Hays Specialist Recruitment (Holdings) Ltd. V. Ions | [2008] EWHC 745 | April 16, 2008

H2O

Hays Specialist Recruitment (Holdings) Ltd. V. Ions

 [2008] EWHC 745 (Ch)

   

Intended Claim

IN THE HIGH COURT OF JUSTICE 
CHANCERY DIVISION

   

20Royal Courts of Justice 
Strand, London. WC2A 2LL

   

16/04/2008

B e f o r e :

MR JUSTICE DAVID RICHARDS
Between :

 

1. Hays Specialist Recruitment (Holdings) Ltd 2. Hays Specialist Recruitment Ltd

Claimants

 

-and-

 
 

1. Mark Ions 2. Exclusive Human Resources Ltd

Defendants

 

Victoria Windle (instructed by Mishcon de Reya) for the Claimants 
Julian Wilson (instructed by Jonathan Stokes Solicitors) for the Defendants 

The Hon. Mr Justice David Richards:

This is an application for pre-action disclosure under section 33(2) of the Supreme Court Act 1981 (as amended) and CPR 31.16. The first respondent Mark Ions was for six and a half years until 5 July 2007 an employee of the first applicant Hays Specialist Recruitment (Holdings) Limited (Hays). The second respondent Exclusive Human Resources Limited (EHR) is a company established by Mr Ions which has since the termination of his employment with Hays been carrying on business in competition with Hays. It is not suggested that this is itself in breach of any contractual or other duty. The potential action against Mr Ions and EHR would be based on allegations that while still an employee Mr Ions copied and then retained confidential information concerning clients and contacts of Hays, that he and EHR have used that information in EHR's business and that Mr Ions breached the restrictive covenants in his contract of employment which lasted for six months after termination of his employment.

Hays through its subsidiaries carries on business as specialist recruitment employment agencies and as providers of staff bureau services. The business is carried on in the UK and abroad, generating dividends of £120 million in the year ended 30 June 2006. The ultimate holding company is Hays plc. The second applicant Hays Specialist Recruitment Limited is a subsidiary of Hays and employed some of the staff who created the database from which it is alleged that Mr Ions may have taken confidential information. As it may have rights in the database and therefore may have claims against Mr Ions, it has been joined as an applicant.

Mr Ion's employment with Hays commenced on 12 January 2001 as a recruitment consultant in the field of human resources and he was later promoted to a managing consultant. From September 2006 he specialised in placing training and similar personnel for a broad range of professional, public sector and commercial clients. He covered Leeds, Newcastle and Edinburgh. He is described in Hays' evidence as "middle ranked".

Mr Ions' contract of employment signed by him on 12 January 2001 required him to devote his whole time and attention during business hours to the business of Hays and to use his endeavours to promote Hays' interests in every respect, giving at all times the full benefit of his knowledge, expertise and skill (clause 7). Clause 18 provided:

"You must not, during the course of your employment or at any time thereafter, make use of, or disclose or divulge to any person, firm or company, any trade secrets, business methods or information which you know, or ought reasonably to have known to be of a confidential nature concerning the businesses, finances, dealings, transactions, client database or other affairs of the Company or the Group or of any person having dealings with the Company which may have come to your knowledge during the course of your employment unless it is necessary for the proper execution of your duties hereunder, and you shall use your best endeavours to prevent the publication or disclosure of any such information."

Clause 20 contained covenants against soliciting, canvassing, dealing with or accepting instructions from clients or applicants with whom he dealt or had contact during his employment, subject to certain restrictions. The covenants were binding during his employment and for a period of six months after its termination.

Before considering the jurisdictional tests which must be satisfied for an order for pre-action disclosure, and the factors relevant to the exercise of the discretion to make the order, I will summarise and, so far as necessary, deal with the allegations made against Mr Ions and EHR and the evidence relating to them. This is of particular importance in this case because Mr Ions and EHR submit that the case alleged is little more than unsubstantiated suspicion and that the present application is just a fishing expedition.

In support of its application, Hays relies on a witness statement of Maureen Sullivan who was Mr Ions' line manager, to which Mr Ions has responded. It is fair to say that Ms Sullivan's statement is long on allegation but rather short on hard evidence in support.

The material evidence as regards the transfer and alleged misuse of information may be summarised as follows. On 18 May 2007 Mr Ions incorporated EHR and he does not dispute that he intended to carry on a competing business through it once he left Hays. When he gave notice on 8 June 2007, he made no secret of his intention to set up a competing business. Although his employment continued for 28 days, he was not permitted to work for Hays during that period. A later search of his e-mail account at Hays has shown that on 18 May 2007, Mr Ions sent invitations to at least two clients or candidates of Hays to join his professional network with a website called LinkedIn. LinkedIn is similar in basic concept to social networking sites such as Facebook but is designed solely for the purpose of professional networking. A person joining LinkedIn, in this case Mr Ions, registers and creates a profile page, with information about his employment and education history. Once registered, the member can use the site in a number of different ways for establishing contacts. The relevant method for present purpose is to upload e-mail contacts and LinkedIn will invite them by e-mail to join the member's network. If the contact accepts the invitation, he or she becomes a "connection" whose contact details will be available to the other connections to the member's network.

LinkedIn is widely used by recruitment companies. Mr Ions gives evidence that he had been a member of LinkedIn for over a year, with the encouragement of Hays, and he exhibits a print-out which appears to show that other employees of Hays, including Ms Sullivan, were members for business purposes.

The two persons known to have been contacted on 18 May 2007 were Rob Grinter and Liz Burnley. Mr Grinter was an applicant registered with Hays. Ms Sullivan exhibited Mr Grinter's reply which stated:

"Mark

Id like you to act on my behalf to find suitable interim or permanent HR/Training positions in the north east.

I am still registered with HAYS and another agency but I don't see any conflict of interest as I want as many people seeking work for me as possible.

Regards

Rob"

The exhibited reply has no date, but Ms Sullivan proceeds in her witness statement on the basis that it was sent while Mr Ions was still employed by Hays and that he has told Mr Grinter that he is setting up his own recruitment agency. The copy of Mr Grinter's e-mail exhibited by Mr Ions shows it as sent on 15 October 2007. Mr Ions states that it followed a telephone call to him on that day. On this evidence Hays can show no more than that on 18 May 2007 Mr Ions invited Mr Grinter to join his network with LinkedIn.

Ms Burnley was the HR operations manager at Huntsman, a client of Hays. She had also been an applicant registered with Hays and was interviewed in November 2004.

Ms Sullivan also suggests that Mr Ions sent a similar invitation to Carl Dawson. Mr Dawson was registered as an applicant in March 2007 and was placed by Hays on 23 May 2007. The evidence produced by Ms Sullivan is an undated e-mail from Mr Dawson to Mr Ions dealing with his new position, which he states will start on 16 July, and adding "I've returned the recommendation favour for you on LinkedIn". The recommendation was given by Mr Dawson on 5 June 2007, as appears from a page from Mr Ions' profile exhibited by him. The recommendation refers specifically to Mr Ions' position with Hays. There is one other recommendation shown, given on 18 May 2007 by Ian Knowlson, a director in Hays' IT recruitment division. Mr Knowlson plainly thought it was acceptable to post a recommendation on Mr Ions' LinkedIn network, and I cannot see that Mr Dawson doing the same provides any evidence to support a case against Mr Ions. Mr Knowlson's recommendation also indicates that Mr Ions was not operating his LinkedIn site in a surreptitious way.

Ms Sullivan alleges that on or around 18 May 2007 "Mr Ions began a campaign of migrating confidential client and candidate contact details from the Applicants' confidential database to his own personal account at the web facility Linked-In", but accepts that she is unable to identify any other clients or candidates beyond Mr Grinter, Ms Burnley and Mr Dawson. It is however to be noted that the invitations to join his network were sent by LinkedIn and could be accepted by simply clicking a link. Hays does not have available to it either the invitations or the acceptances.

While two e-mailed invitations sent on 18 May 2007 is a slender basis for the allegation made by Ms Sullivan, support can be derived from what Mr Ions said and did after allegations were made in a letter dated 16 August 2007 from Hays' solicitors. In a reply dated 18 August 2007 his solicitors stated "Our client denies that he has used the account to unlawfully [my emphasis] retain (sic) valuable and confidential client information. For the avoidance of doubt, such information as our client has is intrinsically part of his own knowledge base having been gained over many years experience in the business". This was elaborated in a letter dated 31 August 2007: "it is accepted that it contains some business contacts although our client will say that it is impossible to divorce these contacts from his own knowledge." In a second letter of the same date, Mr Ions' solicitors stated that he was prepared verifiably to delete "the entirety of the Hays linked contacts" within his LinkedIn network. Mr Ions did not then, and has not since, given any indication of the number or identity of those contacts.

Hays' solicitors wrote on 5 September 2007 requiring a copy of all "business contacts" on Mr Ions' LinkedIn network before any steps were taken to delete them and warning him to preserve this evidence. In an unsigned witness statement received by Hays' solicitors on 26 October 2007 Mr Ions stated that he had arranged for the whole of his old LinkedIn network to be deleted, thereby destroying "any contact information that existed", and that he had not separately maintained a copy of the contact list nor would he able to recreate it. However, the US operators of LinkedIn retain the data and have agreed to preserve it.

The upshot is therefore that Mr Ions had "Hays linked contacts" on his network. He has given no indication of numbers but they are likely to be more than a handful, because he says that he would not able to recreate the contact list. He states in his evidence that "all of the information was put on to the site during the course of my employment with the Applicants." His case, denied by Hays, is that it was done with Hays' consent and that once uploaded and once the invitation to join his network is accepted, the information ceased to be confidential because it was accessible to a wider audience through his network.

Hays relies on two other matters in support of its allegation that Mr Ions transferred confidential information for use in his own business. First, it is said that on 30 May, 1 June and 7 June he conducted a number of "highly suspicious" searches of Hays' database which contains, it is said, business sensitive and confidential data on past, current and prospective clients and candidates. The database is the applicants' "most valuable asset and is the cornerstone of their business". Mr Ions accepts that he made the searches in question but, for reasons which he gives, denies that they were in any way suspicious, but were carried out as part of his usual duties. Clearly this raises a dispute on which I cannot reach any view on this application. There is however no substantial basis in the evidence for considering that Mr Ions misused or retained for his own benefit any information derived from these searches. He has from the start denied that he printed off or made a manual record of any data or otherwise acquired any data. Ms Sullivan says that the terms of this denial raised her suspicions, leading her to believe that Mr Ions may have cut and pasted data into a spreadsheet or email and then sent it out of the business by electronic means: this she says, in her experience, is the most likely means by which he would have taken such data. This is denied by Mr Ions who points out that if he had taken these steps, there should be a record on Hays' system but none has been produced. At this stage, in my view, Hays can make little if anything of these searches of the database. Ms Sullivan gives double hearsay evidence of a remark said to have been made in September 2007 to Mike Redmond, an employee of one of Hays' clients, by Mr Ions that he had a database as good and as big as that of Hays. Mr Ions states that Mr Redmond has denied that the remark was made. The quality of the evidence of this alleged remark is such that I disregard it.

Secondly, Mr Ions had a file of documents called a Sales Presenter. It was found to be missing after he left Hays. His solicitors wrote in their letter dated 18 August 2007 that he did not know whether or not he had it and in their letter dated 31 August 2007 that after a diligent search he had found it in an old briefcase stored in his garage. It was returned to Hays. On the evidence, it does not appear that there was much, if any, confidential information in the Sales Presenter or that the information would be of use to Mr Ions in his own business, with the exception of personal testimonials for Mr Ions. The Sales Presenter is not of great significance on this application and does not give rise to a request for disclosure of any particular class of documents.

In my judgment Hays has reasonable grounds for considering that it may have a claim against Mr Ions as regards the transfer of information concerning clients and applicants by uploading it to his LinkedIn network while still employed by Hay and with a view to its subsequent use by him in his own business. He accepts that he had Hays linked contacts on his site. He has given no indication as to numbers, but it seems very likely to be more than just a few, and he has given no indication as to when he uploaded the contacts except that it was during his employment. The only hard evidence shows that he was doing so on 18 May 2007, after he had made arrangements to incorporate EHR. An application for disclosure in relation to a potential claim based on the transfer and misuse of this information cannot in my judgment be characterised as a fishing expedition.

Mr Wilson on behalf of Mr Ions and EHR made submissions that this could not in any event amount to a breach of Mr Ions' duties as an employee. First, the express terms of Mr Ions' contract (clause 18) and any implied duties protects the client database and customer lists, but not the identities of individual clients or candidates known to Mr Ions. I am not satisfied that recording, while still an employee, contact details of only some clients and applicants with a view to their future use in a competing business would not be a breach of his duty, but in any event Mr Ions' own evidence is consistent with a more widespread transfer of details. This is not a case of a former employee remembering some contact details after the termination of his employment. The transfer to his network occurred during his employment and the list was such that he could not recreate it once he deleted it.

Secondly, Mr Wilson submits that it is not Mr Ions' action in uploading e-mail addresses to LinkedIn, but the invitees' acceptance to become connections, which resulted in the information becoming available on his network and it is not then confidential but publicly available, at least to his other connections. In my view, this breaks down at the first stage. If the information was confidential, it was Mr Ions' action in uploading the e-mail addresses which involved a transfer of information to a site where at least the details of those addressees who accepted his invitation would be accessible by him after his employment had ceased. The evidence suggests that he may have done so, not for the benefit of Hays but for the benefit of his post-termination business. If so, even if confidentiality in the information was thereafter lost, Hays may well have a claim against Mr Ions.

Thirdly, it is submitted that none of the information concerning the identity of clients was in any event confidential because contacts at employers are readily available from published directories and the like. This may be true as regards clients, although I cannot be confident at this stage that it applies to all the clients, but it cannot apply to many of the applicants.

I am not saying that Mr Wilson's submissions lack all substance, but on this application, without more evidence of Mr Ions' actions and the results as regards his LinkedIn site, it is impossible to say that they will constitute good defences to any claim which may be made by Hays.

The other main potential claim against Mr Ions is for breach of the restrictive covenants in his contract of employment. The evidence on which Hays relies at this stage is as follows. First, Mr Ions said in his first witness statement in October 2007 that he had been approached by five persons or organisations to whom the restrictive covenants might apply. He named them and stated that he had not acted for them and would not do so unless and until the restrictive covenants were released or lapsed in December 2007. There is no evidence that he or EHR has acted for any of them. This provides no support for Hays' application. Secondly, Hays relies on the e-mail from Mr Grinter, but there is no evidence that Mr Ions or EHR acted for him, Mr Ions denies that he did so and the terms of Mr Grinter's e-mail tend to support Mr Ions' account.

Thirdly, Sameena Bashey of GE Energy PII says that she was contacted by Mr Ions in or about September 2007 and told that he was running his own agency. This is not denied by Mr Ions, although he denies that he has obtained any business from GE Energy PII. GE Energy PII was a client of Hays and Ms Bashey had been registered as an applicant. The restrictive covenants apply to clients or applicants with whom Mr Ions dealt or had contact during his employment. Mr Ions denies that Ms Bashey was "an applicant of mine at Hays" and Hays has no evidence to show that he dealt or had contact with her. Mr Ions denies having dealt with GE Energy PII in the six months before he left Hays. This is not, however, the test under the express terms of the restrictive covenants: provided that a client was in contact with Hays or a Hays group company in the last six months of Mr Ions' employment, it is enough that he dealt or had contact with the client at any time during his employment.

Fourthly, in September 2007 EHR acted for Avecia, a client of Hays for whom Mr Ions ran an advertising campaign during 2006. Again Mr Ions relies on the fact that he did not deal and was not in contact with Avecia in the six months before 5 July 2007 but, as explained above, that is not the test under the express terms of the restrictive covenant.

Mr Ions raises arguments as to the enforceability and construction of the restrictive covenants, but the issues are not so obvious that a proper view can be reached on this application. The position is therefore that Hays has an arguable basis for suggesting that Mr Ions may have been in breach of the restrictive covenants as regards Avecia and GE Energy PII.

I turn now to the requirements of CPR 31.16(3) which governs the making of an order for pre-action disclosure and provides as follows:

"The court may make an order under this rule only where-

(a) the Respondent is likely to be a party to subsequent proceedings;

(b) the Applicant is also likely to be a party to those proceedings;

(c) if proceedings had started the Respondent's duty by way of standard disclosure, set out in rule 31.16, would extend to the documents or classes of documents of which the Applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to-

(i) dispose fairly of the anticipated proceedings;

(ii) assist the dispute to be resolved without proceedings; or

(iii) save costs."

Each of the requirements of paragraphs (a) to (d) of 31.16(3) must be satisfied before the court can consider, in the exercise of its discretion, whether to make an order for disclosure.

The requirements of paragraph (a) and (b) are satisfied if the applicants and respondents may well be parties if proceedings are issued: Black Sumitomo Corporation [2002] 1 WLR 1562 paras 71-72. It is accepted by Mr Ions and EHR that these requirements are satisfied as regards themselves and Hays. It is not accepted that it is satisfied with regard to the second applicant, but that makes no practical difference to the outcome of this application.

Whether the requirement of 31.16(3)(c) is satisfied is in issue. Hays must show that if it brought proceedings the documents or classes of documents included in its application would fall within the respondents' duty by way of standard disclosure. As David Steel J observed in Hutchinson 3G UK Ltd v 02 (UK) Ltd [2008] EWHC 50 (Comm) at para 38, all the documents within a category or class must be subject to standard disclosure, and at para 44 that the applicants must show that it is more probable than not that the documents are within the scope of standard disclosure in regard to the issues that are likely to arise. The rules for defining documents within the scope of standard disclosure are CPR 31.6 to 31.9. In particular in the context of the present application, the documents are confined by 31.6 to those on which the respondents would rely, those which adversely affect either their own or Hays' cases and those which support Hays' case. They do not include documents which may lead to a train of inquiry enabling Hays to advance its case or damage the respondents' case.

To apply the test for standard disclosure:

"the court must be clear what the issues in the litigation are likely to be i.e. what case the claimant is likely to be making and what defence is likely to be being run so as to make sure the documents being asked for are ones which will adversely affect the case of one side or the other, or support the case of one side or the other." (Bermuda International Securities Ltd KPMG [2001] Lloyd's Rep PN 392 at para 26 per Waller LJ)

Mr Wilson submitted that Hays' complaints lack the degree of clarity and identity of issues required before the test in 31.16(3) (c) can be satisfied. For the reasons given earlier in this judgment, I consider that Hays has demonstrated possible claims as regards uploading contact details on to Mr Ions' LinkedIn network and the subsequent use of those contact details in his competing business, and breach of the restrictive covenants at least as regards Avecia and GE Energy PII, with sufficient clarity to meet the requirements of this test.

It is necessary to examine each of the documents or classes of documents of which disclosure is sought. The draft order would require Mr Ions and EHR to give disclosure of the documents listed in schedule A to the order, which is as follows:

"1. All LinkedIn "business contacts" referred to in the letter from Jonathan Stokes to Mishcon de Reya dated 31 August 2007.

2. All emails and/or other communications sent to or received by the Respondents' LinkedIn Account from the Applicants' computer network between 1 May 2007 to date.

3. All documents (including but not limited to timesheets, invoices, bank statements, emails, terms of business) evidencing the use made and business obtained by the Respondents from the "business contacts" referred to at paragraph 1 above.

4. The Respondents' database of client and candidate contacts for the period 18 May 2007 to date, together with all documents evidencing the source and use of the clients and candidates listed on the said database."

Paragraph 1 of schedule A is not framed as an order for disclosure of documents at all. In paragraph 6.5.1 of her witness statement, Ms Sullivan explains it as follows:

"LinkedIn "business contacts" - namely all details of persons who have been registered or otherwise recorded onto the Respondents' linked-in network between 1 May 2007 to date. This information is required to determine the extent of Mr Ions' transfer of confidential information and breach of covenant."

An order for the provision of information is not an order for the disclosure of documents. As it seems to me, paragraph 1 is outside CPR 31.16.

Paragraph 2 is limited to emails or other communications sent to or received by Mr Ions' LinkedIn account "from the Applicants' computer network". This is aimed at the first potential claim identified above, that Mr Ions transferred confidential business contacts to his LinkedIn account for use by him in his future business. Mr Wilson submitted that this category would be disclosable only if the documents tended to show that the uploading was (or was not) wrongful. I do not accept this submission. The issues raised by the potential claim include the content and extent of the uploading as well as whether it was wrongful. Indeed, if Mr Wilson's submissions as to what is covered by duties of confidence are correct, the extent of the uploading will be relevant to whether it was wrongful.

If paragraph 3 is limited to business contacts uploaded by Mr Ions to LinkedIn while he was employed by Hays, this category would in my view be subject to standard disclosure. In fact, as I have mentioned, Mr Ions' own evidence is that all of the information was put on to the site during the course of his employment with Hays. The potential claim against Mr Ions and EHR is that he uploaded business contacts from Hays records without authority and with a view to using them in his competing business. Even if he uploaded them with authority, it is difficult to imagine that the authority was not limited to using them in the performance of his duties as an employee of Hays. Post-termination use of the contacts lies at the heart of Hays' potential claim, which will be supported or adversely affected by these documents.

Paragraph 4 is in my view plainly too wide. The respondents' database of client and candidate contacts may well contain many persons who had no contact with Hays. The respondents are not required to disclose their entire database to prove the negative that Mr Ions has not acted in breach of his restrictive covenants. It is for Hays to allege a plausible case that he has acted in breach of the covenants and disclosure will relate to the alleged breaches. As presently framed, Hays' possible claim in this respect would require standard disclosure of documents relating to the respondents' dealings with Avecia and GE Energy PII, but no more. Hays' claim to disclosure of the respondents' entire database so that it can identify dealings with those clients and candidates which might give it a claim for breach of the restrictive covenants is simply a fishing expedition and misunderstands the role of both standard disclosure and the power to order pre-action disclosure.

In the light of Mr Ions' evidence that he caused his LinkedIn account to be deleted, Hays seeks also an order that the respondents should sign and send to the operator of the LinkedIn website a letter in the form scheduled to the draft order. The proposed letter would instruct and authorise LinkedIn Corporation to supply to Hays' solicitors copies of all documentation and information in its possession relating to Mr Ions' account. The letter goes on to state that the Hays' solicitors would search the data for "relevant documentation".

In response to submissions by Mr Wilson, Miss Windle for Hays accepted that an order for the provision of documents directly from a third party to Hays was outside the scope of standard disclosure and outside the court's power under 31.16. Documents in the physical possession of LinkedIn Corporation are in Mr Ions' control and subject to standard disclosure if he has a right to possession of them or a right to inspect or take copies of them: CPR 31.8. Assuming this test to be satisfied, and there was no argument to the contrary, the appropriate course as Miss Windle accepted is for Mr Ions to require production to him by LinkedIn Corporation of the documents or copies and for him then to disclose those which fall within a class identified by the order. Those classes are, for the reasons already given, documents which evidence the uploading of business contacts while Mr Ions was employed by Hays and those which evidence dealings with them by Mr Ions or EHR.

As regards the requirement to satisfy para (d) of 31.16(3), the Court of Appeal in Black v Sumitomo Corporation emphasised the need to consider whether, as a matter of jurisdiction, para (d) is satisfied, before going on to consider the question of discretion. It will be satisfied if "there is a real prospect in principle" that disclosure would meet one or more of the objects set out in para (d): para 81 per Rix LJ.

Miss Windle submitted that each of the purposes set out in para (d) would be achieved by an order for disclosure. It would assist in disposing fairly of the anticipated proceedings because it is, she said, clear that Mr Ions has acted wrongfully but Hays is hampered in pleading its case by not knowing the extent of his wrongdoing. By . providing documents which would inform Hays as to the likely size of its claim, pre-action disclosure would also enable sensible settlement discussions to take place with a view to resolving the dispute without proceedings. Although Miss Windle did not add this, it might also show any relevant activity by Mr Ions to have been on such a small scale as not to be worth pursuing. In any of these events, there would be a real prospect of saving costs.

Mr Wilson pointed out that it could be said in almost every case that pre-action disclosure will assist settlement or the proper pleading of particulars of claim. He relied on para 55 of the judgment in Hutchinson 3G UK Ltd 02 (UK) Ltd where David Steel J said that in the light of that consideration the circumstances must be outside the usual run to allow the hurdle in para (d). The Judge immediately went on to say that this is a somewhat barren point, because the absence of any convincing grounds for distinguishing the case from the normal run would be telling grounds for not exercising the court's discretion.

It is I think clear from Black Sumitomo Corporation at para 85 that the court should have in mind that in general:

"the concept of disclosure being ordered at other than the normal time is presented as something differing from the normal, at any rate where the parties at the pre-action stage have been acting reasonably."

Like David Steel J, I consider it academic whether this arises when deciding whether an order is desirable for the purposes of 31.16(3)(d) or when exercising the overall discretion under the rule.

There were particular points on which Mr Wilson relied in submitting that the requirements of 31.16(3)(d) were not satisfied. First, it was unfair to subject the respondents to a roving inquisition and unfair to put them to the burden of the wide disclosure sought. Secondly, the extent of the proposed disclosure would be expensive. I have already held that the proposed disclosure is too wide to satisfy the requirements of standard disclosure. Narrowed in the way I have already indicated meets in my view the respondents' objections as to the cost and extent of the proposed disclosure.

Further objections on which Mr Wilson relied were that the purpose of disposing fairly of the anticipated proceedings was not met because it is said on behalf of Hays that it already has sufficient evidence on which to commence proceedings, and that the absence of any proper definition of issues prevents any resolution of the dispute without proceedings. As to the former, it is clear that Hays could for the most part plead a case only in the most general terms. Disclosure should enable there to be fully pleaded particulars of claim from the start. There is a real prospect that disclosure would therefore assist in the fair disposal of the anticipated proceedings. As to a resolution of the dispute without proceedings, disclosure limited as I have described would enable the parties to have a real appreciation of the extent of any claim by Hays against the defendants, which should make resolution easier to achieve.

I conclude that if disclosure is limited as I have indicated, the requirements of 31.16.3(d) are satisfied.

I proceed therefore to consider whether overall this is an appropriate case in which to make an order for disclosure. In para 88 of the judgment of Rix LJ in Black v Sumitomo Corporation to which both Miss Windle and Mr Wilson referred, the approach to the exercise of discretion was stated as follows:

"That discretion is not confined and will depend on all the facts of the case. Among the important considerations, however, as it seems to me, are the nature of the injury or loss complained of; the clarity and identification of the issues raised by the complaint; the nature of the documents requested; the relevance of any protocol or pre-action inquiries; and the opportunity which the complainant has to make his case without pre-action disclosure."

There is, as Black v Sumitomo Corporation and other cases recognise, a significant overlap between the factors relevant to the general exercise of the discretion and those relevant to 31.16.3(d), and Mr Wilson repeated in this context his submissions in relation to 31.16.3(d). Again, I consider that if disclosure is limited as I have described, these objections are met also in the context of the overall discretion. At para 95 of his judgment in Black v Sumitomo Corporation, Rix LJ said:

"In my judgment, the more focused the complaint and the more limited the disclosure sought in that connection, the easier it is for the court to exercise its discretion in favour of pre-action disclosure, even where the complaint might seem somewhat speculative or the request might be argued to constitute a mere fishing exercise. In appropriate circumstances, where the jurisdictional thresholds have been crossed, the court might be entitled to take the view that transparency was what the interests of justice and proportionality most required. The more diffuse the allegations, however, and the wider the disclosure sought, the more sceptical the court is entitled to be about the merit of the exercise."

The allegations here are not diffuse (contrast those in Black v Sumitomo Corporation) nor is the disclosure which I would contemplate wide. Nor do I think that such disclosure would be a fishing exercise or that the complaint against the respondent can be described as speculative.

A separate factor, particularly important in the context of pre-action disclosure, is that disclosure might involve the provision by the respondents of commercially sensitive information to a competitor. This would in my view have been a very substantial objection to the full range of disclosure sought by Hays. By limiting the disclosure to communications with those contacts whose names and addresses Mr Ions took from his e-mail address book while still an employee of Hays, this effect of disclosure is substantially reduced.

The availability of other means of obtaining the relevant documents was recognised in Black Sumitomo Corporation at para 97 as a factor militating against disclosure. Mr Wilson submitted that Hays could search its server for any further responses from contacts such as those received from Ms Burnley and Mr Grinter. However, so far as responses are concerned, all that an addressee needed to do to become one of Mr Ions' connections was to click a link, which would not appear on Hays' server. It is not clear on the evidence exactly how Mr Ions communicated his address book to LinkedIn or allowed it access to his address book, and whether there would be any meaningful trace left on the server. Nor do I have any evidence as to how difficult or expensive a search would be. I do not think that searching the server is an adequate substitute for disclosure by the respondents.

The other means by which it was suggested that Hays could obtain the documents or information was to make enquires of candidates and clients. This would be far more expensive than the limited disclosure which I would contemplate ordering and Hays is obviously hampered by not knowing which candidates and clients were uploaded by Mr Ions to LinkedIn or which of them became his connections. Again I do not regard this as an objection to making an order for disclosure.

There are in my judgment further factors which support pre-action disclosure in this case. First, unlike the parties in Black v Sumitomo Corporation (see paras 52 and 99), Hays and Mr Ions are not "strangers". The potential claim arises out of Mr Ions' employment with Hays. Secondly, and more importantly, Mr Ions accepts that he uploaded the addresses of business contacts to LinkedIn while he was still employed by Hays. He does not suggest that he had any of the business contacts except as a result of his employment with Hays and, given that he had been a full-time employee of Hays for over 6 ½ years, it is very unlikely that he had many, if any, independent contacts. The disclosure is therefore limited to contacts which he obtained in his capacity as an employee of Hays.

Overall, therefore, I am satisfied that it is appropriate to order the disclosure of documents limited as I have earlier indicated.

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Case Information

June 07, 2013

2008-04-16

Richards

[2008] EWHC 745

High Court of Chancery

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