Trying IT Cases

November 1, 2004

When I was called to the Bar in the middle of the last century (1959), I did not dream that there would one day be a Society for Computers and Law, still less that I would be a founder member of that society. At that time, my only acquaintance with a computer was with a huge computer contained in grey steel boxes lining all the walls of a large room that was the control room for my 5.25” anti-aircraft guns when I was on National Service in Gibraltar. There was an enormous amount of hardware whose only function was to translate information received from the radar, plus some information about wind and weather, into instructions to the guns.

The chambers that I joined in 1959 was rather old fashioned even for those days. Our only IT equipment comprised one manual typewriter, telephones, plus two dictating machines for the joint heads of chambers. We were ahead of the game in having the only woman clerk at the Bar. She was excellent but a complete dragon. She told me that I would not be allowed to have any of my work typed. If it was typed, she said, some solicitors might think that it had been done by a more senior member of chambers with not enough work. I was allowed to use a fountain pen rather than a quill, but I had to change from blue to black ink some years later because the photocopying machine that we had acquired would not copy blue ink. I am very grateful for the discipline of manuscript. It encouraged brevity. It also encouraged a logical progression of thought so that if one changed one’s mind on the last page it was not necessary to go back and rewrite the whole Opinion.

Eventually, after a change of clerk, we moved on to the fax machine and we all had personal computers. When I arrived on the Bench, first as an Official Referee, I was an experienced computer user, unlike some of my colleagues. One of them, now long since retired, at the end of a lengthy opening of a computer case, said “Would you please explain to me again the difference between hardware and software”. All of the judges of the Technology and Construction Court are now computer literate – though, as with all judges, they each differ in the degree to which they use their literacy and they also differ in temperament. I heard one of them recently described as one who would not let you die in ignorance.

To move on to my title: Trying IT cases. There is a double entendre in that title. But as a judge I have never found IT cases trying. Trying IT cases is always interesting and fun, though hard work.

Types of IT Case and Splitting Issues

There are broadly two types of IT case. There is the intellectual property case that goes to the Patent Judge. On the other hand there is the case where the purchaser of a system says that it does not work or it does not come up to warranty or specification. I am sorry to say that I never dealt with an IP case on the Bench, though I did quite a lot of copyright work at the Bar.

The sort of IT case that goes to the TCC follows a pattern rather like an architect’s negligence case. The purchaser says, You did not give me what I wanted: the supplier says (a) You did not tell me what you wanted and (b) You did not use the equipment properly. The purchaser then says, You contracted to train me in how to use the equipment and if I did not use it properly it was due to your bad training. Both parties then turn on the consultant for failing to explain the problems to each other. Each party consults an expert in computers and in the particular trade or profession of the purchaser of the equipment. Some very expensive people called forensic accountants also are instructed to wind up the damages into millions.

Very often, the damages really are in millions. If your business is entirely dependent on a computer and the computer does not work, the results can be catastrophic. Some claims are difficult to prove. For example, a claim that if the computer had worked up to warranty there would have been savings in staff wages or in capital invested in stock over a number of years. Such claims involve detailed investigation into past, present and likely future.

Because the damages are potentially colossal, computer contracts very often contain exclusion of liability or at least limitation of liability clauses. That makes them very interesting for lawyers and judges, with interesting arguments about construction of the contract and the effect of the Unfair Contract Terms Act 1977. Such arguments increase the costs of trial and the risks for the parties. It would be an attractive course to take to try and decide the effect of an exclusion clause as a preliminary issue. Decision of such an issue would at least help the parties to negotiate a settlement. But the issue of reasonableness crops up and I have always been persuaded by the parties that it is not productive to try this as a preliminary issue.

I have also explored whether it would be helpful to split the trial and try liability before damages. On each occasion I have been persuaded by the parties that the issues of liability and damage are so bound up together that it would be unhelpful to split them.

One of the unnecessary complications of IT trials is that, as with criminal fraud trials, the complainant or counter-complainant instead of limiting the case to the best points throws in every point good or bad. Parties should remember that, with the modern issue-based approach to costs, a party that substantially wins an action may be severely penalised for taking bad points.

Cutting Down the Paper

The trial of IT actions usually generates a great deal of paper. Solicitors’ charges for photocopying are so enormous that they have little incentive to reduce the number of documents copied at great cost to their clients. To be fair to solicitors, a process of reading documents in order to reduce the number copied would require scrutiny by a senior and expensive brain for each party and the cost of the process would probably be even greater than the cost of photocopying. Moreover, there would always be the problem of the inquisitive judge anxious to look at documents not included in the bundle but referred to in other documents.

What should one do about this problem of documents?

Nine years ago, in February 1995, I started a trial which I intended and planned should be without paper. The case was Mowlem v Eagle Star and others. Among the counsel were the present Lord Chancellor and Steele J. and the recently appointed QB judge Dame Elizabeth Gloster. I had been told that the parties wanted to refer to a million documents. So I organised that all the documents should be put onto computer disk with a common numbering system and that everyone in court should have a computer screen in portrait format and an operator would display on the screens whatever document was being referred to in court at the time. Solicitors and others had laptops connected by telephone to their offices for access to their own computers during the trial. And of course we had Livenote to record the proceedings. The telephone connections and also the power supply to the court had to be upgraded. One of the solicitors at an early stage very sensibly pointed out that the air-conditioning in the court would be inadequate for the heat from all the equipment, so the parties paid for some stand-alone air chillers to be installed in the ceiling. Happily those chillers can also be used as heaters and, even more happily, it was not worth the parties’ while to take them away at the end of the trial.

It was the first civil trial in England to have all the documents on computer disk. Some criminal fraud trials had been conducted in a similar way but there the number of documents was smaller and the reproduction of documents was less satisfactory. In some criminal cases that I observed, the police copied each document in two halves, top and bottom, because their monitors were unable to display the whole document on screen in readable form.

Unfortunately, in the Mowlem case, one or more of the distinguished leaders, when instructed after the arrangements had been made, insisted that there should be paper to scribble on, so all the documents were copied anyway, but at least I had mine on disk, as did everyone else.

The Mowlem case did not concern computers. But I have often wondered why it is that in cases where at least one party is a computer company the parties do not insist on using modern technology in court. Why not put all the documents on disk, and perhaps when someone refers to a document and it is found to be important, copy it to hard copy and put it in a short bundle?

At least I have usually managed to get a daily transcript with a disk and preferably Livenote together with disks of counsels’ submissions and the expert evidence. That all helps to get the judgment out on time.

Avoiding Trial?

I have been asked to say what the judge can do to help the parties to avoid a trial by suggesting settlement discussions or some form of Alternative Dispute Resolution (ADR). I know that I gave offence when answering that question when put to me by members of SCL at a meeting in Gray’s Inn. So I shall give the same answer again. You, the lawyers, are all grown-ups, why don’t you advise your clients to settle? I know that it is contrary to modern thinking, but there are good reasons why the judge should not urge parties to settle.

In the 1960s, the Official Referees were great urgers of settlement. It became plain that they did not like trying the cases that they were specifically appointed to try. As a result, litigants felt that they were being denied justice. More recently, a friend of mine, a practising silk, said to me, “Would you please tell your Brother Judge X that I am perfectly capable of advising my client when and how to settle and I do not like being given a lecture in front of my clients about the desirability of settlement”. Although I agreed with him, I said, “No. You tell him. He is a fellow Bencher of yours.” My reluctance to urge settlement is particularly great in IT cases because I understand that parties are themselves reluctant to litigate. There are usually allegations matched by counter-allegations and the parties may feel that washing their dirty linen in public may cause both or all of them to lose business. So I felt as a judge that the parties probably tried very hard to avoid coming to court, and if, despite all their efforts, they did come to me for judgment, I should not put obstacles in their way. Do other judges of the TCC feel the same way? Some do not, and maybe some do.

On a related topic, should judges make orders that the parties engage in ADR, specifically mediation? I am all in favour of mediation. But I have taken the view that it is unproductive to force people into mediation. I put that view forward recently at a conference attended by a lawyer from the Far East who said that in his jurisdiction it was customary to order mediation even when one party was reluctant and a skilful mediator often produced a settlement. I remain unconvinced. I do not believe that parties should be forced into settlement proceedings of any sort under judicial pressure. The Warner Brothers film, “Disclosure” starring Demi Moore and Michael Douglas showed a dramatic example of a court ordered mediation which the parties went along with, both to keep the judge sweet and at the same time to extract information from the other side without any intention of settling. That film may not be representative of the truth, but it is consistent with stories one hears from spouses ordered to go before a mediator before being allowed to put the story of their family break-up before a judge. It is also consistent with what one hears from experienced mediators in commercial cases. I cite an article by Christopher Cox in the Chartered Institute of Arbitrators’ Newsletter for November 2003 and a letter in response from Francis Miller in the Newsletter for February 2004. By contrast, I understand from The Lawyer (15 March 2004, p 4) that it is Treasury policy, if not Government policy, that ADR should be ordered in order to save costs with a target of reducing the number of commercial and civil cases in the courts by 200,000 by April 2006. If that policy is pursued, it will be good for arbitrators, but what has happened to the concept that justice in the Royal Courts will not be denied? Perhaps we should revert to trial by battle which would be even cheaper. Resort to hired champions (as opposed to duel between personal litigants) was frowned on in the time of King John, but such a system might solve the present problem of what to do about appointing Silks.

If it is right that parties are unwilling to take their IT disputes to court, there are of course other courses open.

First there is arbitration. Often, parties fail to remember that it is possible to make an ad hoc arbitration agreement even though there was no agreement for arbitration in the original agreement between them. Arbitration does avoid the washing of dirty linen in public. It also can avoid the problem of what Lord Mustill has referred to as “the Duff Judge”. But unless the parties themselves agree on an arbitrator (a difficult thing to do) rather than relying on an appointing body, they might get a duff arbitrator.

What about Protocols? There is no IT Protocol. Some solicitors expect that the Protocol for Construction and Engineering Cases should be followed in IT cases. I cannot answer for the present judges. Personally, as a judge I would not have expected any Protocol to be followed unless the law specifically required me to do so. I regard all the Protocols as designed to restrict access to the courts by front-loading costs. Mr. Alex Charlton of 4 Pump Court sent me a most interesting e-mail recounting efforts by his chambers and Masons to draft and have accepted a Protocol for IT cases. That effort was apparently discouraged on the ground that there are too many Protocols and I agree with that view. However, I believe, and I think that Alex Charlton also agrees, that it would be helpful if in IT cases there were a standard agenda (to be adapted to each case) for the first Case Management Conference in the TCC. The same would apply to the Preliminary Meeting in Arbitration. It may be that SCL might formulate such proposals and suggest to the TCC that they be adopted by Practice Direction or less formally. Such an agenda, if drafted, would also be helpful to arbitrators. Alex Charlton’s note to me would be a useful starting point (see p. 24).

Expert Determination may in my view be more suited to the decision of limited issues (if any can be isolated) rather than decision of the whole dispute. A limited issue might be a point of law or an issue of mixed fact and law.

Finally there is Adjudication. Contrary to many predictions, the construction industry has taken adjudication to its heart. The ill-named Housing Grants, Construction and Regeneration Act 1996 (commonly known as the Hugh Grant Act) set up a system of interim decisions subject to being overruled by an order of an arbitrator or the court. While it is difficult to collect reliable statistics, it is undeniable that only a very few of the interim decisions given are challenged in arbitration or the courts. On the other hand, one hears many tales of odd decisions.

I do think that it would be desirable for the IT industry to consider the lessons from the construction industry, both successes and failures, and try to draft a contractual set of rules for adjudication in the IT industry. Perhaps such a task might be undertaken by a sub-committee of SCL. If there were such a set of rules, they might be either incorporated by reference into the original computer contract or agreed to ad hoc when a dispute arose. Consideration might also be given by SCL to maintaining a panel of skilled potential Adjudicators so that disputing parties might be able to avoid “the Duff Adjudicator”.

Peter Bowsher Q.C., FCIArb practised continuously at the Bar from 1959 until 1987. From 1987 until 2003 he spent 16 years on the Bench as an Official Referee and Judge of the Technology and Construction Court. He led the introduction of the use of IT into the court. Since his retirement from the Bench in 2003 he has acted continuously as an Arbitrator and practitioner of other forms of dispute resolution at Keating Chambers, 15 Essex Street, London WC2R 3AU.