Coward Phaestos Ltd & Ors

This claim was issued in 2010 and came on for trial before Asplin J (as she then was) in March 2013. On 17 May 2013 she handed down a lengthy judgment. The opening paragraph described the nature of the claim in the following way:

She went on to describe the parties to the claim and it is convenient to adopt her summary:

The business was founded as a partnership in 1992 in England. The precise date on which that partnership was founded and whether it was Ms Elena Ambrosiadou’s (Ms Ambrosiadou’s) business in which the Claimant, her husband Dr Martin Coward (Dr Coward) participated or was a joint enterprise in which for a short time, others participated, are matters in dispute. Ms Ambrosiadou and Dr Coward are now estranged, Ms Ambrosiadou having filed for divorce in April 2009. It was around that time in December 2009, that Dr Coward left the IKOS business and sought to set up a rival organisation based principally in Monaco. As a result of those events, numerous sets of proceedings were commenced in a number of jurisdictions, including these proceedings.

Dr Coward is a mathematician and computer programmer with a PhD in Control Theory Engineering from Cambridge University. Until his resignation on 11 December 2009, Dr Coward was Chairman and a director of IKOS CIF Ltd, the Third Defendant, (IKOS CIF). It is not disputed that Dr Coward wrote the original software upon which the IKOS business was based and made a significant contribution to the development of the software over the years.

Ms Ambrosiadou is a Chemical Engineering graduate who obtained an MBA from Cranfield Business School and went on to work for British Petroleum before founding the IKOS business with or with the assistance of Dr Coward. She is a

The Defendants are companies which are part of, or have been associated with, the IKOS business. The First Defendant, Phaestos Limited is a UK company, incorporated on 5 July 1991. During part of the time with which this case is concerned, it was called IKOS (UK) Limited. For the sake of simplicity I shall refer to it as IKOS UK throughout. It was one of the partners of IKOS Partners to which I shall refer below, until IKOS Partners was dissolved as of 31 December 2006. Between October 2006 and April 2008, IKOS UK provided programming, research and technical services to IKOS CIF. It is not disputed that some of the software used in the IKOS business was written by IKOS UK employees between March 1993 and April 2008.

…

The Third Defendant, IKOS CIF, is a Cypriot company incorporated on 29 December 1995. It was formerly known as IKOS OFC Limited. It has been IKOS

The Fourth Defendant, IKOS AM is a Cayman Islands company incorporated on 12 January 1996 and is the investment manager to the IKOS Fund which is a hedge fund also located in the Cayman Islands.

Currently, Ms Ambrosiadou is the Chief Executive Officer and a director of IKOS CIF and is the Chief Executive Officer and a director of IKOS AM.”

The only gloss that needs to be added to this summary is that the second defendant ceased trading some time ago and has been struck off of the register and Ms Ambrosiadou is no longer the Chief Executive Officer and a director of IKOS CIF.

Asplin J mentions there having been numerous sets of proceedings between Dr Coward, IKOS and associated parties. Since 2013 the litigation has continued to proliferate. I am told they have now been involved in a total of 31 civil claims in six jurisdictions.

Reference was also made by Asplin J to Dr Coward and Ms Ambrosiadou’s divorce proceedings in Greece that were commenced in April 2009. Divorce proceedings were commenced in Cyprus in 2010. Although their marriage was dissolved in January 2015, the financial aspects of their divorce proceedings have not been concluded. Indeed, Dr Coward’s application that is the subject of this judgment is made with the explicit aim of obtaining access to documents Dr Coward says may assist him in the matrimonial proceedings in Cyprus in which he is seeking a share of the increase in the family wealth between the date of the marriage and the date of separating from Ms Ambrosiadou. That application was made to the court in Cyprus as long ago as 2010. IKOS takes a quite different view about the reasons why Dr Coward is making the application. It says that the application is nothing to do with the proceedings in Cyprus and that it is a general fishing exercise for the purpose of obtaining valuable IKOS documents.

In addition to the many civil claims, there are also ongoing criminal complaints against Dr Coward in Cyprus and Monaco arising out of the events that were the subject of Asplin J’s judgment.

The most recent claim in this jurisdiction was brought by Dr Coward against Ms Ambrosiadou in the Commercial Court. Dr Coward alleged that that his former wife

IKOS says that Dr Coward has not succeeded in a single one of the civil claims he has brought against IKOS and associated parties. This is controversial statement when put in this straightforward way because success can be a matter of degree. However, it appears that Dr Coward has not succeeded outright in any claim and IKOS and Ms Ambrosiadou have been largely, but not entirely successful, in the claims they have brought.

The application that is the subject matter of this judgment arises from an order made by Asplin J on 30 July 2013 dealing with issues that were consequential upon her judgment. Before describing the terms of the application, it is convenient to summarise the nature of the issues in dispute and relevant parts of the procedural history.

Dr Coward claimed to be the owner of the intellectual property rights in the Gauss software and databases which were and are central to the operation of IKOS’ businesses. IKOS counterclaimed seeking a wide range of relief that would follow from their case that they held the IP rights in the software. IKOS also counterclaimed for relief in relation to allegations of breach of confidence.

It is common ground that Dr Coward severed his links with IKOS in December 2009 and took steps to set up his own competing business in Monaco. Before doing so, he downloaded IKOS’ software covertly to the “Red Laptop” which he had acquired for the purpose. He also took with him other items of computer hardware the data on which was the subject of breach of the confidence claims brought by IKOS. The items of hardware were described as the “Burns Laptop”, the “Burns USB” and the “Steyning PC” (together “the Devices”). The Burns Laptop and the Burns USB belonged to Mr David Burns who was an employee of IKOS. The Steyning PC was so named because it was kept at Dr Coward and Ms Ambrosiadou’s residence in West Sussex. The “Burns and Steyning Materials” comprise the information stored on the Devices.

During the course of the litigation Dr Coward handed the Steyning PC to Hogan Lovells, who then acted for him, in March 2010 and handed the Burns Laptop and the Burns USB to Hogan Lovells in August 2010.

An interlocutory order was made by Morgan J on 10 February 2012 which made provision for an inspection and confidentiality regime in relation to inter alia the “Forensic Materials”. They were to be subject to the regime in CPR 31.22 and the order contained permission to apply.

At the outset of the trial before Asplin J, IKOS accepted a proposal put forward by Dr Coward to narrow the issues before the court. This agreement is reflected in an amendment to IKOS’ counterclaim with the addition of paragraphs 55A, 55B and

Several points bear emphasis:

The judgment given by Asplin J concludes with a section under the heading:

“What should the regime be for the delivery up/destruction by Dr Coward of the Burns/Steyning Materials?”

The question clearly relates to the loose end that was left by the agreement reached at the outset of the trial. The answer to the question posed by the judge was given in the following terms:

“308.

It has been agreed that a forensic image of all of the Burns and Steyning materials should be retained by Navigant, an independent firm which has been jointly retained by the parties for similar purposes to date. It is also agreed that there be liberty to apply in this regard.

309.

With regard to the Steyning PC, although it is not disputed that it is the property of the Defendants, as I understand it, they do not press for its return at this stage as long as it is also held by Navigant.

310.

Although I will hear further submissions in this regard also, it seems to me to be relatively clear that all other copies of the Burns and Steyning Materials in the possession, custody or control of Dr Coward should be destroyed and the completion of the destruction confirmed on oath.”

It is significant that Asplin J required Dr Coward to destroy the Burns and Steyning

The order made by Asplin J on 30 July 2013 recited IKOS’ agreement not to pursue its counterclaim so far as it related to the Burns and Steyning Materials and after dealing with IKOS’ successful counterclaim concerning the software and databases, dismissed Dr Coward’s claim and ordered destruction of the material downloaded by Dr Coward to the Red Laptop. Paragraph 6 of the order provided that the parties were to comply with the regime set out in Schedule D of the order concerning what are described there as the “Forensic Materials” (Footnote: ¹). The parties were permitted to vary the terms Schedule D by agreement; no such agreement has been reached.

Paragraphs 11 to 16 of the order deal with confidentiality and continued the regime set up by the order of Morgan J with a number of changes. Schedule C to the order lists the documents that were referred to during the trial that were to remain confidential.

Paragraph 13 of the order provided that:

In respect of any materials not listed in Schedule C to this Order:

The regime in Schedule D to the order comprised the following elements that are relevant to the application:

To put the application now made by Dr Coward under that paragraph in its proper context it is worth recording that:

The application notice summarises the basis upon which the application is made in the following way:

“The Claimant seeks an Order (a draft of which is attached hereto) pursuant to the liberty to apply in the Morgan and/or Asplin Orders and/or CPR 31.22(1)(b), for searches to be undertaken of the Device Images of the Steyning PC, the Burns Laptop and the Burns USB Drive held by Ankura pursuant to paragraph 4 of Schedule D to the Asplin Order, with a view to identifying specific documents relevant to the issues in Cypriot Proceedings between him and Ms Elena Ambrosiadou (Application No: 2/2010). This Application Notice adopts the same defined terms as the draft Order. The Order includes a regime inter alia: (a) to enable any documents relevant to the Cypriot Proceedings to be identified; (b) to allow any Agreed Documents to be used for the purposes of the Cypriot Proceedings; and (c) to identify any Disputed Documents and insofar as necessary for the parties to refer any matters in dispute back to the Court for resolution. The Order is sought because it is in the interests of justice for access to and use of the documentation to be permitted and for the further reasons set out in the witness statements of Liam Hemmings and George Triantafyllides of 6 February 2020 and 12 February 2020, attached hereto.”

The draft order has been amended since the application was made to take into account criticisms by IKOS. However, in essence, the regime proposed by Dr Coward is essentially that summarised in the application notice namely:

The court has been asked to consider the following witness statements:

The length and detail of the evidence provided to the court does much to mask the issues that have to be determined. No doubt this is a function of the manner in which the parties have conducted their disputes over the last 11 years. Neither of them has provided evidence to the court. In Dr Coward’s case this is surprising because his application relies upon, in part, his recollections of disclosure in the claim.

Neither Dr Coward nor Ms Ambrosiadou impressed the trial judge as a witness. Prior to commenting about the manner in which they each gave evidence she observed:

“It was quite clear that they are both highly intelligent and astute individuals. Unfortunately, their approach to giving evidence was tainted by their obvious and deep animosity and the extremely close correlation between their business and their personal affairs.”

As to their evidence, Asplin J went on to say:

IKOS says that the court should be careful when considering evidence provided on behalf of Dr Coward where it records his recollections and describes his motives for making the application. However, it is not the function of the court on dealing with this application to make findings of fact unless the evidence lacks any substance at all. It is neither necessary or appropriate for the court to determine, as IKOS would wish,

The key points concerning the matrimonial proceedings in Cyprus that are relevant for the purpose of the application are:

Dr Coward’s application relates to assets that he alleges Ms Ambrosiadou has not disclosed in the matrimonial proceedings. It is focussed on an investment of $60 million that was initially held in a special purpose vehicle called IKOS 2003 and latterly in Ms Ambrosiadou’s name in an IKOS fund known as the IKOS Equity Hedge Fund. The shorthand used by the parties for the special purpose vehicle and the fund are respectively “the SPV” and “IKOS EH” and I will adopt those abbreviations.

According to Dr Coward, the SPV was an offshore vehicle that was set up for the purposes of mitigating tax relying upon a perceived loophole in Chapter 2 Part 7 of the Income (Earnings and Pensions) Act 2003. The machinery that was deployed for that purpose does not matter save to say that according to Dr Coward:

Ms Ambrosiadou did not make reference to these funds in her written evidence in the proceedings in Cyprus. Dr Coward seeks permission to have access to the Burns and Steyning Materials for searches to be carried out to locate documents that relate to the SPV. He says that the application is made at this stage because his lawyers in Cyprus requested him to obtain further evidence about the SPV after his examination in chief was adjourned part heard in the autumn of 2019.

His belief that the images include documents that are relevant to the SPV, and thus relevant to the proceedings in Cyprus, is said to be based upon his recollection about material facts being prompted by a review of the Material that resulted from orders made under the Police and Criminal Evidence Act 1984 by His Honour Judge Dight on 17 September and 2 October 2019. The orders were made in response to an application made on 13 September 2019 by the City of London Police for Ankura to produce documents that were relevant to the investigation. The application was a response to a Letter of Request from the authorities in Cyprus dated 11 April 2016. The Letter of Request followed a criminal investigation in Cyprus into Dr Coward’s access to IKOS’s computers in 2009 and concerns whether Dr Coward has committed offenses under the laws of Cyprus concerning illegal access to a computer system and illegal interference with (a) computer data and (b) a computer system.

The response to the application made by the City of London Police had two stages. First, an inspection regime was agreed which forms Schedule A to HH Judge Dight’s order dated 17 September 2019. Secondly, after the inspection procedure had been followed, a Production Order was made by HH Judge Dight on 2 October 2019 by consent. The inspection regime had the following principal features:

At each stage IKOS was entitled to object and provision was made for material that might be privileged to be reviewed by independent counsel. In any event, the point IKOS seeks to rely upon is that, for the purposes of the inspection exercise, Dr Coward insisted upon only metadata being inspected in order to determine which documents were relevant to the application by the City of London Police. This was a much more limited approach compared with the proposals in the draft order this court is asked to make. Furthermore, IKOS points to the inherent improbability of this process jogging Dr Coward’s memory of documents that were inspected as part of disclosure in 2012.

Mr Hemming says that after Dr Coward’s evidence was adjourned part heard in the autumn of 2019 he was asked by his lawyers to produce documents providing evidence of the value of the SPV and Dr Coward mentioned to Mr Hemming that there were likely to be documents on the Devices. Mr Hemming goes on to say:

“25.

I understand from Dr Coward that he received regular reports about the values of the various IKOS funds including IKOS EH and that sometimes he would receive emails concerning the value of his and Ms Ambrosiadou’s assets, prepared by IKOS’ in-house accountants. Dr Coward also recalled that early on in the litigation between Dr Coward and Ms Ambrosiadou, Mr Burns had prepared some analyses of the SPV and IKOS EH and Dr Coward thought that these documents may have been on David Burns’ laptop and USB stick. Dr Coward explained to me that this recollection was prompted by his review in the autumn of 2019 of lists of files held within the Forensic Materials for the purposes of the Production Order application. Until that time Dr Coward told me that he had largely discounted the Devices as a potential source of relevant documentation for the purposes of the Cypriot Proceedings.

I will first deal with the alternative ground referred to in the application, namely CPR

It is right to note that paragraph 13 of Asplin J’s order records that CPR 31.22 applies “in the usual way”. This does not, however, create any additional right or entitlement. It merely records that the rule applies. It does not vary the application of the rule for the purposes of this claim. In short, it does not assist Dr Coward’s case whether it is taken in isolation or reviewed with the entire provisions of Asplin J’s order.

CPR 31.22(1)(b) is, in any event, of no assistance to Dr Coward because:

Mr Dale submitted that although this is not a typical case where Dr Coward is seeking to use documents disclosed by IKOS, and although the authorities considering how the court should exercise its discretion under CPR 31.22(1)(b) are not on all fours with this case, it is nevertheless helpful to have regard to the principles they embody. He invited the court to have regard to the summary of those principles set out in the judgment of Eder J at [16] in Tchenguiz v Director of the SFO [2014] EWHC 1315 (Comm). Although that is indeed a helpful summary of the principles that apply to CPR 31.22(1)(b), I do not find it to be of assistance here because the application is made under a regime for retention of the Devices and the Materials at the end of a trial in the circumstances I have described.

As Dr Coward’s case was developed in the exchanges of witness statements, additional grounds of entitlement to have access to the Materials were put forward. The grounds are summarised in Appendix 1 to the applicant’s skeleton argument. In summary they are:

During the course of the hearing Mr Dale was pressed to say whether he relied on these grounds. Very fairly he accepted that they could not be grounds for searching the Burns and Steyning Materials in order to ascertain whether they contain documents that Dr Coward may, depending upon their nature, have an entitlement to see. In short, these additional grounds add nothing to the application.

In the evidence filed on behalf of Dr Coward it was suggested that CPR 31.17 might assist him. The provision in CPR rule 31.17 derives from section 34(2) of the Senior Courts Act 1981 which provides:

“On the application, in accordance with rules of court, of a party to any proceedings to which this section applies, the High Court shall, in such circumstances as may be specified in the rules, have power to order a person who is not a party to the proceedings and who appears to the court to be likely to have in his possession, custody or power any documents which are relevant to an issue arising out of the said claim …”.

CPR rule 31.17(3) provides that:

“(3)

The court may make an order under this rule only where—

(a)

the documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and

(b)

disclosure is necessary in order to dispose fairly of the claim or to save costs.”

Even though Ankura is not in a strict sense a party to the proceedings, it seems to me it is obviously not a person within the contemplation of section 34(2) given that its charges are met jointly by parties and it holds the Devices pursuant to Asplin J’s order. If that hurdle were to be surmounted, the provisions have no application to a claim that was concluded seven years ago and in which there are no substantive issues between the parties to be determined.

I turn to deal with the principal ground of the application, namely the permission to apply provision in paragraph 7 of Schedule D of Asplin J’s order. Although it is also made under the Morgan Order, the Asplin Order provides for the confidentiality regime set up under the Morgan Order to continue to apply in certain respects. It seems to me that the Asplin order supersedes its predecessor, which was an interlocutory order made to govern the position until the end of the trial, and applying under the Morgan order adds nothing.

There are several initial points about paragraph 7 of Schedule D:

At the invitation of the court there was some discussion about the principles that apply to the construction of court orders. There is a helpful and interesting discussion of the subject in the judgment of Mr Edward Murray (as he then was) sitting as a Deputy Judge of the Chancery Division in Feld v Secretary of State for Business, Innovation and Skills [2014] EWHC 1383 (Ch) at [27]-[29]. That decision does not appear to have been cited to Snowden J in Brennan v Prior and others [2015] EWHC 3082

These decisions establish that:

It seems to me there are limits to the extent to which the court can apply by analogy the principles summarised by Lord Neuberger in Arnold v Britton and elsewhere. It is not clear from the authorities, for example, whether it is permissible to have regard to a transcript of discussions between the court and counsel before the order was finalised.

Mr Dale relies on the decision of the Court of Appeal in Calzaghe v Warren [2010] EWCA Civ 1447 as providing authority for the proposition that regard may be had to the transcript. Moses LJ having dismissed Mr Warren’s appeal dealt briefly with Mr Calzaghe’s cross-appeal which turned on whether there was an agreement between the parties that was said to have been recorded in a recital to an order of the first instance judge. Moses LJ had regard to a transcript of discussion between counsel for the purpose of deciding this issue. However, the approach adopted in that case does not support the existence of a principle that in every case where the terms of an order are being construed the court may have regard to discussion with the court because in Calzaghe v Warren to court was concerned with establishing whether an agreement in a particular form existed.

Mr Dale submitted that the Proviso does not form an obstacle to Dr Coward’s application in circumstances in which they were in his possession prior to being put into escrow first under the terms of the Morgan Order and later under Asplin J’s order. I consider that on a plain reading of paragraph 7 of Schedule D, in the full context of the claim, the judgment and the order as whole, its meaning is clear and the proper construction of the order is not open to any real doubt.

Dr Coward wishes to undertake a wide-ranging search of the Burns and Steyning Materials using keywords. Inevitably, even if the keywords are limited in number and carefully defined, their application across a considerable volume of data will lead to a range of document being thrown up from the searches. It is inevitable that they will include business documents that belong to IKOS and confidential documents. It is notable that the methodology proposed by Dr Coward in this application is directed to documents rather than metadata, unlike the review for the City of London Police application. Dr Coward is unable to say that he wishes to search only for documents to which he has a pre-existing right.

It was not the intention of the order that Dr Coward was to be entitled to review a large body of data for the purpose, he hopes, of finding documents that will help his case against his former wife.

I do not consider that the court is entitled to have regard to a transcript of discussions between counsel and the judge in order to establish the proper meaning of the order where there is no ambiguity on the face of the order. The position might be different if the application was to correct the order under the slip rule to reflect what is said to be the true intention of the judge. Where the issue is of construction, there is a good reason why the transcript should not be considered because counsel’s submissions made are more apt to reveal what the advocates had in their minds rather than what the judge was thinking. The judge may or may not intervene during those submissions and any intervention may merely reflect initial thoughts testing the submissions.

In any event, I do not consider that the transcript assists Dr Coward. Mr Dale relies upon the following exchanges between Dr Coward’s counsel and the judge at the consequentials hearing at the time the Proviso was being considered.

“MR. BLOCH: My Lady, there is a fundamental difference between the grounds on which, for example, Dr. Coward can rely and the grounds on which my learned friend can rely. In relation to something which was in Dr. Coward's possession and which he has agreed to, as it were, put into safekeeping, he does not need to establish the standard bases on which ---- MRS. JUSTICE ASPLIN: No, he does not need to establish anything. He can apply.

MR. BLOCH: Whereas in my learned friend's case he would have to establish grounds.

MRS. JUSTICE ASPLIN: He would have to found his foundation.

MR. BLOCH: The only question is how we make that clear in the order”.

Mr Dale submits that the Proviso was intended to apply in a different way to Dr Coward than to IKOS; that he does not need to show grounds to have access the Burns and Steyning Materials, whereas IKOS would have to establish a basis for having access. There is, however, no obvious explanation about why the judge would have intended the Proviso to go one way when the language agreed between the parties and approved by the judge applies to the parties equally.

I accept Mr Abrahams’ submission that the context in which the exchange took place was when Mr Bloch was focussing on hardware which was Dr Coward’s own property such as the Red Laptop. If Mr Bloch’s observation is applied in reverse, IKOS would not need to show grounds for seeking access to the Steyning PC. Quite different considerations apply to the Materials that were extracted from the Devices bearing in mind Asplin J’s requirement that Dr Coward should destroy all copies of the Burns and Steyning Materials. Later exchanges in the transcript between IKOS’ counsel and the judge point towards an insistence by IKOS for the Proviso to apply equally between the parties.

Even if Dr Coward were able to establish a basis upon which he is entitled to have access to the Burns and Steyning Materials for the purpose of undertaking a search for documents relating to the SPV, I consider there are sound reasons for declining to make an order. In summary they are:

The application will be dismissed.