Company awarded all expenses in petition for interdict against ex-employee and recovery of confidential information

A judge in the Court of Session ruled that the expenses should be applied to all the orders under the petition, but was not persuaded that the company’s claim for an additional fee was justified.

Lady Scott heard that the petitioner, Capital Document Solutions Limited (CDS), which provides, by sale or lease, photocopiers, printers, scanners and other office equipment throughout Scotland, raised proceedings against Michael Rae, an executive employed by another company based in Inverness which was acquired by the petitioner in 2013, who left and set up another company, Highland Copiers Limited, following the takeover.

The petition was raised on the basis that, in August 2015, CDS obtained evidence that Mr Rae was in possession of and had made use of a confidential spreadsheet belonging to them, which contained highly sensitive commercial information detailing business arrangements with customers.

The petition sought interdict ad interim and interdict against the respondents making use of or disseminating the spreadsheet.

The petition also sought an order in terms of section 1 of the Administration of Justice (Scotland) Act 1972 for commission and diligence for the recovery of documents, which inter alia sought orders for a commissioner to take possession of the material recovered and to authorise the petitioners to inspect the material.

The orders sought in the commission and diligence were granted in August 2015 and five days later interdict ad interim was granted.

After a very protracted commission process with numerous court hearings over many months, the final report by the commissioner was produced in July 2016.

The respondents had challenged various steps within this process of recovery and were found liable for the expenses of the process.

Once the documents had been recovered, in June 2016, the petitioner sought and was granted interdict, unopposed, against the respondents using the spreadsheet.

The case then called before Lady Scott in an opposed motion by the petitioner to seek (a) the expenses of the petition including all expenses of the commission and (b) an award of an additional fee in terms of RCS 42.14 (3)(b) (c) and (g).

The petitioner’s claim was based on the basic principle that “expenses follow success”, as all the orders sought under the petition had been granted.

The basis of the petition on all fronts was “wrongdoing” by the respondents, as the actions of Mr Rae in respect of the confidential information were “in breach of his contract of employment, in breach of confidence and in breach of the provisions of the Data Protection Act 1998”, it was submitted.

It was also argued that the recovery of the confidential information in the commission process was of assistance in obtaining interdict, and that additional information recovered in the commission process suggested “further wrongdoing” in respect of payments for confidential information, with the police now involved.

But the respondents argued that purpose of the procedure carried out under section 1 of the 1972 Act was to enable recovery of evidence for future proceedings, but this was not connected to the interdict also sought under the petition.

To obtain an order and commission process under section 1 the petitioner had to satisfy the court that there were prospective proceedings which were provision “likely to be brought” and that there was a “stateable prima facie case” for them.

Here the “likely” prospective actions pled were recovery, delivery and damages, but no such proceedings had been brought.

The respondents submitted that the proper position was that at that stage of the petition the petitioner must bear his own expenses for the commission and seek recovery in the subsequent proceedings, and if brought then the successful party would be awarded expenses, including those involved in the commission.

But the judge held that the respondents’ interpretation was “too restrictive”.

In a written opinion, Lady Scott said: “Here both the interdict procedure and the commission procedure related to the same confidential information. Both were based on the same averments of wrongdoing and were directed to preventing wrongful use of the confidential spreadsheet. It was only after recovery of the documents from the commission process was made, that the respondents conceded to the interdict being granted.

“Accordingly both aspects of the petition were based on seeking recovery and preventing damage. Both were successful. It was only after recovery and inspection could be made that the petitioners were in a position to assess future action.

“In these circumstances, in a practical and simple sense, the ordinary principles expenses should be applied to all the orders under the petition. The shared principal purpose of the petition – prevention of use and recovery of the confidential information – was achieved by the both orders and it was only after recovery of the documents the respondents conceded the interdict which was based upon their wrongdoing.

“The costs of the commission were reasonable and necessary for the recovery of the confidential information sought and assisted in establishing the basis for interdict being awarded. I am satisfied that both aspects of the petition form a common cause whereby expenses as a whole on the petition are justified.”

However, she added: “I am not persuaded an additional fee is justified. I agree with the respondents that urgency is always involved in s1 orders by their nature, that the bulk of the task in review of the documents rests with the commissioner and nothing was submitted to suggest that steps taken regarding narrowing the issues were of significance.”