Vneshprombank LLC v Georgy Ivanovich Bedzhamov & Ors [2021] EWHC 1360 (Ch)

BACKGROUND – WHAT IS A SEARCH ORDER? HOW ARE THEY USED?

A search and seizure order is a form of interim injunction which permits a claimant to access a respondent's premises and to search for, copy and remove certain documents or material. Search orders can be an extremely powerful tool for uncovering evidence in Business Protection cases and recovering confidential information unlawfully obtained by a respondent. However, given the intrusive nature of search and seizure orders, the bar to obtain one is high. 

Search and seizure orders have been subject to decisions of the High Court and Court of Appeal over the last couple of years. Including in: 

• A v B [2019] EWHC 2089 (Ch) which held that the purpose of the regime is the preservation of documents, if there is to be an inspection of digital images at that stage, a Claimant would need to justify it as a separate exercise; and
• TBD (Owen Holland) Ltd v Simons & Ors which held that if a search order is obtained, the search must be undertaken carefully, with appropriate safeguards, and must go no further than the order which has been granted. An order for inspection is distinct, will require separate justifications and must be obtained prior to the inspection of documents found during the search order. A link to our article on TBD is here.   

FACTS

In this latest High Court decision of Bedzhamov & Ors the High Court refused permission for the claimant to review certain documents exclusively belonging to third parties recovered via the search order. 

A search order was granted permitting searches for hard copy documents and, of particular relevance to this decision, electronic imaging of data stored on any electronic data storage devices "situated on the premises", the "premises" being what VPB understood to be Mr Bedzhamov's office.  However, the "premises" was actually owned by an investment company which had a number of clients, including Mr Bedzhamov and the office was rented by another entity.  The information held by these third parties included sensitive personal and business information, including information that was legally privileged.  

The number of documents obtained was significant and the Court was concerned about the impact which reviewing each of them would have on the timetable for trial which had already been delayed. The Court was therefore asked to decide whether the review of certain material belonging exclusively to third parties should continue.  

KEY LEGAL POINTS AND DECISION

Mrs Justice Falk decided to halt any further review of the material, relying on the guidance provided by the Court of Appeal in TBD.  Mrs Justice Falk also emphasised the requirement for proportionality in relation to search orders, noting a search order is an exceptional remedy at the extremity of the court's powers and considered the following factors which were weighed against the potential value of any material derived from the inspection:

• The approach taken to the search order and the breadth of the material caught had resulted in the third parties having to justify, with evidence, why particular documents should not be treated as falling within the terms of the search order. 
• The prejudice caused to the business of the third parties whose data was included within the documents.
• The cost implications of the review. 
• The impact of the continued operation of the search order on trial preparation. 

COMMENTARY 

This decision highlights the risk of indiscriminate imaging of storage devices as part of a search order.

In terms of practical points:

• Getting the scope of a search order right is critical. Do not overreach or bite off more than you can chew.
• A search order will only be effective if you then have time to identify and access the documents that you ultimately need for the proceedings. In this case the trial dates made that a challenge and ultimately impacted on the judge's decision.