England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
THE HON MR JUSTICE EDWARDS-STUART
Case No:HT-12-299

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/07/2013

Lord Justice Mummery:

Introductory

1. The issue on this appeal is whether the appellant company is entitled to an order requiring its former Chief Executive Officer, after the termination of his appointment, to give it access to the content of emails relating to its business affairs. The relevant emails, which are stored on his personal computer in England, were sent or received by him on behalf of the company.
2. Fairstar Heavy Transport NV (Fairstar) was incorporated in the Netherlands and is based in Rotterdam. It wants to retrieve and read its electronic business correspondence stored on the personal computer of its former Chief Executive Officer, Mr Philip Adkins. The computer is held by his solicitors (Schillings) in accordance with an undertaking to the court. Fairstar seeks an order for inspection of the content of the relevant emails, initially by an independent IT person. Ultimately it wants to be given copies of the emails. Fairstar asserts that access to the electronic correspondence is essential for the conduct of its business.
3. At end of the hearing below Counsel reached agreement on the wording of a preliminary issue. Edwards-Stuart J, who had asked counsel to produce a form of words stating clearly the issue that he was invited to determine summarily, set out the agreed wording in paragraph 11 of his judgment :

"Does Fairstar have an enforceable proprietary claim to the content of the emails held by Mr Adkins (and/or Claranet) in sofar as they were received or sent by Mr Adkins acting on behalf of Fairstar?"

4. The words "enforceable proprietary claim to the content of the emails" are a description of Fairstar's claim. They make it clear that it is neither a pure contractual claim nor a mere procedural step (e.g. disclosure of documents) in substantive proceedings based on another cause of action. The claim to property in "content" was the main area of contention.
5. There is no express contract of employment between Mr Adkins and Fairstar, which contracted for his services under a written agreement with a company controlled by Mr Adkins. His contract of employment is with his creature company. A clause in the written contract between that company and Fairstar provides that the contract is governed by Dutch law and that the Dutch Courts have exclusive jurisdiction.
6. When the judge gave his answer to the preliminary question agreed and drafted by counsel he naturally did so in the light of the way in which they had argued the issue.
7. For Fairstar the case was that the content of emails created by, or coming into the possession of, an agent while acting for the principal was the property of the principal and remained so after the termination of the agency relationship.
8. For Mr Adkins the argument was that the content of the emails was "information", that information is not recognised by the law as property and that the purely proprietary claim to the content was for that reason misconceived.
9. Edwards-Stuart J gave the answer "No" to the question in [3] above. He concluded that the content of the emails was information, which was not capable of being "property." He dismissed the action on the basis that Fairstar had failed to establish an enforceable proprietary claim. Nothing else was left in the action for decision by the English Courts. Fairstar appeals from the order to that effect dated 6 December 2012 following the reserved judgment handed down on 1 November 2012. Tomlinson LJ granted permission to appeal.
10. Mr Peter Susman QC appearing for Fairstar accepted that the preliminary issue was not based on any allegation by Fairstar of wrongful conduct on the part of Mr Adkins. That was an issue in civil proceedings brought by Fairstar in the Netherlands. The preliminary issue in this action was confined to an assertion by Fairstar of a proprietary right to the content of emails relating to Fairstar's business. That assertion is based on the fact that emails stored on the personal computer were received by and sent by Mr Adkins in his capacity as the then Chief Executive Officer of Fairstar. It is argued on the appeal that Fairstar was and is entitled, as principal, to inspect and copy its business correspondence held by its agent in whatever form, whether hard copy or electronic. The action is brought to enforce that right to the content of the emails, and not as a claim for breach of contract committed by Mr Adkins in his management of Fairstar's affairs as its CEO.
11. The difference between the parties about the legal basis of the claim was accentuated when, in support of the appeal, Mr Susman QC sought leave to file a supplemental skeleton argument. It is principally an update on the progress of the civil proceedings commenced in the Netherlands against Mr Adkins and others. Mr Richard Spearman QC, who appeared for Mr Adkins on the appeal, as well as at first instance, opposed the submission of the supplemental skeleton. He objected that Fairstar's claim was now being put on a completely different legal basis. It was argued before Edwards-Stuart J as a purely proprietary claim to the "content" of the relevant emails. All other possible bases of claim were either unsustainable or were subject to Dutch law and to the exclusive jurisdiction on the Dutch Courts.
12. New authorities produced by Fairstar relate to duties arising from the agency relationship, in particular the duties of the agent to produce to the principal books and documents during and after the termination of the relationship. What was argued as a broad claim to "property in content" below was being argued after judgment as a narrower new claim to "agency documents" taking the case into areas of Dutch contract and company law justiciable exclusively in the Dutch Courts. There was even, Mr Spearman QC suggested, a change of tack at the hearing below. The judge commented on a "fairly substantial shift" on the application for permission to appeal, which he refused.
13. Mr Susman QC denied moving his ground. At the hearing and on this appeal Fairstar pursued the claim that it has always made-a proprietary right to the content of the emails. He contended that Fairstar had the right, as principal, to require Mr Adkins, as agent, to produce and deliver up documents held by him as former agent for Fairstar, so that it could inspect them and copy them. That duty continued after the termination of the agency relationship. The fact that the materials are on a personal computer, which may also store private emails of Mr Adkins, was irrelevant. It was not a valid reason for refusing the relief sought by Fairstar to inspect and copy emails relating to its affairs. Emails relating to the personal or private affairs of Mr Adkins would be excluded from the order.
14. I would allow the supplemental skeleton to be filed. Fairstar has throughout asserted a legal right to the content of the emails in the context of an agency relationship between the parties. That right, to which the label "proprietary" was attached, was to inspect and take copies of electronic correspondence. As explained later, the asserted "proprietary" character of the claim was not, in my view, necessary for its success. I do not think that reliance on the post-termination duties of an agent has raised a new claim which either alters the substance of the case or which has taken Mr Adkins and his advisers by surprise.

The issues

15. Any lingering confusion about the claim can be dispelled by stating what it is not about.
16. Fairstar makes no claim against Mr Adkins in these proceedings (a) to ownership of the computer in which the emails are stored, or to the server, or to a USB stick, or to any electronic medium, or to any sheets of paper, original or photocopy, or, indeed, to any other physical thing or material relating to the form or storage of the emails; (b) to ownership of confidential information in the emails, it not even being alleged that the content is confidential, or is being misused by Mr Adkins in breach of confidence; (c) to ownership of copyright or other intellectual property right in the content of emails; or (d) to any breach of contract or breach of fiduciary duty in respect of or arising out of the content of the emails or the withholding of them by Mr Adkins.
17. In brief, Fairstar claims an enforceable right, described by it as "proprietary", to the content of business emails sent and received by Mr Adkins while Fairstar's CEO and stored by him on his personal computer. That right entitles it to inspect and make copies of the content of the emails, either directly or through an independent person instructed for that purpose.
18. The nature of the prior legal relationship between Fairstar and Mr Adkins as one of agency is not disputed. Emails to and from third parties came into existence and into the possession of Mr Adkins in the course of that relationship. Although stored on his personal computer, the relevant emails relate to Fairstar's business, not to private affairs of Mr Adkins. By means of electronic operation the emails can be retrieved from storage on the computer. Retrieval may either take the form of display on a screen or of a print-out in document form. Fairstar wishes to exercise its right as principal to inspect the electronic documents, either by reading them on screen or by the printing out of hard copies of them. That, it is contended, is the same right that it would undoubtedly have in respect of books and paper documents created by or coming into the possession of the agent in similar circumstances. Even if the emails are not printed out on paper, the same legal principles apply to access to the content of electronic documents as would apply to access to the content of printed paper versions of them.
19. Bowstead & Reynolds on Agency (19^th Ed) Article 50(3) and paragraph 6-093 were cited in support of the general proposition a principal is entitled, at the termination of the agency, to require his agent to produce or deliver up to him books and documents concerning his affairs prepared or held by the agent for him for the purpose of the agency relationship. It is submitted that the differences of form in which business correspondent is recorded, transmitted, sent, received, held or stored is, in principle, irrelevant to the substance of Fairstar's legal right to inspect and copy their content during or after termination of the relationship. The rationale for that right as an incident of agency is the same.
20. Mr Susman QC observed that, as the contemporary world is in near-universal electronic communication, it would be chaotic if a principal (or an employer) were denied the kind of relief sought in this case for inspection of documents relating to their affairs held by the other party to that relationship, simply because the materials were in a paperless form rather than on paper that could be physically delivered up under a court order.

Brief background

21. Fairstar carries on business from Rotterdam. It provides the service of transporting very heavy and valuable cargoes by sea on specially constructed vessels. On 14 July 2012 it was taken over following a hostile bid by Dockwise White Martin Limited (Dockwise), which is also incorporated in the Netherlands.
22. Dockwise terminated the services of Mr Adkins on 14 July 2012. He is a US citizen employed by Cadenza Management Limited (Cadenza), a company controlled by him and registered in Jersey. His services were supplied to Fairview under Service Agreements with Cadenza dated 29 June 2010 and 2 July 2010. The agreements were governed by Dutch Law and contained an exclusive jurisdiction clause for the Dutch Courts. No express contract of employment was made directly between Fairstar and Mr Adkins.
23. A Settlement Agreement was made between Fairstar and Cadenza dated 14 May 2012 subject to Dutch Law and with a Dutch exclusive jurisdiction clause. A civil action brought by Fairstar has been proceeding in the Amsterdam District Court since November 2012. Claims are made in it that Mr Adkins mismanaged the business. There is a claim to enforce a restrictive covenant not to compete. Orders are also sought for the handing over of emails, not on the ground of Fairstar's property in their contents, but as a matter of Dutch company law and contract. No application has been made in those proceedings for service out of the jurisdiction of process seeking relief relating to the emails stored on a server in England. Dockwise has also started proceedings against Mr Adkins in the Dutch Courts.
24. Although Claranet Limited, the second defendant, provides internet services to Cadenza and holds electronic copies of the emails, it has taken no part in the proceedings.
25. The system set up by Fairstar was that all the emails addressed to Mr Adkins at his Fairstar email address were automatically forwarded to his private email address. They were automatically deleted from the Fairstar server without retaining copies. So Fairstar is ignorant of the content of emails concerning its business.
26. As Mr Adkins refused to comply with Fairstar's request for access to the emails, Fairstar applied to the court for an order that copies of emails created on or after 1 January 2011 relating to or referring to Fairstar's business be provided to Fairstar. It was claimed that such emails were and remain the property of Fairstar.
27. On 7 September 2012 Coulson J made an ex parte order to lodge electronic copies of the emails with Schillings in a manner that prevents any tampering with their content. That order was complied with. On 14 September 2012 Eder J varied that order. An order is now sought that in the first instance the emails be inspected by an independent IT expert instructed by Fairstar to be followed by an order that Fairstar be entitled to inspect and copy emails received or sent on its behalf.

Judgment

28. In essence Edwards-Stuart J's conclusion was that the content of the emails to which Fairstar claimed a proprietary right was "information"; that according to the authorities there is no property in information; and that Fairstar did not have the proprietary right on which it based its claim.
29. That was the point on which the parties concentrated in their competing contentions before him. That appears from the authorities cited to the judge and reviewed by him, such as Lamb v. Evans [1893] 1 Ch 280 (printing blocks and materials obtained by defendant while in employment of, or as agent for, the plaintiff could not be used against employer/principal, who was entitled to property in them) and Universal Thermosensors Ltd v. Hibben [1992] 1 WLR 840 (documents improperly retained after end of employment). The judge analysed those authorities as decisions on the ownership and use of physical materials: they did not assist him on the question whether or not the intangible informational content of the emails held on a server in the possession of Mr Adkins could be characterised as property.
30. In the light of those and other authorities cited the judge found no basis for the submission that, for example, information contained in a letter, as distinct from the letter as a physical object, was capable of being the subject of a proprietary claim. For the proposition that, in general, information is not property he cited the majority opinions in Boardman v. Phipps [1967] 2 AC 46 in particular passages at pp 89, 102 and 127. He concluded that the preponderance of authority pointed "strongly against there being any proprietary right in the content of information" and that that applied to the content of an email. He rejected the submission of Mr Susman QC that the content of an email was a form of property, which ought realistically to be recognised by the courts in the case of agency and employment.
31. On analysis of the implications of that proposition the judge held that "he could find no practical basis for holding that there should be property in the content of an email even if [he] thought that it was otherwise open to [him] to do so." He considered that English law provided the protection required against misuse of information contained in emails in the action for breach of confidence and the law of copyright. He therefore determined the agreed preliminary issue against Fairstar and rejected the application to inspect the emails based on that ground. Finally, he commented that he did not view the result "with any enthusiasm in the circumstances of this particular case", though he made it clear that he expressed no view on whether or not there was any other ground upon which the application could have been made in this jurisdiction.

Fairstar's submissions

32. In an initial skeleton argument in support of the application for permission to appeal Mr Susman QC argued that the decision of the judge should be reversed on the ground that "a principal is entitled to inspect and copy correspondence held by its agent whether in hard copy or electronically." It was settled law that, if a principal wants the opportunity to inspect and copy the content of documents held by his agent acting on his behalf, the principal is entitled to require the agent to produce or deliver up the documents. It was also submitted that, on a proper analysis, the principal has a proprietary interest in the content of written documents and that the right to delivery up of the original documents for inspection and copying is an incident of that proprietary interest.
33. The argument was developed as a proposition that the same principle applies in similar circumstances to the content of electronic business correspondence. The judge had fallen into error by confusing the incidents of agency with the different principle that a claim for misuse of confidential information does not rest on a proprietary right to confidential information and by then deciding that, as the contents of the electronic emails was information, it was not the subject of a proprietary right.
34. If the judge was right, Fairstar was left with no alternative remedy. The judge's ruling had far-reaching consequences for principals and employers in similar circumstances. Fairstar had no contract with Mr Adkins and its contract with his employer was subject to Dutch law and exclusive Dutch jurisdiction.
35. In support of the claim to a proprietary right to documents in the agent's hands, other than the agent's working papers, Mr Susman QC cited the general principle extracted from the authorities in Bowstead & Reynolds on Agency (19^th Ed.) at Article 50(3). He cited, in addition to the cases in the judgment below, Lady Beresford v. Driver (1851) 51 ER 335 and (1852) 51 ER 728 (ex-land agent ordered to deliver up documents to former principal relating to her estate and its management); Re Ellis & Ellis (1908) 25 TLR 38 (former solicitors ordered to deliver up payment vouchers to trustee in bankruptcy of former client); Chantrey Martin v. Martin [1953] 2 QB 286 at 294; (professional working papers of accountants not property of client, but letters and other papers created by accountants as agent for client were client's property); Gomba Holdings UK Ltd v. Minories Finance Ltd [1988] 1 WLR 1231 at 1233C (as between principal and agent all documents prepared or received by agent belong to principal and had to be delivered up on termination of agency on basis of ownership of them); and Equitas Ltd v. Horace Holman & Co Ltd [2007] EWHC 903 (Comm) at [27] and [28] as illustrations of the rule that a principal or employer is entitled to delivery up of original documents (or other property) retained or removed by an agent or employee and relating to transactions done as agent. The cases drew no distinction between a document and its content, only between, on the one hand, professional working papers created by and belonging to the agent, which did not have to be delivered up, and, on the other hand, other documents to which the principal was entitled.
36. An important feature of emails, as with other electronic documents, is that there is no original physical document to be delivered up. The principal can only see the content of an email if it is displayed on a screen or if it is printed out on paper by the printer. But that process does not present any practical obstacle to the principal's exercise of the right to inspect and copy it. It is on that aspect that Mr Susman QC contended that the principal has a "proprietary" right to the contents of the email or other electronic document. He also cited Yasuda Fire and Marine Insurance Co of Europe Ltd v. Orion Marine Insurance Underwriting Agency Ltd [1995] QB 174 at 186-7 as an instance of the court recognising the right of a principal to inspect and copy the content of both computerised and hard copy records of former underwriting agents as an incident of the agency relationship independent of any contractual term conferring a right to inspect and copy. See also Pennwell Publishing (UK) Ltd v. Ornstien [2007] EWHC 1570 (QB).
37. Mr Susman QC forcefully argued that it would be an absurd situation if a principal has the right as against an agent to inspect an original or copy letter, or an email that has been printed out, but not an email that the agent declines to print out or display on the screen of his computer.
38. As for the judge's ruling that the content of the letter was information in which there was no proprietary right, the judge had erroneously rejected Fairstar's contention that the right of a principal to inspect the contents of documents in the hands of his agent was distinguishable from a claim to protect confidential information, which was not being made in this case. The judge's discussion of claims to ownership of information in letters and emails was irrelevant to the primary issue here, which was whether Fairstar has a proprietary right as against Mr Adkins entitling it to inspect and copy the content of the emails held by Mr Adkins, whether sent by him or received by him, so long as they related to Fairstar's business affairs while he was its CEO.
39. Finally, Mr Susman QC rejected the criticism by Mr Spearman QC that the case was now being advanced on a completely different basis. The transcript of the hearing of the application to the judge for permission to appeal showed that Mr Spearman QC fully appreciated that Fairstar's central argument always was that the right of access to information in emails pertaining to its business was claimed by the company. As for the supplemental skeleton argument, its purpose was to update the context of this action, not to advance a different case.

Submissions of Mr Adkins

40. The submissions by Mr Spearman QC on behalf of Mr Adkins highlighted a number of points.
41. First, this action is not based on any alleged wrongful or unlawful conduct on the part of Mr Adkins, who is willing to preserve the emails to which the action relates. Mr Adkins had legitimately received and sent emails for work purposes.
42. Secondly, the core objection to Fairstar's claim is that it was misconceived from the outset, being based on a proprietary claim to non-existent property. The claim was to the content of the emails. That is information. There is no property in information. It was not alleged to be confidential or to be the subject of intellectual property rights or any other recognised exclusive rights in intangible property enforceable against all the world.
43. Thirdly, as for the agency relationship, the claim was not raised below and was not for core agency documents, such as accounting books and records: it was a claim to the content of individual items of correspondence in which, according to the authorities, Fairstar had no property. Following the rejection of the proprietary claim Fairstar then attempted to elide it with the legal rights and duties incidental to an agency relationship.
44. In the result Fairstar has no entitlement to inspect the emails by means of any property claim maintainable in the English courts. Mr Spearman QC described the proprietary claim to the content of the emails as of right as "far-reaching", even "breath-taking", and as involving an extension of the law, which was unwarranted in principle and authority and unworkable in practice.
45. Mr Spearman QC took no point either against the existence of a prior agency relationship or against the jurisdiction of the English Courts to decide Fairstar's claim to inspect and obtain copies of the emails on the computer in England, though the English Courts had no jurisdiction on contractual or company law issues. According to Mr Susman QC, the position taken by Mr Adkins in the Dutch proceedings is that the English courts have jurisdiction over the emails on his computer in England. The contention pursued by Mr Spearman QC is simply that Fairstar bases its claim on property in information in which there is no property recognised by English Law.

Discussion and conclusions

46. In my view, it is unfortunate that the agreed wording of the preliminary issue introduced an unnecessary complication into the dispute. The reference to a "proprietary right" was a distraction from the centrality of the agency relationship and its legal incidents. No competing claims of third parties are involved. Fairstar's claim is against Mr Adkins. The assertion of a right to inspect and copy the content of the emails on his computer relating to its business affairs arises from the legal incidents of an agency relationship that survive its termination. That question can be decided, as between those parties, without a jurisprudential debate about the legal characteristics of "property", or whether the content of the emails was "information" in which property existed in this case or could exist at all.
47. Everybody knows that "property" differentiates between things that are mine and things that are not mine. The law lays down criteria for determining the boundary between, on the one hand, those rights that are only enforceable against particular persons and, on the other hand, those rights attaching to things that are capable of being vindicated against the whole world. The claim to property in intangible information presents obvious definitional difficulties, having regard to the criteria of certainty, exclusivity, control and assignability that normally characterise property rights and distinguish them from personal rights.
48. In my judgment, the court should decline to enter into a controversy of that kind when it is not necessary to do so in order to decide the case on its particular facts. It would be unwise, for example, for this court to endorse the proposition that there can never be property in information without knowing more about the nature of the information in dispute and the circumstances in which a property right was being asserted. Some kinds of information, such as non-patentable know-how, are more akin to property in their specificity and exclusivity than, say, personal information about private life.
49. The conclusion that I have reached on this appeal makes it unnecessary to explore the question whether information in the content of the emails is property owned by Fairstar, either as a matter of fact or law. The distinction drawn in the preliminary issue between an electronic communication and the content of it and the claim to a proprietary right in the content was not the real point at issue. It has led to some confusion in the arguments advanced and to error in the outcome. As explained below, the position is that emails and their content stored and held in the computer are, in my view, either documents or should be treated as documents, for the purposes of determining the scope of the legal incidents of the agency relationship that survive its termination.
50. In my judgment, the judge ought to have made an order for inspection of the emails on the computer. He was not prevented from doing so by his conclusion that there was no proprietary right in the content of the emails. The absence of a proprietary right would not affect the legal right of the principal to an inspection and copying remedy against a former agent in respect of the emails. It was not necessary to decide the property issue in order to make the order for inspection or copying. To ask in a case like this the questions such as "Is there property in an email?", or "Who owns the content of an email?" is not a helpful way of stating the real issue, which is not one of ownership of property claimed against the world. The issue is one of enforcement, as between the parties, of particular rights of access by a remedy of inspection and copying, which is based on rights and duties incidental to the relationship that existed between the parties at the relevant time.
51. In brief, Fairstar is entitled to the relief claimed by it against Mr Adkins for the following reasons:
52. First, their former relationship had been that of principal and agent.
53. Secondly, as a general rule, it is a legal incident of that relationship that a principal is entitled to require production by the agent of documents relating to the affairs of the principal.
54. Thirdly, as Black LJ observed in the course of argument, "documents" may, depending on context, include information recorded, held or stored by other means than paper, as is recognised in the Civil Procedure Rules. In CPR 31.4 "document" means "anything in which information of any description is recorded" and "copy" means, in relation to a document, "anything onto which information recorded in the document has been copied, by whatever means and whether directly or indirectly." Those follow the same definition used in legislation. According to the notes to CPR 31.4 " While the word [document] in non-legal usage is commonly associated with information recorded only on paper, the true meaning of the word is far wider, reflecting its derivation from the Latin "documentum" referring to something which instructs or provides information. The term extends to electronic documents, including emails: see Practice Direction 31B, para 1". In that context content cannot be separated from form, since a blank sheet of paper providing no information would not be a document and a blank electronic communication would not be an email.
55. Fourthly, materials held and stored on a computer, which may be displayed in readable form on a screen or printed out on paper, are in principle covered by the same incidents of agency as apply to paper documents. The form of recording or storage does not detract from the substantive right of the principal as against the agent to have access to their content.
56. Fifthly, as for the authorities cited to the judge and in this court on whether there can be property in confidential information, or whether there is property in the content of a letter, as distinct from the paper on which it is written, they relate to a point that does not need to be decided. Quite apart from the existence or non-existence of property in content, Mr Adkins was under a duty, as a former agent of Fairstar, to allow Fairstar to inspect emails sent to or received by him and relating to its business. The termination of the agency did not terminate the duty binding on Mr Adkins as a result of the agency relationship.
57. Finally, no objection was taken to the jurisdiction of the English Court, as distinct from the Dutch Courts, to decide a claim to the content of the emails. The objection was that the claim had no legal foundation, as it was advanced as a purely proprietary claim to ownership of information contained the emails. The judge ought to have rejected that objection for the reasons given above.

Result

58. I would accordingly allow the appeal.
59. Counsel are requested to draft an agreed order in the light of our judgments. In the event of failure to agree each party should supply in draft a form of order with supporting written submissions.

Lord Justice Patten:

60. I agree.

Lady Justice Black:

61. I also agree.