The Court of Session considered the issue of expenses arising from a section 1 application in November last year in the case Capital Document Solutions Ltd v Highland Copiers Ltd and Michael Rae [2016] CSIH 88. That dispute arose where an individual had left employment shortly after his employer had been purchased by a company and had taken with him confidential information which he intended to use when setting himself up in business as a competitor. The petitioning company had sought an order (against the individual and his competing company) for commission and diligence to recover documents relating to the information the confidential information which was taken. This was granted without notice and the order was executed initially by way of a dawn raid on the offices of the individual and his competing company and this was followed by a protracted commission procedure which involved several hearings over many months before a final report was produced by the commissioner around 11 months later. An interim interdict to prevent the use of the confidential information was also granted.
The petitioning company was ultimately awarded interdict against the individual and his competing company to prevent them from making use of the confidential information and the petitioning company sought an award of expenses in their favour.
Whilst the individual and competing company did not oppose the interdict, they did oppose award of expenses against them and, when they were unsuccessful in doing so, appealed the decision regarding expenses to the Inner House. The sough to distinguish a section 1 petition from adversarial litigation and instead classify it as a pre-action application. They argued that they, as the holders of the information, ought to be entitled to the expenses of the commission unless there had been reasonable resistance to recovery.
The position of the petitioning company was that expenses should follow success and they drew the court's attention to the fact that this was not a situation where an innocent third party was being asked to provide documents but rather a case where the petition was directed against the wrongdoers.
In issuing their decision the Inner House emphasised that appeals which related only to expenses should be severely discouraged. They considered how the case sought not only a section 1 order but also an interim interdict in respect of alleged wrongdoing. It was a matter for the discretion of the judge at first instance as to whether it could be said that the party against whom orders were sought had caused the litigation. The court noted that the Lord Ordinary had considered that the commission was a necessary and reasonable step in this case. It agreed with the petitioning company and held that the Lord Ordinary's decision, that the petitioning company was entitled to expenses, should not be overturned.
So what can be taken from this case? The case reiterates the well known principles that, whilst expenses will normally follow success, a decision on whether expenses are to be awarded will be a matter for the discretion of the judge hearing the case at first instance and the prospects of recovery of expenses will depend on the facts and circumstances of the case. Although expenses were awarded in this case, the court did highlight that it is possible a petitioner's actions in proceeding with an section 1 order to recover evidence or information without intimation could be considered to be unreasonable having regard to, for example, prior communication and other matters, and this could mean the expenses would not have be awarded. It is therefore important to consider whether alternative options might be available to recover the information before proceeding with an application for section 1 orders.
