesting the Defendant was being lined up to join another insurance business (§16). 

Costs

HHJ Simpkiss noted the “strong argument that the expense of the [IT expert] exercise is an unknown and may be considerable” (§27). However, for two main reasons, this was not a sufficient basis for dismissing the application. First, it was common ground that the costs of the investigation above a specified cap would be borne 50/50 by the parties (§28). Second, against the backdrop of the damaging circumstantial evidence, HHJ Simpkiss considered that the Defendant “only has himself to blame for the fact that there has now to be a search” (§28).  This reasoning on costs usefully illustrates how (1) the costs burden of the IT expert exercise can be shared; and (2) the court’s approach to the costs of the IT expert exercise may be coloured by the evidence available on the merits of the claim.

Further information

Readers working on computer imaging and inspection orders in this area might wish to consider paragraphs 10.166-10.167 and Appendix 1 of Employee Competition: Covenants, Confidentiality and Garden Leave (3rd ed) which consider the principles and practicalities in more detail. Further, if readers are interested not only in expert inspection but also in deletion of any confidential information found by the expert, this is the subject of another recent Employee Competition Bulletin by the present author (available here).  

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