(1) Triumph Controls UK Ltd v (1) Primus International Holding Company
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson |
| Judgment Date | 07 February 2018 |
| Neutral Citation | [2018] EWHC 176 (TCC) |
| Docket Number | Case No: HT-2016-000104 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 07 February 2018 |
[2018] EWHC 176 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
THE HON Mr Justice Coulson
Case No: HT-2016-000104
Mr Rajesh Pillai and Mr Nathaniel Bird (instructed by RPC) for the Claimants/Respondents
Mr Edward Pepperall QC and Ms Helen Gardiner (instructed by Harrison Clark Rickerbys) for the Defendants/Applicants
Hearing date: 31 January 2018
The Hon.
INTRODUCTION
In these proceedings, the claimants claim some US$65 million against the defendants for breaches of warranty following the sale of the defendants' aerospace business to the claimants via a share capital purchase. It is said that the defendants failed to disclose various aspects of the business, including alleged operational failings at, and lack of accreditation of, their facility at Farnborough. The original trial date was adjourned as a result of the claimants' late application to re-amend the Particulars of Claim, and the trial is now due to take place for five weeks starting on 18 June 2018.
By an application dated 19 December 2017, the defendants sought wide-ranging orders arising out of what they said were the fundamental deficiencies in the claimants' disclosure. On the face of it, the application required the claimants to re-do, from scratch, the search exercise that they had undertaken. That was an unrealistic stance and Mr Pepperall recognised that in his helpful skeleton argument.
In consequence, the defendants sought two more focused orders from the court. The first was an order that the list of 860,000 folders and file paths which had been identified by the claimants on the Farnborough shared drive should be provided to the defendants so that they could see whether there were any folders or file paths which had not yet been – but should be – searched. The second was for an order that the claimants undertake a manual review of the balance of 220,000 documents (out of a total of 450,000) which had been identified as potentially disclosable following the keyword search but which, other than a very limited sampling exercise, had not been further searched.
At the end of the hearing, in view of the proximity of the trial date and the overriding need for speed, I set out orally the conclusions noted at paragraphs 24 and 42 below, and gave brief reasons for my decision. I promised to provide a Judgment setting out those reasons in detail.
Accordingly, I deal with the disputes between the parties in this way. I set out the background to the disclosure dispute in Section 2. I set out the relevant law in Section 3. Thereafter, at Sections 4 and 5, I deal respectively with the application in respect of the file paths, and the application in relation to the 220,000 documents. I am very grateful to counsel for their extremely helpful written and oral submissions.
THE BACKGROUND
Disclosure has been something of a running sore in this case. The claimants' Electronic Documents Questionnaire (“EDQ”) indicated that, following a keyword search, all the documents responsive to those searches would be “manually reviewed”. There was no reference to a Computer Assisted Review (“CAR”).
The parties agreed the keywords. Because of the large amount of potential documents that would have been turned up by the original keywords, those were reduced in number, again by agreement. This refined exercise produced a total of 450,000 responsive documents.
On 8 July 2016, the claimants served their first list of documents. This was based on a review of over 200,000 documents. 12,476 documents were disclosed in that first list.
On 29 July 2016, the claimants served a first supplemental list, disclosing a further 4,163 documents. The covering letter indicated that those had been “manually reviewed”. This made a total of 16,500 disclosed documents.
It has subsequently become apparent that, having reviewed a total of around 230,000 of the 450,000 documents by the end of July 2016, using manual searches aided by CAR, the claimants decided not to search the balance of 220,000 documents which had been de-prioritised for manual review by CAR. The claimants say that they sampled 1% of those documents using a CAR technique which revealed that only 0.38% of the remaining documents would be relevant. They therefore concluded that that was disproportionate and that no further searches were required. The extent to which that was an appropriate course to take is dealt with in Section 5. It was not at any time discussed with the defendants, let alone agreed with them.
Since then, the claimants have produced 10 supplemental lists of documents, together with a separate disclosure exercise relating to valuation documents. Almost 3,000 additional documents have been disclosed as a result, making a total of 19,500 disclosed documents. The evidence suggests that about two thirds of these later documents, so around 2,000 documents, were responsive to the keywords which had been agreed in 2016. On the face of it, therefore, those 2,000 documents should have been disclosed originally.
THE RELEVANT PRINCIPLES OF LAW
The starting point for any consideration of the court's approach to disclosure disputes is Nichia Corporation v Argos Limited [2007] EWCA Civ. 741. Jacob LJ stressed that standard disclosure would not necessarily give rise to ‘perfect justice’. He said:
“50. There is more to be said about the change to standard disclosure and indeed to the express introduction of proportionality into the rules of procedure. “Perfect justice” in one sense involves a tribunal examining every conceivable aspect of a dispute. All relevant witness and all relevant documents need to be considered. And each party must be given a full opportunity of considering everything and challenging anything it wishes. No stone, however small, should remain unturned. Even the adversarial system at its most expensive in this country has not gone that far. For instance we do not include the evidence of a potentially material witness if neither side calls him or her. Nor do we allow pre-trial oral disclosure from all potential witnesses as is (or at least was) commonly the practice in the US.
51. But a system which sought such “perfect justice” in every case would actually defeat justice. The cost and time involved would make it impossible to decide all but the most vastly funded cases. The cost of nearly every case would be greater than what it is about. Life is too short to investigate everything in that way. So a compromise is made: one makes do with a lesser procedure even though it may result in the justice being rougher. Putting it another way, better justice is achieved by risking a little bit of injustice.
52. The “standard disclosure” and associated “reasonable search” rules provide examples of this. It is possible for a highly material document to exist which would be outside “standard disclosure” but within the Peruvian Guano test. Or such a document might be one which would not be found by a reasonable search. No doubt such cases are rare. But the rules now sacrifice the “perfect justice” solution for the more pragmatic “standard disclosure” and “reasonable search” rules, even though in the rare instance the “right” result may not be achieved. In the vast majority of instances it will be, and more cheaply so.”
Another important case dealing with general disclosure principles, particularly relating to electronic documents, is Digicel (St Lucia) Limited and Others v Cable & Wireless Plc and Others [2008] EWHC 2522 (Ch). In that case, Morgan J ordered the defendants to redo the expensive search they had already undertaken, in part because they had acted without the agreement of the claimants in the first place. He said at paragraph 81:
“It is unfortunate that this dispute about the extent of the key word search comes to Court after the Defendants acted unilaterally in choosing key words and conducting a search. In acting unilaterally, and in disregarding the clear advice in Part 31 Practice Direction, the Defendants have exposed themselves to the risk that the Court will conclude that their search was inadequate and that the Court should order the Defendants to carry out a further search. The Defendants submit that because they have already carried out a search, taking a considerable time and involving a very large cost, the Court should be most reluctant to order them to carry out a further search. It seems to me that I should approach the issues in relation to key words in two stages. At the first stage, I will attempt to identify where to draw the line between inclusion and exclusion of the suggested additional key words. If as a result of that process I conclude that the Defendants should have, first time round, used additional key words I will then have to consider whether to make an order for a further search under Rule 31.12. It is also possible for me to distinguish between the e-mail accounts of the 16 individuals who have already been the subject of key word searches and any further e-mail accounts found following the restoration of back-up tapes, where there have not previously been any key word searches.”
In that case, Morgan J also dealt in clear terms with the issue of proportionality. He said:
“94. The Defendants say it would be wholly disproportionate for the Court now to require them to carry out a further search. They refer to the fact that the Defendants, unlike the Claimants, did not bring all the electronic documents together on one database. The...
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