Fairstar Heavy Transport NV v Adkins & Anor

Factual and Procedural Background

On 7 September 2012, the Plaintiff ("Fairstar") obtained a court order against the First Defendant ("Mr Adkins") and the Second Defendant ("Claranet") restraining them from knowingly deleting or interfering with e-mails sent or received by Mr Adkins while acting on behalf of Fairstar. The order also ensured that copies of these e-mails were held electronically by Mr Adkins's solicitors in a tamper-proof manner. The order was initially made by Coulson J and later varied by Eder J, with a return hearing set for 17 October 2012 before the presiding judge.

At the hearing, the Plaintiff sought permission for an independent IT expert to inspect the documents held by the solicitors. Mr Adkins applied to set aside the entire order, arguing that the without-notice application was unjustified due to lack of urgency and no evidence of risk of interference. He further contended that the Plaintiff lacked a proprietary claim to the e-mail content, which was the sole basis for the relief sought, rendering the application misconceived.

Prior to the hearing, there was extensive late service of evidence by both parties, which led to Mr Adkins's counsel requesting an adjournment due to insufficient time to review. The Plaintiff's counsel opposed this, asserting limited reliance on the late material. The court found this situation unsatisfactory and decided to confine the hearing to the central issue of whether the Plaintiff had an enforceable proprietary claim to the e-mail content. Both parties agreed to proceed on this basis.

Fairstar is a Dutch company specializing in maritime transport of heavy cargo, which was taken over by a competitor ("Dockwise") in July 2012, resulting in the immediate termination of Mr Adkins's services as CEO. Prior to the takeover, Fairstar was under financial strain related to payments due for vessel construction under contract with a Chinese shipyard. Mr Adkins contended post-takeover that the contract was unenforceable due to a collateral agreement requiring funding and employment contracts, a position not supported by documentary evidence.

Fairstar claimed that Mr Adkins failed to disclose substantial liabilities to the shipyard before the takeover, a fact disputed by Mr Adkins. The dispute over disclosure and the propriety of the without-notice application to Coulson J was reserved for a separate hearing.

Mr Adkins was not directly employed by Fairstar but by a Jersey company ("Cadenza") which provided his services. Fairstar's e-mails to Mr Adkins were automatically forwarded to his private e-mail hosted by Claranet. It was alleged by Fairstar, but denied by Mr Adkins, that forwarded incoming e-mails were deleted from Fairstar's server, leaving Fairstar without copies of certain incoming and outgoing e-mails.

Fairstar argued that without access to these e-mails, it could not monitor dealings with the shipyard or respond properly to a stock exchange investigation regarding its liabilities. Mr Adkins denied Fairstar's entitlement to inspect these e-mails on any claim recognized in this jurisdiction.

Legal Issues Presented

1. Does the Plaintiff have an enforceable proprietary claim to the content of the e-mails held by the First Defendant (and/or the Second Defendant) insofar as they were sent or received by the First Defendant while acting on behalf of the Plaintiff?

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff asserts a proprietary claim to the content of e-mails created or received by the Defendant acting as its agent.
• Materials created or possessed by an agent in the course of employment belong to the principal.
• The Plaintiff does not rely on copyright or confidentiality obligations but on a proprietary interest in the content of the e-mails.
• It is submitted that the modern context supports recognition of proprietary rights in electronic materials created or held by employees or agents.

Defendant's Arguments

• The Defendant contends that information, including e-mail content, is not property under English law.
• There is no binding authority supporting the proposition that the content of e-mails is proprietary.
• The Defendant argues that the Plaintiff’s claim is misconceived and that there is no proprietary claim available in this jurisdiction.
• Confidential information is protected by equity but is not property per se.
• The Defendant points to practical difficulties and legal inconsistencies in recognizing proprietary rights in e-mail content.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by identifying the central issue as whether the Plaintiff had an enforceable proprietary claim to the content of e-mails held by the Defendant. The court carefully distinguished between the physical medium carrying information and the information itself, emphasizing that the legal question concerned the latter.

The court reviewed extensive authorities, noting that while agents owe fiduciary duties and cannot misuse materials obtained for their principal, this does not equate to a proprietary right in the information itself. Cases involving physical property or databases stored on employer's systems were found not directly applicable to the question of information content ownership.

In considering the Defendant’s argument that information is not property, the court found significant support in leading authorities, including Boardman v Phipps and Force India, which assert that information, including confidential information, is not property in the traditional legal sense. Equitable remedies protect against misuse of confidential information but do not create proprietary rights.

The court considered five theoretical options for ownership of e-mail content, ultimately rejecting those that would create impractical or contradictory outcomes, such as simultaneous ownership by sender and recipient or shared ownership among multiple parties. The court found that recognizing proprietary rights in e-mail content would create untenable legal and practical ramifications.

Accordingly, the court concluded that no proprietary right exists in the content of e-mails under English law, and protection against misuse is adequately provided by equitable doctrines of confidentiality or contractual terms where applicable.

The court acknowledged the practical difficulties faced by the Plaintiff but emphasized that these do not justify extending property rights to information content absent clear legal authority.

Holding and Implications

The court held that the Plaintiff does not have an enforceable proprietary claim to the content of the e-mails held by the Defendant.

This decision results in the dismissal of the Plaintiff's application to inspect the e-mails on the proprietary claim basis. The ruling clarifies that under current English law, information content, including e-mails, is not property capable of proprietary claims, although equitable and contractual protections remain available. No new legal precedent was established; rather, the court adhered to the prevailing authority that distinguishes between physical media and information content for purposes of property rights.