A failed attempt to overwrite stolen company data

InterCity Telecom Ltd and Anor v Solanki is a case involving sales-related data stolen from the claimant company by the defendant and used by him for his own purposes and for the purposes of business rivals of his former employer.

It involves, among other things, breach of contract and covenants, theft of data, breaches of orders and undertakings, and an attempt to cover up stolen data with music files. It ended with judgment against the defendant in a substantial sum, together with an order for indemnity costs and a sentence for contempt of court.

How did I miss this when it was published in February 2015? Looking back, I see that I was abroad on the day when the ever-reliable first-with-the-news Gordon Exall published an article about the case in his Civil Litigation Brief. It came back as Gordon’s Civil Case of the Year 2015, which is how I caught up with it.

The case involves a copybook example of data theft by an employee which reads like one of those compendium examination questions designed to bring in every facet of a subject. Delivered by HHJ Simon Brown QC with his usual thorough crispness, its narrative arc from recital of the facts and the law through to its inevitable conclusion is a helpful one, though it makes no new law. It might also serve as a warning to those who do not appreciate how difficult it is to get rid of electronic data.

The opening recitals in the judgment

The judgment recites reasonably standard duties, obligations and restraints placed upon Solanki during and after his employment, together with his fiduciary duties and statutory provisions relating to the rights of the maker of a database (these, in Paragraph 14, are worth reading by anyone contemplating making off with data, whether belonging to an employer or anybody else).

Paragraph 15 sets out the procedural history, including undertakings and an order backed with a penal notice. There was an application by the claimants for the enforcement of that order followed by the defendant admitting belatedly to the existence of two USB memory sticks, one of which, he said, contained only music files.

Paragraph 17 sets out the history of the recovery of evidence from the defendant’s laptop, iPad and three USB memory sticks. The haul included a helpful entry on the defendant’s to-do list reminding himself to “black out all references” to one of the competing companies. Useful, obviously, to make oneself such a note; more useful still if you know how to do the “blacking out”.

The overwritten data

The section which is interesting from a forensic and evidential point of view begins at Paragraph 17(s) of the judgment which reads as follows:

s. On 8 October 2014, Mr Solanki swore a further third affidavit swearing: “the [SanDisk Memory Stick] is the device [he] use[s] to store [his] personal music and has been listened to, and edited on numerous occasions since 13 February 2014.”

t. Upon initial inspection, Mr Solanki’s claim appeared to be correct – the USB stick did contain just Bollywood music files. However, further review demonstrated that the date of creation of these files was 11 September 2014 at a time between 12:57pm and 12:59pm. Significantly, this post-dated the date upon which the Defendant learnt that the Claimants had discovered the existence of the additional memory sticks, i.e. 4 September 2014 when they made their application and before a court hearing.

u. The Claimants sent the memory stick to Mr Birch, a forensic analyst, for review. He discovered that the SanDisk memory stick had contained various emails that had been extracted by the Defendant during his work for the Claimants. Moreover, the memory stick was shown to have previously contained a spreadsheet with details of thousands of the Claimants’ customers; that file was created on 26 January 2014 and modified on 13 March 2014. Of utmost concern to the Claimants, the database had entries highlighted as “completed” and these included a number of accounts which the Claimants had mystifyingly lost.

It was therefore clear that Mr Solanki had been wrong when he said in his Third Affidavit that the SanDisk Memory Stick was the device he had used to store music. Moreover, it was apparent that Mr Solanki had been untruthful to the Court when he said that the memory stick contained mere music files. The Third Affidavit also stated that “no documents in [Mr Solanki’s] possession after 14 May 2014 and covered by paragraph 3 of [the Undertaking] have been destroyed, removed, disposed of and/or edited.” This was wrong too because the list of files and directories that had been stored on the SanDisk Memory Stick included files that were not on the memory stick at the time that they were delivered-up to the Claimants.

Such deleted files and directories included: (i) a document relating to HCL (one of the Claimants’ most biggest customers) which was last accessed in September 2014 and which was in existence prior to May 2014; and (ii) a directory entitled ‘Phonestall’ (last accessed on 1 June 2014) – contrary to Mr Solanki’s defence claims that he didn’t have “any form of business contact with ASB Utilities Limited, Salts Healthcare Limited and Phonestall.com Limited, and others” .

Conclusions from the judgment

The rest of the judgment draws the inevitable conclusions from the evidence found on the memory sticks and from the claimant’s oral evidence and goes on to give judgment for the claimant for compensatory damages in the sum of £290,009. The judge awarded indemnity costs to the claimants on the basis that the defendant had been “disingenuous, untruthful and dishonest” and that he had “wilfully flouted court orders and deliberately hidden key evidence from the court and the claimants”. I understand (from the always informative Dominic Regan) that the defendant was subsequently fined for contempt of court.

In a sense, as I implied in opening, there are few lessons to be learned from this case because the outcome followed more or less inevitably from the facts; no new law was made and the putative law school examinee would have given more or less the same answer as the judge did. Senior employees should not steal their employer’s data and the court will punish and restrain those who do.

The value of a forensic expert

It is worth noting for those who don’t know (whether they are the wrongdoer, his or her own solicitors, or those for the other side), that mere overwriting of data does not usually dispose of it and that a suitably skilled forensic expert will almost certainly be able to recover overwritten data. The claimants and the lawyers obviously did the right thing in instructing a forensic expert, because it was the data thus recovered, and the defendant’s conduct in relation to it, which spoke for itself in deciding the outcome.

You do not need a forensic expert in every case. It is potentially negligent to fail to consider whether this should be done; most good ones will help you to decide whether their involvement might yield valuable evidence proportionate to the objective.

The conduct point and indemnity costs

The conduct point is important too. Being “disingenuous, untruthful and dishonest”, flouting court orders and hiding evidence is unlikely to survive the cold scrutiny of a judge. The indemnity costs were calculated by the judge at £68,959.25.

Litigation – an “optional activity”?

There is a last point. Those words “disingenuous, untruthful and dishonest” apply equally to the Ministry of Justice and to the ministers who have worked to erode the availability of civil justice in this country. They are the perfect labels for the unpleasant Chris Grayling who was Secretary of State for Justice until sacked in the last reshuffle, and for the slimy Shailesh Vara MP who was and is Minister for the Courts and Legal Aid. Even a decent and intelligent man like Lord Faulks QC, Minister of State in the House of Lords, behaved disgracefully in the House of Lords debate on court fees, parroting the MOJ line on court fees and describing litigation as an “optional activity”.

Gordon Exall is eloquent on this point at the end of his post about this case, emphasising that the claimant company had absolutely no alternative but to bring proceedings in the circumstances described in the judgment. How does this sit with the tax on litigation which is what the court fees really are?



About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
This entry was posted in Discovery, eDiscovery, Electronic disclosure, Litigation, UK cases. Bookmark the permalink.

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