Microtechnologies, LLC v Autonomy, Inc (aka HP Autonomy) & Anor [2017] EWHC 613 (QB)

Case No CR 2016-285[2017] EWHC 613 (QB)IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONON APPEAL FROM THE SENIOR MASTERIN THE MATTER OF THE EVIDENCE (PROCEEDINGS IN OTHERJURISDICTIONS) ACT 1975AND IN THE MATTER OF AN APPLICATION PURSUANT TO CPR PART 34Date AND IN THE MATTER OF A CIVIL PROCEEDING NOW PENDINGCase No 15-cv-2220-RMW-HRL
Before
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OFCALIFORNIA (SAN JOSE DIVISION) ENTITLED AS FOLLOWS:Royal Courts of JusticeStrand, London, WC2A 2LLDate: Thursday, 16th February 2017MR. JUSTICE MORRIS
Between
MICROTECHNOLOGIES, LLCAppellantPlaintiffAppellantAUTONOMY, INC (a/k/a HP AUTONOMY)DefendantAUTONOMY SYSTEMS LIMITEDDefendantMR. SUSHOVAN TAREQUE HUSSAINDefendantDefendants and Plaintiffs-in-CounterlaimDefendantNon-PartyDefendantMICROTECHNOLOGIES, LLC Plaintiff- and -AUTONOMY, INC (a/k/a HP AUTONOMY) AUTONOMY SYSTEMS LIMITED-and-MR. SUSHOVAN TAREQUE HUSSAIN Defendants and Plaintiffs-in-Counterlaim/Appellant Non-Party/ Respondent
Digital Transcription by Marten Walsh Cherer Ltd.,1st Flosor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.Telephone No: 020 7067 2900. Fax No: 020 7831 6864 DX 410 LDEEmail: info@martenwalshcherer.comWeb: www.martenwalshcherer.com
for THE PLAINTIFF did not appear and was not representedMR. CONALL PATTON (instructed by Travers Smith LLP) for Defendants and Plaintiffs-in-Counterclaim/AppellantMR. RICHARD LISSACK QC and MR. OLIVER JONES (instructed by Simmons & Simmons LLP) for Non-Party Respondent
JudgmentMR. JUSTICE MORRIS :
[1]On 16th December 2016 I handed down judgment in this case allowing the appeal by Autonomy Inc and Autonomy Systems Ltd. ("the Autonomy Parties") against the order of the Senior Master dated 27th September 2016 which refused an examination of Mr. Hussain and concluding in my judgment that an order for examination should be made. I use the same terminology here as I used in that judgment. I have now heard argument on a number of consequential matters arising from the judgment and, in particular, in relation to the terms upon which that examination should be conducted and to resolve outstanding issues relating to costs.[2]Mr. Hussain has applied to the Court of Appeal for permission to appeal against my decision in December but both parties accept that in the meantime it is appropriate for me to address these consequential matters. Many of the terms of the order consequential upon the judgment have been agreed and, indeed, in the course of argument today we have made some further progress towards agreement.[3]The remaining points in dispute can be summarised under the following five heads:(1) timing of the bundle of documents;(2) list of questions;(3) cross-examination;(4) restrictions on use; and(5) costs. In relation to costs there are five sub issues, the first two of which are summary assessment in relation to the costs of this appeal and the costs of the Autonomy application below. I have heard argument on all those points, except the remaining points on costs and this is my ruling on the first four points, plus the first two elements of costs.[4]In assessing these issues I have fully taken into account both the need to consider the fairness of the procedure for all parties and to consider the right balance to be struck between the competing interests involved. On the one hand Mr. Hussain should not be taken by ambush in the course of this examination and I also take account of the fact that he is personally the subject of proceedings and investigations on many fronts which is placing a substantial burden upon him and his time. On the other hand the Autonomy Parties must be allowed to seek to obtain evidence which the US court has concluded it is appropriate for them to seek.[5]Whilst it is the case that I found in my judgment that in some respects an examination would otherwise be oppressive, I also found that that oppression is in fact neutralised in this case by the ability of Mr. Hussain to rely on his Fifth Amendment rights. I should add that if he chooses not to rely on those rights then, in my judgment, the examination does not thereby become oppressive because it is he who is volunteering to participate.[6]The first issue then is the bundle of documents. It is agreed that the Autonomy Parties will provide Mr. Hussain with a bundle of documents in advance of the examination. The main, narrow, issue between the parties is how far in advance of that examination the documents should be provided. The Autonomy Parties initially suggested seven days before but have now accepted that 21 days is an appropriate amount of time and is sufficient. Mr. Hussain asks for 28 days in advance. The Autonomy Parties have said in argument today that there will only be about three lever arch files of materials.[7]In my judgment documents should be provided 28 days before the examination. There is no prejudice to the Autonomy Parties in having to do this a little bit earlier and the way things presently stand there are no time constraints upon the production of the documents. I consider that Mr. Hussain should have sufficient time to prepare for the examination, given the other constraints and pressures he is under and this period of 28 days will allow a little more time in the event that in fact there are substantially more than the three lever arch files currently indicated.[8]There is then the further question about whether or not further documents could be relied upon after that 28-day period or before. On the one hand I am reluctant to rule out reference to any further document altogether; on the other hand I do not wish any general liberty to rely on further documents to lead to delay on the part of the Autonomy Parties in providing the main bundle of documents.[9]Accordingly, in the course of argument I believe the parties have agreed that the question of any further documents and whether they can be relied upon should be dealt with by way of a liberty to apply to the examiner to allow further documents to be referred to in the course of the examination. Such application will, of course, encompass the ability of the examiner if the need arose to adjourn the examination in the event of late and substantial further documents being produced. On that basis, it is not necessary, nor appropriate to put any time limit on that application for liberty to apply. If it is done very late and with a large amount of documents, then appropriate applications can be made.[10]I then turn to the second issue which is the list of questions. In this case the letter of request from the US court contains a detailed list of topics which is to be found in Annex A to the letter of request. Mr. Hussain contends that the topics remain very widely drawn and expose him to questioning on a vary broad date range in relation to a very broad range of topics. Despite an earlier contention Mr. Hussain does not seek to strike out requests 3(9) or 10 themselves, but says the Autonomy Parties should be required to produce a list of questions which will be put to him. This is particularly the case in circumstances where it is Mr. Hussain's position that he will be invoking his Fifth Amendment rights in response to all questions. He should therefore be given full and proper opportunity consider the questions that are to be asked in advance.[11]There is some learning about the need for a list of questions on an examination of this sort and I have been referred to passages in the text book, The Law and Practice of Compelled Evidence in Civil Proceedings, Sara Cockerill QC, in particular the passages at page 119, ^paragraph 7.30. However, in my judgment, there are no rigid rules as to content of a list of questions and it is clear that practice varies.[12]I was initially attracted by Mr. Hussain's contentions in this regard and I take fully into account the need to avoid tactical ambushing. However, on close consideration of the list of topics in the US court's letter of request, it has been in general difficult to see what list of questions, as opposed to list of topics, of greater particularity, could and should be provided.[13]Some general points. First, the examination and the questions must be confined to the topics listed in Annex A as modified which, as I shall explain in a moment, will be the case.[14]Secondly, I do not consider that there is any need for a further express restriction in the order to the effect that further questions are not to be allowed. Follow up questions within the scope of the examination are to be allowed, but that will obviously be subject to the wider limitation on scope of the questioning which is in paragraph 9(f) of the current draft of the order. On that particular issue I am going to direct that the wording of 9(f) should be modified to make it clear that it is directed to ensuring that all questions fall within the scope of Annex A and the wording will be “only those questions which fall within the scope of Annex A of this order may be asked of Mr. Hussain in the examination”.[15]The purpose of that wording is to delimit the four corners of the examination but not to prevent, within those four corners, specific questions other than those identified in Annex A.[16]The third general observation is that the topics in the US letter of request are very specific. In those cases where they are not in the form of a question, they can easily be seen as being in the form of a question and, subject to one particular issue, it has been hard to see what more specific questions could be particularised. That is particularly so given the fact that the documents to be relied on in the course of the examination will be provided to Mr. Hussain in advance.[17]As far as requests 3(9) and 10 are concerned, they are in terms confined to the transactions and subjects already identified within the remaining detailed list of topics in Annex A. Further, to the extent that any such communications are recorded in documentary form and are already known to the Autonomy Parties, or indeed MicroTech, those documents will again be disclosed in advance of examination. By their provision in advance, Mr. Hussain will be able to anticipate being shown such a document and asked the question, "Were you aware of document X?"[18]In so far as other matters are concerned and non-documented communications, Mr. Patton, for the Autonomy Parties, has clarified and I will so direct, first, that topic 10 will be reformulated into a question along the lines of topic 3(9) and, second, that those questions relating to awareness of communications are limited to Mr. Hussain's actual awareness of any such communications and that he will not be expected to take any steps prior to the examination to refresh his memory or, indeed, acquire an awareness of something which he does not currently have.[19]Finally in line with the guidance in Cockerill, I do consider that there should be some greater specificity in relation to certain matters such as time periods and meetings and, indeed, it appears now that the following modifications have been agreed. i) First, that there will be a date range specified for each of the transactions in paragraph 3 of Annex A. ii) Second, that if and in so far as any meetings are to be asked about in the examination, such meetings will be identified in advance by reference to their date and attendees. iii) Thirdly, if in the event that questions are to be put about any specific non-documented communication, then advance notice of that communication will be given. iv) Fourthly, there is one remaining area of dispute, which is the question as to whether in paragraph 3(9) and 10, the persons there should be specified exclusively and that there should not be reference to communications with a wider class of non-specific persons such as, for example, members of Autonomy management in general. I am not prepared to accept that modification, it seems to me that the class is already necessarily defined by reference to both the description Autonomy management and the description “officer, member, employee or shareholder of MicroTech” and the wording in relation to the parties to the communications will remain as in Annex A.[20]I think that covers everything in relation to list of questions.[21]I now turn to cross-examination. In relation to this issue Mr. Hussain contends that although the US Court’s letter of request seeks an order that the Autonomy Parties be permitted to cross-examine Mr. Hussain, this should not be permitted. The starting point is that the examination must be conducted in the same way as if the witness were giving evidence at a trial and that requires the application of English procedure. The normal rule should be applied that the person calling the witness may only ask non-leading questions in examination-in-chief. Whilst it is accepted that there is a discretion to order otherwise and that the US court has requested that the parties be permitted to cross-examine, it is not appropriate, in Mr. Lissack's submission, for this court to exercise its discretion to depart from the English procedure in this case. In particular, it is contended that the cross-examination would give rise to pressure upon Mr. Hussain to waive his Fifth Amendment right, contrary to his interests.[22]The Autonomy Parties submit that specifically in this case there is an express request by the US court to allow cross-examination, accepting that absent any such request the examination would usually take place in the English mode, subject to one exception; that exception being the ability of an English court to allow a witness to be cross-examined when that witness is deemed to be hostile. They submit that Mr. Hussain, in the circumstances of this case, will necessarily be a hostile witness. In summary, the Autonomy Parties submit that there is no objection to adopting the US approach to witness examination in this case.[23]In my judgment, in this case it is not appropriate for there to be a restriction on leading questions being asked and so in that sense cross-examination will not be prohibited and, indeed, will be allowed.[24]First, there is a discretion not to apply the English approach to examination, see CPR 34.18(2)(a). Secondly, in this case and most significantly, there is an express request by the US court that cross-examination be allowed. In the letter of request the US court itself stated:
"... I request that the attorneys for all parties to this action shall be permitted to present and to conduct examination and cross-examination of the witness. For the avoidance of doubt, I request that attorneys for the Autonomy Parties be permitted to cross-examine this witness."
[25]I make the following observation on this. First, there is the emphasis on the request to permit cross-examination and, secondly, that observation has to be seen in the context of submissions having been made before the US Judge prior to the making of that ruling, that in the English procedure cross-examination is not allowed. Mr. Hussain had submitted to the US court that it should not be allowed in this case.[26]A further point is that such cross-examination is not incompatible with English law, see Desilla v Fells (1879) 40 LT 423. I do not quote the observations of Cockburn CJ but there it was made plain that there is no absolute bar upon allowing cross-examination in circumstances where it is permitted under the foreign procedure.[27]Further in this regard the QB Model Form of order at paragraph 7(d), contemplates the possibility of cross-examination in appropriate cases. I should add that it is not necessary for me to decide in this instance upon the question whether Mr. Hussain is or will necessarily be a hostile witness for the purposes of the principles of English procedural law relating to leading questions in examination-in-chief.[28]The third point in favour of the exercise of discretion in their way is that US rules of evidence are clear, that in a case such as the present, cross-examination is allowed and that leading questions can be asked. This is pointed out in evidence by Mr. Robinson in his witness statement at paragraph 26, evidence which was not contradicted.[29]Finally, as regards the suggestion that cross-examination would put unfair pressure upon Mr. Hussain to waive his Fifth Amendment rights, I find it hard to see how this will arise. Either Mr. Hussain will or he will not invoke those rights and the fact that leading questions as well as non-leading questions, will be permitted, will not in my view make any difference as to the decision that he will no doubt make of his own volition. Accordingly on this issue, leading questions will be allowed.[30]The fourth substantive issue is restrictions on use of the examination or the evidence produced on the examination. Mr. Hussain seeks a provision in the order that the evidence given the examination may not be used for any purpose other than these proceedings, these proceedings being the US proceedings. There has been wide-ranging argument on this issue in skeletons and orally and, indeed, interesting argument. The form of the order that has been sought has changed in the course of that argument. That is not a criticism; it is part of the process of the debate heard today.[31]The background to this is that there is already in place a protective order in the US proceedings which means, absent relaxation of that order or objection, that Mr. Hussain will be able to designate the contents of his examination as private and confidential and by such designation prevent the use other than in the US proceedings.[32]A further particular background fact is that there is currently an order for disclosure in the Chancery proceedings which on its face requires at least disclosure of the transcript of the evidence which will be given in the examination. I proceed on the basis that, first, compliance with the disclosure order in the Chancery proceedings, by which I mean giving disclosure of the existence of the examination and the evidence, would not put either party in breach, either of the US protective order, if it were in place, or any order that this court might make on restriction as to use.[33]Second, however, inspection in the Chancery Division or deployment in evidence or other use for the purpose of the Chancery proceedings would potentially put either party in breach of the US protective order or, more particularly, any order upon restriction as initially proposed by Mr. Hussain today.[34]There is some considerable dispute between the parties as to whether under common law there is in place a residual implied restriction on collateral use of the evidence, see Dendron GmbH v. University of California [2005] 1 WLR 200 at paragraphs 27 to 33. Mr. Lissack is inviting me to follow that case, Mr. Patton for the Autonomy Parties has invited me to distinguish or not to follow it as being wrongly decided. However, since in either event it is common ground that this court has a discretion whether to impose such a restriction or to relax one if there is an implied one, I do not enter upon the debate as to the status of the Dendron decision.[35]As to discretion, Mr. Lissack, for Mr. Hussain, urges me to impose a restriction on use for the time being, albeit in a more limited form than that originally sought. The more limited form is that that restriction should be subject to two effective controls, liberty to apply on the part of any party, but most particularly one would imagine on the Autonomy Parties, such a liberty to apply to operate in two different ways. In so far as use is sought in the Chancery proceedings then the application to lift any restriction should be made to the assigned judge in those proceedings, Hildyard J. Second, in so far as use is sought for any other purpose, including for example use in proceedings elsewhere in the United States, any application to lift the restriction should be made to me or to another judge of this division.[36]He submits that this will only arise if the US court does not allow the designation under its protective order, but in that event, will place a degree of further control over use in that event. Mr. Patton submits that no such order should be made: first, because there is a mechanism under the US court's protective order to prevent use in the English proceedings; secondly, the examination is a substitute for giving live evidence at trial in California and such live evidence should not be restricted; thirdly, ultimately it may be a matter for the judge in the Chancery proceedings to rule upon the admissibility in those proceedings of the transcript of the examination. He also submits that the proposal now is an added layer of complexity which serves no useful purpose and may potentially put people at risk of being in breach of orders inadvertently or in circumstances where it is not appropriate.[37]I have concluded in my discretion that in this case it is not appropriate that there should be such a restriction on use. If need be and for the avoidance of doubt - and this will be a matter of drafting the order because I suppose if there is an implied restriction as a matter of common law then there would have to be a release from it - some appropriate wording can be used to make plain that I am not going to impose any restriction.[38]Whilst I see force in the proposal put forward by Mr. Lissack in the course of argument today and, indeed, in an effort to seek to meet the point half way, ultimately I see no positive benefit in the terms he proposed.[39]First, I accept that in the first place it is for the US court, as the court seized of the substantive proceedings in this case, to decide what use may be put to the evidence given in those proceedings. To that extent and without wishing to express any view on Dendron, that is a difference between this case and Dendron.[40]Secondly, in so far as use in the Chancery proceedings is concerned, Hildyard J will have a discretion in relation to the ultimate admission of the evidence from the examination at the trial or otherwise in those proceedings.[41]Thirdly, in so far as use for any other purpose is concerned and, most particularly, use in other US proceedings, perhaps brought by the Autonomy Parties (which is indeed a concern expressed by Mr. Hussain) then it is right that the court which should decide upon the propriety of use should be either the US court currently seized of the proceedings or perhaps any other US court in which, in this hypothetical scenario, such proceedings would be brought.[42]In my judgment any order from this court will only cause potential conflict, will not add to the protection and it may well be that this court is not the appropriate court to be ruling on whether or not the material can be used in those other proceedings.[43]So for those reasons, there will be no restriction on use. Whilst, of course, emphasising that there is currently in place the protective order and, use in the Chancery proceedings remains to be decided upon.[44]That leaves for the moment two further issues which I deal with at this stage. The first is the question of the costs of the appeal before me. It is common ground that there should be an order in favour of the Autonomy Parties that they should have their costs of the appeal. The only issue is whether not there should be a summary or detailed assessment and, if detailed, whether there should be an interim payment. Whilst the Autonomy Parties seek summary assessment of their costs, in my judgment given the fact that there is already going to be a detailed assessment in relation to other costs orders of the costs below, I am going to direct that there will be detailed assessment of the costs of this appeal.[45]As far as interim payment is concerned, I am going to order that there should be an interim payment on account of 60% of the figure of £76,228.24 which will be somewhere in the region of £50,000, the precise figure can be worked out.[46]The other current point is the costs of the Autonomy Parties' application below and whether there should be an interim payment now. It is common ground there should be an interim payment. Again, in my judgment, the appropriate amount is 60% of the relevant figure, the relevant figure being £213,347.02.[47]That, I think concludes everything apart from costs of today and the costs of the application below and your 5(4)(c) point. MR. LISSACK: 5(4)(c) and one other small point. MR. JUSTICE MORRIS: I will make the direction in 5(4)(c) that is sought. 48. (Further discussion ensued)[48]I have to deal finally with the aspects of costs in relation to the hearing of today which effectively is the hearing on the issues about the terms of the order and also that aspect of the hearing before the Senior Master, where Mr. Hussain made an application in relation to those terms. A wide area of issues have been canvassed, some of which Mr. Hussain has succeeded on at an early stage by dint of concession on the part of the Autonomy Parties, and others where Autonomy have plainly succeeded.[49]Taking a broad brush approach I was minded to make an order, on both, of no order. However, what I am going to do is, in relation to the costs below of the application, I am going to make no order. But in relation to the costs today I am going to order that the Autonomy Parties should have 25% of their costs of today to reflect the fact that whilst there has been give and take and to and fro, on the two more substantial issues in relation to restriction on use and on cross-examination the Autonomy Parties have been successful. So that will be the order in relation to the costs of today.