An interesting judgment in the Mercantile Court highlights the importance of getting disclosure right, and the costs penalty that might apply if you get it wrong.
In Earles v Barclays Bank plc  EWHC 1 (Mercantile) HHJ Simon Brown QC, a judge with a well deserved reputation for knowing about e-disclosure, has made a number of comments on the failures of the Bank in respect of disclosure and includes considerable criticism of the legal team representing them.
The relatively complex claim turned on whether or not certain phone calls were made giving instruction to Barclays Bank. Not all relevant records were sought. As Simon Brown J observed:
The lack of disclosure by the Bank of the phone records, the Transfer Sheets and e-mail account of Mr Leech cannot be ascribed to a lack of understanding of the duties of disclosure and how to procure retrieval of electronic "documents" by the Bank's first class legal teams, both in and out house, and document storage managers as demonstrated by the correspondence referred to above. The explanation that the void occurred because Mr Leech had retired from the Bank's employment is a lame excuse- an expert in information technology, either in house or a consultant, could easily have been instructed to retrieve ESI from various back up sources one would have thought but no such expert appear to have been instructed to do so. One expects a major high street Bank in this day and age of electronic records and communication with an in house litigation department to have an efficient and effective information management system in place to provide identification, preservation, collection, processing, review analysis and production of its ESI in the disclosure process in litigation and regulation. However, even though the failure to disclose such critical information to assist the Court is surprising and to be deplored, there is no evidence that it has been done deliberately or constitutes spoliation in order to gain a tactical evidential advantage at the trial. None of the Bank's personnel such as in house counsel Elizabeth Freeman who undertook the bank's disclosure have been challenged on that. Accordingly, I decline to make any adverse inferences against the Bank either. The Bank's telephone databases and back up tapes as well as the Transfer Sheets should have been disclosed but I do not believe it has been established that these have been deliberately withheld to avoid its own case being undermined. In my judgment this was a decision made by the Bank's legal team on the erroneous grounds of relevance and proportionality, not as part of any tactical move to gain an evidential advantage in the litigation. (emphasis added)
As this extract hints, the Bank won its case and was thus the successful defendant. But that was by no means the end of the story when it came to costs. When considering his order for costs, the judge returned to the failures in disclosure mentioned above:
"It would be extremely difficult to define the exact limit by which the skill and diligence which an attorney undertakes to furnish in the conduct of a cause is bounded or to trace precisely the dividing line between the reasonable skill and diligence which appears to satisfy his undertaking, and the crass negligentia or lata culpa mentioned in some of the cases, for which he is undoubtedly responsible. The cases, however, which have been cited and commented on at the bar, appear to establish, in general, that he is liable for the consequences of ignorance or non-observance of the rules of practice of this court; for the want of care in the preparation of the cause for trial; or of the attendance thereon with his witnesses and for the mismanagement of so much of the conduct of a cause as is usually and ordinarily allotted to his department of the profession [emphasis added]
This was no doubt intended to be an expensive lesson for the Bank and their solicitors (£202,000 in costs turned, for a variety of reasons, into a costs order against the unsuccessful claimant of only £38,000). But the reality in all probability is that the Bank were never going to see any costs from the defendant, who appears to be highly insolvent. Nevertheless, the comments from HHJ Simon Brown QC should reverberate around the premises of all in-house legal departments and need to be carefully ingested by all litigation lawyers too.