Court of Appeal provides guidance on applications for search and imaging orders

• United Kingdom

• Financial services disputes and investigations
• Litigation and dispute management - Freezing Orders

02-11-2020

TBD (Owen Holland) Ltd v Simons & Ors [2020] EWCA Civ 1182

Facts of the Case

• The facts of the case and findings at first instance are summarised in our previous post on this case. Click here.

Court of Appeal Decision

• The Claimant (“C”) appealed against the order that it had breached the search order and, as a consequence, had to destroy certain documents. There were also appeals with regard to related committal proceedings but these are not addressed in this briefing.
• The Court of Appeal (“CoA”) dismissed C’s appeal and largely reinforced the High Court’s decision, in so doing drawing a sharp distinction between search orders and imaging orders (the latter being how it described orders permitting copies to be made of digitally held information).

• The CoA emphasised that the inspection of documents, to the extent it is provided for in a search order, is for very limited purposes, being restricted to (i) the duration of the actual search (i.e. the right falls away after the search is complete) and (ii) the purpose of conducting that search (i.e. identifying listed items, copying them where necessary and delivering them into the safekeeping of the party specified in the search order).

Analysis and practical advice

• The leading judgment of Arnold LJ contains a lengthy survey of the law in respect of both search orders and imaging orders.
• As regards search orders, he identified three fundamental principles:
  
  
  • First, the purpose of a search order is to preserve evidence in order to prevent the defendant from altering, destroying or hiding it. It is not to give the claimant early disclosure or enable it to carry out its own form of disclosure exercise outside of the usual process and without the usual safeguards.
  • Secondly, the facts that justify a search order being made may also justify the making of a without notice order for the disclosure and inspection of documents and/or provision of information pursuant to either CPR Part 18 or the court’s inherent jurisdiction, e.g. under the Norwich Pharmacal or Bankers Trust Orders jurisdictions. However the two types of orders (i.e. search orders and orders for disclosure/inspection) are distinct, require separate juristification, have different effects and should not be conflated.
  • Thirdly, both search orders and without notice orders for the disclosure and inspection of documents and/or provision of information must contain proper safeguards for respondents (which are different as between the two types of order) and these must be respected during the orders’ execution. As regards search orders, the standard form order should therefore always be used, unless there is a good reason to depart from it.
• However, given that most documentary evidence is now typically stored in digital form, if what a claimant requires is an order to ensure the preservation of evidence, an order requiring the respondent to permit the imaging of its digital devices and cloud storage may be the most effective means of achieving that objective. As regards such orders, Arnold LJ set out the following guidelines:
  
  
  • If an imaging order is granted, that may make a traditional search order unnecessary, or at least enable the scope of the order to be significantly restricted.
  • Where a claimant applies for both a search order and an imaging order (as is often the case), and the court is minded to grant an imaging order, the presumption will be that a search order is not necessary unless the contrary can be demonstrated. Further, even if it is granted, the court will give careful consideration as to its scope having regard to the terms of the imaging order.
  • Once an image is taken there is, in general, no justification for any searching or inspection of that image for the purposes of preserving those documents. It should therefore, save in exceptional cases, be kept in the safekeeping of the relevant forensic IT expert who took the image (rather than the applicant or applicant’s solicitors) and not searched or inspected by anyone until the return date.
  • If there is to be any departure from the above, it will require a “very high degree of justification” and must be “specifically and explicitly approved by the court”. Such cases might, for example, include where there is an urgent need to follow property or identify wrong doers and the claimant is better placed to carry out that exercise, e.g. because of the resources available to it.
  • At the return hearing, consideration will be given to the timing and methodology for disclosure and inspection of the documents captured in the image. The presumption will be that the defendant will give disclosure of those documents in the normal way. While there may be circumstances which justify a departure from that, there should never be any unilateral searching of the image by or on behalf of the claimant. The methodology (such as the keywords to be used) must be either agreed between the parties or approved by the court.
• In contrast to freezing orders and search orders, there is at present no standard form of imaging order. The Court of Appeal therefore used this case to call on the Civil Procedure Rules Committee to produce one as a matter of urgency, in order to effectively balance the rights of the parties and avoid the exercise being attempted, as at present, on an ad hoc and often ex parte basis. A further advantage would be that a standard form order would also require the applicant to show the judge any proposed variation and justify it. In the meantime, the Court of Appeal emphasised that it was the responsibility of the applicant and the court to give careful consideration to the safeguards required.

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