Single Buoy Moorings Inc. v Aspen Insurance UK Ltd (on behalf of all underwriters subscribing to Policy No. HL250608 save for AIG Europe Ltd)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr. Justice Teare
Judgment Date13 July 2018
Neutral Citation[2018] EWHC 1763 (Comm)
Date13 July 2018
Docket NumberCase No: CL-2015-000536

[2018] EWHC 1763 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Rolls Building, 7 Rolls Buildings

Fetter lane, London EC4A 1NL

Before:

Mr. Justice Teare

Case No: CL-2015-000536

Between:
Single Buoy Moorings Inc
Claimant
and
Aspen Insurance UK Limited (on behalf of all underwriters subscribing to Policy No. HL250608 save for AIG Europe Ltd)
Defendant

Mark Howard QC, Neil CalverQC, Stephen MidwinterQC, Fred HobsonandSophie Shaw (instructed by Herbert Smith Freehills) for the Claimant

Alistair Schaff QC, Benjamin ParkerandAlexander MacDonald (instructed by Clyde & Co LLP) for the Defendant

Hearing date: 4 July 2018

Mr. Justice Teare
1

This judgment concerns three applications by the Defendant, an insurer, relating to disclosure and privilege. The applications are made in an action which is due to be tried in October, November and December 2018. In the action a very substantial claim is made for an indemnity under a policy of insurance in respect of damage to an oil rig, known as a MOPUstor (a mobile offshore production unit attached to a storage tank on the seabed). In view of the proximity of the trial it is necessary for the court to rule on the applications as soon as possible. I was asked to read some long and very detailed statements by the solicitors involved. It is not possible in the short time available to summarise it all. I have concentrated on those matters which appear important in the context of the applications which have been made.

2

One application is for permission pursuant to CPR 31.20 to rely upon certain documents said to have been mistakenly disclosed by the Claimant to the Defendant in circumstances where the Claimant maintains that they were in fact privileged from inspection (and therefore from use at trial). Another is an application for specific disclosure of certain categories of documents. The third application concerns redactions made from disclosed documents. A common theme to all the applications is a contention by the Claimant that the documents in question are privileged from inspection.

3

It is first necessary to recount, very shortly, why the documents sought in these applications are relevant. There is no dispute that they are relevant. In 2006 SBM, the Claimant, contracted with an energy company, Talisman, to design, build and erect a MOPUstor. In June 2011 the MOPU platform was towed out to a location in the North Sea where it was to be attached to the stor by means of legs which would fit into sleeves protruding upwards from the stor. The legs required “grouting” but there was delay in the grouting operation which was not completed until 12 July 2011. In May 2012 problems were found with the grouting, which were said to have caused fatigue damage to parts of the legs and to the structure below them. On 10 July 2012 Talisman ordered the demanning of the platform on the grounds of safety. By the time the MOPU was remanned in 2014 it had been left exposed for two winters in the North Sea which caused damage to the topsides. That damage, together with the sub-sea damage, is claimed from several insurers. All but one of those claims have been settled. The claim against the Defendant is the one remaining claim. Whilst the Claimant alleges that the topsides damage was caused by the defective grouting the Defendant maintains that in reality the cause was the Claimant's decision to bring the contract to an end and to decommission the MOPUstor for commercial reasons connected with delays in, and the unexpected expense of, the construction project. The Defendant therefore seeks disclosure of documents concerning the circumstances in which the contract was ended and the MOPUstor was decommissioned in order to advance its case. It is those documents which are the subject of these applications. In response the Claimant says that relevant documents have been properly searched for (by electronic means) and disclosed but inspection of some of them has been properly withheld on the grounds of privilege. The Claimant says that all the applications should be dismissed.

The application for permission to use documents said to have been disclosed by mistake

4

This application is made pursuant to CPR 31.20 which provides that where a party has inadvertently allowed a privileged document to be inspected the party who has inspected the document may use it only with the permission of the court.

5

It is common ground that the principles upon which that power should be exercised are those set out in Al Fayed v Commissioner of Police of the Metropolis [2002] EWCA Civ 780. It is necessary to set out paragraph 16 of the judgment of Clarke LJ (as he then was) which summarises the relevant principles.

“i) A party giving inspection of documents must decide before doing so what privileged documents he wishes to allow the other party to see and what he does not.

ii) Although the privilege is that of the client and not the solicitor, a party clothes his solicitor with ostensible authority (if not implied or express authority) to waive privilege in respect of relevant documents.

iii) A solicitor considering documents made available by the other party to litigation owes no duty of care to that party and is in general entitled to assume that any privilege which might otherwise have been claimed for such documents has been waived.

iv) In these circumstances, where a party has given inspection of documents, including privileged documents which he has allowed the other party to inspect by mistake, it will in general be too late for him to claim privilege in order to attempt to correct the mistake by obtaining injunctive relief.

v) However, the court has jurisdiction to intervene to prevent the use of documents made available for inspection by mistake where justice requires, as for example in the case of inspection procured by fraud.

vi) In the absence of fraud, all will depend upon the circumstances, but the court may grant an injunction if the documents have been made available for inspection as a result of an obvious mistake.

vii) A mistake is likely to be held to be obvious and an injunction granted where the documents are received by a solicitor and:

a) the solicitor appreciates that a mistake has been made before making some use of the documents; or

b) it would be obvious to a reasonable solicitor in his position that a mistake has been made;

and, in either case, there are no other circumstances which would make it unjust or inequitable to grant relief.

viii) Where a solicitor gives detailed consideration to the question whether the documents have been made available for inspection by mistake and honestly concludes that they have not, that fact will be a relevant (and in many cases an important) pointer to the conclusion that it would not be obvious to the reasonable solicitor that a mistake had been made, but is not conclusive; the decision remains a matter for the court.

ix) In both the cases identified in vii) a) and b) above there are many circumstances in which it may nevertheless be held to be inequitable or unjust to grant relief, but all will depend upon the particular circumstances.

x) Since the court is exercising an equitable jurisdiction, there are no rigid rules.”

6

It is first necessary to summarise, briefly, the chronology of disputes between SBM and Talisman because these are the foundation of the claim to privilege. The principal dates can be taken from the skeleton argument of Mr. Howard QC. In 2011 a dispute developed between Talisman and SBM relating to the execution of the construction project. In November 2011 SBM started arbitration proceedings against Talisman relating to liability for certain costs (described by the Claimant's solicitor as reimbursement of certain build costs). In July 2012 Talisman notified SBM that it intended to submit a substantial cross-claim, which it did in February 2013 when it brought a cross-claim for USD 2.8 billion based on an alleged wilful breach of contract. “Wilful default” had been alleged as early as April 2011.

7

In August 2012 SBM and Talisman established an “off-project” team which engaged in seven months of negotiations with Talisman with a view to settling the dispute. In particular Sietze Hepkema joined SBM in May 2012 as Chief Governance and Compliance Officer and his role was “to resolve disputes between SBM and Talisman and to find a way forward on the Project.” He and Mr. Paul Warwick of Talisman in August 2012 established an “off-contract” team focused on resolving the ongoing disputes. The team met regularly but only a limited number of people within SBM were aware that settlement talks were taking place. The talks resulted in a settlement reached on 11 March 2013 pursuant to which it was agreed that the MOPUstor would be decommissioned once the parties were able to re-man it.

8

This application concerns five documents which were provided by the Claimant to the Defendant without any claim to privilege. After a long and complex procedure of disclosure and the taking of witness statements the Claimant's solicitor formed the view that the whole or parts of those documents were in fact privileged from disclosure. They so informed the Defendant and requested their return. The question is whether the Defendant should be permitted to use the documents in this litigation.

The March 2012 documents

9

I shall deal first with what have been described as the March 2012 documents. They consist of minutes of a “Talisman MOPUstor Sponsor Meeting” between representatives of SBM and Talisman on 16 March 2012. Parts 1–4 concerned an update of current activities and discussions concerning the Rowan Stavanger. Part 5 concerned “feedback” from Talisman further to discussions between B. Chabas and T. Meggs, the chief executives of SBM and Talisman. Part 6 concerned how...

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