Case Law: Civil Procedure Rules Examples

When is a document relevant?

  • The duty to search for documents is defined by the  Civil Procedure Rules 31.6 . Case law examples include:
  • Rowley v Liverpool City Council (1989) (comparative earnings)
  • Loutchansky v Times Newspapers (2002) (statement of disclosure is conclusive)
  • Marlton v Tektronix UK Holdings Ltd 2003 (ruling stated that  databases, backups tapes and servers should be counted as documents, and so should be disclosed)
  • Atos Consulting Ltd v Avis plc (2007) (ruling stated that redaction allowed)

 Duty to Search

Pre Action Disclosure:

Withholding Documents

  Preservation and Disclosure of all Documents

  • Rockwell Machine Tool Co Ltd v E P Barrus

 

 

Civil Procedure Rules: Witholding Documents

The Civil Procedure Rules, Part 31, relate to  the disclosure of documents in relation to a case. However, part 31.19, provides for with holding documents.

In the recent case (April 2009) of the Home Secretary (Secretary of State) v AHK, GA, AS, MH, FT and NT, this very subject matter was discussed; starting at Paragraph 12.

CPR 31.19

(1) A person may apply, without notice, for an order permitting him to withhold disclosure of a document on the ground that disclosure would damage the public interest.

(2) Unless the court orders otherwise, an order of the court under paragraph (1) –

(a) must not be served on any other person; and

(b) must not be open to inspection by any person.

(3) A person who wishes to claim that he has a right or a duty to withhold inspection of a document, or part of a document, must state in writing –

(a) that he has such a right or duty; and

(b) the grounds on which he claims that right or duty.

(4) The statement referred to in paragraph (3) must be made –

(a) in the list in which the document is disclosed; or

(b) if there is no list, to the person wishing to inspect the document.

(5) A party may apply to the court to decide whether a claim made under paragraph (3) should be upheld.

(6) For the purpose of deciding an application under paragraph (1) (application to withhold disclosure) or paragraph (3) (claim to withhold inspection) the court may –

(a) require the person seeking to withhold disclosure or inspection of a document to produce that document to the court; and

(b) invite any person, whether or not a party, to make representations.

(7) An application under paragraph (1) or paragraph (5) must be supported by evidence.

(8) This Part does not affect any rule of law which permits or requires a document to be withheld from disclosure or inspection on the ground that its disclosure or inspection would damage the public interest.

Bad Advice: Solicitors or Consultants?

The major cases last year relating to the civil procedure rules part 31,  were all  different, with different problems, but they have something in common – bad advice.

In all of these cases it appears the solicitors firms provided poor advice to their client, and that may well be true,  but is that the end of the story? Why was bad advice given?

DigiCel

The DigiCel revolves around keywords, and keywords not being used correctly. If a different litigation support company had been used, then different options may have been provided to law firm and therefore their client. For example, some electronic discovery companies charge per unit of data processed, and therefore the law firm will need to cull the data as much as possible using keywords. There is a financial incentive, often a very significant one, to cull the data as much as possible as early as possible.

Other consultancy firms charge on a consultancy basis, and so if the data is culled or not makes no difference to their billing rates.

Some firms, in the later category, will load everything into a review platform and then filter the keywords at the clients requests. This means that if the keywords change, at the request of the client or court, the full set of data can be viewed very quickly, at little to no cost, this provides a significant advantage to the instructing solicitor. However, companies with a rigid pricing structure per unit would require that the entire data set was reprocessed, at potentially prohibitive costs to the client.

Hedrich v Standard Bank

This case involves failure to properly disclose data, and in particular a CD. If Zimmers, the law firm involved, had instructed a electronic discovery firm that had a full list of exhibits, electronic database, and tracking system, they would have known, immediately that they did not have the full set of data.

Abela v Hammonds

In this cases there were several issues, but the one of interest is the instructing law firms failure to process and search the email data on back up tapes, as they stated it was not reasonable.

It appears that the solicitor was not advised correctly. Email data, on tapes, unless its highly unusual can be processed quickly and effectively with modern tools and technology. IndexEngines allows tape data to be searched from numerous email platforms, keyword searched, and then only the relevant data extracted directly from the tape, in a ready to load and process format. Companies like Palmer Legal Technologies, offer fast and efficient services, to process tapes and provide consultancy advice.

Tapes can be complicated, e.g. if there is a tape back up every day and every month, can a monthly tape contain everything that is on all 20 tapes? (answer – depends on the deleted cache retention policy).

Therefore quality advice and quality technology needs to be obtained by the law firms. Some (not all) companies, particularly a couple of the bigger firms, have fantastic technology, but its fantastically expensive and they want the client to use a methodology that fits their process, and their tools, not the clients.

When a case goes wrong the law firm will get blamed in court,  the reality is that while they took the decision to court, the biggest error they probably made is the selection of their electronic discovery consultant in the first place.

Case Law: Disclosure – Abela v Hammond Suddards

In the case of Abela v Hammond Suddards 2008  the detail of the CPR 31 was looked at, and in particular the reasonableness, or otherwise of a search, which comes under 31.7 of the CPR.

The respondent (Hammond) argued that the recovery of 21 months of backup tapes was too greater a task, and could cost £150,000.

These figures appear to be quite ridiculous.

If there was on tape a day, 5 days a week, 20 days a month, there would be 420 tapes over 21 months, and if ALL of the tapes were to be processed, and an expensive company was to be used then the cost of  around £200,000 could be achieved.

By why use one every day? Why not  one tape a week, or one a month? Selecting one  week or one a month would radically reduce the costs, and still be reasonable. Certainly more reasonable than not doing any.

The judgment of the court was that:

It is “not that no stone must be left unturned” but that a “reasonable search” is conducted. But it is the court that decides what is reasonable, “not the disclosing  solicitor“.

The judge did not believe the issue with tapes either stating that: “I am unimpressed by problems with acquiring tape drives, licenses, and hard disk space to process the data

The judge also referred to the DigiCel Case, for a measure of reasonable searches using keywords.

Is time of turning a blind eye to the incredible important source of back tapes over?

In the current market tape extraction has been more accesible: Tools like Index Engines, which can speed through backup tapes, searching and indexing the data on hundreds of tapes at a time , hard drive space is incredibly cheap (1 TB available for £50) and more and more companies offering tape extraction, eMag, Altrium, Ontrack, Palmer Legal Technologies, Sanderson Forensics, therefore there is no real excuse not to process some backup tapes, or seriously consider at least examining a good sample of them.

Case Law: Disclosure Hedrich v Standard Bank London Ltd

The case of  Hedrich v Standard Bank London Ltd at the court of appeal in 2008 is a veritable essay on the failings of disclosure by a solicitor under the Civil Procedure Rules Part 31.

The judgment, written by Lord Justice Ward,  is both pithy and witty starts with with the statement that  solicitors should carry a similar warning to cigarettes, in respect of their costs.

Following  litigation between the Bank and Hedrich a consultant relating to billing, the bank sued Hedrich for costs, due to the failure to disclose information/data on time.

In the case it was clearly shown that there was a failing to disclose on time, with multiple lists of documents produced, disclosing documents. Lord Justice Ward even described the original trial and disclosure as a “shambles” putting some the blame with the solicitors, Zimmers and some with Hedrich. The main problem revolved around the failure to disclose a CD of data that Zimmers had in their possession but denied/forgot they had.

Below is an except from the judgment in the court of appeal  showing the chaos of the disclosure:

24)  On 18th May 2005 Master Leslie gave directions for standard disclosure by list by 30th June, subsequently extended by agreement to 7th July, with the trial to take place in the Michaelmas term 2005. The claimant’s list was dated 21.6.2005 and simply listed six categories of documents including “documents relating to letter of credit in favour of Metis and related documents”. There was no reference to missing e-mails. In response to a complaint about the deficiencies in relation to that disclosure Zimmers sent a revised and expanded list dated 22nd July containing 123 documents but there did not appear to be any further documents relating to Metis. This led to a further protest about deficiencies with the disclosures. Mr Zimmer said he would see his client in Germany on 16th August but that had to be postponed until the end of the month. This should have given him the chance for a thorough investigation of his client’s documents, both those electronically stored and those on paper. Even after that visit, the revised list dated 13th September contained 171 documents, only some of which related to Metis. When it was pointed out to him that some of these documents referred to enclosures which were not themselves disclosed, Mr Zimmer said he would review the matter.

25)  In his evidence filed in his application to come off the record, Mr Zimmer revealed (though why this privileged information was disclosed is unclear) that there was a conference with counsel on 3rd October when the claimant gave instructions that he had not acted for third parties or otherwise in breach of the consultancy agreement. We do not know much more than that about what took place on that occasion.

26)  The Bank sought an adjournment on grounds that the claimant’s disclosure was incomplete, the case was not ready and the time estimate was too short. The Bank indicated that they had become concerned to make wider enquiries into facts and matters until then unknown to the Bank, particularly the claimant’s dealing with a Mr Tusder which might have been in breach of the Agreement. They gave notice of the possibility of a counterclaim to plead repudiation. The Bank also stated that it intended to disclose further documents – “we envisage a significant amount of further documentation will be produced once the Bank’s further diligent and rigorous enquiries are complete.” I mention this because in an appeal wholly based on Zimmers’ failures, there may be, I say no more, a little element of the kettle calling the pot black, at least at this stage in the litigation.

27)  Silber J. refused to adjourn the matter and ordered on 21st October 2005 that there be mutual supplementary standard disclosure by 4 pm on Friday 4th November 2005 in relation to the issues to be tried at the hearing set to commence on 21st November 2005. Such disclosure was to include the provision of e-mails and other documents relevant to the issues.

28)  A few days later Mr Zimmer met with the claimant and Mr Kaul in Hamburg. His priority was to finish the claimant’s witness statement. During the visit Mr Zimmer was shown a mass of documentation contained in clear plastic wallets piled on the claimant’s desk, floor and other furniture. On looking through some of this material it appeared to him that all of these papers related to matters before the period of the consultancy or after its expiry and for that reason he did not consider them to be relevant in the action. Whilst there he took instructions from Mr Kaul because he had been told by the claimant that Mr Kaul had managed to retrieve all of the T-Online e-mails from the claimant’s computer. He took a witness statement from him which was served in the trial and Mr Kaul was called as a witness. Mr Zimmer was told by Mr Kaul that he had copied the complete hard drive from Mr Hedrich’s computer onto his, Mr Kaul’s, laptop, including the e-mail files which he had been able to open using T-Online software.

29)  On 4th November 2005 both parties gave the supplementary disclosure pursuant to the order of Silber J. Zimmers also served a witness statement of Mr Kaul and a CD Rom entitled “e-mail correspondence claimant-defendant”. (This is not the Kaul CD Rom.) In a letter of 8 November Zimmers wrote:

“3. We have taken instructions again and our client confirmed that the e-mails we have disclosed in this cd-rom are the only ones our client has on his system relating to METIS. We hope to receive by fax today the e-mails as our client prints them out in Hamburg and sends them to us by fax. This should show the date and time of the original e-mail.

4. At the outset our client was not able to access the e-mails which were later recovered. As far as he was concerned they were gone. That is the basis of his original instruction to us. You are welcome to cross-examine him on this point at trial if you wish.”

Later about 1600 hard copy pages were delivered in four arch lever files.

30)  Such was the muddle and confusion over disclosure and what was an original document and what was a copy that the trial which had been fixed for 21st November had to be adjourned, with both parties being given permission to amend. On 24th November the Bank for the first time pleaded the case on which they eventually succeeded, namely the repudiation by the claimant working for others in conflict with his duties to the Bank. Unusually, but understandably in the light of that confusion, Mr Zimmer was ordered on 29th November, the second day of the trial, to file an affidavit stating with precision in relation to each document when it arrived, how it was dealt with and how it was disclosed.

The judgment went on to say that

The disclosure given by Mr Hedrich may have been defective, as was conceded. But that is not the issue. The issue is whether Zimmers were clearly and obviously in breach of their duty to the court to ensure that the client properly discharged his duty to give proper disclosure.

The issue for the Bank was their action blamed Zimmers, and as the judge implied on several times Zimmers did appear to be at fault. However in the preceding case the Bank had gone to great lengths to demonstrate that Hedriech was not a reliable witness resulting in the following problem.

“The supreme irony of the Bank’s case [is that]…. [t]he Bank spent days successfully cross-examining Mr Hedrich up hill and down dale, not just on the curiosities of his disclosure but of essential conflicts between him and his witness Mr Tusder. They painted him to be a liar and they were successful in that endeavour. In doing so they have destroyed Mr Hedrich’s credibility and they cannot in those circumstances succeed in establishing as a strong prima facie case that his word should be preferred to that of Mr Zimmer, a solicitor of the Supreme Court.

Therefore while Zimmers had failed to disclose the document, and there was a “shambles” in the production lists, the court stated that:

“I am not satisfied that Zimmers were negligent at all. They produced the [missing data] when its relevance was reasonably obvious. By then all the costs had been incurred and causation is not established.”

A brief summary of the cases, is also available at 7 Bedford Row

  • The Bank lost its appeal against a refusal by the Judge at first instance to make a wasted costs Order against Zimmers.
  • He stated on disclosure that document had been lost. In fact they had been retrieved by an expert and placed on a CD Rom 9 months before the trial and 5 months before Disclosure.
  • The solicitor had been told of the existence of the CD then but he did not receive a copy until shortly before trial and did not then examine it
  • He did not realise that it contained relevant documents and disclose them until the 3rd day of the trial.
  • The Court held that the issue was whether Zimmer  was clearly and obviously in breach of his duty to the court to ensure that the client properly discharged his duty to give proper disclosure
  • Given the difficulties in reading the CD ROM and given the reasonable expectation that it contained nothing which was material, it was not negligent to have left this unopened until information at trial made its relevance plain.
  • By then all the costs had been incurred and thus causation was not established

Case Law: Disclosure – Bermuda International Securities Ltd v KPMG

The cases of Bermuda International Securities Ltd v KPMG in February 2001 relates to pre-action disclosure, under 31.16, of the Civil Procedure Rules, and is often quoted along side Black V Sumitomo.

Bermuda International Securities Ltd, owned by Bank of Bermuda, which in turn is owned by HSBC was in litigation against KPMG .

BIS Ltd had applied to obtain information from KPMG and in the original case the court found against KPMG, and therefore KPMG appealed.  The case hinged on 31.6 of the Civil Procedure Rules and tested each of the points.

  • (1)This rule applies where an application is made to the court under any Act for disclosure before proceedings have started.
  • (2)The application must be supported by evidence.
  • (3)The court may make an order under this rule only where –
    • (a)the respondent is likely to be a party to subsequent proceedings;
    • (b)the applicant is also likely to be a party to those proceedings;
    • (c)if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and
    • (d)disclosure before proceedings have started is desirable in order to –
      • (i)dispose fairly of the anticipated proceedings;
      • (ii)assist the dispute to be resolved without proceedings; or
      • (iii)save costs.
  • (4)An order under this rule must –
    • (a)specify the documents or the classes of documents which the respondent must disclose; and
    • (b)require him, when making disclosure, to specify any of those documents –
      • (i)which are no longer in his control; or
      • (ii)in respect of which he claims a right or duty to withhold inspection.
  • (5)Such an order may –
    • (a)require the respondent to indicate what has happened to any documents which are no longer in his control; and
    • (b)specify the time and place for disclosure and inspection.

Therefore the judges had to asses the following tests.

  1. Were BIS Ltd likely to become a party to proceedings, and were KPMG likely also to be a party to those proceedings i.e. in this case were BISL likely to sue KPMG?;
  2. If so, were KPMG. likely to have in their possession custody or power documents relevant to an issue “arising or likely to arise out of that claim”?;
  3. If so, did the circumstances as specified in the rules exist to provide the jurisdiction to order “those documents” to be disclosed and produced to the applicant’s legal advisers, and/or any other professional adviser? [It is noteworthy that under the section it is not particular documents, but the documents that would otherwise ultimately have been produced on discovery under the old rule O.24 with which the section appears to have been concerned].
  4. Under CPR 31.16 the circumstances additional to those already made a requirement by the section, are that an order should “only” be made where
    1. if the proceedings had started the respondent’s duty by way of standard disclosure would extend to “the documents or classes of document of which the applicant seeks disclosure”;
    2. disclosure of the documents before proceedings have started is desirable to dispose fairly of the proceedings; assist the dispute to be resolved without proceedings; or to save costs.
  5. An order must specify the documents or classes of documents and must require the respondent to comply with 4(b). The order may require compliance with 5. The details of 4(b) and 5 are not relevant to this appeal, but the compulsion to specify may be of relevance.

The court held that that the appropriate test was that the applicant has enough evidence to plead a prima facie case but seeks pre-action disclosure in order to particularize it.

The Court stated that it was appropriate to order pre-action disclosure of documents in a wide range of cases. The court also stated that it was for the judge, exercising his/her case management powers, to determine the circumstances in which such an order would assist in resolving the dispute and, if so, whether the order would be desirable. The Court of Appeal upheld the first instance decision of Walker J, which required KPMG to give pre-action disclosure of audit files, correspondence and other documents relating to Bermuda International’s negligence claim against KPMG. The Court of Appeal also confirmed that it had been open to Walker J not to order Bermuda International to pay the costs of the application or the costs of providing the documents despite the presumption in CPR 48.1 that these costs should be paid by the party seeking pre-action disclosure, as KPMG was refusing to produce documents ‘root-and-branch’.

The court found, again, in favour of Bermuda International Securities Ltd and KPMG was compelled to produce the documents.

Case Law: Disclosure – Black v Sumitomo Corporation

The case of Black v Sumitomo Corporation is often cited as the a leading case in pre-action disclosure under the Civil Procedure Rules Part 31.16. The  appellants, Sumitomo, were represented, in part, by Orlando Geldhill.

In this appeals case in 2001 at the Supreme Court  Mr Herbet Black, and his companies, stated that Sumitomo Corporation (a trading company) had cost him $126 million, through unlawful manipulation of the markets.

In the previous cases the judge, Michael Brindle QC had ordered pre-action disclosure by Sumitomo, on nine counts. However Sumitomo appealed this and the cases was heard by Lord Justice Ward, Lord Justice May, and Lord Justice Rix in Decemeber 2001.

The original judge ordered the following disclosure

  1. Statements showing copper warrants held by or on behalf of the Respondents (or any of them) throughout or at any time during the period 1 June 1996 to 1 October 1996.
  2. Daily trading statements showing copper futures positions, copper options, or any other copper positions, held, granted, purchased and/or sold by or on behalf of the Respondents (or any of them) throughout or at any time during the period from 1 June 1996 to 1 October 1996 on or through the LME and/or COMEX.
  3. Documents containing or evidencing any agreement between the Respondents or any of them and Goldman Sachs (or any part of Goldman Sachs) relating to the advice given or action taken by Goldman Sachs (or any part of Goldman Sachs) in relation to Sumitomo’s copper positions on the LME and/or COMEX during the period 1 June 1996 to 1 October 1996.
  4. Documents evidencing the China Deal (referred to in paragraph 19 of Mr Vigrass’ first statement) and made between GMMC, CNIEC and/or the Respondents (or any of them).
  5. Documents disclosing the China Deal (referred to in paragraph 4 above) to the regulatory authorities.
  6. Documents evidencing the physical delivery of Copper to CNIEC as referred to in paragraph 19 of Mr Vigrass’ first statement.
  7. Judgments or pleadings in civil or regulatory actions brought since June 1996 by or against the Respondents (or any of them) relating to or involving allegations in respect of the China Deal (referred to in paragraph 4 above) and/or to manipulation of the copper market between 1 June 1996 and 1 October 1996.
  8. Written communications from the Respondents (or any of them or any person on their behalf) to CFTC, SIB, SFA or LME and/or notes of meetings between the Respondents (or any of them or any person on their behalf) and CFTC, SIB, SFA or LME between 1 June 1996 and 1 October 1996 relating to the disclosure of Sumitomo’s intentions and activities in relation to the unwinding of its copper positions.
  9. Any transcripts and/or minutes of the meeting of 28 June 1996 referred to in paragraph 15 of Mr London’s statement.

The court ruled that there is no requirement that it be likely that proceedings by issued, but merely that the persons are likely to be involved if proceedings are issued.

And the  court also ruled that that it was not a high standard of proof which the applicant had to meet to establish that the respondent was likely to be a party to subsequent proceedings, but in the case of  Black v Sumitomo, the Court of Appeal considered that the claim raised by Mr Black was “speculative in the extreme” and that the original application was a fishing expedition.

The court also made clear that an order for pre-action disclosure should not be made where there are alternative methods of  obtaining the relavant data/documents

As a result  the decision over the lower court was overruled by the appeals court, unanimously.



Follow

Get every new post delivered to your Inbox.

Join 29 other followers