David Brown (Petitioner) v BCA Trading Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Registrar Jones |
| Judgment Date | 17 May 2016 |
| Neutral Citation | [2016] EWHC 1464 (Ch) |
| Docket Number | Case No: CR-2016-000997 |
| Court | Chancery Division |
| Date | 17 May 2016 |
[2016] EWHC 1464 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
In The Matter Of TRADEOUTS LIMITED
And In The Matter Of THE INSOLVENCY ACT 1986
7 Rolls Building
Fetter Lane
London
EC4A 1NL
Mr Registrar Jones
Case No: CR-2016-000997
Tim Wright (Solicitor) (of Candey) appeared on behalf of the Petitioner
Mr S Hossain QC (instructed by Berwin Leighton Paisner LLP) appeared on behalf of the Respondents
During the course of this case management hearing, a number of matters have been raised for which I have not had to give a reasoned judgment. However, this issue is contested. It is the question whether or not electronic disclosure by the Respondents should be provided, as they ask, using predictive coding or via a more traditional keyword approach instead. Currently it is agreed that disclosure should be on a standard basis and currently it is not possible to decide otherwise.
The majority of the documents that may be relevant for the purposes of trial will be in the hands of the First Respondent. Whilst that in itself does not determine the outcome, it is relevant to take into account when considering the Respondents' assertion, presented from their own view and on advice received professionally, that they think predictive coding will be the most reasonable and proportionate method of disclosure. It is also relevant to take into account when their lawyers identify the favourable difference in cost which they expect to incur if predictive coding is used instead of key word searching. There is no factual or expert evidence to contradict those assertions.
In those circumstances it has to be extremely significant that the costs envisaged for predictive coding are in the region of £132,000, as opposed to costs for a key word search approach of at least £250,000 (and indeed I believe that figure may even reach £338,000 on a worst case scenario).
That, of course, is relevant and persuasive only to the extent that predictive coding will be effective and achieve the disclosure required. That is not merely a question of the effectiveness of the intellectual property being used. It starts with the need to identify what documents (electronic or otherwise) are required for the purposes of trial disclosure within the context of proportionality and the overriding objective. When the size of potential disclosure is significant both in terms of quantity of documents and the time required to be spent on the disclosure process, it is particularly important for the lawyers to identify by reference to the true issues, the anticipated categories of documents and to enter into discussions to seek to minimise the work required and therefore the costs. Obviously this must be achieved without impinging upon the importance of disclosure but such discussions are important not just to reduce costs at the disclosure stage but also to make the future trial manageable.
The statements of case from both sides within this section 994 Companies Act 2006 petition present extremely broad issues of factual dispute. Realistically, however, experience shows that issues will narrow significantly by the time the trial is reached. This can mean that what may have appeared to be necessary disclosure based upon the statements of case at this stage, will turn out to have been unnecessary and indeed to a large degree irrelevant to the way the case will be heard at trial. It can mean that costs will have been incurred which need not have been incurred both during disclosure and when complying with subsequent directions concerning evidence. It may be difficult to foresee this outcome but experienced solicitors should be able to make a reasonable attempt at doing so.
I am not intending to criticise the parties in regard to their statements of case. These reflect the traditional approach towards section 994 petitions and, of course, not only must the lawyers present their client's case as best they can but also cases change over time and views reached at trial as to the need for earlier work may be attributable to the benefit of hindsight. Nevertheless disclosure is a stage when great advantage in terms of time and cost may be achieved by seeking to narrow down issues. This requires, as the parties accept, an internal assessment followed by a discussion between the parties concerning the likely shape of the issues at trial within the context of disclosure. A successful outcome from the use of predictive coding must, at least to some extent, depend upon the success of the parties having been able first to narrow down the issues and therefore the categories/types of documents relevant to the disclosure process.
This must be the first stage and I have made proposals for that process in the form of directions for the identification of issues with the aim of narrowing down what needs to be the borders for the searches. Those directions cannot be precise at this stage because the information available is not yet sufficiently precise and the parties need first to carry out their investigations and enter into dialogue. The directions intend to aid that process by both sides identifying within a schedule the issues they consider relevant, the documents relating to them, their source and location. This is not issue based disclosure but it should narrow matters down and reduce the costs. It is hoped that an approach of co-operation will avoid the need to return to apply for more detailed relief but obviously the parties can return if required.
I have also handed down the protocol proposed by the Technology and Construction Court, which is of great assistance for the process of disclosure of electronic documentation. In addition it is important to comply with CPR PD 31B, paragraphs 8 and 9 (discussions before the case management conference in relation to the use of technology and disclosure).
Looking at the second stage, the identification of documents to be disclosed: Assuming those directions are successful (or even if they are not), I reach the conclusion based on cost that predictive coding must be the way forward. There is nothing, as yet, to suggest that predictive coding will not be able to identify the documents which would otherwise be identified through, for example, keyword search and, more importantly, with the full cost of employees/agents having to carry out extensive investigations as to whether documents should be disclosed or not. It appears from the information received from the Respondents that predictive coding will be considerably cheaper than key word disclosure.
I appreciate that cost is not the only element and I have been taken by Mr Hossain QC for the Respondents to relevant passages from the recent decision of Master Matthews, Pyrrho Investments Ltd [2016] EWHC 256 (Ch). At paragraph 31 the learned Master sets out ten factors, together with an underlying eleventh, which assisted him to agree with the proposition of all parties that predictive coding for that case was appropriate:
"(1) Experience in other jurisdictions, whilst so far limited, has been that predictive coding software can be useful in appropriate cases.
(2) There is no evidence to show that the use of predictive coding software leads to less accurate disclosure being given than, say, manual review alone or keyword searches and manual review combined, and indeed there is some evidence (referred to in the US and Irish cases to which I referred above) to the contrary.
(3) Moreover, there will be greater consistency in...
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