Admiral Management Services Ltd v Para-Protect Europe Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stanley Burnton |
| Judgment Date | 04 March 2002 |
| Neutral Citation | [2002] EWHC 233 (Ch) |
| Docket Number | Case No: HC0004329 |
| Court | Chancery Division |
| Date | 04 March 2002 |
[2002] EWHC 233 (Ch)
The Honourable Mr Justice Stanley Burnton
Case No: HC0004329
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Alistair McGregor QC and Nigel Porter (instructed by Boyes Turner) for the Claimant
Harvey McGregor QC and Gerard Clarke (instructed by Field Fisher Waterhouse) for the Defendants
Dates of Hearings: 11 December 2001 and 19 February 2002.
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
………………………..
The Hon. Mr Justice Stanley Burnton
Mr Justice Stanley Burnton
The proceedings
The Claimant's business includes the provision of consulting and forensic services in relation to the security of computer systems. The individual Defendants are former employees of the Claimant. The First Defendant is a competitor of the Claimant. It was incorporated in England and Wales on 29 June 2000 by its American parent company Para-Protect Inc.. Between July and August 2000 all of the individual Defendants left the Claimant to join First Defendant.
In these proceedings the Claimant alleged that the Second and the Third Defendants, while still employees of the Claimant, had orchestrated the exodus of the Claimant's staff to First Defendant and solicited the Claimants' customers to transfer their business to it. They also alleged that the Second Defendant and the Third Defendant had stolen or copied documents of the Claimant for use in the First Defendant's business.
On 20 September 2000, the Claimant applied without notice for a search and seizure order and interlocutory injunctions against the First Defendant, and for other relief against the Second and Third Defendants. An order was made by Hart J on 22 September 2000. It provided for the imaging (i.e., copying) of the hard discs of computers on the First Defendant's premises and the copying of other electronic storage media. The execution of the order was to be supervised by a Supervising Solicitor, and he was to have the benefit of an independent computer expert if he so required. The order also provided for the delivery up of documents by the Second Defendant and the Third Defendant.
On the same date, the Claimant's Claim Form was issued. It included claims for injunctions, accounts of profits and damages in relation to the Defendants' alleged use of confidential information derived from documents of the Claimant, an injunction restraining the first three Defendants from entering into or fulfilling any contract for the provision of IT security services with any client of the Claimant who had been approached by the Second Defendant or Third Defendant while they were employees of the Claimant and accounts of any profits earned as a result of any such contract, damages for breach of confidentiality, breach of contract and breach of the individual Defendants' fiduciary duties, conspiracy and breach of copyright. In addition, various injunctions were sought restraining allegedly wrongful acts of the Defendants competing with the Claimant's IT security business.
The search and seizure order was executed on 25 September 2000. Documents and floppy discs belonging to the Claimant were removed from the First Defendant's premises, and the imaging of the First Defendant's computers was begun. The Claimant alleges that the documents removed contained confidential information belonging to it. The orders against the Second Defendant and Third Defendant were served on them on 25 and 26 September 2000.
Draft Particulars of Claim were prepared but never formally served. The Claimant's applications for injunctive relief came back before the Court on 3 October, when undertakings were given on behalf of the Defendants.
On 1 November 2000, the proceedings were settled by a consent order of that date ("the Order"). The Defendants made no express admission of liability. The Order was in Tomlin form, staying the proceedings except for the purpose of carrying into effect or enforcing the terms of the Order. It contains extensive undertakings on the part of the Defendants in relation to the Claimant's documents and in relation to the protection of its business, and an agreement by the Defendants to pay the Claimant "by way of agreed damages the sum of £40,000 …. in full and final satisfaction for all claims for financial compensation in whatever form arising within the Claimant's claim herein except the Claimant's claim to the sums set out in paragraph 1 of the order herein …' In addition, the Defendants were ordered by paragraph 4 of the Order to pay to the Claimant the costs of "the claim and all proceedings therein including the costs of and occasioned by the applications herein made on 20 September 2000 and adjourned to 22 September 2000 such costs to be the subject of a detailed assessment if not agreed". Paragraph 1 of the Order is as follows:
"1. That the following issues be referred to a Judge of this Division for determination, namely:
1.1 whether the sums of £120,000, and/or £67,500 and/or £6,500 claimed by the Claimant for work done by employees within its forensic department and by Andrea Cumming and by a consultant as part of its costs of the claim and/or of any proceedings within this claim and/or occasioned by the application on 20 September 2000 and adjourned to 22 September 2000 constitute costs in whole or in part properly recoverable by the Claimant subject to detailed assessment of those costs; or
1.2 If the same do not constitute costs in whole or in part properly so recoverable, whether the same may be claimed in whole or in part against the Defendants as damages subject to assessment of damages."
It is common ground that the "work done" referred to in paragraph 1 of the Order was work carried out in investigating and obtaining evidence of the torts committed by the Defendants complained of in these proceedings.
By a consent order dated 30 July 2000 it was ordered that the issues set out in paragraphs 1.1 and 1.2 of the Order of 1 November 2000 be determined by way of preliminary issue, and directions were given for pleadings and evidence. The preliminary issue was heard before me on 11 December 2000.
Andrea Cumming, referred to in paragraph 1.1 of the Order, is an employee of the Claimant whose responsibilities extend beyond its forensic department. The Claimant has abandoned its claim in respect of the consultant referred to in paragraph 1.1 of the Order.
This is my judgment on the preliminary issues. It follows that I have not considered any questions of fact or detail other than those relevant to the questions of principle.
Costs
The issue raised by paragraph 1.1 of the Order is whether and to what extent may the Claimant company recover by way of costs sums in respect of the time and work of its own employees.
The Claimant concedes that in the ordinary way a company cannot recover by way of costs any payment for the time of its employees engaged in investigating or prosecuting its claim. It contends that some of its employees were experts in the field of computers, and that it is entitled to recover sums for their work in connection with the claims against the Defendants. It also contends that its employees provided expert services in determining whether documents found on the Defendants' computers were the Claimant's documents or copied or derived from its documents or contained the Claimant's confidential information.
The Defendants dispute that they have accepted liability for the costs claimed. They deny that costs may be awarded in respect of the time of a company's expert staff working on a claim. In addition, they dispute that any of the staff in question were experts for this purpose. They dispute that the level of expertise involved was sufficient to qualify them as experts. It was also submitted on their behalf that, since none of them would or could be called as expert witnesses in the proceedings, on account of their lack of independence, accordingly nothing could be recovered for their time or work.
I can deal with the question of liability in principle shortly. If any of the costs referred to in paragraph 1.1 of the Order fall within paragraph 4 of the order, the Defendants are required to pay them. Paragraph 4 is in the normal wide terms, including not merely the costs of the application for a search order and injunctive relief but in addition the costs incidental to the application. As will be seen, in Re Gibson's Settlement Trusts [1981] 1 Ch 179, Megarry V-C pointed out that the costs "incidental to" proceedings go beyond those "of" the proceedings.
Furthermore, the wording of paragraph 1.1 indicates that the Defendants are to pay such costs referred to in it as are "properly recoverable". These words must be taken to refer to the rules for the recovery of costs, of which the most basic is that costs "of and incidental to" proceedings are in the discretion of the Court: section 51 of the Supreme Court Act 1981. Whether the costs referred to in paragraph 1.1 of the Order are in principle "properly recoverable" is one of the issues before me. Apart from paragraph 4 of the Order, it would be implicit in paragraph 1.1 that if the costs claimed by the Claimant are "properly recoverable", they are to be recovered from, that is are payable by, the Defendants. Paragraph 1.1, like paragraph 1.2, cannot sensibly be interpreted as creating an academic issue that has no relevance to the enforceable rights and liabilities of the Claimant and the Defendants.
The time from which costs may be recoverable
The time during which work was done...
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