Lock International Plc v Beswick
| Jurisdiction | England & Wales |
| Judgment Date | 1989 |
| Date | 1989 |
| Year | 1989 |
| Court | Chancery Division |
Practice - Discovery - Anton Piller order - Cross-undertaking in damages - Failure to disclose relevant financial information on ex parte application - No evidence justifying making of ex parte order - Order executed - Whether order to be set aside
In February 1989 the plaintiff, a manufacturer of metal detectors, obtained an ex parte Anton Piller order against eight of its former employees and a competing company with whom they had since commenced employment. Under the Anton Piller order which was executed the next day, the plaintiff was allowed to search not only the competing company's premises but also the homes of three of the other defendants, and to remove not only documents containing specified confidential information but also the competing company's drawings, commercial documents, computer records and prototypes. The plaintiff undertook not to use the information except for prosecution of its action, and in support of a cross-undertaking in damages the plaintiff disclosed what was said to be the latest report and accounts for the 18 months ended on 31 December 1987, which showed net assets of about £800,000 and a pre-tax profit for the period of £1.76 m. In fact, as appeared from accounts for the six months ended on 30 June 1988 which had been filed at the Companies Registry, the plaintiff had recently given financial assistance to H. Plc. to enable it to purchase the plaintiff and associated companies. That assistance took the form of a guarantee of a £94m. overdraft facility, supported by a charge over the plaintiff's assets. Since its purchase of the plaintiff, H. Plc. had announced the closure and sale of another subsidiary.
On the defendants' application to discharge the Anton Piller order on the ground of material non-disclosure: —
Held, granting the application, that the plaintiff had not made a fair disclosure of its financial position in connection with the cross-undertaking in damages, and the failure to disclose the 1988 accounts, although inadvertent, was a material non-disclosure entitling the defendants to have the order discharged, subject to the court's discretion to maintain it; that the evidence did not justify any form of ex parte relief, let alone an Anton Piller order; that since the question of non-disclosure was not concerned with the merits of the plaintiff's case, and the question whether the order should have been made did not involve an investigation of conflicting evidence, and since the parties were in competition with each other, it was right to discharge the order now in order to show that no prima facie case of dishonesty had been shown against the defendants; and that, accordingly, the defendants should have leave to proceed on the cross-undertaking as to damages and an order for the return of the material seized (post, pp. 1279D–E, 1283C–E, 1285A–E, H–1286A).
Per curiam. There must be proportionality between the perceived threat to the plaintiff's rights and the remedy granted. The fact that there is overwhelming evidence that the defendant has behaved wrongfully in his commercial relationships does not necessarily justify an Anton Piller order. The making of an intrusive order ex parte even against a guilty defendant is contrary to the normal principles of justice and can only be done where there is a paramount need to prevent a denial of justice to the plaintiff (post, p. 1281E–F).
The following cases are referred to in the judgment:
American Cyanamid Co. v. Ethicon Ltd. [
Anton Piller K.G. v. Manufacturing Processes Ltd. [
Booker McConnell Plc. v. Plascow [
Brink's Mat Ltd. v. Elcombe [
Bullivant (Roger) Ltd. v. Ellis [
Columbia Picture Industries Inc. v. Robinson [
Dormeuil Freres S.A. v. Nicolian International (Textiles) Ltd. [
Dunlop Holdings Ltd. v. Staravia Ltd. [
Faccenda Chicken Ltd. v. Fowler [
WE.A. Records Ltd. v. Visions Channel 4 Ltd. [
Yousif v. Salama [
The following additional cases were cited in argument:
Ackroyds (London) Ltd. v. Islington Plastics Ltd. [
Alfred Dunhill Ltd. v. Sunoptic S.A. [
Amber Size and Chemical Co. Ltd. v. Menzel [
Blacklock (H.) & Co. Ltd. v. C. Arthur Pearson Ltd. [
British Motor Trade Association v. Salvadori [
Foley (B.) Ltd. v. Ellott [
Harvey Tiling Co. (Pty.) Ltd. v. Rodomac (Pty.) Ltd. [
Johnson & Bloy (Holdings) Ltd. v. Wolstenholme Rink, Plc. [
Lerose Ltd. v. Hawick Jersey International Ltd. [
Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc. [
Printers & Finishers Ltd. v. Holloway [
Reid and Sigrist Ltd. v. Moss and Mechanism Ltd. (
Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (
Seager v. Copydex Ltd. [
Searle (G. D.) & Co. Ltd. v. Celltech Ltd. [
Standex International Ltd. v. C. B. Blades [
Terrapin Ltd. v. Builders' Supply Co. (Hayes) Ltd. [
Motions
By notice of motion dated 1 March 1989, the plaintiff, Lock International Plc., sought, inter alia, an order that the defendants, Ivan Beswick, Thomas Cooper, Alan Dearman, Keith Ives, Andrew Lock, Michael Procter, Ian Schofield, Christopher Sykes and Safeline Ltd., their servants agents or officers, be restrained until trial of the action or further order from (1) making use of or disclosing any trade secrets or confidential information of the plaintiff acquired by the first to eighth defendants or any of them in the course of their employment with the plaintiff including but not limited to the matters set out in the schedule thereto; (2)(a) infringing the plaintiffs' copyright in any of their drawings or manuals by inter alia making or erecting any metal detector reproducing any material contained therein or any substantial part thereof; (b) converting to their own use and infringing copies of the work subject to such copyright; (3)(a) inducing or procuring breaches of contract between the plaintiff and any of its employees and distributors or any of them by seeking to obtain or use any trade secrets or confidential information of the plaintiff acquired by any such distributors or employees in the course of their employment with the plaintiff, including but not limited to the matters set out in the schedule, (b) divulging any such information set out in (a) to any other defendant or any other third party save with the express written consent of the plaintiff; (4)(a) passing off or enabling others to pass off metal detectors not being the goods of the plaintiff as and for the plaintiff's goods and from selling advertising or offering for sale any metal detector under or in connection with the word “Metaltek” or any other word calculated to deceive together with the logo used by the plaintiff or alternatively the mere use of the word “Metaltek” or any other word calculated to deceive without clearly distinguishing such metal detector from those of the plaintiff; (b) carrying on business under the name “Metaltek” or under any name comprising the name “Metaltek” likely to mislead or deceive the public into believing that the ninth defendant was the same company as or was connected with the plaintiff or that the business of the ninth defendant or any of the defendants was the same as or in any way connected with the business of the plaintiff.
By notice of motion dated 14 March 1989, the defendants sought an order (1) that orders made by Saville J. on 15 and 17 February be set aside; (2) that the plaintiff whether acting by its directors, servants, agents or otherwise howsoever he restrained from making any use whatsoever including tendering the same in evidence, of any of the information documents computer discs prototypes or other material seized or inspected by the plaintiff or its solicitors pursuant to or as a result of such orders.
By a second notice of motion dated 14 March 1989, the defendants asked that the plaintiff's action be dismissed on the ground that the plaintiff had failed to serve a statement of claim in due time or at all, or for such further or other order as to the court should seem proper.
The facts are stated in the judgment.
Stephen Silber Q.C., Mary Vitoria (instructed on inter partes motion only) and Jane Owen for the plaintiff.
Alastair Wilson Q.C. and Alexander Drysdale Wilson for the defendants.
11 April. Hoffmann J. handed down the following judgment.
1. The motionsIn this action the plaintiff, a company which manufactures industrial metal detectors, alleges that the defendants, who are engaged in a competing business, have been misusing its trade secrets and confidential information, interfering with its contractual relations and passing off their products as the plaintiff's. The first eight defendants are former employees of the plaintiff who commenced employment with the ninth defendant, Safeline Ltd. (“Safeline”), on various dates between August and December 1988. The action was commenced in the Queen's Bench Division on 15 February...
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