ELVEE LTD (T/A TRACK DIRECT) v (1) CLIVE TAYLOR

[Donald ramsbottom]

Not crypto, but some of you may be interested in this, from Lawtel, as ever
do not read if you do not like law.





ELVEE LTD (T/A TRACK DIRECT) v (1) CLIVE TAYLOR (2) MARK LOCKET (3) KEITH
MUSSETT 
(4) E-MEDIA COLOUR LTD (2001) 

Court:
CA (Sir Andrew Morritt V-C, Chadwick LJ) 6/12/2001 

Subject:
INTELLECTUAL PROPERTY - INFORMATION TECHNOLOGY - CIVIL PROCEDURE - EVIDENCE 


Descriptors:
SEARCH AND SEIZURE ORDERS : RESTRAINING ORDERS : MATERIAL NON-DISCLOSURE : 
RECOGNISED RISKS : PRESERVATION OF EVIDENCE : FORMER EMPLOYEES : UNLAWFUL AND 
DIRECT COMPETITION : CONFIDENTIAL INFORMATION : SKILL AND CARE : DIGITAL
IMAGES 
: PHOTOGRAPHS : COMPACT DISCS : CDS : COMMERCIAL ADVANTAGE : FULL AND FRANK 
DISCLOSURE : COPYRIGHT : EVIDENTIAL VALUE : DELAY IN JUDGMENT 

Summary:
The judge was right not to have discharged a search and seizure order on the 
grounds of material non-disclosure where it was justified because there was 
a recognised risk to physical evidence requiring preservation. 

Text:
Defendants' appeal from the decision of David Oliver QC dated 20 February
2001 
where it was ordered that a restraining order preventing the defendants from 
using material taken by the first, second and third defendants ('D1, D2 and 
D3') from the claimant ('Elvee') when they left Elvee's employment, continue 
in the terms originally ordered. Elvee, which used to employ D1, D2 and D3, 
specialised in the design and production of colour computer graphics. In
February 
2000 D1 and D2 set up a company ('E-Media') by which they became its
directors 
and shareholders. Within a ten-day period D3 also left Elvee and began
working 
at E-Media. At the beginning of April 2000 E-Media began: (i) trading in
direct 
competition with Elvee; and (ii) taking two of Elvee's substantial clients. 
Soon after D1, D2 and D3's departure, Elvee discovered that approximately 200 
of its blank CDs had gone missing. Following extensive investigation it
became 
apparent that D1, D2 and D3 had made copies, on the CDs, of a large number 
of Elvee's computer files comprising confidential information and images from 
Elvee's photo library which were its stock-in-trade and had attempted to
delete 
all the evidence of their copying actions. As a result E-Media would have
been 
able to carry out work for Elvee's customers without first having to create 
its own versions of those photographs which took time and required skill and 
care. It was asserted that E-Media obtained a commercial advantage over Elvee 
which it would not otherwise have had. Elvee first obtained the search and 
seizure order and the restraining order at an application without notice
before 
Poole J on 4 July 2000 in the Queen's Bench Division. A further date for the 
return hearing was set at 18 July 2000 and the search and seizure order was 
executed on 5 and 6 July 2000. The defendants instructed a solicitor on 6
July 
2000 who wrote to Elvee asking whether Elvee had made full and frank
disclosure 
at the hearing on 4 July 2000 in particular in relation to an existing claim 
taking place involving the parties in Uxbridge County Court; this raised the 
question about what disclosure should have been made on the images found at 
E-Media's premises. D1, D2 and D3 swore affidavits on 11 July 2000 and
further 
affidavits on 14 July 2000, the thrust of which was to accept that data had 
been copied on between ten to fifteen CDs in March and that they were removed 
at the client's request. D1, D2 and D3 alleged that the copyright of the data 
belonged to the client and not Elvee, affirming that Elvee was paid only to 
enhance digital images for reproducing purposes. Before Astill J on 18 July 
2000, and by consent, it was ordered that the property be presented and
further 
that the defendants be restrained from using that material. The judge
transferred 
the proceedings to the Chancery Division "for a full hearing as soon as
possible". 
Further affidavits were sworn by the defendants and the proceedings came on 
for hearing at the end November/beginning December before David Oliver QC, 
at which he was asked to address three issues: (a) whether the search and
seizure 
order should be discharged; (b) if not, what action should be taken; and (c) 
whether the order made should continue. David Oliver QC concluded that the 
order should continue and the issue before the Court of Appeal was whether 
he was right to conclude that Poole J's order should not be discharged.
Ultimately, 
the questions asked of the Court of Appeal were whether the judge should have 
discharged the order on the grounds of material non-disclosure and whether 
he was right not to have discharged the order on the grounds of material
non-disclosure. 
Elvee cross-appealed from the costs order submitting that the judge was wrong 
to have reserved all costs to the trial judge. 

HELD: (1) If the judge should have discharged the order, then the material 
should have been returned to the defendants. However, the Court of Appeal was 
not required to take a view on this matter. To do so would have overridden 
the objective that cases be dealt with justly. There was a need to consider 
the appropriate use of the court's resources, thereby avoiding delay. (2)
There 
was data that was shown to be potentially evidential to issues in the case 
and that data was likely to be lost or corrupted if returned to the
defendants; 
not because of an intention so to do but because any further work on the data 
would have the effect of altering the evidence. If the data was to be of
evidential 
value, it was sensible to take steps to preserve it. (3) The allegation made 
in the Uxbridge proceedings was essentially for wrongful solicitation of
clients. 
There was no issue as to copyright as alleged in the present proceedings and 
therefore it was safe to say that the material non-disclosure of the Uxbridge 
proceedings would have made little or no difference. (4) Intellectual
property 
applications involving orders for search and seizure should be made in the 
Chancery Division. Matters of this nature tended to create different problems 
and would generally need to be dealt with by judges used to dealing with
these 
kind of problems. Notwithstanding that, the Court of Appeal was not of the 
view that an order should be discharged merely because proceedings were
commenced 
in the incorrect division. (5) This was not a case where material
non-disclosure 
justified the court to set aside a search and seizure order. This was a case 
that fell within the principle as stated in Brink's Mat Ltd v Elcombe (1988)
 1 WLR 1350 that a search and seizure order was justified where there was a 
recognised risk to physical evidence requiring preservation. (6) In response 
to a cross-appeal by Elvee to set aside and vary an order for costs, the
Court 
of Appeal was of the opinion that the judge was wrong to have reserved all 
costs to the trial judge because there was nothing that could happen at the 
trial that could affect the costs in the application to discharge the search 
and seizure order on the grounds of material non-disclosure. Accordingly, the 
costs order would be varied to include the costs of the application in
November/December 
and February as Elvee's costs in any event. (7) On 18 July 2000 Astill J
ordered 
that the hearing "take place as soon as possible". There was no explanation 
why David Oliver QC took so long to deliver his judgment (extemporaneously) 
following the hearing in November/December. If events occurred giving rise 
to such a delay, then the judge should have said so, else the parties might 
be left with the feeling that the case did not receive the prompt attention 
it deserved. Individuals agreeing to take on the position of Deputy High
Court 
Judge must be aware of the need to balance their other professional
obligations 
with that required of them as judges. 

Appeal dismissed. Cross-appeal allowed. 

Donald Ramsbottom BA LLb (Hons) PGdip
Ramsbottom & Co Solicitors
Internet and Global Encryption Law Specialists & General UK  Law Matters
5 Seagrove Avenue Hayling Island Hampshire UK
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