Employer had no property claim in its emails or their contents: (1) Capita Plc, (2) Capita Property & Infrastructure Ltd v Darch & Others*

Introduction

In this team move case, the draft order sought by the claimants at the interim stage included a provision (at paragraph 3) that the ten defendants (eight former employees, one current employee and a competitor company with whom the individuals were now associated):

“forward to the claimants’ solicitors copies of all emails that they have received into any non-Capita email account from any email account at Capita (including their own)” (emphasis added).

The claimants argued that all Capita emails, and/or their contents, were Capita’s property. Richard Spearman QC (sitting as a Deputy Judge of the Chancery Division) dismissed the application [2017] EWHC1248 (Ch). He also rejected the claimants’ application for permission to appeal [2017] EWHC 1401(Ch). 

First Judgment dismissing the application for interim relief

The Judge held:

(1) The relief claimed went “considerably wider” than the standard disclosure obligations which the defendants would have in due course [56].

(2) Applying the factors identified in Aon Ltd v JLT Reinsurance Brokers Ltd [2010] IRLR 600: (i) the claimants could formulate a case without this relief; (ii) the width of the order sought was excessive; (iii) there would not be any saving of costs; (iv) damages were likely to be an adequate remedy for Capita; (v) Capita did not need the emails to be able to take pragmatic steps to protect their business from future loss; and (vi) the emails were not needed to police other aspects of the relief sought by Capita [58]-[61].

(3) The proposed order would, or would be likely to, infringe the individual defendants’ right to respect for private and family life guaranteed by Article 8 of the ECHR [65].

(4) The claimants’ argument that the emails and/or their contents were the claimants’ property was not well founded [67]:

(a)   The true basis of the judgment of the Court of Appeal in Fairstar Heavy Transport NV v Adkins [2013] EWCA Civ 886, which was relied on by Capita, was the agency principle (i.e. that a principal is entitled to require production by the agent of documents relating to the affairs of the principal). While the Court of Appeal deliberately refrained from expressing a concluded view as to whether the contents of emails are, or are capable of being, “property”, the tenor of its reasoning was to the contrary effect [69]. 

(b)   The conclusion that the contents of emails were not property was supported by later decisions of the Court of Appeal: Your Response Limited v Data Team Business Media Limited [2014] EWCA Civ 281 (“When information is created and recorded there are sharp distinctions between the information itself, the physical medium on which the information is recorded and the rights to which the information gives rise. Whilst the physical medium and the rights are treated as property, the information itself has never been” per Lloyd LJ at [42]) and Environment Agency v Churngold Recycling Ltd [2014] EWCA Civ 909 (in which the Court of Appeal held that it was not strongly arguable that electronic data could be the subject matter of the tort of conversion) [71]-[72].

(5) The claimants’ belated attempt to invoke the agency principle did not get around the problems of the width of the relief sought in the present case or the fact that it was framed in such a way as to capture personal and private emails (which were expressly excluded from the relief claimed by the company against the former CEO in Fairstar) [73].

Second Judgment rejecting the application for permission to appeal

The Judge held (at [10(4) and (7)]):

(1)  Capita’s case had not placed reliance on any intellectual property right other than the database right. In principle, a claim for ownership and infringement of copyright might have been available to Capita, but Capita had not asserted the same. 

(2) His judgment had not contained a ruling that an employer is not entitled to recover its former employees’ work emails. His analysis had been to the contrary effect. Capita’s difficulties were twofold: (i) its primary argument did not depend on agency obligations but instead depended, misguidedly, on a proprietary claim; and (ii) in any case, the relief sought (a) was too wide and (b) included personal and private emails.

(3)  It was not open to Capita to appeal on the basis that the Judge should have fashioned “an appropriate carve-out” to cater for the defendants’ personal and privacy rights. Those rights had very clearly been invoked by the defendants and Capita had made clear that it was pressing for the full width of the relief sought, and had not advanced any fall-back or alternative case. (This was also a basis for rejecting the claimants’ application for permission to appeal against the costs order made against them: [18]).

(4)  In any event, the drafting and implementation of “an appropriate carve-out” was not necessarily straightforward: in Fairstar, provision had been made for the defendant to withhold production of emails that he claimed to be personal and private and for those emails to be submitted for assessment to an agreed independent barrister, and for any disagreement with the barrister’s determination to be resolved by the court.

Conclusion

The application might have been successful if (a) the claimants’ argument had been based on (i) the agency principle and/or (ii) intellectual property rights other than the database right; and (b) the wording of the draft order had (i) not been so wide and (ii) included an express carve out for personal and private emails. A willingness to modify the wording of the draft order might also have assisted the claimants’ costs position.

*[2017] IRLR 718; [2017] EWHC 1248 (Ch); [2017] EWHC 1401 (Ch)