Search and deploy? Search orders and electronic data

A search order is perceived as one of the most, if not the most, draconian orders the court can make. It authorises a claimant to enter a defendant’s premises to search for, copy and remove documents or other material. The purpose of the order is, as the statutory basis for it makes plain, to preserve evidence. The recent case of TBD (Owen Holland) Ltd v Simons and others [2020] EWHC 30 (Ch) highlights the risk that a party may face a strike out of its claim if it takes steps beyond this. The case also adds much-needed guidance on the practical issues presented by imaged data and how the current standard form search order, and the safeguards built into its terms, are both currently out of step when it comes to electronic rather than physical documents.

Background facts

In a claim relating to the alleged infringement of intellectual property rights, the claimant obtained a search order for the copying of documents from computers at the first and second defendants’ premises. The search order set out the categories of documents subject to the order, covering both physical and electronic documents. It reflected the standard form terms appended to Practice Direction (PD) 25A, in particular the safeguards noted further below. It also included non-standard terms that:

• The defendants provide access to enable forensic images of the data on its computers to be taken; and
• The claimant’s computer experts could take a copy of the files on any computers found on the premises for analysis by them following completion of the search. Following this analysis, they could deliver into the safekeeping of the claimant’s solicitors any further relevant items which they recovered.

The claimant conducted a file-by-file review of some items, which appeared to have been physical materials. Digital data comprising some 400,000 files was imaged pursuant to the order. It was agreed, as recorded in the supervising solicitor’s report, that there would follow discussion between the solicitors acting for the parties as to how computer experts engaged for the exercise would extract the relevant items from the data.

The claimant’s solicitors subsequently wrote to the solicitors for the first, second and third defendants seeking to agree parameters for a search of the copied data and providing proposed keywords. Chasers were sent to the solicitors and also to the first defendant who was no longer represented, concluding that it would be presumed that the keywords were agreed and the search would proceed on this basis. The solicitors for the second and third defendants did not respond, but the first defendant did, objecting to the suggested keywords.

The claimant proceeded to search the copied data using the keywords. It used the search results to join additional defendants, pursue committal proceedings and seek to obtain evidence from third parties.

The third, fourth and fifth defendants, who had been joined to the proceedings, contended that this was in breach of the search order and sought relief, including the strike out of the claims against them.

Search orders

The statutory basis for search orders is set out in section 7 of the Civil Procedure Act 1997, which is echoed in the relevant part of the Civil Procedure Rules (CPR), CPR 25.1(1)(h). Section 7 provides that the court may make an order for the purpose of securing the preservation of evidence or property which is or may be relevant to existing or proposed proceedings.

Section 7 states that an order may permit a person to enter premises in the jurisdiction, carry out a search for or inspection of anything described in the order and make or obtain a copy, photograph, sample or other record of anything so described.

Certain safeguards are built into the process:

• In common with any interim injunction made without notice, the applicant must: (1) provide an undertaking to pay any damages which the respondent sustains and which the court considers the applicant should pay; and (2) make full and frank disclosure, that is all matters of fact and law material to the court’s decision, including any adverse to the applicant.
• An independent solicitor, experienced in the operation of search orders, will be appointed to supervise and report on the execution of the search. This supervising solicitor performs a number of functions. These include personally serving the order on the respondent, explaining its terms in everyday language, advising the respondent of their right to take legal advice and potentially to claim privilege, and making a list of all material removed from the premises. These functions are reflected in the terms of the standard form order annexed to PD 25A.
• Before permitting entry to any person other than the supervising solicitor, the respondent may gather together any documents they believe to be incriminating or privileged and hand them to the supervising solicitor for assessment. If the supervising solicitor decides that the respondent is entitled to withhold production of any of the documents, these will be excluded from the search and noted in the supervising solicitor’s report. Again, this procedure is reflected in the terms of the standard form order.

Electronic data

Electronic data can provide its own particular challenges. It is well established that the term “document” is construed widely, to include anything on which data may be stored. This could include the data held on a digital voice assistant, for example, or on other smart domestic appliances. Subject of course to its precise terms, the extent of what may be captured by the search order could be very broad.

PD 25A provides that the claimant may not search the defendant’s computers unless it has sufficient expertise to do so without damaging the claimant’s system. In light of this and the broader range of devices holding data than perhaps envisaged by PD 25A, good practice will be to use a specialist and independent IT expert to carry out the task, which will also help protect against the claimant seeing information they may otherwise not be permitted to see.

The standard form search order annexed to PD 25A envisages that documents on a computer will be searched by looking at documents on screen and relevant documents copied out one by one. The respondent is entitled to insist that privileged computer files are separated out and not copied during a search, but sorted through later. In practical terms, given the exponential growth in digital data this may be difficult to achieve and what may often happen in practice, as was the case in TBD, is that a computer image is taken of the data. This will have the advantage to the claimant of not only speed but also, for both parties, of both preserving the data and being less intrusive. 

The question of imaged data was considered in another recent case, A v B [2019] EWHC 2089 (Ch). There, an issue arose as to whether the claimant or defendant should go first in inspecting imaged digital data taken during the search. The defendant argued that it should review the documents first, as it would if the exercise were a disclosure exercise. The court, however, permitted the claimant the first look, noting that a search order would have been obtained on the basis of a strong prima facie case of the defendant’s dishonesty and propensity to cover its tracks by destroying evidence. This could mean that the defendant should not necessarily be trusted to carry out the inspection itself, though the court acknowledged that the involvement of solicitors for the defendant could change the position.

The court in A v B was keen to stress, however, that it was not advocating such an approach as a general practice. It noted that the exercise was highly intrusive and that digital images were likely to contain irrelevant material which was private and confidential (if not privileged) and which the claimant should not see, if possible. It added that there was no justification for a search of the digitally imaged documents being, as a general rule, carried out by the claimant and/or at the preservation stage.

Decision

As with the decision in A v B, the court was at pains to draw a distinction between the process under a search order and a disclosure exercise. It observed that the essential purpose of a search order was not to provide early disclosure, but rather to preserve documents necessary for the proper conduct of litigation before the courts (the court’s emphasis). In several places in its judgment, the court underlined (in the actual words of the judgment itself) the preservatory nature of the order and that there was no permission to use the documents.

It observed that the restrictions placed on the search, including isolating incriminating or privileged documents, only work where it is possible to consider material on an item-by-item basis. Imaged data, by its nature, cannot accommodate such an approach and the data will likely contain not listed items, which may be confidential, privileged or incriminatory.

It followed, in the court’s view, that if there was to be an inspection of documents on the imaged data, this needed to be justified as a separate exercise and analysed in terms of the disclosure jurisdiction. Using this as its base point, the court then grappled with the non-standard term in the order that the claimant’s computer experts were permitted to analyse the imaged data and deliver into the safekeeping of the claimant’s solicitors any further relevant items which they recovered.

The court observed that it was very difficult to know what to make of this provision. It found it impossible to say how the computer experts were supposed to analyse the imaged data in any meaningful way and how the provision could be workable. Even if it was, the search order sanctioned no use of the material beyond preservation.

It followed that there had been a significant and unjustifiable breach of the search order by the claimant. This was particularly serious in the case of the imaged data given the absence of the safeguards as to irrelevant, confidential, privileged and incriminating documents.

This was compounded by the fact that the claimant’s solicitors were aware that the consent of the defendants was required, a return date had been fixed where the question of inspection could have been raised with the court, one of the defendants had objected to the inspection and the claimant had gone so far as to deploy the searched data.

Attempts by the claimant’s counsel to justify the claimant’s actions did not gain traction with the court:

• Counsel highlighted the lack of cooperation by the defendants. This did not, however, justify a wholesale breach of the order. The appropriate course was to return to court for direction.
• The liquidator of one of the defendants had confirmed it had no objection to the use of documents. However, this was after the event and the court had no hesitation in holding that such sanctioning did not justify the breach of the order: the search order material should have been safeguarded and left unused until the court made an order regarding disclosure.

In terms of remedy, the court stopped short of striking out the claim. While it had no doubt that it had the jurisdiction to do so, and the breach had been flagrant and very serious, the court did not consider that it was appropriate at that point in time to strike out the case. Material to the court’s view were that:

• It was highly likely that had the claimant, at the return date, sought some form of disclosure of the search order material, this would have been granted by the court.
• The court strongly suspected that the material which was used to join the applicants would have been disclosed.
• The applicants could not say what (if any) privileged, incriminatory or confidential material the claimant actually held as a result of its conduct.
• It was rare for the court to strike out a statement of case because it was based upon evidence improperly obtained.

However, while the court did not rule out the possibility of a strike out further down the line, it ordered that the claimant hand over all of the imaged files to a third-party firm of solicitors to review them for privilege, self-incrimination and relevance. If it transpired that the material held by the claimant was privileged and confidential and a fair trial was not possible, then the court would contemplate strike out of all or some of the claim. The court stated that the costs of these steps would be borne by the claimant in any event and irrespective of the outcome of the proceedings.

Comment

Clearly, the key message to take away from the judgment is that search orders by their nature are preservatory and the question of the use of preserved material must be raised specifically with the court, either to be addressed in the terms of the search order or, more probably, at the return date. Along with the court’s judgment in A v B, it serves as a warning not to confuse the procedure under a search order with that for disclosure. In addition to the considerable risk this presents to a party’s case, practitioners risk facing a professional negligence claim or disciplinary action.

On a practical level, the judgment highlights a couple of issues with the standard form order when it comes to electronic data and which are inconsistent with the approach advocated by the court:

• The standard form order treats digital documents as if they are physical documents and, as such, susceptible to an item-by-item search whereby the respondent facilitates the display of a listed item, so that that item can be read and copied. The court in TBD noted that this is unlikely to be a practical way forward in any normal IT environment and the fact is that imaging is both less disruptive for the respondent and a more efficient way to proceed with a search.
• The order contains an undertaking by the applicant only to use any information or documents for the purposes of the proceedings. As the court noted, this implies disclosure is ordered by the court. The court’s approach in TBD to dealing with this apparent inconsistency was to treat the undertaking as redundant, unless disclosure had been specifically ordered in the body of the order.

 This article was first published by the Commercial Litigation Journal.