E-disclosure and Sanctions

Gordon Exall looks at a recent judgment dealing with compliance with an unless order in the context of e-disclosure

A hearing on the question of whether a party has complied with an unless order is always a fraught one. The stakes are high and the issue of compliance central to the case.  Here I look at issues of compliance in relation to an order for e-disclosure.

When a party applies to strike out because of an alleged breach of a peremptory order the application is bound to be fraught since a party can fail on a technical point far removed from the merits of the action as a whole. This problem is compounded where the breach relates to an allegation relating to a failure to give proper e-disclosure.  In a case involving a failure to give proper disclosure using e-disclosure there are large numbers of documents involved and numerous potential ways of failing to comply fully with an order for disclosure.  For this reason, compliance in relation to orders for e-disclosure is likely to be an area rife for controversy.  In most cases where e-disclosure takes place, the stakes are high and the number of documents enormous. If a party can obtain a speedy end to the action by arguing that their opponent should be struck out for non-compliance, this will be an attractive option.   

A Working Example: Atrium Training Services

In Re Atrium Training Services Ltd [2013] EWHC 2882 (Ch) Mr Justice Birss considered the issue of whether a party should be struck out for failure to comply with an order for e-disclosure.

Background 

Atrium involves an action brought by liquidators against former directors of a company.  The court made a peremptory order obliging the liquidators to conduct a search for documents falling within CPR, r 31.6 and provide a list of documents identifying the documents located as a result of their search. The disclosure exercise was completed by the liquidators using the Unified e-disclosure platform and the list was served within the required time along with a disclosure statement signed with a statement of truth. There were around 6,000 documents in the list, consisting of about 22,000 pages.  An application was made to strike out the action on the grounds that there had not been full disclosure and that, in any event, e-disclosure was not the correct means of preparing the list.  (For ease of reference in this article I will refer to the parties making that application as 'the applicants'.) 

 Alleged Missing Documents 

The applicants argued that relevant documents were missing from the list and the action should, therefore, be struck out.  This argument was not accepted by the court.   In order to consider whether there was a breach the judge held that he needed to examine what the order obliged the party to do.  The order in this case obliged the disclosing party to conduct a 'reasonable search' for documents.

It was common ground that a number of relevant documents had not been disclosed in the e-list and they should have been.   However, the fact of relevant non-disclosure was not enough.  In order to establish a breach the court had to find that a reasonable search had not, in fact, taken place.   The judge accepted that this could be done by inference. However, in order to draw such an inference the deficiencies relied on would have to be so significant that it was clear to the court that a reasonable search had not happened.  

On the facts of the case the judge could not draw that inference:  

 'This is a substantial case involving very serious allegations. It justifies an extensive disclosure exercise from the point of view of proportionality. However even looking at the exercise with the benefit of hindsight, I can see no justification for saying that it was not a reasonable search. It was very extensive. It was plainly carried out in good faith. It was explained in detail in advance to Mishcon de Reya and indeed was based on a methodology which had been ventilated in court before Henderson J when the unless order was made. It was completed within the time specified by the order. It is true that two classes of relevant documents were missed but there is no suggestion that this was the result of bad faith and I am satisfied that the fact these two classes were missed does not support an inference that the exercise itself was not a reasonable search. In my judgment the liquidators are not in breach of the order of 7th June 2013 on that ground.'

 

The Argument that the List Was Defective 

The applicants put forward a second argument that the list was defective, and so the order was breached on this basis. They alleged that the list failed to comply with CPR, r 31.10(3) which requires the disclosing party to identify the documents in a convenient order and manner and as concisely as possible. More specifically they stated that the list failed to properly identify the documents in it.  

The list was produced by e-disclosure software.   The applicants argued that this had no practical utility since it did not properly identify the documents.   The court accepted that the list complied with Practice Direction 31B.  Further the reality was that this was not a major practical burden. Although the form of categorisation could lead to a party not knowing whether a document was worthy of inspection, the e-disclosure meant there was no need to ask for inspection. The parties had access to the relevant database and the uploaded documents could be accessed using the software. (Although as we shall see the judge made case management directions to make the task of identification simpler). 

The Argument that the Electronic Documents Practice Direction Did Not Apply

The applicants had a further argument that the Electronic Documents Practice Direction did not apply to the case. The documents being disclosed were hard copy documents which had been scanned into the database for the purpose of the disclosure exercise.

The judge accepted that the e-disclosure Practice Direction would not ordinarily apply where 'paper' documents were put in electronic form for the purpose of disclosure. However the use of the e-disclosure had been agreed between the parties and the court in previous hearings as a system being beneficial to all concerned. The judge stated it would be 'absurd' to say that PD 31B did not apply, despite the fact that strictly speaking the underlying documents were not originally electronic documents.  

Directions Made to Simplify Identification of the Documents

The judge ordered the liquidators to use their reasonable endeavours to provide better descriptions of the documents. However he made it clear that this was not a reason to delay the parties examining the documents in the interim.    

Practical Guidance: Candour Always Helps

We are in an era where the courts are becoming less forgiving of mistakes made by litigators, and litigants during the course of litigation.  However, one telling feature of this case was the judge accepted the evidence (candidly given by the liquidators) that there had been innocent mistakes and oversights. It is clear that the reason for these mistakes and oversights were explained, in detail, in a witness statement. There was evidence before the judge to enable him to understand the reason for these mistakes and find that they were honest and understandable errors.

This led to the judge's conclusion 'that a serious effort was made on the liquidators behalf to perform a proper disclosure exercise.'

This demonstrates the importance of putting evidence before the court and, if mistakes have been made, admitting them and providing material which explains how those mistakes were made.  Even in the most technical of processes human error can occur and, if explained fully and properly, may be forgiven.

The judgment can be found at http://www.bailii.org/ew/cases/EWHC/Ch/2013/2882.html

The e-disclosure Practice Direction is at www.justice.gov.uk/courts/procedure-rules/civil/rules/part31/pd_part31b

 

Gordon Exall is a Barrister at Zenith Chambers, 10 Park Square, Leeds. His blog on Procedure, Limitation, Default and the Civil Procedure Rules is at http://civillitigationbrief.wordpress.com/. This article is an edited version of a blog post from that blog.

 

 

 

 

 

Published: 2013-10-07T12:01:34

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