E-mails: Documents or Property?

Susan McGhie Sang takes a detailed look at Fairstar v Adkins, and where the Court of Appeal judgment leaves us on e-mails and property rights in them.

In what circumstances and for what reasons should laws applying to paper documents be applied to electronic documents? This issue was addressed in relation to an e-mail by the Court of Appeal in the case of Fairstar Heavy Transport N.V v Adkins & anor [2103] EWCA Civ 886. The first instance judgment of Edwards-Stuart J (see [2012] EWHC 2952 (TCC)) was discussed in an article by David Blunt QC in the February/March 2013 issue of Computers & Law (see The New and the Old – E-mails and the Common Law). The Court of Appeal allowed the appeal, holding the issue on which the first instance decision was based, namely whether there was a proprietary right in the content of an e-mail, to be the wrong issue.

Facts

The defendant was the former CEO of the claimant, Fairstar. Adkins controlled and was employed by his company, Cadenza. Cadenza contracted with Fairstar to provide Adkins' services. There was no contract between Adkins and Fairstar. The contract between Cadenza and Fairstar was governed by Dutch law and gave exclusive jurisdiction to the Dutch courts. Fairstar was taken over by a competitor and Adkins' services were terminated. Fairstar brought an action in England for an order that an independent IT expert be permitted to inspect certain e-mails held in electronic form on the computer of the defendant. The computer was being held by the defendant's solicitors in England pursuant to an earlier order.

Fairstar needed to see these e-mails to assess whether they were bound by certain transactions with third parties. The e-mails from the third parties, addressed to Adkins at his Fairstar e-mail address, had been automatically forwarded by Fairstar's server to Adkins' personal e-mail address, downloaded to his computer and then automatically deleted from Fairstar's server, without Fairstar retaining copies. Adkins had sent e-mails directly from his computer to these third parties. Neither of the parties had printed copies of the e-mails. The only way of ascertaining the content of the e-mails was for the claimants to inspect the electronic version of the e-mails on the defendant's computer or obtain copies from it.

First instance judgment

Edwards-Stuart J was asked to rule solely on the issue of whether Fairstar had a proprietary claim to the content of these e-mails. Fairstar argued that as the e-mails in Adkins' possession were sent or received by him as their agent, they had a proprietary interest in them and a right to inspect and obtain copies. Fairstar could not bring a contractual claim against Adkins in England because of the exclusive jurisdiction clause. They had no claim in copyright as they were not the author of the e-mails, nor did they claim a breach of the duty of confidence.

Edwards-Stuart J distinguished between an e-mail in electronic form and a printed e-mail or letter. At common law the recipient of a letter had a proprietary right to it in the sense of paper on which it was written. However, that rule did not apply to an e-mail which existed only in electronic form. He held that the content of the e-mails was 'information' and that there was no property in information. Therefore Fairstar had no proprietary right in the e-mails and no right to inspection. He held that in other circumstances the laws of copyright, contract and confidential information provided sufficient protection against misuse of information contained in e-mails, and practical considerations militated against holding that there was a proprietary right in an e-mail. The main practical consideration which he identified was the enforceability of a right of the owner of an e-mail to require other persons in possession of a copy to delete it.

Court of Appeal judgment

The Court of Appeal allowed Fairstar's appeal with Mummery LJ giving the judgment. He held that the agreed wording of the preliminary issue in the court below had caused Edwards-Stuart J to come to his decision on the wrong basis. Whether or not there was a proprietary right in the e-mails was not the issue. Instead the law of agency provided the principal with a right to require his agent to deliver up to him all documents in the agent's possession which related to the principal's affairs. This right applied regardless of who owned the documents in the agent's possession. The only other question was whether e-mails were documents for this purpose. CPR, r 31.4 defines 'document' as meaning 'anything in which information of any description is recorded' and a 'copy' of a document as 'anything onto which information recorded in the document has been copied, by whatever means and whether directly or indirectly'.

Mummery LJ continued (at [54]):

'According to the notes to the CPR 31.4 "While the word  [document] in non-legal usage is commonly associated with information recorded only on paper, the true meaning of the word is far wider, reflecting its derivation from the Latin 'documentum' referring to something which instructs or provides information. The term extends to electronic documents, including e-mails: see Practice Direction 31B, para 1".  In that context content cannot be separated from form, since a blank sheet of paper providing no information would not be a document and a blank electronic communication would not be an e-mail.'

He stated that materials stored on a computer which could be displayed on a screen or printed were covered by the same incidents of agency as paper documents (at [55):

'The form of recording or storage does not detract from the substantive right of the principal as against the agent to have access to their content.'

He further held that the questions of whether there is property in confidential information, and whether there is property in the content of a letter as distinct from the paper on which it was written, were not relevant to the case before them and did not need to be decided. The order for inspection of the e-mails was granted.

Issues remaining after the Court of Appeal decision

The Court of Appeal's decision was reached by applying the meaning of 'document' in procedural rules on inspection and disclosure of documents, and the English law of agency to the e-mails. No objection had been raised to the jurisdiction of the English courts to grant the order sought, and it appeared that the claimant had taken the position in the Dutch proceedings that the English courts had jurisdiction in relation to documents on Adkins' computer located in England. The rather odd result was that, although the contract which gave rise to the agency relationship was governed by Dutch law, English law was applied in respect of the incidents of this agency.

The different approaches taken at first instance and in the Court of Appeal raise many interesting questions in relation to the extent to which old common-law principles, and indeed new rules and practice directions, apply to electronic documents. 

Current laws applicable to e-mails

There are already several principles and rules of law applicable to letters which could be applied by analogy to e-mails. The rights they provide have different purposes and may belong to different people.

A document such as a letter may be valuable because it creates or provides evidence of rights and obligations. It is logical to treat documents in electronic form as documents for evidentiary purposes – to ascertain what parties have said, done and agreed. The issue here should be one of ensuring the integrity of the electronic document and the reliability of the evidence. For the purposes of discovery and inspection under the CPR, electronic documents may be just as relevant to the issues and facts as paper documents, as is recognised by Practice Direction 31B.

In agency law there should be no reason to limit to paper documents the rule that the principal should have a right to inspect documents in the possession of the agent which relate to the principal's affairs. Electronic documents are common and their contents are likely to be just as material to the rights and obligations of the principal as paper documents.

For the purposes of conducting due diligence, electronic documents should be regarded similarly to paper documents.

Proprietary rights in an e-mail?

The Court of Appeal judgment appears from a practical point of view to be more straightforward than the decision of Edwards-Stuart J, although it sidestepped the key issue in the court below, namely whether there is a proprietary interest in an e-mail. We are therefore left with Edwards-Stuart J's decision that there is no proprietary interest in an e-mail and the Court of Appeal judgment to the effect that it had not been necessary to decide that issue.  It may still be valid to question whether there is a need in general for a 'proprietary right' in relation to an e-mail.

What aspects of an e-mail would be protected by a proprietary right?

It may be that in certain circumstances there should be a proprietary right in an e-mail. However for this purpose, what is an e-mail?  Other than the information in the e-mail is there anything else which could be owned?

In Fairstar  the medium on which the e-mails were stored was clearly the property of Adkins, and there was no printed version of the e-mails. Both courts equated the e-mail with the information it contained. Mummery LJ held that a document would be the same as the information contained in it. There was therefore no point in arguing whether the information in the e-mail was something separate, as discovery and inspection of a document amounted to discovery and inspection of the information in it. Edwards-Stuart J in considering whether there was a proprietary interest in the content of an e-mail had held that this would be a claim to a proprietary interest in information as there was no physical document on the facts of that case.

In other circumstances, it might be relevant to look at ownership of the paper on which an e-mail is printed, or whether there is any other aspect of an e-mail which could be considered property, such as physical media of the drive or the electronic transmission.

What would having a 'proprietary right' mean?  Proprietary rights are rights in property enforceable against the world, such as the right to possession, the right to recover possession from anyone else by an action in conversion, and rights to transfer, licence or grant security over the property. A printed e-mail could be likened to a letter, the recipient of which owns the paper on which it was written. This gives him the right to recover it if stolen.[1]  Printed e-mails forming part of a client's file should attract a solicitor's lien in the same way as other paper documents.

However, it is more likely that other rights would be more useful in the case of e-mails – rights in respect of the content of the e-mail – rights to preventing copying, dissemination, use or misuse, rights to accessing and inspecting e-mails on computers of another person, rights to obtain copies or require deletion of e-mails in the possession of other persons. Would a proprietary right to an e-mail automatically confer such rights on the owner?

Copyright

A proprietary right to the paper on which an e-mail is printed or the medium on which it is stored is unlikely to give the owner a right to prevent copying and dissemination of the e-mail. Copyright law gives the author of a letter rights to prevent others from copying and publishing the form of expression. Fairstar was not the author of the e-mails so copyright was not argued in that case. An e-mail should be treated like a letter for copyright purposes and protected as a literary work.[2]  The Copyright, Designs and Patents Act 1988recognises works in electronic form.[3]

However, copyright does not protect the information itself, which could be re-presented by another person in another form, as long as there is sufficient originality in the second work.[4] Copying and forwarding an e-mail without the author's permission would be a breach of copyright, and as a part of a delivery up order he may be entitled to request an order that infringing copies of an e-mail be deleted from an infringer's computer. But copyright laws would not confer these rights on the recipient of an e-mail.

Confidential information

Is there any protection for the information in the e-mail?  Edwards-Stuart J considered an e-mail as consisting solely of the information it contained. Citing Force India Formula One Team v 1 Malaysian Racing Team [2012] EWHC 616,  he held that there was no property in confidential information. The breach of a duty of confidence in relation to such information would give rise to remedies against the person in breach of the duty, rather than proprietary rights against the world.

The rights of the owner of the confidential information are based on the confidential nature of the information and the equitable jurisdiction over those who disclose or misuse such information in breach of a duty of confidence rather than on any right, proprietary or otherwise, in the information itself. In the world of business, the value of confidential information in the form of know-how and trade secrets is largely dependent on the ability of the owner to keep it confidential. The owner of such information may prevent its disclosure and misuse. His remedies may include orders for delivery up or deletion of copies of e-mails containing the information. However, once the information ceases to be confidential, the owner of the information will have no rights to prevent persons other than the original discloser from further disclosing or using the information. Also it is not always clear-cut whether information has the necessary quality of confidence to attract the duty of confidence.

Database Rights

Arguably a mailbox containing e-mails may satisfy the definition of a database[5], but it would probably be difficult to establish the subsistence of database right[6].

Is there a need for a proprietary right in an e-mail?

Is there a need for a general proprietary right in an e-mail? Would such a proprietary right give effective remedies to the owner? Before modern technology made it easy to copy and forward contents of a document, recovering and safeguarding the physical document via a claim in conversion may have been an effective way to control dissemination and misuse of the contents of the letter. If an e-mail is printed by the recipient, the recipient should have a right to recover the paper on which it is printed from someone who stole it. However, this is unlikely to be an effective way to control dissemination, use or disclosure of the information in it.

Arguably a victim of hacking could use the law of confidence to prevent the hacker from disclosing and misusing confidential information contained in e-mails obtained in this way. The law of confidence would not assist if the information is not confidential. The practical difficulties of identifying the hacker and preventing disclosure and misuse before it is too late, as well as jurisdictional issues, limit the usefulness of this remedy in practice. Would giving the recipient a proprietary right and a claim in conversion of the e-mail be any more effective in a case of unlawful interception of an e-mail? Would this give the owner rights to access the e-mail held on another's computer, rights to control its dissemination, or require its deletion. It might be better to have legislation creating civil liability for obtaining access to e-mails or interception of communications in the course of transmission with rights and remedies tailored to these circumstances. Legislation could provide these rights and remedies in other circumstances, perhaps in the context of particular relationships. There may be relationships other than that of agency and the duty of confidence which should give rise to such rights, for example where employees, independent contractors or consultants have created or received e-mails on their computers which affect the rights and obligations of the person for whom they are carrying out work.

Practical implications

An employer would normally own the copyright in e-mails created by the employee in the course of employment. The employee would have a duty of confidence to his employer not to disclose the employer's confidential information. As part of his duty of good faith, the employee should disclose to the employer any e-mails he has sent and received on behalf of the employer.  Access to e-mails sent and received by the employee is unlikely to be an issue for the employer where business e-mails are addressed and sent either to the employer's e-mail address or to the employee's work e-mail address and stored on the employer's server. However, if they are downloaded onto the employee's computer, the employer may wish to have a right to require the employee to delete them. With the rise of Bring Your Own Device and working from home/telecommuting policies, employers should ensure that they maintain control over e-mails received by employees on their own devices and have very clear contractual terms and work policies to ensure that they have full rights of ownership, including rights to obtain and inspect e-mails and other electronic documents and data sent and received on behalf of the employer but kept on the employee's computer. If the company wishes to remotely access or delete e-mails or information over which it claims ownership but which are held on the employee's computer, it should ensure that the employee agrees to this. If the employee does not agree the employer could be liabile under the Computer Misuse Act 1990, s 1. Such terms would become even more important after the employment is terminated.

In most cases it would not be necessary for the employer to assert a proprietary right against the employee to e-mails received by the employee on his behalf, but is there a reason why the employer should not be the owner of such e-mails in the same way as he would be the owner of business letters received by the employee on his behalf?   Property rights would enable the employer to claim against third parties who obtain them.

Where company information is shared with an independent contractor there is an even greater need for the rights of ownership to be expressly agreed in the contract. The company would not be able to rely on implied duties of confidence and good faith applicable to an employee.

Conclusion

While there are some circumstances in which it seems clear that e-mails should be treated in the same way as a letter, there are areas where the laws governing paper documents do not appear to adequately protect senders or recipients of e-mails. Information contained in an e-mail is not protected by the law of confidence if it is not confidential information. Copyright does not grant rights to the recipient to control copying and dissemination. However, parties to a contract can provide for how e-mails are to be treated between them and create in personam rights in this regard.

Holding that there is a proprietary right to an e-mail may be one way of protecting an e-mail and equating it to the paper on which a letter is written. This approach may not be the best way to treat electronic documents which, by their nature, give rise to different problems. It may be better to consider specific rights and remedies in the context of particular relationships and circumstances.

The value of an e-mail lies in the information contained in it. It is artificial to regard it as separate from such information for the purpose of determining who should have (i) rights to access, use and transfer the information; (ii) rights to prevent access, disclosure and transfer of the information; and (iii) rights to require others to provide access to or delete such information. 

To what extent should such information be treated as property? This issue does not only pertain to access to e-mails but to the broader issue of how information should be regarded and protected. Perhaps the time has come for a comprehensive re-think of the extent to which information, whether in electronic form or otherwise, should be protected in the digital age, and of the rights and remedies attaching to electronic documents and communications.  

Susan McGhie Sang is a freelance tutor and former Senior Lecturer in Commercial Law at The University of Law (incorporating The College of Law). She is currently volunteering at Merlin/Save the Children.



[1] Oliver v Oliver (1861) 11 CBNS 139

[2] CDPA, s 3.

[3] CDPA, ss 3 and 56.

[4] In Philip v Pennell [1907] 2 Ch 577, biographers of the artist Whistler who had lawfully obtained letters written by the artist had the right to use the information contained in the letters in the biography, although they could not publish the letters. Publication would have required permission of the copyright holder, ie the personal representatives of Whistler.

[5] CDPA, s 3A 'a collection of independent works, data or other materials which –

(a)    are arranged in a systematic or methodical way, and

(b)    are individually accessible by electronic or other means.'

[6] Copyright and Rights in Databases Regulations 1997 (SI 1997 No 3032), reg 13

Published: 2014-01-02T11:35:40

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