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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Anton Piller KG v Manufacturing Processes Ltd & Ors  EWCA Civ 12 (08 December 1975)
Cite as:  Ch 55,  1 All ER 779,  EWCA Civ 12
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COURT OF APPEAL
On appeal from Order of Mr Justice Brightman.
B e f o r e :
LORD JUSTICE ORMROD and
LORD JUSTICE SHAW
| ANTON PILLER K.G.,
|MANUFACTURING PROCESSES LIMITED,
|BERNARD PRESTON WALLACE and
|ALFRED HENRY STEPHEN BAKER,
Official Shorthandwriters, Ltd., Room 392, Royal Courts of Justice,
and 2, New Square, Lincoln's Inn, W.C.2).
appeared on behalf of the Appellants (Plaintiffs).
Crown Copyright ©
THE MASTER OF THE ROLLS: During the last eighteen months the judges of the Chancery Division have been making Orders of a kind not known before. They have some resemblance to search warrants. Under these Orders, the plaintiff and his Solicitors are authorised to enter the defendant's premises so as to inspect papers, provided the defendant gives permission.
Now this is the important point: The Court orders the defendant to give them permission. The Judges have been making these Orders on ex parte applications without prior notice to the defendant. None of the cases have been reported except the one before Mr Justice Templeman on the 3rd December, 1974. It is E.M.I. v. Pandit, 1975 1 Weekly Law Reports, 302. But in the present case Mr Justice Brightman refused to make such an Order.
On appeal to us, Mr Laddie appears for the Plaintiff. He has appeared in most of these cases, and can claim the credit - or the responsibility - for them. He represented to us that in this case it was in the interests of justice that the application should not be made public at the time it was made. So we heard it in camera. It was last Tuesday. After hearing his submissions, we made the Order. We now come to give our reasons in public. But at the outset I must state the facts, for it is obvious that such an Order can only be justified in the most exceptional circumstances.
Anton Piller are German manufacturers of high repute. They make electric motors and generators. They play an important part in the big new computer industry. They supply equipment for it. They have recently designed a frequency converter specially for supplying the computers of International Business Machines.
Since 1972, Pillers have had, as their agents in the United Kingdom, a company here called Manufacturing Processes Limited, which is run by Mr A.H.S. Baker and Mr B.P. Wallace. These agents are dealers who get machines from Pillers in Germany and sell them to customers in England. Pillers supply the English company with much confidential information about the machines, including a manual showing how they work, and drawings which are the subject of copyright.
Very recently Pillers have found out - so they say -that these English agents have been in secret communication with other German companies called Ferrostaal and Lechmotoren. The object of these communications is that the English company should supply these other German companies with drawings and materials and other confidential information so that they can manufacture power units like Pillers. Pillers got to know of these communications through two "defectors", if I may call them so. One was the Commercial Manager of the English company, Mr Brian Firth; the other was the Sales Manager, Mr William Raymond Knight. These two were so upset by what was going on in the English company that on their own initiative, without any approach by Pillers whatever, on the 2nd October 1975 one or both flew to Germany. They told Pillers what they knew about the arrangements with Ferrostaal and Lechmotoren. They disclosed also that the English company was negotiating with Canadian and United States firms. In making these disclosures, both Mr Firth and Mr Knight were putting themselves in a perilous position, but Pillers assured them that they would safeguard their future employment.
The disclosures - coming from defectors - might have been considered untrustworthy. But they were supported by documents which emanated from both Ferrostaal and Lechmotoren. They showed that the English company was in regular communication with those German companies. They were sending them drawings and arranging for inspection of the Piller machine, for the express purpose that the Lechmotoren company might manufacture a prototype machine copied from Pillers. One of the most telling communications was a telex from Lechmotoren to Mr Wallace saying:
"It is the opinion of Mr S (of Lechmotoren) that the best way to find a final solution for the prototype is to send Mr Beck to you as soon as the latest design of Piller has arrived in your factory. In this case it is guaranteed that the Lech prototype will have exactly the same features as the Piller type. We hope you will agree to this proposal and we ask you to let us have your telex in order to arrange Mr Beck's visit accordingly".
On getting this information, Pillers were extremely worried. They were about to produce a fine new frequency converter called the "Silent Block". They feared that the English company, in co-operation with the German manufacturers, would make a copy of their "Silent Block" and ruin their market. They determined to apply to the Court for an injunction to restrain the English company from infringing their copyright or using confidential information or making copies of their machines. But they were fearful that if the English company were given notice of this application, they would take steps to destroy the documents or send them to Germany or elsewhere, so that there would be none in existence by the time that discovery was had in the action.
So, on Wednesday 26th November, 1975, Pillers' Solicitor prepared a draft Writ of Summons and, with an affidavit, they went before Mr Justice Brightman and asked, first, for an interim injunction to restrain infringement, etc., and, secondly, for an Order that they might he permitted to enter the premises of the English company so as to inspect the documents of the Plaintiffs and remove them, or copies of them. Mr Justice Brightman granted an interim injunction, but refused to order inspection or removal of documents. He said:
"There is strong prima facie evidence that the Defendant company is now engaged in seeking to copy the Plaintiffs' components for its own financial profit to the great detriment of the Plaintiffs and in breach of the Plaintiffs' rights".
He realised that the Defendants might suppress evidence or misuse documentary material, but he thought that that was a risk which must be accepted in civil matters save in extreme cases.
"it seems to me that an Order on the lines sought might become an instrument of oppression, particularly in a case where a plaintiff of big standing and deep pocket is ranged against a small man who is alleged on the evidence of one side only to have infringed the plaintiff's rights".
Let me say at once that no Court in this land has any power to issue a search warrant to enter a man's house so as to see if there are papers or documents there which are of an incriminating nature, whether libels or infringements of copyright or anything else of the kind. No constable or bailiff can knock at the door and demand entry so as to inspect papers or documents. The householder can shut the door in his face and say "Get out". That was established in the leading case of Entick v. Carrington, in (1765) 2 Wilson. None of us would wish to whittle down that principle in the slightest.
But the Order sought in this case is not a search warrant. It does not authorise the Plaintiffs' Solicitors or anyone else to enter the Defendant's premises against his will. It does not authorise the breaking down of any doors, nor the slipping in by a back door, nor getting in by an open door or window. It only authorises entry and inspection by the permission of the Defendants. The Plaintiff must get the Defendant's permission. But it does do this: It brings pressure on the Defendants to give permission. It does more. It actually orders him to give permission - with, I suppose, the result that if he does not give permission, he is guilty of contempt of Court.
This may seem to be a search warrant in disguise. But it was fully considered in the House of Lords 150 years ago and held to be legitimate. The case is East India Company v. Kynaston, (1821) 3 Bligh, 153. Lord Redesdale said at page 163:
"The arguments urged for the Appellants at the Bar are founded upon the supposition that the Court has directed a forcible inspection. This is an erroneous view of the case. The order is to permit; and if the East India Company should refuse to permit inspection, they will be guilty of a contempt of the Court. ... It is an order operating on the person requiring the defendants to permit inspection, not giving authority of force, or to break open the doors of their warehouse".
That case was not, however, concerned -with papers or things. It was only as to the value of a warehouse; and that could not be obtained without an inspection. But the distinction drawn by Lord Redesdale affords ground for thinking that there is jurisdiction to make an Order that the defendant "do permit" when it is necessary in the interests of justice.
Accepting such to be the case, the question is in what circumstances ought such an Order to be made. If the defendant is given notice beforehand and is able to argue the pros and cons, it is warranted by that case in the House of Lords and by Order 29, Rule 2 (1) and (5), of the Rules of the Supreme Court. But it is a far stronger thing to make such an Order ex parte without giving him notice. This is not covered by the Rules of Court and must be based on the inherent jurisdiction of the Court. There are one or two old precedents which give some colour for it, Hennessey v. Rohmann, 1877 Weekly Notes, and Morris v. Howell, (1888) 22 L.R. Ir., an Irish case in 1888. But they do not go very far. So it falls to us to consider it on principle. It seems to me that such an Order can be made by a Judge ex parte, but it should only be made where it is essential that the plaintiff should have inspection so that justice can be done between the parties: and when, if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed, the papers will be burnt or lost or hidden, or taken beyond the jurisdiction, and so the ends of justice be defeated: and when the inspection would do no real harm to the defendant or his case.
Nevertheless, in the enforcement of this Order, the plaintiffs must act with due circumspection. On the service of it, the plaintiffs should be attended by their Solicitor, who is an officer of the Court. They should give the defendant an opportunity of considering it and of consulting his own Solicitor. If he wishes to apply to discharge the Order as having been improperly obtained, he must be allowed to do so. If the defendant refuses permission to enter or to inspect, they must not force their way in. They must accept his refusal, and bring it to the notice of the Court afterwards, if need he on an application to commit.
You might think that with all these safeguards against abuse, it would be of little use to make such an Order. But it can be effective in this way: It serves to tell the defendant that, on the evidence put before it, the Court is of opinion that he ought to permit inspection - nay, it orders him to permit - and that he refuses at his peril. It puts him in peril not only of proceedings for contempt, but also of adverse inferences being drawn against him; so much so that his own Solicitor may often advise him to comply. We are told that in two at least of the cases such an Order has been effective. We are prepared, therefore, to sanction its continuance, but only in an extreme case where there is grave danger of property being smuggled away or of vital evidence being destroyed.
On the evidence in this case, we decided last Tuesday that there was sufficient justification to make an Order. We did it on the precedent framed by Mr Justice Templeman. It contains an undertaking in damages which is to be supported (as the Plaintiffs are overseas) by a bond for £10,000. It gives an interim injunction to restrain the infringement of copyright and breach of confidential information, etc. It orders that the Defendant do permit one or two of the Plaintiffs and one or two of their Solicitors to enter the Defendant's premises for the purpose of inspecting documents, files or things, and removing those which belong to the Plaintiffs. This was, of course, only an interim Order pending the return of the summons. It is to be heard, we believe, tomorrow by the Judge.
LORD JUSTICE ORMROD: I agree with all that the Master of the Rolls has said. The proposed Order is at the extremity of this Court's powers. Such Orders, therefore, will rarely be made, and only when there is no alternative way of ensuring that justice is done to the applicant.
There are three essential pre-conditions for the making of such an Order, in my judgment. First, there must be an extremely strong prima facie case. Secondly, the damage, potential or actual, must be very serious for the applicant. Thirdly, there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made.
The form of the Order makes it plain that the Court is not ordering or granting anything equivalent to a search warrant. The Order is an Order on the defendant in personam to permit inspection. It is therefore open to him to refuse to comply with such an Order, but at his peril either of further proceedings for contempt of Court - in which case, of course, the Court will have the widest discretion as to how to deal with it, and if it turns out that the Order was made improperly in the first place, the contempt will be dealt with accordingly - but more important, of course, the refusal to comply may be the most damning evidence against the defendant at the subsequent trial. Great responsibility clearly rests on the Solicitors for the applicant to ensure that the carrying out of such an Order is meticulously carefully done with the fullest respect for the defendant's rights, as my Lord has said, of applying to the Court, should he feel it necessary to do so, before permitting the inspection.
In the circumstances of the present case, all those conditions to my mind are satisfied, and this Order is essential in the interests of justice.
I agree, therefore, that the appeal should be allowed.
LORD JUSTICE SHAW: I agree with both Judgments. The overriding consideration in the exercise of this salutary jurisdiction is that it is to be resorted to only in circumstances where the normal processes of the law would be rendered nugatory if some immediate and effective measure was not available. And, when such an Order is made, the party who has procured the Court to make it must act with prudence and caution in pursuance of it.
THE MASTER OF THE ROLLS: Mr Laddie, of course there is no opponent here. We do not do anything about the costs at the moment. But can you tell us what happened?
MR LADDIE: My Lord, we were allowed into the premises. An opportunity was afforded to the Defendants to have their Solicitors present; but I understand that opportunity was not taken up. Unfortunately, one of the Directors was out of the country at the time, with one of the most important files with him. We have had access to that file now, after a delay. He wanted to see his Solicitors. Of course, we did not object. I think the only thing I can say at the moment is that we are not satisfied even now that the important file was returned intact.
THE MASTER OE THE ROLLS: At all events, the Order has been effective?
MR LADDIE: My Lord, yes.
THE MASTER OP THE ROLLS: In some cases it may not be; but we may say this is yet another case in which the Order has been effective. What the result of it will be, no-one knows.
MR LADDIE: Even on the partial sight that we had, some documents of relevance have been retained. My Lord, I am obliged.
THE MASTER OE THE ROLLS: I am very glad the Defendants obeyed the Order and allowed the inspection.