Formica Ltd v Export Credits Guarantee Department
| Jurisdiction | England & Wales |
| Judgment Date | 13 July 1994 |
| Date | 13 July 1994 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division
Before Mr Justice Colman
Company - documents - guarantor entitled to specific discovery
Where a guarantor of losses incurred by a company had been contractually entitled to view documents which had come into existence in the company's pursuit of its potential losses, the guarantor was entitled to specific discovery of those documents as it had a common interest with the company in the recovery of the company's debts.
Mr Justice Colman so held in the Queen's Bench Division in a judgment delivered in open court after a hearing in chambers when allowing in part an application by the defendant, the Secretary of State for Trade and Industry, acting by the Export Credits Guarantee Department, for specific discovery of documents held by the plaintiff, Formica Ltd.
The defendant had guaranteed to indemnify the plaintiffs against 90 per cent of any loss which the plaintiff sustained in connection with, inter alia, the insolvency of buyers of the plaintiff's products. In October 1991 one of the plaintiff's customers, a Swedish company, Lamett AB, with which the plaintiff had contracted, went into liquidation, owing the plaintiff £1.1 million. The plaintiff claimed against the defendant to be indemnified under the agreement.
The defendant disputed the claim on the basis that the plaintiff had not promptly disclosed all facts which affected the guaranteed risks. He alleged that the plaintiff had been aware a month before the liquidation of Lamett of the difficulties that it was experiencing and that another company and business rival, Perstorp SA, was interested in purchasing Lamett's business.
The defendant alleged that the plaintiff had entered into discussion with Perstorp with a view to securing the payment of Lamett's debt once Lamett had been purchased. The defendant said that the plaintiff acted to safeguard its interests other than that it had in common with the defendant. The plaintiff informed the defendant of the situation only when Lamett had gone into liquidation.
The defendant sought discovery of, inter alia, documents from which a summary had been drawn up, for the plaintiff's own purposes, of what had passed between the plaintiff and Perstorp. The summary had been disclosed to the defendant but the plaintiff claimed that the documents underlying it were privileged.
Mr Jeffrey Gruder for the plaintiff; Mr Richard Spearman for the...
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