Fairstar Heavy Transport Case Study Solution

Full case report

Fairstar Heavy Transport NV v Adkins

Reference [2012] EWHC 2952 (TCC)
Court High Court (Technology and Construction Court)

Judge Edwards-Stuart J

Date of Judgment 1 Nov 2012


Summary

Examination of emails – Information as property – property in the content of an email


Facts

C was a Dutch shipping company. D1 was its CEO but was employed by a company registered in Jersey, Cadenza, which he controlled; C contracted with the company for his services. D2, Claranet, hosted Cadenza’s email server. On 14 July 2012, C was taken over by the owners of a competitor in a hostile bid, and D1’s employment was brought to an end.

Prior to the takeover C had been in financial difficulty and D1 had been preoccupied with raising funds to pay for new vessels. On 3 May 2011 C had entered into an agreement with a shipyard for the construction of a vessel, and subsequently became liable to make payments for it. C was in default of its obligation to pay and agreed that the shipyard would put off service of a notice of default. In default, a cancellation charge of about US $37 million was due.

D1 took the position after the takeover that the agreement was unenforceable by the shipyard. C’s case was that D1 never revealed in the period before the takeover that it had incurred the substantial liability to the shipyard. This was disputed by D1.

As a result of D1’s employment arrangements, all incoming emails at his work address were automatically forwarded to his private email address at Cadenza. Cadenza’s email account was hosted by D2, which was aware of but played no part in the proceedings. C said that incoming emails forwarded to D1 were automatically deleted by its server with the result that it had not copies of them. Outgoing emails were sent by D1 from his own computer so that, unless copied to someone at C, no such emails would reach its server.

C’s case was that without the incoming and outgoing emails it could not tell what had been going on  in relation to the agreement with the shipyard; it also required them to respond to an investigation into the extent of existing liabilities detailed in its 2011 accounts. Accordingly it applied for an order that an independent IT expert should be permitted to examine the emails which were held as sealed documents by D1’s solicitors.


Issue

Was the content of the relevant emails to be regarded as property, and did C as a result have a proprietary claim to the content of the emails held by Ds 1 or 2, insofar as they were sent by D1 acting on C’s behalf?


Held

Dismissing C’s application.

That there is no authority or practical basis for holding that there should be property in the content of an email. Protection is provided against misuse of information in emails either by the equitable jurisdiction of breach of confidence, or by the law of copyright, where applicable. Practical considerations in fact militate against finding that a proprietary right exists.

C did not have any proprietary claim to the content of the emails held by D1.


Comment

The classic statement of the law by Lord Upjohn in Boardman v Phipps [1967] 2 AC 46, at 127, to the effect that information is not property at all, holds good in relation to emails. Any proprietary rights claimed in information will continue to be found only on the basis of particular circumstances giving rise to an equitable or contractual breach of confidence, the unusual employment relationship between the parties here meaning that this was not how the claim was framed. The Judge noted the confirmation of the point by more recent authority, much of which will be familiar to media law practitioners.

Although this decision reinforces the current position in law, it is notable for its extensive attention to practical considerations regarding emails and whether their content is capable of being property. Arguments based on ‘internet-exceptionalism’, focused on the proposition that the internet has presented the law with an entirely novel set of circumstances which require a new approach, may, as the Judge observes, be “beguiling”. Here, however, they would have muddied rather than cleared the waters, even if the legal position had allowed them.


Download this Judgment


Instructing Solicitors

Ince and Co LLP, Schillings

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In November last year we published a Law-Now reporting on the case of Fairstar Heavy Transport NV v Adkins and another in which the High Court said that there were no proprietary rights in the content of emails. This meant that a company had no right to see the content of emails relating to its affairs that were held on the personal computer of its former CEO. You can view the article here.

This case has since been overturned by the Court of Appeal, which decided that the company’s right to see the emails did not depend on whether it owned the content. The relationship between the parties, a company and its former CEO, was that of principal and agent, and this relationship gave rise to the right of the company, as principal, to inspect the relevant emails since they related to its affairs, and this right survived the termination of their relationship. In passing, the court said that it would be unwise to endorse the proposition that there can never be property in information without knowing more about the type of information and the circumstances in which a property right in that information was being asserted.

Fairstar Heavy Transport NV v Adkins and another [2013] EWCA Civ 886

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