Microstrain Ltd Trading as CubicM3 v John Delany, Ivan McFadden, Joseph (Otherwise Joe) Brennan, Lukasz Piorunkiewicz, Jackie McGovern, Patrick (Otherwise Pat) Gavin and Resolute Engineering Group Ltd

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Allen
Judgment Date02 March 2021
Neutral Citation[2021] IEHC 136
Date02 March 2021
Docket Number[2020 No. 7472P.]
Between
Microstrain Limited Trading as CubicM3
Plaintiff
and
John Delany, Ivan McFadden, Joseph (Otherwise Joe) Brennan, Lukasz Piorunkiewicz, Jackie McGovern, Patrick (Otherwise Pat) Gavin and Resolute Engineering Group Limited
Defendants

[2021] IEHC 136

[2020 No. 7472P.]

THE HIGH COURT

Costs – Search order – Stay on execution – Plaintiff seeking costs – Whether the plaintiff failed to make full disclosure on the interim application

Facts: The High Court (Allen J), on 5th November, 2020, on motion ex parte of counsel for the plaintiff, Microstrain Ltd, made an order requiring the first, second and third defendants, Mr Delany, Mr McFadden and Mr Brennan, to immediately deliver up to an independent forensic IT expert all devices in their possession or control which contained information or which previously contained information which might have been deleted in relation to the plaintiff’s business, and restraining those defendants from deleting, interfering with or taking any other steps to destroy any such material on any such devices. The order went on to direct that the forensic IT expert should image the devices in order to make a forensic copy and to keep that copy safe pending further order of the court. At the same time Allen J made a separate interim order directed to the fourth, fifth and sixth defendants, Mr Piorunkiewicz, Ms McGovern and Mr Gavin, restraining them from deleting, interfering with or taking any other steps to destroy any of the plaintiff’s materials or any materials derived from the plaintiff’s materials. The defendants were duly served with the interim orders and notice of motion for interlocutory orders. The motion was adjourned from time to time to allow for the filing by the defendants of replying affidavits and the filing of further affidavits on behalf of the plaintiff and came on for hearing on 14th January, 2021. At the hearing of the motion the defendants submitted to all but one of the reliefs sought by the plaintiff. They accepted that the plaintiff has been successful in its application but submitted that it should not be awarded the costs of the interim application and that they, the defendants, should have the costs of the interlocutory motion on the grounds, firstly, that the plaintiff did not on the interim application make full disclosure and secondly, that the evidence on which the application was grounded was hearsay.

Held by Allen J that he rejected the defendants’ argument that the plaintiff failed to make full disclosure on the interim application. He noted that notwithstanding argument as to the appropriateness of one of the reliefs sought, the plaintiff was acknowledged to have been entirely successful and the defendants had not made out their argument that there was any reason why the plaintiff should not have its costs against the first, second, third and seventh defendants. He held that the first, second and third defendants, on their own case as well as the plaintiff’s case, were the prime movers while the role and responsibility of the fourth, fifth and sixth defendants was less clear and for that reason he was not satisfied that he could justly adjudicate their liability for the costs of the interim and interlocutory applications. He held that the trial judge would have a clear picture of the extent of their involvement and as between the plaintiff and the fourth, fifth and sixth defendants he would reserve the plaintiff’s costs.

Allen J held that the plaintiff had not made out the necessity for the making of a search order. He was not persuaded to make an order for an immediate payment on account. He was not satisfied that he had sufficient information upon which he could safely make a fair assessment at the level proposed. He held that it would not be just that the defendants’ liability to pay the plaintiff’s costs would be postponed while their liability in respect of their own costs would be met immediately. He held that he would list the case for mention, remotely, in two weeks’ time to allow the parties to consider his judgment.

Applications refused. Costs against the first, second, third and seventh defendants awarded. Costs against the fourth, fifth and sixth defendants reserved.

JUDGMENT of Mr. Justice Allen delivered on the 2nd day of March, 2021

Introduction
1

On 5th November, 2020, on motion ex parte of counsel for the plaintiff, I made an order requiring the first, second and third defendants to immediately deliver up to an independent forensic IT expert all devices in their possession or control which contained information or which previously contained information which might have been deleted in relation to the plaintiff's business, and restraining those defendants from deleting, interfering with or taking any other steps to destroy any such material on any such devices. The order went on to direct that the forensic IT expert should image the devices in order to make a forensic copy and to keep that copy safe pending further order of the court.

2

That order was sought on the basis that it was said to be necessary to ensure the preservation of confidential information which was said to have been accessed and removed from the plaintiff by the first, second and third defendants during the currency of their employment and used by them both during the currency of their employment and subsequently for the purpose of establishing and carrying on the business of the seventh defendant in competition with that of the plaintiff. The removal and use of that information was said to have been in breach of the first, second and third defendants' contracts of employment and of their duties at common law. The order directed to the first, second and third defendants also enjoined them from deleting any material on their devices.

3

In making the order I expressed myself to have been satisfied that the plaintiff had established an extremely strong prima facie case; that the potential or actual damage to the plaintiff was very serious; that there was clear evidence that the defendants had in their possession incriminating documents or things; and that there was a real possibility that the defendants might destroy such material before an application inter partes would be heard.

4

At the same time I made a separate interim order directed to the fourth, fifth and sixth defendants restraining them from deleting, interfering with or taking any other steps to destroy any of the plaintiff's materials or any materials derived from the plaintiff's materials.

5

The defendants were duly served with the interim orders and notice of motion for interlocutory orders. The motion was adjourned from time to time to allow for the filing by the defendants of replying affidavits and the filing of further affidavits on behalf of the plaintiff and came on for hearing on 14th January, 2021.

The issues on the interlocutory motion
6

At the hearing of the motion the defendants submitted to all but one of the reliefs sought by the plaintiff. They accept that the plaintiff has been successful in its application but submit that it should not be awarded the costs of the interim application and that they, the defendants, should have the costs of the interlocutory motion on the grounds, firstly, that the plaintiff did not on the interim application make full disclosure and secondly, that the evidence on which the application was grounded was hearsay.

7

The defendants in their replying affidavits have made a number of admissions. The first, second and third defendants admit that during the currency of their employment they copied a list of all of the plaintiff's leads and business prospects under negotiation, that they took that list with them when they left, and that both before and after they left their employment they abused that confidential information for the immediate benefit of the seventh defendant and effectively for their own benefit. However, they argue that because they did what they did before Mr. Justin Elliott, the man who swore the affidavit grounding the application, was employed by the plaintiff, he did not know what he knew from facts within his own knowledge and so his evidence was inadmissible. In the main the defendants do not contest the accuracy of what Mr. Elliott has deposed. Rather their argument is that from a legal perspective anything that happened within the plaintiff prior to the commencement of his employment on 29th June, 2020 is, as far as Mr. Elliott is concerned – as Mr. Rumsfeld might have put it – an unknown known.

8

The second strand to the defendants' argument is that the finding of the court that there was a real possibility that the defendants would destroy material was based on incomplete evidence. The argument is that the orders to which they have submitted on the interlocutory application would not have been made on the interim application if the court had been apprised of the full facts and the plaintiff had properly spelled out the case against, as well as for, the making of the interim order. By the way, the third, fourth, fifth and sixth defendants have admitted that they breached the order of 5th November, 2020 by deleting information which they had been ordered not to delete, but they argue that this could not properly have been apprehended by the plaintiff before the order was made.

Legal principles
9

There is no contest as to the applicable principles of law, which are well established. On the ex parte application the plaintiff was obliged to make full and frank disclosure of all facts which it was material for the court to know. This was expressly noted by Mr. Dowling when he moved the ex parte application. The duty extends beyond making the fullest possible disclosure of all facts known to the applicant to those facts which would have been known to the applicant had he made proper enquiries. Reference was made to R. v. Kensington Income Tax Commissioners Ex parte...

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