Atlantisrealm Ltd v Intelligent Land Investments (Renewable Energy) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lord Justice Simon |
| Judgment Date | 19 July 2017 |
| Neutral Citation | [2017] EWCA Civ 1029 |
| Date | 19 July 2017 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2017/0710 |
[2017] EWCA Civ 1029
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Queen's Bench Division, Leeds District Registry
His Honour Judge Klein (sitting as a High Court Judge)
C50LS538
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Jackson
and
Lord Justice Simon
Case No: A1/2017/0710
Charles Hollander QC (instructed by Goodman Derrick LLP) for the Appellant
Lisa Linklater (instructed by Newtons Solicitors) for the Respondent
Hearing date: Tuesday 4th July 2017
Approved Judgment
This judgment is in eight parts, namely:
Part 1 – Introduction
| Part 1 – Introduction | Paragraphs 2 – 5 |
| Part 2 – The facts | Paragraphs 6 – 17 |
| Part 3 – The present proceedings | Paragraphs 18 – 25 |
| Part 4 – The appeal to the Court of Appeal | Paragraphs 26 – 29 |
| Part 5 – The law | Paragraphs 30 – 34 |
| Part 6 – Inadvertent disclosure | Paragraphs 35 – 38 |
| Part 7 – Was the mistake obvious? | Paragraphs 39 – 50 |
| Part 8 – Decision | Paragraphs 51 – 57 |
This is an appeal by the defendants in ongoing litigation against an interlocutory judgment refusing to order the deletion of a privileged email which had been disclosed to the claimants. The issue in this appeal is whether the judge correctly applied the legal principles governing inadvertent disclosure.
The claimants in the litigation and respondents in the present appeal are Atlantisrealm Limited. I shall refer to them as "Atlantisrealm". The defendants in the litigation and appellants in the present appeal are Intelligent Land Investments (Renewable Energy) Limited. I shall refer to them as "ILI".
Atlantisrealm's solicitors are Newtons. ILI's solicitors are Goodman Derrick LLP, to whom I shall refer to as "GD". During 2014 ILI's solicitors were Shepherd and Wedderburn to whom I shall refer as "SW".
After these introductory remarks I must now turn to the facts.
Part 2 – The facts
ILI and its subsidiaries are in the business of constructing and operating onshore wind farms. Two of its subsidiaries in 2014 were ILI (Low Waterhead) Limited and ILI (Cleughhead) Limited. I shall refer to those two companies as respectively "Low Waterhead" and "Cleughhead". Those two subsidiary companies embarked upon developing wind farms at the two locations in Lanarkshire from which they took their names.
By a share purchase agreement dated 7 th April 2014, ILI agreed to sell to Atlantisrealm the entire issued share capital of Low Waterhead and Cleughhead. Schedule 1 to the share purchase agreement contained warranties. Clause 1.11 of the warranties provided:
"Cleughhead has the necessary rights and consents to develop, construct and operate an onshore windfarm which is eligible for participation in the FIT scheme."
Clause 2.11 of the warranties provided:
"Low Waterhead has the necessary rights and consents to develop, construct and operate an onshore windfarm which is eligible for the participation in the FIT scheme."
Following completion of the purchase, Atlantisrealm brought proceedings in the Chancery Division of the High Court, claiming damages for breach of warranty. The essence of the claim was that Low Waterhead and Cleughhead did not have the necessary rights of way over land in order to deliver the turbines and other necessary components to site. ILI denied that there was any breach of the warranties, if properly construed.
ILI pleaded in its defence:
"11. In light of those matters and of the actual words used, the "necessary rights and consents to develop, construct and operate an onshore windfarm which is eligible in participation with the FIT scheme" meant such rights and consents as reasonable persons (equipped with the knowledge of AR and defendant) would have considered it necessary be in place when the SPA was made, excluding such rights and consents as AR knew were yet to be obtained.
12. But ILI –
i. Did not warrant the existence of those rights and consents which both parties knew had yet to be obtained.
ii. Did not warrant the existence of all rights and all consents which might become necessary as the project unfolded according to the particular decisions and solutions which AR devised or upon which the Council or other interested parties insisted in response to the matters mentioned in paragraphs 9 and 10(viii) above.
iii. Did not warrant that the wind turbines could be delivered to site at any particular cost.
13. For the avoidance of doubt ILI contends for the construction mentioned in paragraphs 11 and 12 above on two alternative bases:
i. The objective basis of construction: the meaning of the warranties is that which they would convey to a reasonable person having all the background knowledge available to the parties at the time of the contract.
ii. The shared subjective basis of construction: both parties shared the subjective understanding that the warranty bore the meaning set out in paragraphs 11 and 12 above. As a matter of law if both parties to a contract share a common subjective belief as to its meaning, then that is its meaning."
Atlantisrealm denied those paragraphs in its reply. The action was transferred to the Technology and Construction Court.
Disclosure took place in the autumn of 2016. ILI served its list of documents on 9 th September 2016. The list identified 4,891 documents. ILI provided those documents for inspection on 18 th October 2016.
Amongst those documents were many emails between SW and ILI. One of them was an email from John Morrison, a corporate solicitor at SW, to Mark Wilson, chief executive of ILI, dated 26 th March 2014. I shall refer to this as "the March email". Mr Morrison was commenting on the current draft SPA and Atlantisrealm's proposed amendments. Mr Morrison's final comment was:
"The only other point I had was that they have reinserted the warranty on the site having all necessary development rights which would in effect be a guarantee from ILI of the whole project, which is not acceptable and was not in the framework agreement."
This document, whilst not fatal to ILI's case, provided useful ammunition for Atlantisrealm in relation to the issue of what was the shared subjective understanding of the parties.
On 20 th January 2017 Mr Christopher Newton of Newtons wrote to Mr Nicholas Cook of GD concerning arrangements for a settlement meeting. In the last sentence he wrote:
"I don't know whether you have started your consideration of disclosure yet? The email below will be of interest to you."
Mr Newton attached a copy of the March email.
Mr Cook immediately responded, stating that the March email was privileged and had been disclosed inadvertently. He asked Mr Newton to delete all copies.
Mr Newton maintained that ILI had waived privilege in the March email. He refused to delete it. In those circumstances ILI applied for an injunction.
Part 3 – The injunction application
By an application notice issued on 13 th February 2017, ILI applied for an injunction (a) requiring Atlantisrealm to give up or destroy all copies of the March email and (b) restraining Atlantisrealm from using or referring to the email in the course of the proceedings.
Mr Cook of GD filed a witness statement in support of that application, explaining how the March email came to be disclosed. At paragraphs 6 to 8 he said:
"6. The Document mistakenly disclosed was one email out of a disclosure comprising a total of 4,891 documents. The reasonably large nature of this disclosure made it possible that mistakes could occur. To the best of my knowledge, the Document was the only email disclosed that attracted privilege, out of all 4,891 documents disclosed. For the record, during the disclosure exercise we specifically sought to exclude privileged Shepherd and Wedderburn emails, but to disclose those Shepherd and Wedderburn emails to which no privilege could be said to attach, rather than simply to exclude all Shepherd and Wedderburn emails, which would have been improper. In the region of 1,000 emails were excluded on the basis of privilege.
7. There were around 150 emails involving Shepherd and Wedderburn disclosed; as explained above, these emails were all intentionally disclosed as they were either common to the parties or were simply progressing elements of a transaction involving the parties and did not contain any element of advice. The Document clearly falls into a different category from those emails intentionally disclosed.
8. I will now explain the process by which the disclosure exercise was undertaken. Our client provided us with online access to its entire email folder relating to this transaction. There were 7,389 emails contained in this folder. We then undertook a "two-tier" review process, under which the initial review was conducted by a combination of 0–2 year PQE solicitors, and trainees. These junior fee-earners were instructed to categorise documents as "disclose", "privileged" or "not relevant", and to flag electronically every document which they were not entirely sure about, on grounds of either privilege or relevance. I then reviewed every flagged document, of which there were around 1,000 – 1,500. The Document was not one of them. I, in turn, flagged a handful of documents for discussion with Stephen Hornsby, the partner in charge of the case. At the end of the process, every document had been categorised as either disclosable, or not disclosable on the basis of privilege (primarily) or non-relevance. A list of all disclosable documents was automatically created (i.e. it was not prepared by hand, but generated by the computer), which became the schedule to the Defendant's disclosure list."
Mr Stephen Fallon of Newtons filed a witness statement...
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