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Calor Gas Ltd granted permission to search the business premises of retailers suspected of carrying out illegal activity with Calor Gas cylinders

In the recent case Calor Gas Ltd v Wilson the High Court granted a search order, probably the most draconian order the court can make.

This search order was granted to Calor Gas Ltd (“the Claimant”), against both contractual and non-contractual parties (Bloxwich Hardware and DIY (“Bloxwich”), Kings Heath DIY (“KHDIY”) and The Gas Station (“TGS”) (“the Defendants”)) in circumstances where the court was shown strong evidence that the Defendants were guilty of illegal activity with the Claimant now allowed to enter the Defendants’ premises and to search and remove materials.

Background

The Claimant provides cylinders to each of its distributors. The Claimant retains ownership of the cylinders, selling the liquid petroleum gas to fill them and prohibiting any other company from doing the same. This business model protects profits and ensures that health and safety requirements are met.

Bloxwich and KHDIY are both contractual retailers of the Claimant’s product, whilst TGS is not. A steep decline in gas bought by Bloxwich led the Claimant to carry out private investigation and an ongoing surveillance operation at each of the Defendant’s sites.

A private investigator revealed cylinder transportation and unmarked tanker visits between sites and lax health and safety procedures in action such as individuals smoking whilst filling the Claimant’s cylinders.

The Claimant submitted that there was clear and persistent evidence suggesting both Bloxwich and KHDIY were using TGS to refill the cylinders.

The Claimant issued a claim against the Defendants, one of which the Claimant had no contract with, and asked the court to grant a search order which would allow a search of the Defendants’ business premises and the seizure and removal of its cylinders. Allowing a party to litigation to search a Defendant’s property makes this a highly intrusive order.

What did the court decide?

The court agreed that there was compelling evidence that TGS had refilled Bloxwich and KHDIY’s gas cylinders, meaning the Defendants could be liable for trespass to goods, passing off, and unlawful means conspiracy, with Bloxwich and KHIDY also liable for breach of contract and breach of a fiduciary duty.

The court concluded that there was powerful evidence that the various Defendants will be in possession of incriminating items given the evidence of cylinder transportation between the businesses.

It was noted that where retailers use the Claimant’s cylinders to source gas from elsewhere, there is an obvious economic loss. The court considered this alongside the reputational risk and safety concerns of incorrectly filling the cylinders, concluding that the serious harm condition was met.

The court inferred from the Defendant’s attempts to conceal that the parties realised they would be in  “serious difficulties” if their activities were brought to light. Coupled with TGS’s experience in a highly regulated industry the court ordered that the premises be searched and the Claimant’s property removed.

Finally the court considered the proportionality of the order and noted that a number of features limited the impact of the searches. Searches did not extend to computers or residential premises, seizure was confined to the Claimant’s own cylinders, and the information obtained could only be used in the course of the proposed proceedings (with the exception of sharing relevant information with the Health and Safety Executive).

Relevance  

The case highlights that when deciding whether to impose a search order the court will exercise great care and scrutiny, weighing up the strength of the case alongside the impact of granting the order.

In the right circumstances a search order can assist a Claimant in cutting off illegal activity and allow them to obtain further valuable evidence or documents from the Defendant’s property. It also serves as a reminder that search orders may be an option for businesses who’s operations are jeopardised by another party, with or without a contractual relationship.

For further information, please get in touch with our commercial litigation team

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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Ashleigh Lavender

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Nichola Evans

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