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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Centek Holdings Ltd & Anor v Giles [2020] EWHC 1682 (Ch) (26 June 2020) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2020/1682.html Cite as: [2020] EWHC 1682 (Ch) |
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2020] EWHC 1682 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
4INTELLECTUAL PROPERTY LIST (ChD)
Rolls Building Fetter Lane London |
||
2020 |
B e f o r e :
____________________
(1) CENTEK HOLDINGS LIMITED |
||
(2) CENTEK TECHNOLOGIES LIMITED |
||
(3) CENTEK LIMITED |
Claimants | |
| -and- | ||
TRISTRAM GILES | Defendant |
____________________
Ville
(instructed by Michelmores LLP) for the Claimants
Mr Gerwyn Wise (instructed by TV Edwards Solicitors) for the Defendant
Hearing dates: 15, 16 and 26 June
2020
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
Mr Justice Marcus Smith:
Centek
design, manufacture and supply devices called "centralisers" and "stop collars" for the oil and gas industry. The Defendant Mr
Giles
was employed by
Centek
from 4 March 2002 until 31 August 2019, most recently as
Centek's
Product Development Manager.
Giles
gave notice of leaving that position on 5 August 2019. Mr
Giles
left
Centek
in order to take up employment with a Malaysian enterprise, involving Farrah, Rafek,Shaiful and Saufi as well as two companies called Floxpax and Rapax.
Giles
took
very
substantial amounts of confidential and proprietary material with him, which I shall refer to as the
Centek
Material.
Centek,
suspecting this, sought interim relief and commenced these proceedings. The interim relief sought by
Centek
was granted by Norris J in an order in these proceedings dated 30 August 2019 (the Order). By that order, Mr
Giles
was ordered not to use, access or distribute
Centek
Material (paragraph 2 of the Order), abide by specific restrictive covenants (paragraph 3 of the Order), disclose and preserve
Centek
Material and the "Devices" and "Accounts" on which it was kept (paragraphs 4 and 5(a)-(b) of the Order), preserve disclosable documents (paragraph 5(f) of the Order) and facilitate the imaging of such Devices and Accounts by "Independent Experts" (paragraph 6 of the Order).
Giles
purported to comply with the Order, and swore a number of affidavits in purported compliance. In particular, Mr
Giles
swore the following affidavits pursuant to the Order:
(1) His first affidavit, sworn 5 September 2019 (Giles
1).
(2) His second affidavit, sworn 6 September 2019 (
Giles
2).
(3) His third affidavit, sworn 17 September 2019 (
Giles
3).
(4) His fourth affidavit, sworn 23 September 2019 (
Giles
4).
(5) His fifth affidavit, sworn 2 October 2019 (
Giles
5).
Giles
breached the Order in multiple regards, including in the swearing of affidavits that were false in material respects.
2020
made in these proceedings, Centex sought an order for the committal of Mr
Giles.
There are multiple individual contempts alleged under 6 broad heads, as follow:
| (1) Breach of pargraph 5(b) of the Order |
Paragraph 5(b) of the Order ordered Mr Giles to deliver up all copies of all material within his control that embodied Centek Material by 4:30pm on 16 September 2019 |
Mr Giles did not comply with paragraph 5(b) of the Order because he did not deliver up by 4:30pm on 16 September 2019 |
| Contempt 1 | (a) the "back_up_mayay" folder (the Malay Back Up Folder) referred to in paragraphs 25 to 36 of the affidavit of Danny Howett (Howett) and section 9.1 of the affidavit of Charlotte Bolton (Bolton), but instead deleted it on about 3 September 2019 | |
| Contempt 2 | (b) the contents of his WhatsApp account (the WhatsApp Account), but instead deleted copies of it and provided the doctored copy of it at Exhibit CB1/17 referred to in sections 6.3, 9.2 and 9.3 of Bolton | |
| (2) Breach of paragraph 5(f) of the Order |
Paragraph 5(f) of the Order ordered Mr Giles to preserve relevant disclosable documents and/or documents relevant to this dispute |
Mr Giles failed to preserve the required documents in accordance with paragraph 5(f) of the Order because he |
| Contempt 3 | (a) deleted the Malay Back Up Folder on about 3 September 2019 | |
| Contempt 4 | (b) deleted copies of the WhatsApp Account and prvoided the doctored copy of it at Exhibit CB1/17 | |
| Contempt 5 | (c) gave instructions to a third party on about 1 September 2019 to delete his email account tris. giles@rapax.com.my (including by sending messages which included "So basically I need to wipe, without any trace, most or all of my emails
so there is no way whatsoever that a specialist company can retrieve" and "That's why I need it gone!! Thanks for your help!") with the result that access to it was prevented and/or it was deleted (the Rapax Account) |
|
| Contempt 6 | (d) wiped and failed to preserve the contents of the HP Laptop referred to in paragraphs 58 to 64 of Howett and sections 6.5 and 9.4 of Bolton (the HP Laptop) on about 8 September 2019 | |
| Contempt 7 | (e) failed to preserve the missing USB memory device referred to in paragraphs 59(3) to 64 of Howett and sections 6.5 and 9.4 of Bolton (the Missing USB Device) between 8 September and 2 October 2019 | |
| (3) Breach of paragraph 4(b) of the Order |
Paragraph 4(b) of the Order ordered Mr Giles to disclose the name and address of everyone to whom he had disclosed, supplied or offered to supply Centek Material by providing a sworn witness statement detailing them by 4:30pm on 16 September 2019 |
Mr Giles failed to disclose the name and address of everyone to whom he had disclosed, supplied or offered to supply Centek Material by 4:30pm on 16 September 2919 in accordance with paragraph 4(b) of the Order because he did not do so in relation to |
| Contempt 8 | (a) the lady identified as "Farrah" (an ex- Centek employee and current director of a Malaysian company "Flowpax" who worked on behalf of Rapax |
|
| Contempt 9 | (b) the man identified as "Saufi" (an ex-employee of Centek's customer and distributor Halliburton, who worked on behalf of Rapax) to whom he had been supplying and offering to supply Centek Material from at least June to July 2019 as illustrated in the WhatsApp conversations in Exhibits AB1/2 and AB/3 to the second affidavit of Andrew Boulcott (Boulcott) and in other ways |
|
| (4) Breach of paragraph 4(c) of the Order |
Paragraph 4(c) of the Order ordered Mr Giles to provide Centex with full details of every supply or offer to supply Centek Material by 4:30pm on 16 September 2019 and to provide copies of such material |
Mr Giles failed to provide full details of every supply or offer to supply Centek Material by 4:30pm on 16 September 2019 or provide copies of such material in accordance with paragraph 4(c) of the Order, in that he did not do so in relation to |
| Contempt 10 | (a) the content of the WhatsApp Account and his supply of Centek Material through it to Farrah, Saufi and the man identified as "Rafek" (who also worked on behalf of Rapax) but instead provided the doctored WhatsApp record at Exhibit CB1/17 to the Claimant |
|
| Contempt 11 | (b) the Malay Back Up Folder | |
| Contempt 12 | (c) the documents obtained from the Malaysian Defendants identified in section 4 of Boulcott and sections 8 and 9.6 to 9.9 of Bolton | |
| (5) Breach of paragraph 3(a) of the Order Contempt 13 |
Paragraph 3(a) of the Order ordered Mr Giles not to be engaged or concerned in a business in competition with Centrex's Restricted Business until the return date or 12 January 2020. On 10 October 2019, the Consent Order of Mr Justice Marcus Smith vacated the Return Date fixed for 7 October 2019 and varied paragraph 3 of the Order such that it remained in force until 12 January 2020 | Mr Giles continued to assist Farrah, Saufi, Rafek, Shaiful, Rapax and/or Flopax with their centralizer business after the order was served on him on 31 August 2019 including by working for Rapax remotely from 31 August 2019 on the basis that "the Malaysians" would pay him "as long as I'm still working" as set out in Exhibit DH1/19/3-4 to Howett and doing so after that including by modifying or dealing with a PowerPoint presentation called 'The_CHIEF (003)' at Exhibit AB3/8 to Bolton on about 3 November 2019 and assisting in the writing of and dealing with "The Memorandum of Understanding"between Oakenshield and Ezzytech at Exhibit AB3/9 on about 6 December 2019 B. False Affidavits |
| (6) False evidence |
Mr Giles gave false evidence: |
|
False evidence in Giles 3 |
(a) in Giles 3 in that |
|
| Contempt 14 | (i) Centek Materials were not only supplied or offered to the people identified as "Rafek" and "Norman Mokhtar" (para 3) |
|
| Contempt 15 | (ii) Centek Materials were not only forwarded to Rafek on the dates listed in paragraphs 4(a) to 4(i) (para 4) |
|
| Contempt 16 | (iii) Rafek was not the only person who Mr Giles contacted regarding this and was not the only person Mr Giles sent the files to (para 7) |
|
| Contempt 17 | (iv) Mr Giles had not delivered up all copies and all materials that embodied the Centek Material (para 10) |
|
| Contempt 18 | ( v) to the best of his knowledge Mr Giles had not done everything possible to comply with the Order (para 12) |
|
False evidence in Giles 4 |
(b) in Giles 4 in that |
|
| Contempt 19 | (i) he had not only disclosed Centek Material to Rafek (para 4) |
|
| Contempt 20 | (ii) he had not taken all reasonable steps to recover possession of copies of the Centek Material supplied to third parties (para 9, 1st sentence) |
|
| Contempt 21 | (iii) he had given Rapax or Flowpax Centek Material (para 9, 2nd sentence) |
|
| Contempt 22 | (iv) he had not done everything possible to comply with the Order and knew that to be so (para 12) | |
False evidence in Giles 5 |
(c) in Giles 5 in that |
|
| Contempt 23 | (i) it was not true that no Centek Material was transferred on to any type of device or passed on to any third party (para 8) |
|
| Contempt 24 | (ii) he had not done everything he could to comply with the Order and Michelmores' requests (para 9) | |
Those false statements interfered with the course of justice and were likely to interfere with the course of justice because they undermined the recovery, preservation and disclosure of the information and materials which the Order was intended to protect and Mr Giles had no honest belief in the truth of the statements set out above and knew of the likelihood that they would interfere with the course of justice |
Giles
has admitted all of these contempts. In his sixth affidavit (
Giles
6), which was sworn on 26 May
2020,
Mr
Giles
states at paragraph 2:
"I accept the contempt as set out in [
Centek's]
Application Notice dated 7 April
2020.
I apologise to the Court and
Centek
for breaching the Order of Mr Justice Norris dated 30 August
2020
and for giving false evidence in my third, fourth and fifth affidavits as set out in [
Centek's]
Application Notice dated 7 April
2020.
Unfortunately, I am unable to purge the contempt for the reasons set out below
"
2020
was not concerned with the question of whether Mr
Giles
had committed the contempts alleged against him. Through his counsel, Mr Wise, Mr
Giles
made clear as he had done in his sixth affidavit that he admitted all of the contempts alleged against him, and that I was only concerned with the question of the appropriate punishment and the question of mitigation. In this regard, Mr
Giles
relied on the content of
Giles
6 and a further affidavit (
Giles
7) sworn 2 June
2020.
Giles,
I should say that I have considered closely the evidence against Mr
Giles,
as this has been adduced by
Centek.
I am satisfied, so that I am sure, that each of the contempts alleged has, indeed, been committed by Mr
Giles
and I am satisfied that it is appropriate to accept the admissions made by Mr
Giles
through his counsel.
Giles'
admitted contempts. In the course of argument, I was referred to a number of authorities, most importantly Financial Conduct Authority
v.
McKendrick, [2019] EWCA Civ 524, which sets out (including by reference to other cases) the factors that should be taken into account.
Giles'
admissions the Order contained a clear penal notice; was clear and unequivocal in its terms; and was prospective in that both in its terms, and in terms of when it was served, it was capable of being complied with.
Giles'
multiple breaches of the Order as anything other than deliberate. In this regard, Mr
Giles'
evidence was that he "did read the Order, but I just did not realise how serious it was" (
Giles
6 at paragraph 11). I am afraid I do not believe this evidence: as I have noted, the Order is clear in its terms, and the penal notice makes clear beyond doubt the importance of the Order and the seriousness of any breach of it.
Giles
had left
Centek
and was looking to make his fortune in Malaysia. He admits as much in
Giles
6, where he states at paragraph 11:
"What was going round in my mind was that I could be about to lose my new position and the security and lifestyle I had hoped my family would get through my working in Malaysia."
That, I think, puts Mr
Giles'
dilemma
very
well. He had burnt his boats with
Centek
by extracting the
Centek
Material from the company, resigning, and committing to the Malaysian
venture.
When he was caught, there was no going back. The choice Mr
Giles
had was either to proceed with the Malaysian
venture
or to forgo the money he would thereby derive from it by complying with the order, in circumstances where there was no prospect of a return to
Centek.
very
clear from the contempts he has admitted that Mr
Giles
chose to carry on in Malaysia, and as an inevitable result he breached the Order in the respects he has now admitted. Those breaches occurred over time. By way of example, the Order is dated 30 August 2019, yet the false affidavits which represent contempts 14 to 24 were made between 17 September 2019 and 2 October 2019. Having (I am sure rightly) recognised that there was no way back to his old life at
Centek,
Mr
Giles
elected not to abandon Malysia, but to pursue that
venture.
In so doing, he elected to breach the Order. He can only have done so deliberately. His conduct involved deception of a high order. Not only did Mr
Giles
lie in
Giles
3, 4 and 5, he also quite deliberately failed to abide by the restrictive covenants he had been ordered to comply with and neither preserved nor disclosed the
Centek
Material he had taken.
Centek
emphasised the extent to which Mr
Giles'
failure to comply with the Order had damaged
Centek.
Essentially, it was
Centek's
evidence that in the competitive market in which it (
Centek)
operated,
Centek's
business had been materially damaged by Mr
Giles'
conduct.
Giles'
infringements. I have no reason to doubt
Centek's
evidence and to be clear Mr
Giles
did not seek to challenge this evidence: but it cannot be said, save in a generalised sense, that Mr
Giles
would have known precisely what harm would befall
Centek
in terms of lost business opportunities in Malysia. Of course, in general terms he would have appreciated that breaching the order in the manner he did had the potential of seriously damaging
Centek.
Giles'
mitigation. There are, I consider, three aspects to this:
(1) First, there is the fact that MrGiles
has admitted all of the contempts alleged against him, and so has saved the time and expense that would have been involved in proving these. He has done so without qualification. Although it was clear some time before
Giles
6 that Mr
Giles
was not going to dispute the allegations against him, it was really only in
Giles
6 that that intention was clearly and unequivocally articulated. It follows that Mr
Giles'
admissions have come fairly late in the day. The Order, as I have described, was made on 30 August 2019, and Mr
Giles'
breaches of the Order took place over a considerable period of time thereafter. On the other hand,
Giles
6 was sworn on 26 May
2020,
some time after the application to commit was made on 7 April
2020.
In short, whilst I accept that Mr
Giles
is entitled to a significant discount in his sentence by reason of his "guilty plea", I have to recognise that that plea came relatively late in the day, well-after the case against him had been articulated.
(2) Secondly, there is Mr
Giles'
apology for breaching the Order, which he made in person from the witness box and in
Giles
6. Whilst I accept that Mr
Giles
is sorry, I am afraid that I regard his apology as amounting to no more than an acknowledgment that he has breached the Order and has been caught doing so, rather than as a genuine reflection of remore. I have considered the terms of
Giles
6
very
carefully, and listened most carefully to Mr
Giles'
evidence in the witness box. Even now, Mr
Giles
fails to acknowledge the true significance of his breach of the Order. By way of example, Mr
Giles
has yet to accept that his conduct in breaching the Order was done in furtherance of a scheme to use the
Centek
Material against
Centek
by benefiting
Centek's
competitors. There is no other way to regard Mr
Giles'
conduct, yet he maintained his denial that he was not assisting
Centek's
competitor. Thus, paragraph 12 of
Giles
6 states:
"I had worked forCentek
for so many years and had a particular way of designing and using data and I did not want to start from scratch but use what I already knew. I never had any intentions of using the data against them and did not believe we would be in competition with them as my understanding was at the time they would not have been eligible for the
VDP
contracts as they are not a Malaysian company."
I am afraid I regard this as incredible. It is one thing to deploy abstract skills one has learned with one employer to the benefit of another, subsequent, employer. It is quite another to take the former employer's information, and use that information to further another's business. I consider that this essential failure on the part of MrGiles
to acknowledge the true nature of his conduct explains that regrettable lack of detail amounting in some cases to serious omissions in his account of his Malaysian dealings. I am afraid that Mr
Giles
has been neither full nor frank with the court in his evidence, and that is a factor that affects his plea in mitigation. I say this, fully recognising two factors that will have affected the drafting of
Giles
6:
(a) First, MrGiles
was
very
frank that he so did not want to remind himself of his past conduct, that he simply could not bear to look at the detail of the documents that he had "in the back of his car". I can sympathise with this denial, but this does not obscure the partial nature of Mr
Giles'
mitigation.
(b) Secondly, although MrGiles
was, if I may say so, outstandingly well-served by his counsel, Mr Wise, and those instructing Mr Wise, there was an inequality of arms between the time and expense lavished on
Centek's
evidence (all of which was helpful) and the fact that the budget for legal assistance does not run to a similar attention to Mr
Giles'
evidence. I have no doubt that if money were no object,
Giles
6 might have become (subject to Mr
Giles'
willingness) a more detailed account of his Malaysian misdoings.
Even recognising these two factors, I consider that there is a deliberate lack of frankness inGiles
6, which serves to undercut the apology and regret that Mr
Giles
seeks to convey.
(3) Thirdly, and finally, there is the more general mitigation that is contained in
Giles
7.
Giles
7 seeks to articulate the devastating effect that imprisonment would have on Mr
Giles'
family his wife, his children, his mother, the community around him. I accept this evidence, and there is no doubt in my mind that it is genuine and true. I accept that Mr
Giles
is of good, unblemished character; I take account of his character references, which I accept; I take particular account of the evidence from his family, as to the suffering they are presently undergoing because of Mr
Giles'
conduct and to what would happen were Mr
Giles
to be imprisoned. Mr
Giles
is not only an important emotional support for his family, he is also the only breadwinner. I also accept that these proceedings from the date of the Order to date have been remarkably unpleasant for Mr
Giles
and that he is suffering including medically as a result.
various
contempts alleged against and admitted by Mr
Giles,
it is impossible to seek to allocate specific sentences for each contempt. Instead, I shall seek to arrive at a single sentence for all contempts. As to this:
(1) The nature of MrGiles'
contempts is such that the custody threshold is met. This was quite rightly recognised by Mr Wise on Mr
Giles'
behalf.
(2) I consider that the starting point for contempts of the gravity of Mr
Giles
must be 20 months imprisonment. That is towards the maximum of 24 months. Whilst I would not go so far as to say that this was the "
very
worst sort of contempt", it does not (in terms of the extent of Mr
Giles'
breaches, the significance of the Order, and Mr
Giles'
protracted and deliberate flouting of the rules) fall far short. Recognising, as I do, that my sentence must reflect the minimum necessary, 20 months seems to me the appropriate starting point. I note what the Court of Appeal said at [40] of McKendrick:
" because the maximum term is comparatively short, we do not think that the maximum can be reserved for thevery
worst sort of contempt which can be imagined. Rather, there will be a comparatively broad range of conduct which can fairly be regarded as falling within the most serious category and as therefore justifying a sentence at or near the maximum."
(3) Turning, then, to the question of mitigation, I consider that the first and third factors warrant a significant deduction in sentence, and I propose to reduce my 20 month starting point to a period of 14 months.
(4) In McKendrick, the Court of Appeal made clear that, in an appropriate case, it was important, when sentencing, to differentiate between the punitive/deterrent and coercive aspects of the sentence. This is undoubtedly the case here. I consider that, in this case, there are significant elements of both in play. The punitive/deterrent element of the 14-month period is 8 months; and the coercive element 6 months. There is a significant coercive element because for the reasons I have articulated I do not consider that
Giles
6 comes anywhere near to purging Mr
Giles'
contempt, nor do I accept Mr
Giles'
assertion that his contempt cannot be purged. Of course, there are things done by Mr
Giles
that cannot be undone. But that makes Mr
Giles'
obligation if he is to purge his contempt to make a full and candid disclosure of his wrongdoing all the more important.
Giles
and his family has weighed heavily on me, but I do not consider giving due weight to this effect that I can appropriately suspend the sentence for the following reasons:
(1) The Order is an important one, and it is essential that breaches of such orders are properly butressed by sanctions that are and are seen to be appropriately serious.(2) In this case, Mr
Giles
has not merely breached the Order, he has flouted it over a period of time and with a deliberation that, in my judgment, must be marked by an unsuspended sentence.
(3) Moreover, Mr
Giles
has had the opportunity of being
very
frank in seeking to purge his contempt. He has not availed himself of that opportunity, and I do not consider that suspending his sentence, on condition that he now be full and frank, is in any way appropriate. Rather, Mr
Giles
must serve his punishment and if he does choose to purge his contempt in the manner I have suggested the coercive element of my sentence (6 months) can be remitted.
Giles
is sentenced to 14 months imprisonment, unsuspended, and I order that Mr
Giles
be committed to prison for this period. Mr
Giles
will be entitled to unconditional release after serving half his sentence, by
virtue of section 258 of the Criminal Justice Act 2003.