Darchem Engineering Limited v Andrew Richardson

These are my reasons for making the imaging order that I made at an inter partes hearing on Monday 30^th June 2025. The application originally sought an interim injunction and orders for delivery up of documents. At the beginning of the hearing, the defendant provided undertakings in the form set out in the Order. Those undertakings covered a good deal of the ground sought to be covered by the additional applications. In the light of the undertakings and the imaging order, I limited the additional orders so that they relate only to a small group of documents, a number of which the defendant admits sending and which contain confidential information belonging to the claimant.

At the beginning of the hearing, I also made an order that the proceedings be conducted in private pursuant to CPR 39.2 (3)(c) and Regulation 10 (4) Trade Secrets (Enforcement etc) Regulations 2018. I gave reasons for making that order at the time. Mr Croxford KC accepted that the final Order and any written judgment would be a public document. I have given him the opportunity to make any submissions he wishes to make as to any redactions that might be needed to this judgment.

The claimant is a large engineering company. It designs, manufactures and installs high integrity steel and titanium products. It operates in a number of sectors. A significant part of its business is in the naval and marine defence sector. It designs, manufactures and installs propulsion uptake and downtake systems, fire barriers, mission bay doors and other components in United Kingdom warships.

The defendant began his employment with the claimant in around 2009. In January 2014, he entered into a new employment contract as a site co-ordinator in the claimant’s special fabrication systems business. His duties included conducting site product installation and surveys for the claimant’s naval contracts. Those duties were predominantly carried out at naval dockyards. On 4^th December 2024, the defendant gave notice of his resignation from the claimant. His final working day at the claimant’s offices was 18^th December 2024. On around 7^th January 2025, the defendant commenced employment with New Design Technology UK Limited (“NDT UK”) as a project manager. NDT UK is a competitor of the claimant. It was founded by one of the claimant’s former employees.

After the defendant left the claimant’s employment, the claimant became concerned about emails and attachments that it discovered that the defendant had sent to his personal Hotmail account. Some of these appeared to the claimant to have been sent at a time when the defendant was contemplating or had accepted employment with NDT UK. The claimant was concerned that these documents contained confidential and classified information. It has commenced proceedings for breach of the defendant’s contractual and other obligations of confidence to the claimant. A defence has been filed, but there have been no further steps in the proceedings.

I stress that this is an interim application. The case has not reached the stage at which definitive findings of fact can be made. What follows appears from the material that was filed for the present applications.

The principally relevant defence contracts held by the claimants for the purposes of these applications, are for work on the Royal Navy’s Type 23 and Type 31 frigates.

The claimant has completed four contracts for Type 23 ships. All related to the Power Generation Machinery Upgrade (“PGMU”) to replace diesel generator sets. The contracts were for: the manufacture, supply and installation of PGMU uptakes and downtakes for three ships; and the design, manufacture, supply and installation of the port and starboard gas turbine exhaust systems for one of those ships.

The claimant understands that two further Type 23 contracts will be put out to tender in around 2026. The claimant understands that they will be for the manufacture, supply and installation of the PGMU uptakes and downtakes and of the gas turbine exhaust systems on a fourth ship. The claimant expects to submit bids for these contracts and expects NDT UK to do so also.

The claimant’s work on the Type 31 frigates is in the design, manufacture, supply and installation of the intake and exhaust systems for the main engines and generators. The claimant obtained the sub-contract to design, manufacture and supply these systems for all five Type 31 ships. The claimant’s evidence is that it is not aware that any other company submitted a bid for this work. The contract was awarded in February 2020. The design and manufacture works were completed in around June 2024.

In August 2023, the claimant was awarded the sub-contract to install the intake and exhaust system it had designed and manufactured, on the first Type 31 ship. Once again, the claimant’s evidence is that it is not aware of any other bids for this contract.

On 5^th February 2025, the claimant submitted its bid for the installation contract for the second and third Type 31 ships. On 12^th February 2025, a contract manager at the head contractor (Babcock International Group Plc) spoke to the claimant’s project engineer. He explained that the head contractor was “exploring other opportunities” with respect to the installation contracts on the second to fifth Type 31 ships. The claimant’s evidence is that discussions relating to the installation contracts for the second and third ships have continued without resolution. The claimant is surprised by this stance taken by the head contractor, given that the claimant has designed and manufactured all five systems and has the installation contract for the first ship. It is concerned that the delay may be as a result of an attempt by NDT UK to under-cut its bid. The claimant expects that the tender process for the installation of the systems on the fourth and fifth Type 31 ships to open soon.

On 13^th January 2014, the defendant signed the claimant’s confidentiality agreement. After defining “confidential information” and “customer information”, that agreement provides:

“2.1

The Employee shall not (subject to clause 6):

2.1.1

during the term of this Agreement or at any time after its termination (for whatever reason) directly or indirectly make use of or divulge or communicate to any person, firm, company or organisation any of the Confidential Information or Customer Information of which the Employee may have become possessed during the continuance of the Employee's employment; or

2.1.2

copy or reproduce in any form or by or on any media or device (or allow others to copy or reproduce) documents, disks, tapes or other material containing or referring to Confidential Information or Customer Information.

2.2

All documents (including copies), disks, tapes and other material (in whatever medium) held by the Employee containing or referring to Customer Information or Confidential Information or relating to the affairs and business of the Company or any Group Company (and whether or not prepared by the Employee or supplied by the Company or any Group Company) shall be the property of the Company or the relevant Group Company and shall be delivered to the Company or the relevant Group Company forthwith upon request and in any event upon the termination of the Employee's employment (however arising). …

4.

The Employee confirms that he is aware of his obligations to ensure compliance with Ministry of Defence security measures relating to any information he may learn during his employment about or in connection with any work done or projected to be done for the Ministry of Defence by the Company or any third party.”

The claimant’s “Acceptable Use Policy” in respect of IT resources includes the following passage:

“ System users must always comply with Darchem confidentiality agreements and must not disclose trade secrets. … When there is a need to store and transfer company information, system users should submit a request to an IT representative for a Darchem IT approved storage device or solution (e.g. USB, flash drives, DVD/CD recordable disks, external hard drives, secure file transfer method) that is enabled with encryption standards… Email should not be used to send bulk, unsolicited “spam” messages, create or forward non business messages, conduct non Darchem commercial activities, subscribe to websites or web services for personal use, or send messages (e.g. by phone, page) anonymously in any manner that could place Darchem at risk.”

In his Defence, the defendant accepts that he was aware of this policy but does not admit that he was aware that he was obliged to comply with it.

Each time that one of the claimant’s employees logs onto a business computer the Notice and Systems Use Agreement appears automatically. A user is required to click “OK” to the notice before being permitted to proceed. This reads:

“This system contains information that is subject to export control laws and company policies. There are many laws established by a number of national governments that protect and restrict access to Darchem's technical information... These protections apply to all employees everywhere in Darchem if you have access to the protected data. Darchem requires you to comply with all controls that protect the information stored in our systems. Failure to comply with these laws, regulations and company policies could result in serious penalties. By accessing this system you agree you will: […] 2. Never allow system access by other persons, and never transfer technical data, technology, or any other sensitive business information (hereafter "System Data), except as authorized […] 4. Transfer System Data outside your business location only if you know and ensure: A. The export classification of all technical data or technology you transfer is accurately determined and correctly marked, B. that any ICTI to be transferred is marked with the applicable Distribution Statement and is transferred in accordance with US Department of Defense requirements, C. The person(s) or business(s) to whom you wish to send System Data are authorized to receive it, D. Any necessary licenses or other authorizations are in place in advance and E. The transfer method follows all applicable company export control and data protection requirements. Questions? Contact your local Trade Compliance officer or submit an IT Helpdesk ticket. By clicking "OK" you agree to these terms for systems use.”

The defendant accepts this in his Defence, however he says that he makes no admissions as to the meaning or effect of the Systems Use Agreement.

On 29^th October 2010, the defendant signed a declaration acknowledging his confidentiality obligations in relation to material covered by the Official Secrets Act 1989. In order to carry out his work for the claimant, the defendant was obliged to obtain Security Check clearance from United Kingdom Security Vetting.

The claimant also relies on implied obligations of confidentiality and the Trade Secrets (Enforcement etc) Regulations 2018.

The Particulars of Claim sets out a number of emails that the defendant sent from his work to his personal email from February 2023 onwards. The defendant accepts that at least three of these emails were sent. The defendant also lists (although he does not produce) further work emails that involved his personal account, in an exhibit to his first witness statement. However, for the purposes of the present application, Mr Croxford KC focussed on the emails of 28^th November 2024 and 18^th September 2024.

On 19^th December 2024, the day after the last day the defendant spent in the office, the claimant decided to review the defendant’s work device. The claimant’s evidence is that this was done because the defendant had left the claimant for NDT UK and the claimant was concerned that NDT UK was competing for work that the claimant would usually expect to undertake.

That review revealed that at 15:19 pm on 28^th November 2024 (four days after tenders for the installation of the intake and exhaust systems on Type 31 ships two and three were invited (a fact of which the defendant says he was unaware) and a few days before he handed in his notice), the defendant sent an email from his work to his personal Hotmail account. It contained four attachments:

The claimant asserts that the documents at (b) and (c) are protected by the Official Secrets Act 1989.

When confronted by this email in correspondence, the defendant said that: the email was never received by his Hotmail account (this appears to be confirmed by a ‘bounce-back’ message on his work email); he could not remember sending it; he believed some of the documents belonged to him; but he sent the documents to himself “to cross reference as a tool in future (if required but note [sic] for any job specifically)”.

In his Defence, the defendant: admits that his sending this email did not have a legitimate reason or work purpose (paragraphs 7 and 44); admits that he applied or intended to apply for a position at NDT UK when he sent the email (paragraph 45 (a)); and admits that he intended that the attachments would be accessible to him once he took up employment with NDT UK (paragraphs 6 and 45 (b) – although in paragraph 9 of his first witness statement, the defendant says this was to be for his personal use). At paragraph 7 of his Defence, the defendant says that he “naively (and he now accepts, wrongly) believed that because he had created the documents or because they were documents he envisaged he would retain after his employment ended, there was no harm in his sending the email” (which he says he made no attempt to conceal).

Later investigations by the claimant revealed that the defendant sent a series of emails from his work to his personal account on 18^th September 2024. They were:

In his first witness statement, the defendant says that after being contacted by the claimant about the 28^th November 2024 email, he went through his personal email account and “deleted everything I could immediately find”. Mr Croxford KC expresses concern about the fact of these deletions but also about the fact that the defendant has admitted that he retains some relevant emails. It follows, says Mr Croxford, that the deletion process must have been selective. He says that this increases the claimant’s suspicions about what the defendant might have done with its confidential information.

In TBD (Owen Holland) Ltd v. Simons [2021] 1 WLR 992 at paragraph 178, Arnold LJ set out the advantages and the key disadvantage of an imaging order. He explained that the advantages of such an order are that it is “relatively non-intrusive” and “enables all digital evidence to be preserved for subsequent analysis”. He identified the key disadvantage as being that it is in the nature of the imaging process that there is no discrimination between types of information. He then said:

“…Thus imaging can only ever be a preservation step, and it must be followed by proper consideration of the issues of disclosure and inspection of the documents preserved by the imaging process.”

In Nix v. Emerdata Limited [2024] EWHC 125 (Comm) at paragraph 30, HHJ Pelling KC (sitting as a judge of the High Court) applied the following passage from the judgment of Pepperall J in Hyperama Plc v. Poulis [2018] EWHC 3483 (QB):

“23.1

First, I apply the elevated standard of whether I have a high degree of assurance that Hyperama will be able to establish its claims at trial in view of the strength of the order that is sought. Such standard is not significantly different from the "extremely strong prima facie case" required to justify a search order but, given that the order is less invasive, I accept that it may be that less is required to justify [what is described in that case as] a doorstep order.

23.2

Secondly, I consider whether Hyperama has established that the damage, potential or actual, to its business interests is very serious.

23.3

Thirdly, I consider whether there is clear evidence that the Defendants have incriminating documents in their possession.

23.4

Fourthly, I consider whether there is a real possibility that the Defendants might destroy such material before any inter partes hearing can take place.

23.5

Fifthly, I consider whether the relief sought is proportionate to its legitimate aims.”

(ii)

The disclosure order

In Lakatamia Shipping Co Ltd v. Su [2020] 1 WLR 2852 at paragraphs 16 to 26, Foxton J held that there is an inherent jurisdiction to order disclosure to secure compliance with an interim order where: (i) the applicant has an extremely strong prima facie case; (ii) the damage or potential damage to the applicant would be serious; (iii) there is clear evidence that the defendant has in its possession incriminating documents and a real possibility that it might destroy such documents; and (iv) the harm caused by the order is neither excessive nor disproportionate to its legitimate object.

The defendant admits sending the 28^th November 2024 email and attachments. He admits that he had no legitimate work purpose for doing so. He says that he intended to use the attachments in his work for NDT UK.

Although the defendant denies knowing this, they were sent four days after the opening of the tender process for the installation contracts on the second and third Type 31 frigates. NDT UK was at least a potential competitor of the claimant’s in that process.

There can be no doubt that the attachments to the email contain the claimant’s confidential information. I also accept the claimant’s evidence that that information would be of significant assistance to anyone seeking to compete for the next four Type 31 installation contracts. The claimant had designed and manufactured the systems that were to be installed and one of the documents was its installation guide for the first ship.

The inclusion of the claimant’s costs structure is particularly concerning both by reason of its content but also because of the claimant’s evidence that the defendant’s role did not require him to use or review it. I cannot come to any final conclusion as to the defendant’s assertion when making submissions at the hearing that he had included this attachment by mistake. However, the failure by the defendant to mention this reason in his defence or either of his two witness statements calls for an explanation.

I accept that the evidence appears to be that the 28^th November 2024 email was never received by the defendant’s Hotmail account. I also accept that the claimant’s internal investigation has not discovered another route by which the defendant may have taken the documents. However, the defendant’s intention when sending the email has been admitted and the purpose of the imaging order application is to preserve the data that may establish whether or not he obtained it by other means, once he realised that the email did not arrive.

The 18^th September 2024 emails must be viewed against the above background.

I repeat what I say above, that my findings at this stage can only be on the basis of the material that has been filed for this application. The evidence is necessarily less comprehensive than it would be at any trial. It has also not been tested by cross-examination.

The first relevant email sent on 18^th September 2024 was NDT UK’s job description for a job that appears to be at least very similar to the job that the defendant left the claimant to take up. It is therefore strong evidence that his new job with NDT UK was in the defendant’s mind when he sent the emails he sent in the following 40 minutes.

Against that background, the nature and variety of the content of the emails and attachments calls for an explanation. The attachments relate to a range of the claimant’s projects: the Type 23 PGMU project, but also work on a Type 45 destroyer and a Royal Fleet Auxiliary ship. The screenshot of the file structure of the claimant’s “B-Drive” is a sufficiently unusual thing for an employee to send to his personal Hotmail account that it calls for a specific explanation. The need for any such explanation to be cogent and supported by appropriate evidence is heightened by reason of the admissions that the defendant has made as to his intention to use the claimant’s information in his employment with NDT UK when he sent the 28^th November 2024 email.

In the absence of a sufficiently cogent explanation, it seems to me that I could have a high degree of assurance that the claimant would prove at trial that the defendant intended to use the material that he forwarded on 18^th September 2024 in connection with his application to NDT UK for his current job.

The defendant asserts that he needed the information that he sent, in order to carry out the tasks he was about to carry out on a Type 23 frigate. He said that he needed the survey report for the Type 45 destroyer because he was working on it. He said he needed the Royal Fleet Auxiliary document to use as a template for upcoming installation work. He said he needed the file structure so that he knew how to set out the file structure for the Type 23 frigate he was about to work on.

As regards the need to send these together to his Hotmail account, the defendant’s explanation was as follows. He was supplied with a work laptop from which he could access the claimant’s systems. However, the wifi at the site he was working at was not sufficient. He said he needed the documents in electronic format at the site so that they could be amended with the client and then printed. He said that he sent the documents to the Hotmail account because he could then access them on his personal phone and print them using his personal mobile phone service. The claimant strongly denies that there were IT difficulties of this kind.

The defendant has not filed any real independent evidence on which I can base a finding that his explanations are correct. His second witness statement does attach timesheets which he uses to explain the receipt of earlier emails, but no independent evidence to support his tasks or working arrangements on 18^th September 2024. The crucial issue as regards the 18^th September 2024 emails is why the attachments and the screenshot of the file structure of the claimant’s “B-Drive” needed to be sent to his personal Hotmail account in a compendious way at this time. The defendant has not provided independent evidence to support the wifi and printing problems that he relies on. The explanation that he needed to have the range of attachments of this size and nature on his phone in order to amend them electronically with the client and then print them does not seem to me to accord sufficiently with ordinary experience for me to accept it without such evidence. The same applies to the sending of a screen shot of the B Drive file structure.

It follows that on the basis of the material and submissions before me at the hearing, I do not think that there was sufficient evidence to undermine my conclusion as to the necessary high degree of assurance under this heading.

I accept the claimant’s argument that in the light of the evidence as to the 28^th November 2024 email and the 18^th September 2024 emails, there is a sufficient basis for it to investigate whether the defendant has obtained, retained or used its confidential information on other occasions.

I therefore conclude that the evidential test for an imaging order is satisfied.

The claimant’s application has two bases under this heading.

First, the potential damage to its business interests from NDT UK obtaining the information and using it to compete for and obtain contracts for which the claimant is or may in the future also be competing. I accept that on the evidence set out above, the potential damage to the claimant’s business interests from such conduct is very serious.

Secondly, the potential damage to its business interests if its employees mishandle, and it does not properly investigate, the misuse of information that includes classified defence information.

The defendant accepts that when the 28^th November 2024 email was reported to the Ministry of Defence, it classified the resulting risk level as “moderate”. However, he has provided evidence that he was interviewed (apparently as a result of the first report made by the claimant) and has been permitted to retain his security clearance and his access rights to naval dockyards. It is not totally clear from the materials that have been filed, whether the claimant’s report of the 18^th September 2024 emails was considered at the time of the defendant’s security interview and there is no evidence of what was said in that interview. However, the imaging order is being sought on the basis that there may be material that is not yet known to the claimant which shows additional unauthorised use of classified information.

I accept that the mishandling by its employees, and a failure properly to investigate unauthorized use of, classified defence information also has the potential to cause very serious damage to the claimant’s business interests as a defence contractor.

The defendant accepts that at the time of the hearing he had confidential information belonging to the claimant in his possession. He also admits deleting relevant emails. The claimant’s evidence is that at least some deleted emails and documents can be recovered and that the imaging process is capable of catching the data that is necessary for that task. It is in the nature of information sent by email to a personal email account that it can easily be forwarded without the claimant’s knowledge. The claimant is also concerned by the evidence that the deletions may have been selective.

It follows that there is sufficiently clear evidence of incriminating documents being in the defendant’s possession.

The claimant relies on the defendant’s admission that he has deleted emails in the past. It says that this is good evidence that there is a real possibility that the defendant may do so again. I accept that submission.

However, it seems to me that this limb of the test is satisfied for another reason. As set out above, the imaging process can recover at least some ‘deleted’ material. Without an imaging order there is a risk that such material may be or become irrecoverable. This aspect of the process is also the answer to the defendant’s submissions based on delay in bringing the application. It seems to me to provide a proper basis to make this order now.

I fully recognise the seriousness of the process of imaging an individual’s personal devices and online and other accounts. However, I take into account the fact that this order will simply preserve the data. None of the defendant’s data will come into the possession of the claimant unless, through the process of searching the preserved data for relevant material, it is otherwise disclosable in the proceedings.

I have considered the devices and accounts that the claimant said it wished to image in its draft order. As I said at the hearing, and after being sent the post-hearing draft order, there is no basis in this case for extending the order to accounts such as bank accounts or accounting software as asked for in the original draft. I also refused to make an order containing general wording which might catch obviously irrelevant material. The order that I make is confined to those databases and accounts which appear likely to contain the kinds of documents or communications that are in issue in these proceedings. I am satisfied that the order I have approved is proportionate to its legitimate aims.

As set out above, at the beginning of the hearing, the defendant gave undertakings as to the use of the claimant’s confidential information. That made it unnecessary to consider the claimant’s application for an interim injunction. At the same time as giving those undertakings, the defendant undertook to deliver up the confidential information he had retained.

The claimant nevertheless sought a disclosure order which extended to any messages that forwarded any confidential information of the claimant.

I refused that broad order. The defendant has given the undertakings to deliver up and I am making an imaging order which will preserve any such material. I said that the material sought should be dealt with by disclosure in the ordinary way. In making that decision, I had regard to the length of time between the 28^th November 2024 email coming to the claimant’s attention and the application for the Order. I also took into account the fact that there is evidence that potentially undermined the claimant’s general submission that the use of personal email accounts was absolutely prohibited by it. The defendant in his first witness statement gives specific instances of what he says are employees more senior to him in the organisation emailing him to his personal account.

Having said this, I am provided to make a more narrow order. That order will be confined to the emails of 28^th November 2024 and 18^th September 2024 and to the small number of additional emails referred to in the Particulars of Claim which also attached confidential information of a similar kind. It seems to me that there is an extremely strong prima facie case in relation to the 28^th November 2024 email and the 18^th September 2024 emails and that the order (including the small number of additional emails attaching similar material) is neither excessive nor disproportionate to the legitimate object of discovering whether any such information was in fact passed to one of the claimant’s competitors.