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Fraud Insights: Court of Appeal provides fresh guidance on search and imaging orders

Posted on 30 April 2021

The case of TBD (Owen Holland) Ltd v Simons and others [2020] EWCA Civ 1182 provides fresh guidance on the use and purpose of search and imaging orders. In particular, the judgment clarified that search orders are distinct in form and function from disclosure orders and issued advice on the correct approach to imaging orders, the latter being a topic not previously considered by the Court of Appeal. In so doing, the judgment emphasised the importance of there being adequate safeguards for respondents, and raised questions as to whether the current procedural framework offers sufficient protection for respondents subject to imaging orders.

Background and judgment

The Claimant issued proceedings against the Defendants for copyright infringement, and subsequently employed search orders against the First and Second Defendants. The search orders provided for the delivery up of documents in both standard form (the provision of physical documents), and non-standard form, by way of an imaging order permitting the searching party to take images of the entirety of the First and Second Defendants' digital data.

Once the imaging process was complete, the Claimant suggested that a keyword search be run across the data obtained, and proposed a list of keywords for searching to the First and Second Defendants. Even though no agreement was reached, the Claimant unilaterally applied the keyword searches to the imaged material. These searches failed to filter out privileged material and personal documentation. Moreover, the Claimant used the material obtained from the searches: (i) in support of its application to re-join the Third Defendant to the proceedings (the Third Defendant had previously successfully applied to strike out the claim against it);  (ii) to add the Fourth and Fifth Defendants to the proceedings; (iii) to support committal proceedings; and (iv) to obtain evidence from third parties in support of its claim.

The Third, Fourth and Fifth Defendants applied to strike out the claim against them on grounds that the Claimant had breached the terms of the search order, arguing that the Claimant possessed privileged information that would make a fair trial impossible. In response, the Claimant argued that it was not for the Third, Fourth and Fifth Defendants to take issue over alleged breaches, as they were not the subjects of the search orders.

The High Court found that, while striking out the claim in its entirety would be disproportionate, the Claimant had breached the terms of the search order in a significant and serious manner and that, consequently, certain documents had to be destroyed. In addition, the High Court ordered that a review of the searched documents should be conducted, at the Claimant's expense, by independent solicitors. On appeal, the Claimant argued that the High Court had been wrong both in its interpretation of the search order, and in ordering a review of the searched documents.

Dismissing the Claimant's appeal, the Court of Appeal agreed with the High Court's decision. The Court of Appeal concluded that the Claimant had not been entitled to carry out a keyword search unilaterally, and had breached the terms of the search order in a significant and serious manner. The breach was both in the Claimant's inspection of the searched documents, and its subsequent use of the information obtained to (i) amend its claim form, (ii) support its application for committal proceedings, and (iii) write to third parties to obtain evidence in support of its claims.

Search Orders vs. Disclosure Orders

In forming its conclusion, the judgment identified three fundamental principles of search orders. Firstly, the purpose of search orders is to preserve evidence by preventing a defendant from destroying, concealing or altering documents. Search orders are not intended to provide a claimant with early disclosure, or enable it to undertake its own disclosure exercise absent the standard procedural processes and safeguards.

Secondly, it may be that the facts giving rise to a search order also justify the making of a without notice order for the disclosure and inspection of documents. However, there is no guarantee of this: search orders and disclosure orders are distinct, having different procedural threshold requirements and intended consequences.

Finally, both search orders and orders for disclosure and inspection must contain safeguards for respondents, which the applicant adheres to at execution of the order. Importantly, in respect of search orders, the Court of Appeal made clear that the standard form search order should be used unless there is good reason to depart from it. In particular, the Court of Appeal noted that a particularly serious omission in respect of the amended, non-standard search order in this case was its failure to make any allowance for the likelihood that analysis of the imaged material would recover documents that were, or might be, subject to legal professional privilege.

Search Orders vs. Imaging Orders

The Court of Appeal's judgment also drew a sharp distinction between search orders and imaging orders, noting that the arrival of digital imaging impacts standard search orders in ways frequently overlooked.

Clearly, given that the large majority of documentary evidence is now stored digitally, an order permitting the searching party to take a copy of the data content of any computer, laptop, smart phone, or hard drive/cloud storage of the respondent may be the most effective means of ensuring the preservation of evidence. However, the Court of Appeal made clear that, if an imaging order is made, then a search order may well be unnecessary, or at least severely restricted, and that this approach should be presumed unless there is evidence to the contrary. 

If an imaging order is made, then the Court of Appeal noted that it should provide appropriate safeguards, including:

  1. A requirement that keywords for searching forensically imaged data is either agreed between the parties or, in the absence of an agreement, determined by the Court;  
  2. Forensic computer experts should store forensically imaged data until the return date; the images should not be searched or inspected in the interim. This rule should apply save in exceptional circumstances, and any departure from it will require a high degree of justification and specific Court approval; and
  3. On the return date, the Court should give consideration to the timing and method of disclosure and inspection of documents captured in the images. The presumption should be that it is for the defendant to provide disclosure in the usual way. Even if this presumption is departed from, there should not be any unilateral searching of images by, or on behalf of, the claimant.

Comment

Martin Shobbrook, Partner in the Fraud Defence and Business Disputes Group at Mishcon de Reya says:

"With the increasing amount of electronic data and the need to preserve documents in the context of fraud allegations, applications for imaging orders will undoubtedly increase. It remains to be seen whether future applicants will still seek to obtain a search orders or whether they will limit their application to the parameters of an imaging order In highlighting the potential pitfalls of issuing search and imaging orders in the digital era, this case raises notable questions as to whether the current procedural framework offers sufficient safeguarding provisions for respondents. In particular, it is revealing that in their judgment, the Court of Appeal Justices identified an urgent need for the Civil Procedure Rules Committee to produce a standard form imaging order to ensure that any respondent has its interests adequately protected.

In addition to the safeguards proposed by the Court of Appeal Justices, it would be prudent for a standard form imaging order to provide similar protections to those found in the standard form search order. These might include, for example, a requirement that an independent solicitor is present to supervise any imaging exercise, and provisions entitling the respondent to seek legal advice and ask a court to vary or discharge an order."

Freya Mead, Trainee in the Fraud Defence and Business Disputes Group at Mishcon de Reya says:

"Search orders, famously described by Donaldson LJ in Bank Mellat v Nikpour as 'one of the law's two nuclear weapons' (the other being freezing orders) are some of the most draconian provisions that a respondent can be subjected to. Imaging orders are also extremely intrusive and are often served without warning and providing very little time for a respondent to obtain legal advice, consider its position and assess how best to respond. Until such a time as a standard form imaging order is available, the Court of Appeal has made clear that it is the responsibility of the applicant and its legal representatives, as well as the Court hearing the application, to give due consideration to the provision of appropriate safeguards in an imaging order. This case provides a clear warning to applicants on what they need to consider when making an application and to also ensure they do not exceed the remit of what they are permitted to do once the order is made in respect of the imaged material."

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