The Anton Pillar case


Download Anton Pillar case

​ANTON PILLER KG v. MANUFACTURING PROCESSES LTD. AND OTHERS 

[COURT OF APPEAL] 

[1976] Ch. 55 [1975 A. No. 6292] 

Practice – Discovery – Motion for – Action for infringement of copyright and using confidential information – Interim injunction and order for inspection – Application ex parte for order to enter premises to inspect and remove documents and files – Court’s inherent jurisdiction 

The defendants, an English company and their two directors, were the United Kingdom agents of the plaintiffs, German manufacturers of frequency converters for computers. The plaintiffs claimed that the defendants were in secret communication with other German manufacturers and were giving them confidential information about the plaintiffs’ power units and details of a new converter, the disclosure of which could be most damaging to the plaintiffs. In order to prevent the disposal by the defendants, before discovery in an action, of documents in their possession relating to the plaintiffs’ machines or designs, the plaintiffs applied ex parte for an interim injunction to restrain the defendants from infringing their copyrights and disclosing confidential information and for an order for permission to enter the defendants’ premises to inspect all such documents and to remove them into the plaintiffs’ solicitors’ custody. On the plaintiffs undertaking to issue a writ forthwith Brightman J. granted the interim injunction but refused to order inspection or removal of documents. 

On the plaintiffs’ ex parte appeal, which was heard in chambers with judgments later in open court:- 

Held, allowing the appeal, that in most exceptional circumstances, where plaintiffs had a very strong prima facie case actual or potential damage to them was very serious and there was clear evidence that defendants possessed vital material which they might destroy or dispose of so as to defeat the ends of justice before any application inter partes could be made, the court had inherent jurisdiction to order defendants to AND “permitAND ” plaintiffs’ representatives to enter defendants’ premises to inspect and remove such material; and that in the very exceptional circumstances the court was justified in making the order sought on the plaintiffs’ ex parte application (post, pp. 58E-F, 60F-H, 61B, E-F, H-62B). 

Dicta of Lord Redesdale in United Company of Merchants of England, Trading to the East Indies v. Kynaston (1821) 3 Bli.(O.S.) 153, 163-164 applied. 

E.M.I. Ltd. v. Pandit [1975] 1 W.L.R. 302 approved. 

Per curiam. In the enforcement of such orders, plaintiffs must act carefully and with full respect for defendants’ rights (post, pp. 61C, 62C-D, E). 

Order of Brightman J. reversed in part. 

The following cases are referred to in the judgments: 

E.M.I. Ltd. v. Pandit [1975] 1 W.L.R. 302; [1975] 1 All E.R. 418. 

Entick v. Carrington (1765) 2 Wils.K.B. 275. 

Hennessy v. Rohmann, Osborne AND Co. [1877] W.N. 14; (1877) 36 L.T. 51. 

Morris v. Howell (1888) 22 L.R.Ir. 77. 

United Company of Merchants of England, Trading East Indies v. Kynaston (1821) 3 Bli.(O.S.) 153. 

The following additional cases were cited in argument: 

Anwyl v. Owens (1853) 22 L.J.Ch. 995. 

Fowler v. Lewy (1875) 1 Char.Cham.Cas. 14. 

Lonsdale (Earl of) v. Curwen (1799) 3 Bli.(O.S.) 168 (note). 

Pall Europe Ltd. v. Microfiltrex Ltd. (unreported), October 28, 1974 

INTERLOCUTORY APPEAL from Brightman J. 

On November 26, 1975, on the ex parte motion of the plaintiffs, Anton Piller KG (a limited partnership), Brightman J., on the plaintiffs’ undertaking (1) forthwith to issue a writ of summons in their intended action against the defendants, Manufacturing Processes Ltd. (AND “M.P.L.AND “), Bernard Preston Wallace and Alfred Henry Stephen Baker, and (2) to abide by any order of the court as to damages sustained by the defendants by reason of any order to be made, ordered that the defendants be restrained until December 2, 1975, or further order, from (i) infringing the plaintiffs’ copyrights in original circuit board drawings and photographs therefrom for their equipment, (ii) publicising or using other than for the plaintiffs’ benefit any confidential information or documents supplied to them by the plaintiffs, (iii) manufacturing or helping others to manufacture copies of the plaintiffs’ equipment, (iv) disposing of or destroying (a) infringements of such copyrights (b) documents or articles relating to the design, manufacture or supply of the plaintiffs’ equipment. 

Brightman J. declined to order the further relief set out in a schedule: 

AND “That the defendants … do permit such persons not exceeding two as may be duly authorised by the plaintiffs and members or employees not exceeding two of the plaintiffs’ solicitors to enter forthwith the premises known as … or such parts thereof as shall be occupied or used by the defendants at any hour between 8 … in the forenoon and 9 … in the evening for the purpose of (a) inspecting all documents or articles relating to the design, manufacture, sale or supply of copies of the plaintiffs’ equipment … (b) removing into the plaintiffs’ solicitors’ custody (i) all original documents relating to the manufacture, operation or maintenance of the plaintiffs’ equipment which … had been supplied by the plaintiffs to the defendants (ii) all documents or articles relating to the design, manufacture, sale or supply of copies of the plaintiffs’ equipment ….AND ” 

The plaintiffs, who had been willing to undertake that the documents or articles removed would not be used by them save for the purposes of the action without leave of the court, issued a writ against the defendants claiming injunctions, delivery up of all infringing copies of copyright material and inquiries as to damages. 

The plaintiffs appealed ex parte by leave of the judge against the refusal to grant the relief set out in the schedule. The appeal was heard in chambers on December 2. 

The facts are stated in the judgment of Lord Denning M.R. 

Hugh Laddie for the plaintiffs. So far as is known there have been seven ex parte applications to the courts for AND “permitAND ” orders for inspection, five of which have been granted. In the case of an order made by Goff J. on October 28, 1974, Pall Europe Ltd. v. Microfiltrex Ltd. (unreported) [1974 P. No. 4640] solicitors were present and incriminating material was found. 

The courts have recognised that it is a very severe form of order that is sought. Yet every day of the week orders are made severely restricting a defendant’s business activities, his property or his actions. In many cases an injunction would be enough but there are cases where matter may be destroyed. There is matter here which might well be made unavailable in the action by destruction or other disposition. 

R.S.C., Ord. 29, r. 2 deals with the AND “Detention, preservation, etc., of subject matter of cause or matter.AND ” By Ord. 29, r. 2 (5) an application for an order under the rule has to be made by AND “summons or by notice.AND ” 

It is under the inherent jurisdiction of the court that power is found to make the order sought. The Court of Chancery has such power, e.g., to prevent property from being removed from the jurisdiction. 

As to the power to AND “permitAND ” inspection, see United Company of Merchants of England, Trading to the East Indies v. Kynaston (1821) 3 Bli.(O.S.) 153, per Lord Redesdale at pp. 163-164. Lord Redesdale said at p. 166 that Earl of Lonsdale v. Curwen (1799) 3 Bli.(O.S.) 168 (note) was directly in point and that AND “the order was made before the decree, and upon a question where the rights of the parties were uncertain.AND ” This is an equitable, discretionary, remedy. Anwyl v. Owens (1853) 22 L.J.Ch. 995 where AND “the object of the applicationAND ” was to AND “preserve property during litigationAND ” is entirely consistent with the Kynaston decision and with the present application made to preserve property during the trial. For an example of an ex parte application for an order for inspection of premises made in an emergency, see Hennessy v. Rohmann, Osborne AND Co. [1877] W.N. 14, where the application was made under the then Ord. 52, r. 3, and Malins V.-C. said that AND “the circumstances … warranted him in making an immediate order for inspection of the premises,AND ” although he did not act under that rule. The court has inherent power to dispense with notice. See also Morris v. Howell (1888) 22 L.R.Ir. 77. In Fowler v. Lewy (1875) 1 Char.Cham.Cas. 14 Quain J. said that he could not make an order for inspection ex parte. 

This application falls within the words of Templeman J. in E.M.I. Ltd. v. Pandit [1975] 1 W.L.R. 302, 307-308 but Templeman J. went too far in imposing stringency on plaintiffs. The plaintiffs in the present case want to preserve property so that it cannot be used to their prejudice and in order to prevent the defendants destroying it. Enormous damage may be done to the plaintiffs. Brightman J. recognised AND “the strong prima facie evidenceAND ” of what the defendants are doing. It is virtually 

impossible to establish that the defendant is a proven rogue on an ex parte application. That standard is too high. Brightman J.’s judgment was too restrictive. 

The defendants did not appear and were not represented. 

At the conclusion of the hearing in chambers the court made an order ex parte substantially in the form of the schedule to the order of Brightman J. The order was directed to be drawn up on December 2 and served and the court said that the reasons for the order would be delivered on December 8. 

Dec. 8. The following judgments were delivered. 

LORD DENNING M.R. During the last 18 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 Templeman J. on December 3, 1974, E.M.I. Ltd. v. Pandit [1975] 1 W.L.R. 302. But in the present case Brightman J. refused to make such an order. 

On appeal to us, Mr. Laddie appears for the plaintiffs. 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 KG (AND “PillersAND “), the plaintiffs, 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 Ltd. (AND “M.P.L.AND “), which is run by Mr. A. H. S. Baker and Mr. B. P. Wallace, their two directors. These agents are dealers who get machines from Pillers in Germany and sell them to customers in England. Pillers supply M.P.L. 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, M.P.L., have been in secret communication with other German companies called Ferrostaal and Lechmotoren. The object of these communications is that M.P.L. 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 AND “defectors,AND ” if I may call them so. One was the commercial manager of M.P.L., Mr. Brian Firth; the other was the sales manager, Mr. William Raymond Knight. These two were so upset by what was going on in M.P.L. that on their own initiative, without any approach by Pillers whatever, on October 2, 1975, one or both flew to Germany. They told Pillers what they knew about the arrangements with Ferrostaal and Lechmotoren. They disclosed also that M.P.L. 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 M.P.L. 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 a representative of Ferrostaal to Mr. Wallace saying: 

AND “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 (also of Lechmotoren) to you as soon as the … latest design of P. (Piller) has arrived in your factory. In this case it is guaranteed that the Lech prototype will have exactly the same features as the P-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.AND ” 

On getting this information, Pillers were extremely worried. They were about to produce a fine new frequency converter called the AND “Silent Block.AND ” They feared that M.P.L., in co-operation with the German manufacturers, would make a copy of their AND “Silent BlockAND ” and ruin their market. They determined to apply to the court for an injunction to restrain M.P.L. and their directors, the defendants, from infringing their copyright or using confidential information or making copies of their machines. But they were fearful that if the defendants were given notice of this application, they would take steps to destroy 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, November 26, 1975, Pillers’ solicitors prepared a draft writ of summons and, with an affidavit, they went before Brightman J. and asked, first, for an interim injunction to restrain infringement, etc., and, secondly, for an order that they might be permitted to enter the defendants’ premises so as to inspect the documents of the plaintiffs and remove them, or copies of them. Brightman J. granted an interim injunction, but refused to order inspection or removal of the documents. He said: 

AND “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.AND ” 

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. 

AND “Otherwise,AND ” he said, AND “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 plaintiffs’ rights.AND ” 

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 AND “Get out.AND ” That was established in the leading case of Entick v. Carrington(1765) 2 Wils.K.B. 275. 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 defendants’ premises against their 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 plaintiffs must get the defendants’ permission. But it does do this: It brings pressure on the defendants to give permission. It does more. It actually orders them to give permission – with, I suppose, the result that if they do not give permission, they are 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 United Company of Merchants of England, Trading to the East Indies v. Kynaston (1821) 3 Bli.(O.S.) 153. Lord Redesdale said, at pp. 163-164: 

AND “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.AND ” 

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 AND “do permitAND ” 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 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 R.S.C., Ord. 29, r. 2 (1) and (5). 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 the Supreme 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, Hennessy v. Rohmann, Osborne AND Co. [1877] W.N. 14, and Morris v. Howell (1888) 22 L.R.Ir. 77, an Irish case. 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, that 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 defendants an opportunity of considering it and of consulting their own solicitor. If the defendants wish to apply to discharge the order as having been improperly obtained, they must be allow to do so. If the defendants refuse permission to enter or to inspect, the plaintiffs must not force their way in. They must accept the refusal, and bring it to the notice of the court afterwards, if need be 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 defendants that, on the evidence put before it, the court is of opinion that they ought to permit inspection – nay, it orders them to permit – and that they refuse at their peril. It puts them in peril not only of proceedings for contempt, but also of adverse inferences being drawn against them; so much so that their own solicitor may often advise them 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 Templeman J. 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 restraint the infringement of copyright and breach of confidential information, etc. It orders that the defendants do permit one or two of the plaintiffs and one or two of their solicitors to enter the defendants’ 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. 

ORMROD L.J. I agree with all that Lord Denning M.R. 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 Lord Denning M.R. 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. 

SHAW L.J. 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. 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. 

Solicitors: Collyer-Bristow AND Co. for Band, Hatton AND Co., Coventry. 

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