SES Contracting Ltd. & Anor v UK Coal Plc& Ors

There are two applications before the Court. The first seeks against all four Respondents orders for disclosure of documents pursuant to the provisions of Part 31.16 of the Civil Procedure Rules (“CPR”), that is to say pre-action disclosure. The second application is pursued against the first two Respondents only and is an alternative to the first application. In the second application, the Applicants seek disclosure on a Norwich Pharmacal basis if this Court came to the conclusion that in the cases of the First and Second Respondents the requirements of Part 31.16 of the CPR were not met.

In fact, the alternative second application has featured little during the hearing before me. It was accepted on behalf of the first three Respondents by Miss Bridget Lucas that two (the same two) of the four requirements to be met to bring a case within Part 31.16 were satisfied in the cases of each of the first three Respondents, while the other two, it was said, were not satisfied in the cases of any of them.

The Fourth Respondent was represented separately from the other Respondents by Mr Charles Samek. The position adopted by the Fourth Respondent was that in his case also the two requirements of Part 31.16 which Miss Lucas accepted were satisfied in the cases of her clients were met. Thus the first focus of the hearing has been on whether the other two requirements of Part 31.16 were satisfied in respect of any of the Respondents. Moreover, the objections taken to the remaining two requirements of Part 31.16 in the cases of the first three Respondents and the Fourth Respondent were essentially the same.

The other focus of the hearing before me has been on the question of discretion in the event that I reached the conclusion that all four requirements of Part 31.16 were satisfied.

The First Applicant, SES Contracting Limited, carries on business as a specialist mining and tunnelling contractor. The Second Applicant, SES Holdings Limited, is a holding company and the parent company of the First Applicant. The chairman of the Second Applicant is Mr William Shinkins. He is also the principal shareholder in the Second Applicant.

The First Respondent, UK Coal Plc, is the successor to British Coal as the parent of a group of companies which operate the bulk of the rump of the British coal industry. The Second Respondent, UK Coal Mining Limited, is the principal operating company in the group, the company, which insofar as anyone does nowadays, mines the coal. The Third Respondent, Centechnology (UK) Limited (“Centech”), is a subsidiary of the First Respondent and carries on business as a provider of contracting services to the Second Respondent and others. The Fourth Respondent is Mr Mark Weston, who is now the chief executive officer of Centech, but was, until 8th July 2005, the chief executive officer of the Second Applicant and a director of 13 companies in the group controlled by the Second Applicant.

Until the matters which have given rise to these applications, the principal customer of the First Applicant was the Second Respondent. The Second Respondent had over the years developed a specialist expertise in undertaking, and a pool of specialist equipment to undertake, sophisticated tunnelling and mining. The Second Applicant had other customers apart from the Second Respondent, but, as I understand it, the Second Respondent was by far the most important of the Second Applicant’s customers. Moreover, it seems that in recent years those equipped to perform the services of the Second Applicant in the United Kingdom have reduced in number so that, until the emergence of Centech, the Second Applicant was fast becoming a monopoly supplier of the services which it offered to the Second Respondent. The chief executive officer of the First Respondent is, and was at all times material to these applications, Mr Garold Spindler, generally known as Gerry Spindler.

The matters which have prompted the applications before the Court began when, contrary to what it considered that it had been told would happen, the First Applicant was unsuccessful in a tender, called Kellingley Phase 2, to undertake the construction of a drivage at the Kellingley Colliery of the Second Respondent. The tender was made in April 2006, and the outcome was announced to the First Applicant on 3rd May 2006. The successful tenderer was Centech. The First Respondent took the view that not only had it been given an indication by the Second Respondent that its tender would be successful, but Centech was technically not equipped to undertake the drivage in question.

In addition, having obtained the tender, Centech then attempted to obtain the services of employees of the First Applicant so as to enable it to perform the contract. Further, it seems that the Centech tender bid was based on achieving a rate of progress of 24 metres per week in sandstone -- a very optimistic rate. In fact, so it appears, Centech only achieved three metres per week. At that rate, it would have been likely to lose money on the work. However, instead of seeking to hold Centech to its contract, the Second Respondent renegotiated the basis of payment and agreed to substitute a cost plus basis.

The questions put in the minds of Mr Shinkins and his colleagues about the lack of success of the Kellingley Phase 2 tender set them on a course which, in about September 2006, put them in touch with Mr Nicholas Bradley. Mr Bradley had been a business associate of Mr Weston, but the two of them had fallen out. Mr Bradley provided copies of some emails written by Mr Weston. At the root of the applications before me are those emails.

The first email to which it is appropriate to refer is one which was sent by Mr Weston to Mr Bradley on 29th May 2005. For the avoidance of confusion when I come to deal with Mr Weston’s evidence about this particular email, he refers to it as having a date of 3rd June, but they are indeed one and the same email. The material part of the email of 29th May 2005 was this:-

“I have been summoned to a meeting with UK Coal on Friday to discuss me running their in-house contracting company that they have already incorporated, we need to make sure we’ve got a cut of this action as this takes AMCO and SES out of the frame totally. Resulting in Bill”, which is a reference to Mr Shinkins, “being desperate for cash at the year end, due to his expansion into Network Rail and his redundancy liabilities associated with ex Thyssen staff. Life is definitely getting interesting.”

The reference to AMCO was a reference to what was at that stage the only competitor of the First Applicant in the business which the First Applicant undertook.

The other email to which it is appropriate to refer at this stage is one which Mr Weston sent to Mr Spindler on 7th June 2005. It said this:-

‘Dear Gerry, thank you for the opportunity to talk with yourself yesterday. Please find attached information following our discussion I thought it prudent I respond promptly in view of your meeting schedule.

I would appreciate any response through this e-mail address or directly in the present circumstance. The “grapevine” has already reported back on our meeting of yesterday!’

The email had a number of attachments to it. One of those attachments was in the form of a memorandum from Mr Weston to Mr Spindler and, in the course of the hearing before me it was referred to as the “options document”. It was headed “Private and Confidential”. There was then the heading “Options Regarding UK Coal In-House Contracting”. The memorandum said this:-

“The size of the mining contracting market is now clearly defined as regards numbers following the recent closure of the Selby Coalfield. The expected reduction in total Contractors numbers has not materialised partially due to the move to flexible working arrangements that has absorbed UK Coal employees. This has allowed a gap in the market that fortuitously has held the core employees. It is essential in the current UK climate to be able to hold a core of key skill sets for the salvage of longwalls, development of roadways, specialist stone work and repair of roadways.

Remuneration packages have to be sufficiently attractive to encourage loyalty, flexibility and output performance. Any economic entity must be totally divorced from traditional restrictive working practices and over-paid, underperforming attitudes.

The NEWCO must operate as a contracting company, being pro-active, aggressive, acquisitive and self-critical.

To my mind two basic options are available to fulfil the given parameters, those of (1) A separate legal entity; (2) A flexible and mobile workforce; (3) A reduction in out-turn costs; (4) A commercially minded and motivated management; (5) Sustainability.

Option One: UK Coal continues with the plan to incorporate and roll-out an in-house contracting company to fulfil the short term needs of winders and artisan specialists to cover maintenance at non-social working times.

In due course the scope of the NEWCO’s works expands and incorporates general contracting with a gradual reduction in contractors’ workloads namely those of AMCO & SES Contracting Ltd.

MWCO takes a 50/50 (for the sake of this scenario) equity share in the NEWCO and builds an operational, administrative and commercial team to run the new company as a separate legal entity. Site costs and administrative costs are included in the costs build up, MW” -- this, of course, refers to Mr Weston -- “remuneration and holding company expenses excluded.

Advantages: (1) Low start up costs and flexibility to grow; (2) Ability to recruit on as needs basis with possible re-allocations from within UK Coal utilising costs savings; (3) A clear break from the TUPE implications in new un-contracted business areas; (4) Perceived as a division of UK Coal from a corporate perspective to the Board.

Disadvantages: (1) Attraction of the correct people to run the NEWCO will be hindered by the current incumbent contractors due to their diversity of business interests and ability to relocate resources internally; (2) Perception from employees that irrespective of the legal entity this is a division of UK Coal and invites union involvement in terms and conditions; (3) Difficulty in maintaining a constant base workload to keep key skill sets in place to meet demand; (4) The growth from embryonic to circa. £12m turnover will require systems and procedures for operations, control and execution that may inhibit response and the focus on deliverables.

Option Two. UK Coal employs MW on a temporary basis as a consultant. On day one after MW leaving SES (NEWCO) approach SES to buy the Assets and Liabilities of SES Contracting Limited. This will include the order book, plant assets, creditors, debtors and employment liabilities. Not the share capital, in this way, any injury/disease claim liability will remain with SES Contracting and formally Specialist Engineering Services. (Reference Company Structure).

Equity share arrangements as in Option One.

SES Contracting has a management structure that is working inclusive of Site Staff: administration, quantity surveyors and estimators. Any additional resource required would be wage roll and accountancy, which can be inter-traded with UK Coal.

Advantages: (1) A ready made business is up and running that achieves the same ends as the generic NEWCO; (2) The company works with the current people and can be added to or reduced easily as workloads demand; (3) The business operates in areas outside UK Coal which can give short term external cash and longer term areas for smoothing resource requirements; (4) Company has works with National Trust, English Heritage, Corus, Tarmac Northern and Store Norske Spitsburgen Grubekompani; (5) 80 potential employees at Tower with possible transfer potential to Dawmill in part; (6) It is a recognisable entity, even with a name change, to the contracting work force employed within UK Coal currently.

Disadvantages: (1) The price to pay for business, in light of the substantial forward order book being unavailable the purchase price should be nominal; (2) The TUPE costs which on the work force of 256 employees would be in the region of £400k. The 80 employees at Tower are covered by a secured trust of £336k held by Williamsons in Hull; (3) One or two immediate redundancies would be required with no accrual possibility.

In short my preference would be Option 2 with the comfort factor in that it is an entity that I am confident that can deliver from Day One and no ramp up.

I enclose, confidentially, up to date accounts for SES Contracting. This gives an indication of my realisation of the medium term projection for NEWCO. The Tower contracting work to reduce in the next 24 months due to natural exhaustion, being more than replaced by take up in the market from existing contract and on going requirement.

Initial savings projections on this basis would be 6.75% saving on insurance wage roll plus 20% mark up on £8.06m wage roll = £652k. Plus 50% of trading profits @ £1.2m = £600k = £1,200,000 annualised saving.

This is obviously a generic projection without getting into the detail of further savings tailoring specific overhead to match requirement.

On this basis I would be interested in taking either proposal forward and would not be averse to UK Coal having the controlling interest in one or two percentile points. Providing suitable protection was provided in the shareholders’ agreement to prevent un-agreed buyout, liquidation and suitable lock-in that reflected the commitment to the arrangement.

I trust this is of interest to yourselves and look forward to your further communication.”

In fact, as matters turned out, following the failure of the First Applicant to obtain the award of the tender for the Kellingley Phase 2 works, Mr Weston did indeed approach the Applicants with a suggestion that the business of the First Applicants should be sold at a price of £1. At any rate, that was the evidence of Mr Shinkins. The position was that, in about April 2005, Mr Weston, in conjunction with a business associate, had made an offer to purchase the business of the First Applicant, again according to Mr Shinkins, at a price of £8 million, of which £4 million would be paid immediately.

Attached to the options document, and therefore attached to the email of 7th June 2005, were financial documents concerning the First Applicant. The detail of the documents is not material for present purposes. What is material is that in the documents there was a great deal of detail, including a summary of the departmental management accounts.

Before the Applicants received those copy emails, a letter had been written on its behalf by its solicitors, Messrs Andrew M. Jackson, to the directors of the First Respondent. It was a long letter, but it is important. It read as follows:-

‘Dear Sirs, Our Client: Specialist Engineering Services Limited.

SES is an experienced well-established specialist mining contractor which has been carrying out contracting work for UK Coal for many years and at a number of sites, including from November 2005, and with a further variation in February 2006, the Phase 1 tunnelling work for UK Coal at the Kellingley Colliery.

In March 2006 UK Coal began a tender process for the Phase 2 tunnelling work. Like Phase 1 the work will be highly specialised and it is essential to its performance that the contractor should have available to it managers, supervisors and skilled staff with the necessary knowledge and experience. Without the necessary high level of knowledge and experience the efficient and above all the safe performance of the work cannot be guaranteed. There are very few such personnel in the United Kingdom and indeed, SES is now the principal operator in that field. The Phase 2 work was projected to commence in June 2006.

The Phase 2 Kellingley contract had been carried out by SES in a satisfactory manner. SES tendered for the Phase 2 contract on 24 March 2006. Based on conversations with UK Coal managers, SES Contracting expected to be awarded the Phase 2 contract. At a meeting held on 20 February 2006 at Harworth Park Mr Garner of UK Coal, Commercial Director, chairing the meeting, said words to the effect of “Cards on the table, you are doing the extension works [i.e. Phase 2] and you are going to get the rest at Kellingley”. As a result, SES continued on-going works (Phase 1) and agreed with UK Coal the programme and increased manpower necessary in respect of the Phase 2 works. SES also did not seek out other opportunities to which its workforce could be deployed in the absence of work from UK Coal.

However, on or about 3 May 2006 representatives of UK Coal (Mr Tinsley and Mr Lambert) visited Mr Shinkins of SES to inform him in person that SES had not obtained the Phase 2 contract which was to be awarded instead to Centechnology Ltd (“Cen-Tech”). Cen-Tech is a wholly-owned subsidiary of UK Coal. Its directors include a Mark Weston whom we refer to in more detail below. They also include Gerry Spindler, UK Coal plc’s CEO.

Mr Tinsley requested that SES give Cen-Tech their men in order to perform the contract. Specifically he said that UK Coal would like SES to agree to a smooth transfer of all the SES workforce at Kellingley to Cen-Tech so that Cen-Tech could undertake the Phase 2 work. He said that if SES did so, Mr Lambert would provide unspecified future work to SES, although this could not be guaranteed.

Mr Tinsley also stated that Cen-Tech’s bid had been cheaper than SES’s. Mr Shinkins formed the distinct impression that Mr Tinsley was far from happy about awarding this contract to Cen-Tech given the importance to Kellingley Colliery of completing Phase 2 of the contract thereby ensuring continuous coal production. Cen-Tech had no track record in this field or, indeed, any personnel with which to carry out the works.

Mr Weston was, until July 2005, CEO of SES. In that capacity he of course acquired an intimate knowledge of SES’s operations and prices. In early 2005 he and Brendan White (Commercial Director - SES Holdings) proposed a management buyout of SES for £8 million. Mr Shinkins made it clear that he was not interested. On 28 June 2005 Mr Weston resigned from SES.

SES considers that Mr Weston is intent on damaging its business. As well as the events described below in relation to the Kellingley Phase 2 contract, during a meeting held on 2 November 2005 in order to discuss SES’s tender for conveyancing works for CCL (Continental Conveyors Limited), the Managing Director of CCL, Mr Tony Saunders, stated that he was concerned that SES might not be able to fulfil any contract with CCL. He said this was because he had been told by Mark Weston at Cen-Tech that SES would not be involved in the mining industry by the end of 2005. Cen-Tech put in a tender for this CCL conveyancing work. Subsequently Mr Weston offered to buy SES Contracting for £1.00 and, in June 2006, stated that there was not a role for SES in the UK mining industry.

Following Mr Tinsley and Mr Lambert’s visit to SES concerning the Kellingley Phase 2 contract, on 4 May 2006 Mr Weston contacted Mr Shorthouse, Managing Director of SES Contracting, and informed him that he wanted all the men who were working at Kellingley. On 5 May Mr Weston met Mr Shorthouse. He again stated that he wanted all the men and that he was “desperate for management”. He stated that he wanted the men without a TUPE transfer. His position was that SES should finish the Phase 1 works and then make the men redundant, obviously at significant cost to SES. Cen-Tech would then engage the men on the following day.

It was at this point that Mr Weston proposed to Mr Shorthouse, following conversations he said he had had with “Gerry” (presumably Mr Spindler), that Cen-Tech would be prepared to pay £1.00 plus an assumption of liabilities of SES Contracting Limited.

Thereafter Mr Weston and Cen-Tech have made further repeated attempts to obtain SES staff:-

(i)

On 12 May Mr Weston again contacted Mr Shorthouse to ask about his proposal. He was informed that SES was not for sale. He responded that he was disappointed that the situation could not be dealt with easily and that he would not have to advertise. He stated that he required a mining director, commercial manager and several site management teams.

(ii)

On 17 May Mr Weston rang Mr Shorthouse at home, informed him that job advertisements were out and asked him to reconsider.

(iii)

On 18 May Mr Sabin of Cen-Tech contacted Mr Stretton, an SES electrical engineer to offer opportunities at Cen-Tech. Mr Sabin did so again on 26 May and told Mr Stretton that if he applied, he would get a job.

(iv)

On 19 May Mr Weston contacted Dave Hyland, SES’s Commercial Manager, and on 22 May invited him to apply for a job at Cen-Tech.

(v)

On 23 May Mr Weston rang from Kellingley seeking permission to talk to SES’s personnel there.

(vi)

Mr Weston also contacted John McMurdo, SES’s Site Manager at Welbeck, to offer a job.

(vii)

On 31 May Mr Weston telephoned Mr Shorthouse to suggest there had to be give and take and stated that “off the record” he could get UK Coal to “roll over” and accept TUPE liabilities.

On 16 June 2006 Mr Shinkins met with Mr Spindler at Harworth Park. The meeting had been requested by Mr Shinkins, following Mr Weston informing SES staff the previous day that there was not a role for SES in UK mining, and reiterating that he (Mr Weston) was directly answerable to Mr Spindler.

Mr Shinkins expressed his dismay that after years of service throughout the troubled and changing fortunes of the industry, SES had been dismissed in a most unprofessional manner. Mr Spindler stated that Cen-Tech were awarded the Kellingley Phase 2 contract, albeit that the tendering process was biased towards Cen-Tech, as he would expect it to be. Mr Spindler also asked if Mr Shinkins would be interested in the sale of other contracts outside UK Coal. Mr Shinkins assumed that this followed from the unsuccessful previous attempts to acquire SES and its contracts. Mr Spindler stated that he would not justify using SES when making his own people redundant, who possessed the same skills. Our client cannot accept this explanation given that Cen-Tech has made repeated attempts to acquire SES personnel.

Accordingly:-

The response to that letter was a letter from Messrs Nabarro Nathanson, acting on behalf of the first three Respondents before me, but at that time acting only on behalf of the first two Respondents. The letter said this:-

‘Our client, UK Coal, has supplied to us a copy of your letter to them dated 21st July 2006 requesting documents relating to the tender for contract works at Kellingley Colliery (Drivage of Beeston - Phase 2).

We note from paragraph 11 of your letter that whilst you allege that Cen-tech and Mr Weston appear to have acted “wrongfully and tortiously” by misrepresenting Cen-tech’s position to UK Coal, no allegations are made against UK Coal such as to form the basis of a cause of action against the company. Your client therefore bases its request for documents on the Norwich Pharmacal principle, presumably by reason of the fact that Part 31.16 of the Civil Procedure Rules would not be applicable, given that UK Coal is not likely to be a party to any subsequent proceedings.

We have a number of observations to make in relation to the legal basis for your client’s request under the Norwich Pharmacal principle.’

It is not necessary for the purposes of this judgment to read that part of the letter. I pick the letter up at the third bullet point, making legal submissions:-

‘The principal purpose of the Norwich Pharmacal relief is to facilitate the production of “information” necessary to enable the ultimate wrongdoer to be sued. Whilst the principle can, in certain circumstances, be extended to include documents (as opposed to information, such as names and addresses) the relief is not to facilitate the pursuit of the applicant of documents that it hopes will amount to evidence. This is particularly so in circumstances where the identity of the alleged wrongdoers is already known. That said, we reiterate that UK Coal is satisfied that, notwithstanding your allegations against Centech and Mark Weston, there is no merit in such claims.

In summary, we do not believe that your clients’ request for documentation is justified and we are therefore instructed to decline the request.’

That position has essentially remained unchanged from that time to the hearing of the applications before me.

At some point prior to 9th November 2006, the date of his first witness statement in which he dealt with this point, Mr Alun Jenkins, a contracts manager employed by the First Applicant, was told, he says at paragraph 14 of his witness statement, by Mr David Maskill, who had in turn been told by Mr Stuart Beaumont, that during a meeting Mark Weston was

“provided with our tender details”, that is the tender details of the First Applicant, “and told that this was what he had to beat. Mr Maskill previously worked for SES and transferred over to Centech as part of site management. Mr Beaumont is Centech’s site manager at Kellingley Colliery.”

I need not for present purposes read on in paragraph 14 of Mr Jenkins’s witness statement.

While it is fair to say that the legal analysis of the position on the part of the Applicants developed over time, by the date of the hearing before me how it was analysed by Mr Charles Béar QC and Mr Henry King was this. First, there was evidence that Mr Weston had provided unlawful assistance to the first three Respondents. At paragraph 17 of his written skeleton argument, Mr Béar put it in this way:-

“UKC knew that MW was still employed by and a director of SES. If SES’s inferences are correct it appears to have engaged with him in developing plans for Centech, which led to the actual development of Centech as it has occurred and the consequent severe damage to SES. UKC is therefore potentially liable for the tort of inducing or participating in MW’s breaches of duty. In addition UKC is potentially liable in equity as a knowing accessory to the breach of fiduciary duty. Accordingly, pre-action disclosure is in principle available under CPR 31.16.”

At paragraph 20 of his skeleton argument, Mr Béar explained that a separate breach is that:-

“At no stage before his departure did MW warn SES about UKC’s plans and MW’s planned involvement in them. The duty to warn and protect an employer in respect of threats to its business is a fundamental feature both of a director’s fiduciary duty and of an employee’s implied contractual obligation of fidelity.”

Then, at paragraph 23, Mr Béar explained the liability of Mr Weston, so it was contended, for breach of confidence:-

“MW, while SES’s chief executive, disclosed confidential SES information to UKC in the course of discussing how to benefit UKC’s business.”

Then, at paragraph 38, Mr Béar explained:-

“It is a tort for A to injure B’s business by unlawful means. The elements of the tort are (i) an intention to injure the business of B, (ii) the use of unlawful means and (iii) damage. On the current law as set out by the Court of Appeal in Douglas v Hello (No. 3) [2006] QB 125, intention requires some element of purpose albeit falling short of predominant purpose or motive. Intention is not established by proof of knowledge of consequences but such knowledge may justify an inference.”

Then, at paragraph 43, Mr Béar said:-

‘There is moreover a further basis of unlawful means. The courts have recently acknowledged an implied contract created by the invitation and submission of competitive tenders. The customer impliedly undertakes to consider tenders equally and genuinely, and not in bad faith: see most recently the Privy Council decision in Pratt Contracting v Transit New Zealand [2004] Build LR 143. The Court of Appeal has previously held that the customer inviting tenders owes an implied contractual obligation to “consider” and “honestly consider” all tenders. Although the legal labels are relatively new, it is submitted that there is nothing surprising in principle in allowing a claim by a tenderer who is asked to submit a bona fide bid and then loses out as the result of a collusive process between the customer and a rival bidder.’

The application under Part 31.16 of the CPR was issued on 23rd November 2006. The application in reliance upon the Norwich Pharmacal principles was issued originally on 15th November 2006 and reissued on amendment on 30th November 2006. The original applications were supported by the first witness statement of Mr Shinkins and the first witness statement of Mr Jenkins. The terms of the orders sought in relation to the application under Part 31.16 were these:-

‘(2) The categories referred to in (1)(a) above,’ which was a general provision requiring the location of the documents and the giving of disclosure in relation to them, ‘are:-

(1)

Documents passing between Mark Weston and employees or officers of UK Coal Plc, UK Coal Mining and/or Centech (including but not limited to Gerald Spindler, Phil Garner and Phil Denson) created on or before 8 July 2005.

(2)

Any documents referring to, or continuing exchanges begun in, documents within item (1) above.

(3)

Notes of (including e-mail references to) any meetings or conversations occurring on or before 8 July 2005 between Mark Weston and employees or officers of UK Coal Plc, UK Coal Mining and/or Centech (including but not limited to Gerald Spindler, Phil Garner and Phil Denson).

(4)

Documents created by or at the direction of, or sent to, Gerald Spindler after 1 January 2005 and referring to plans for and/or the development of

(a)

in-house contracting within the UK Coal group’s mining business, and/or

(b)

Centech (whether referred to by the name “Centech”, as Newco or otherwise).

(5)

Business plans, budgets, management accounts or similar documents (by whoever prepared) for Centech or other in-house mining contracting company of the UK Coal group (however described) from 1 January 2005 to date.

(6)

E-mails, notes, memoranda and other documents created by or at the direction of Mark Weston and/or Gerald Spindler on or after 1 January 2005 and -

(a)

referring to SES (including any subsidiary of SES Holdings plc) and/or Mr Shinkins and/or rail contracting business and/or any customers of SES (other than the UK Coal group) referred to in Mark Weston’s “Options” document of 7 June 2005; and/or

(b)

appraising or modifying the proposals in Mark Weston’s “Options” document of 7 June 2005; and/or

(c)

referring to the engagement of Mark Weston to work for one or more companies within the UK Coal group; and/or

(d)

referring to the ownership of Centech (or other in-house UK Coal group mining contracting company however described).

(7)

Documents (a) containing, (b) referring to, and/or (c) making use of any of the information contained in or attached to an e-mail sent by Mark Weston to Gerald Spindler on 7 June 2005 (including but not limited to the “Options” document and the copy of SES’s management accounts sent by Mark Weston to Mr Spindler).

(8)

Board minutes of Centech from 1 January 2005 to date.

(9)

Minutes of the boards of UK Coal Plc and UK Coal Mining Limited and of the Executive Management Committee of the UK Coal group from 1 January 2005 where referring to any of the following: in-house mining contracting, Centech, Mark Weston, SES and/or Kellingley Colliery Phase 2 extension works or contract.

(10)

Centech’s bid document(s) relating to the Kellingley Colliery Phase 2 extension works, including the Form of Tender provided to Centech and all correspondence subsequent to it.

(11)

Notes/memoranda/emails made by or on behalf of those representing the UK Coal group at the site visit on 16 March 2006 by the First Applicant and Centech and relating to that site visit.

(12)

Notes and reports of meetings with Centech or Mr Weston concerning Centech’s bid for the Kellingley Phase 2 contract.

(13)

Memoranda/emails between Mr Spindler and Mr Tinsley concerning the award of the Kellingley Phase 2 contract prior to its award to Centech.

(14)

Appraisals or other comparative documents concerning the First Applicant’s and Centech’s bids for the Kellingley Phase 2 works, and meeting notes, memoranda or other records containing the reasons for decision.

(15)

Notes or minutes of meetings and/or correspondence with Centech regarding the rate of progress achieved in the Kellingley Phase 2 works.’

What was forthcoming in response to the issue of the application under Part 31.16 were five witness statements on behalf of the First to Third Respondents and a lengthy witness statement from Mr Weston. These statements ran to some 67 pages, of which that of Mr Weston amounted to 38. The general effect of this evidence was that the dealings between Mr Weston and the First and Second Respondents before he joined Centech had been entirely innocent, that the decision to award the Kellingley Phase 2 tender to Centech had been made on proper grounds and that the Applicants had nothing to complain about. It was not suggested in any of these witness statements that none of the Respondents had any of the documents in any of the categories sought. With one minor exception, none of the witnesses volunteered, as an exhibit to his witness statement, any copy of a contemporaneous document to support what he said in his statement.

Mr Weston dealt with the email of 29th May 2005 (which, as I have said, he described as dated 3rd June 2005) in his witness statement at paragraphs 36 to 38. What he said was this:-

‘36. Whilst reference is made to a meeting on 3 June 2005, I have no recollection of this. I can only assume that the meeting was reorganised to 6 June 2005. It is not true, as Mr Shinkins suggests (paragraph 14) that the meeting I had with UK Coal on 3 June 2005 was intended to take SES totally out of the frame. This is a clear misconstruction of the email quoted at paragraph 13 of his witness statement. As the meeting was to discuss a possible job option, I naturally did not inform my then employers that it was taking place but I do not think that the meeting can fairly be labelled “clandestine”. By meeting UK Coal, I do not believe that I thereby breached any obligation owed to SES. Prior to my commencing consultancy work for UK Coal on 10 July 2005, my first and only meeting with Mr Spindler was on 6 June 2005.

37.

In addition, Mr Shinkins is incorrect in his supposed interpretation of the quotation from the 3 June email (paragraph 15) when he says that it was my strategy to leave SES desperate for cash at the year end and therefore vulnerable to a renewed offer to buy it. Rather, my comments in the email recognised that:

(1)

I felt that an eventual consequence of UK Coal deciding to take the contracting work in-house would be to remove the need for UK Coal to use outside contractors.

(2)

SES was in a poor financial state.

38.

Mr Shinkins’ suggestion that I advocated SES diversifying into Network Rail is also untrue. Although this was one of the very few rail-related decisions I agreed with, the decision was that of the SES’s Board which wished to move away from the problems with Jarvis. Mr Shinkins’s suggestion that any of this was linked to the management buyout not proceeding is nonsense.’

About the options document, Mr Weston gave an account at paragraphs 41 to 43 of his witness statement. He said:

‘41. Mr Shinkins refers to an email which I sent to Nicholas Bradley on 6 June 2006 ... I knew Mr Bradley as he had provided computer and printing and marketing services to the SES group, we had become friendly and, as set out further below, from time to time we discussed various business opportunities together. The email I sent Mr Bradley attached a memorandum entitled “Options Regarding UK Coal In-House Contracting”.

42.

Mr Shinkins misinterprets (in paragraph 19) an attachment to that email where he refers to a comment about Contracting being available for purchase for a nominal amount “in the light of the substantial forward order book being unavailable”. This order book was likely to be unavailable due to work being likely to dry up at Tower Colliery (which at that stage was contributing 30% of Contracting’s income) and the financial pressure on the business surrounding and the difficulties in obtaining payment in respect of the work for Jarvis. Mr Shinkins is wholly wrong, therefore, to suggest that I evolved a plan to put financial pressure on SES so as to provoke a fire sale. The financial pressure was already there due to what I have explained above.

43.

The sending of the options document has to be considered in the context of my interest at the opportunity with UK Coal. Whilst I was looking at the Mastertons’ deal nothing was certain and I wanted to maximise my opportunities. Very simply, I got carried away and in drafting the options documents I accept that I referred to confidential information which I should not have done and neither should I have forwarded this information to UK Coal. Fortunately, I do not believe that either Mr Spindler or UK Coal ever read these documents. I believe this as when I subsequently met Richard Cole, UK Coal’s Company Secretary, on or about 14 June 2005, he returned the documents to me and stated “we cannot accept these; no one has read them or seen them.” I apologised.’

Mr Spindler dealt with the options document at paragraphs 15 to 20 of his witness statement. He said:-

“15.

I have been shown a copy of an e-mail from Mark Weston to me timed at 15:53 on 7 June 2005 and referred to … and with its attachments, I can understand why it has caused Mr Shinkins concern. Whilst I do not specifically recall reading this e-mail (as opposed to the attachments), that is not to say that I did not receive it. It is just that I generally prefer to read hard copies of e-mails and will often ask my secretary to print them off for me. This is particularly the case where an e-mail contains a number of attachments as with this e-mail.

16.

Whilst I do not specifically recall reading the e-mail in question I do remember seeing a hard copy of the documents attached to it. I can only assume, therefore, that my secretary printed off the e-mail and attachments for me.

17.

When I saw the accounting information of SES and registered what it was, I recall thinking that this was information that we perhaps shouldn’t have been sent. I did not read the documents further but took them with me when I went to speak with Richard Cole. I showed the documents to him, and he agreed with me that Mr Weston should not have sent them. He informed me that he would give the information back to Mr Weston, who he was due to have a meeting with. I understand that Richard handed the documents to Mr Weston at a subsequent meeting.

18.

As for the e-mail itself, I do not recall exactly what I did with it and when. My usual policy is to clear my inbox on a sporadic basis (approximately weekly). I have sub-folders within my inbox for certain issues that I deal with on a regular basis, within which I store things I may need to refer back to. Any e-mails that do not fall within a particular sub-folder, I will delete during one of my cleaning up exercises. As the e-mail was not one that would fall within one of my sub-folders, I would, no doubt, have deleted this during one of my cleaning up exercises a week or so after receipt. I do not, however, specifically recall deleting that particular email.

19.

I am fairly certain that I did not forward the e-mail of 7 June 2005 to anyone, but if I did, the only person I might conceivably have sent it to would have been Richard Cole. I understand that he does not recall ever receiving the e-mail, but only the documents I took into his room with me, which suggests to me that I did not forward it. I did not examine the documents, and I could not (at least until they were exhibited to Mr Shinkins’s statement) recall what they showed, and I have not used any information contained in them. These were unsolicited documents, and, whilst I clearly saw them to register what they were, I was sufficiently aware of the potential sensitivity attached to such documents to know that I probably ought not to have them, and that the best thing would be to return them to where they had come from.

20.

I understand that UK Coal’s IT manager, Dave Woods, has searched the computer system at UK Coal to establish whether or not a copy of the e-mail or the responses to it remains on the system. I understand, however, that there are no such records which indicate the e-mail has been deleted.”

Mr Béar subjected that passage to careful syntactical analysis and suggested that Mr Spindler was conspicuously not dealing with what had happened to the original electronic attachments. Perhaps that is a fair point, or perhaps it is just that the language which Mr Spindler has chosen to use in his witness statement has created a misleading impression. But that is not a matter which I am in a position to decide.

Mr Spindler dealt with the circumstances leading up to the award of the Kellingley Phase 2 tender at paragraphs 22 to 25 of his witness statement. He said:-

‘22. Having set up Centech to provide a cost effective service to UK Coal, I would obviously prefer it if the contracts could be awarded to it. I did not, however, inform those responsible for deciding to whom to award the Kellingley Phase 2 contract that they must award the contract to Centech, come what may. Centech had to be competitive, and that was the point. There were certain instances in which it may not have been sensible or appropriate to award a contract to Centech. For example, I believe that SES was willing to undertake particular contracts on a “turn key” basis and thus effectively take on all the risk on time for completing the works, it may be that Centech could not or would not take such a risk in which case SES may have been awarded the contract even if the price was more. In most tenders, I fully expected Centech to be cheaper than SES, in part because of the favourable insurance position.

23.

As it happens, I understand that Centech’s tender on Kellingley Phase 2 was considerably less than that of SES. Whilst I am aware that some of the colliery team may have preferred to continue with SES, perhaps to avoid the unnecessary disruption that a change in contractor inevitably causes, this, for my mind, did not outweigh the commercial benefits to UK Coal in awarding the contract to Centech. Ultimately, the decision to award the contract to Centech was one made by the contracts team. It was not a decision made by me, and it was not a case of me overruling the wishes of UK Coal’s operating staff, as alleged by Mr Shinkins in paragraph 92.2 of his statement.

24.

Mr Shinkins makes a number of complaints about Centech being awarded the contract. I do not tend to get involved with the management of contract works, but I have spoken with David Lambert, UK Coal’s contracts manager, who advises me that, whilst there have been complications with the works at Kellingley Phase 2, these are because of geological difficulties and are problems that any contractor would have faced and are not complications that could have been foreseen at the tender stage. I am not aware of any issues that would lead me to think that UK Coal was misled in the manner suggested by Mr Shinkins.

25.

In particular, in relation to this contract, Mr Shinkins and Mr Jenkins suggest that they have heard that Mr Weston was shown the SES bid, and given a price to beat by Centech. As Mr Lambert has indicated, there is a strict tender process that is adopted by UK Coal and I am not aware of anything that would suggest that that was not complied with here. I do not share Mr Shinkins’s view, therefore, that Centech made knowingly false representations to UK Coal, or that the tender bid represented “the ongoing process of the plans developed by Mr Weston and me in 2005” as alleged in paragraph 88 of Mr Shinkins’s statement.’

It is right to say that Mr Béar subjected that passage also to careful syntactical analysis and again suggested that Mr Spindler was conspicuously avoiding dealing with particular aspects. Mr Béar identified such aspects as being, or at any rate including, first, that Mr Spindler did not in terms deal with the issue whether he was influential in the decision to award the Kellingley Phase 2 contract to Centech or not. Second, Mr Spindler, in paragraph 25 of his witness statement, did not in terms say that the Second Respondent had not understood that Centech had been made aware of the tender price of the First Applicant or indeed that Centech had not been made aware of the tender price of the First Applicant. All Mr Spindler said was that he contended, as did Mr Lambert, that there was a strict tender process and he, Mr Spindler, was not aware of anything that would suggest that that was not complied with here.

In the light of the six witness statements on behalf of the Respondents to which I have referred, Mr Shinkins made a further witness statement. In his further witness statement he said, amongst other things, in paragraph 2, this:-

“If allowed access at this stage to the limited documents which we seek, proceedings may be avoided altogether (because our suspicions will either be borne out or removed by disclosure of the documents), or will be less costly.”

In relation to the suggestion that he had told Mr Jenkins that Centech had been made aware of the tender price of the First Applicant for Kellingley Phase 2, Mr Beaumont made a second witness statement, in which he said, at paragraph 2:-

‘As far as I can recall, Mr Weston did not ever inform me that he had been given information about SES’s tender and told that it was “what you have to beat”, as Mr Jenkins suggests at paragraph 13 of his second witness statement. I do not recall ever indicating this to Mr Maskill either. I have spoken with David Maskill and he does not recall me saying this to him, nor indicating that to Mr Jenkins.’

Another point which Mr Shinkins had made in his first witness statement was that he had been told by Mr Tinsley of the Second Respondent that the Second Respondent had been told to award the Kellingley Phase 2 tender to Centech. That contention was not disputed in the evidence filed on behalf of the Respondents.

The material provisions of Part 31.16 of the Civil Procedure Rules are these:-

“(1)

This rule applies where an application is made to the court under any Act for disclosure before proceedings have started.

(2)

The application must be supported by evidence.

(3)

The court may make an order under this rule only where -

(a)

the respondent is likely to be a party to subsequent proceedings;

(b)

the applicant is also likely to be a party to those proceedings;

(c)

if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d)

disclosure before proceedings have started is desirable in order to -

(i)

dispose fairly of the anticipated proceedings;

(ii)

assist the dispute to be resolved without proceedings; or

(iii)

save costs.”

It was accepted by Miss Lucas on behalf of the first three Respondents and by Mr Samek on behalf of the Fourth Respondent that the requirements in CPR 31.16(3)(a) and (b) were met in the circumstances of the present case. Those are the first two requirements to which I referred earlier in this judgment. However, both Miss Lucas and Mr Samek did not accept that the requirements set out in CPR 31.16(3)(c) and (d) were met, which were the remaining two requirements to which I also referred earlier in this judgment.

It was common ground that the principles to be applied in relation to an application under CPR Part 31.16 were explained by the Court of Appeal in Black v Sumitomo Corporation [2002] 1 WLR 1562. The only substantive judgment delivered in that case was that of Lord Justice Rix. My attention was drawn to a number of passages in that judgment. As they are important, it is necessary to set them out. The first passage to which it is appropriate to refer is at paragraph 52. In paragraph 52, Lord Justice Rix was concerned with the nature of the case which it was suggested in that matter by Mr Black, the Applicant, wanted to pursue. It is not necessary to set out the detail of that case for the purposes of this judgment, but, towards the end of paragraph 52, Lord Justice Rix said this, upon which Mr Béar relied:-

“Thus unlike a personal injury claimant who has suffered some undoubted misfortune, but needs disclosure to investigate the mechanism of his misfortune, Mr Black’s losses are themselves a matter of uncertainty and dispute. No complaint was made to the regulatory authorities which he knew were investigating the situation.”

Mr Béar submitted that, in the circumstances of the present case, the Applicants had suffered an undoubted misfortune and what they were seeking by the application under Part 31.16 to do was to investigate the mechanism of that misfortune.

Mr Samek, on behalf of Mr Weston, submitted, on the contrary, that it was important for me to bear in mind that there was an important distinction drawn by Lord Justice Rix in Black v Sumitomo Corporation between cases of personal injury or professional negligence on the one hand, where the Court might be readily persuaded that it was appropriate to order pre-action disclosure under Part 31.16, and cases, as Mr Samek generally described them, of fraud. By “fraud”, I believe what Mr Samek meant was simply cases in which what was alleged was dishonesty or impropriety on the part of the respondent or respondents. Mr Samek drew to my attention in particular paragraphs 56 to 58 in support of the submission to which I have just referred. There, Lord Justice Rix said:-

‘56. In RHM Foods v Bovril Ltd [1982] 1 WLR 661 the plaintiffs, in a passing off action, sought disclosure in advance of pleading their statement of claim. They alleged a deliberate intent to deceive the public. The judge acceded to the application. This court acknowledged the jurisdiction to make such an order, but considered that the exercise of that jurisdiction would require an exceptional case and that it would be unfair to the defendants to order disclosure against them before the plaintiffs had pleaded their serious allegations. Oliver LJ said (at 668H/669A):-

“I do not say that there cannot be such a case, for the court has a wide power to order discovery where the justice of the case demands it, but it must be very rare. Like Lawton L.J., I remain, despite counsel for the plaintiff’s powerful advocacy, wholly unconvinced that this case, on the unparticularised allegations of his deponents’ individual beliefs, is a case where the discovery sought at this stage is necessary for fairly disposing of the matter and I too, therefore, would allow the appeal.”

57.

Those cases were decided under the former regime of the Rules of the Supreme Court and I do not consider them to be formally binding in the context of the Civil Procedure Rules, a new code with its overriding objective, its greater flexibility, its statements of truth, and its new principles of disclosure, favouring both more limited disclosure and earlier disclosure. Nevertheless, in my judgment it is not to be supposed that in the modern context allegations of fraud have become just like any other allegations. There is still the obligation on counsel pleading fraud to satisfy himself that he can properly do so: Mr Vos has himself relied on that obligation, to hint that without the pre-action disclosure which his client seeks, he might find himself unable to sign a statement of case which pleads fraud. There is still the obligation (see 16PD at 9.2 [regarding statements of case]) to “specifically set out” any allegation of fraud.

58.

Moreover, if the opportunity provided by CPR 31.16 is set against the background of the prospective parties’ obligation in any case not covered by a protocol “to act reasonably in exchanging information and documents relevant to the claim” and if consideration is given to the question of what the extent of that obligation is in a case of alleged fraud, it is hard to think that a prospective claimant could easily say that his allegedly fraudulent prospective defendant had failed to cooperate by refusing widespread disclosure in response to unspecific and unverified (because unpleaded) allegations.’

At paragraph 68, upon which Mr Samek also relied, Lord Justice Rix said:-

“What, however, these authorities on the unamended section in my judgment reveal, and usefully so, is as follows. First, that at any rate in its origin the power to grant pre-trial disclosure was not intended to assist only those who could already plead a cause of action to improve their pleadings, but also those who needed disclosure as a vital step in deciding whether to litigate at all or as a vital ingredient in the pleading of their case. Secondly, however, that (as what I would call a matter of discretion) it was highly relevant in those cases that the injury was clear and called for examination of the documents in question, the disclosure requested was narrowly focused and bore directly on the injury complained of and responsibility for it, and the documents would be decisive on the conduct or even the existence of the litigation. Thirdly, that on the question of discretion, it was material that a prospective claimant in need of legal aid might be unable even to commence proceedings without the help of pre-action disclosure.”

Obviously legal aid is not in issue in the present case.

At paragraphs 71 and 72 of his judgment, Lord Justice Rix explained the proper approach to the first two requirements in rule 31.16(3) of the Civil Procedure Rules. In paragraph 71, he said:-

“Of course, in one sense it might be said that a person is hardly likely to be a party to subsequent proceedings whether as a claimant or otherwise unless some form of proceedings is itself likely to be issued. Two questions, however, arise. One is whether the statute requires that it be likely that proceedings are issued, or only that the persons concerned are likely to be parties if subsequent proceedings are issued.”

I can summarise the remainder of that paragraph by saying that the conclusion to which the learned Lord Justice came was that the second was the appropriate construction, that the persons concerned are likely to be parties if subsequent proceedings are issued.

Then in paragraph 72, Lord Justice Rix said:-

‘As to the second question, it is not uncommon for “likely” to mean something less than probable in its strict sense. It seems to me that if I am wrong about the first question, then it is plain that “likely” must be given its more extended and open meaning … because otherwise one of the fundamental purposes of the statute will have been undermined. If, however, I am right about the first question, the second question is of less moment. Even so, however, I am inclined to answer it by saying that “likely” here means no more than “may well”. Where the future has to be predicted, but on an application which is not merely pre-trial but pre-action, a high test requiring proof on the balance of probability will be both undesirable and unnecessary: undesirable, because it does not respond to the nature and timing of the application; and unnecessary, because the court has all the power it needs in the overall exercise of its discretion to balance the possible uncertainties of the situation against the specificity or otherwise of the disclosure requested. Clearly, the narrower the disclosure requested and the more determinative it may be of the dispute in issue between the parties to the application, the easier it is for the court to find the request well-founded; and vice versa.’

It was in the light of that indication that Miss Lucas and Mr Samek accepted that the first two requirements in CPR Part 31.16(3) were met in the present case.

At paragraphs 81 and 82 of his judgment, Lord Justice Rix dealt with the significance of the word “desirable” in CPR Part 31.16(3)(d). He said:-

‘81. It is plain not only that the test of “desirable” is one that easily merges into an exercise of discretion, but that the test of “dispose fairly” does so too. In the circumstances, it seems to me that it is necessary not to confuse the jurisdictional and the discretionary aspects of the paragraph as a whole. In Bermuda International Securities Limited v KPMG [2001] Lloyd’s Law Reports: Professional Negligence 392 to 397, para 26, Waller LJ contemplated that paragraph (3)(d) may involve a two-stage process. I think that is correct. In my judgment, for jurisdictional purposes the court is only permitted to consider the granting of pre-action disclosure where there is a real prospect in principle of such an order being fair to the parties if litigation is commenced, or of assisting the parties to avoid litigation, or of saving costs in any event. If there is such a real prospect, then the court should go on to consider the question of discretion, which has to be considered on all the facts and not merely in principle but in detail.

82.

Of course, since the questions of principle and of detail can merge into one another, it is not easy to keep the two stages of the process separate. Nor is it perhaps vital to do so, provided however that the court is aware of the need for both stages to be carried out. The danger, however, is that a court may be misled by the ease with which the jurisdictional threshold can be passed into thinking that it has thereby decided the question of discretion, when in truth it has not. This is a real danger because first, in very many if not most cases it will be possible to make a case for achieving one or other of the three purposes, and secondly, each of the three possibilities is in itself inherently desirable.’

For the avoidance of any doubt, I make clear that I have very much in mind that it is a two stage process and that, if I come to the conclusion that the requirements in CPR Part 31.16(3) are met in the circumstances of the present case, it is then necessary for me to consider as a matter of discretion whether it is appropriate to make an order in the terms sought by the Applicants, or perhaps in a variation of those terms.

Lord Justice Rix dealt with the issue of discretion separately in a section which began at paragraph 87 of his judgment. At paragraph 88, he said:-

“That discretion is not confined and will depend on all the facts of the case. Among the important considerations, however, as it seems to me, are the nature of the injury or loss complained of; the clarity and identification of the issues raised by the complaint; the nature of the documents requested; the relevance of any protocol or pre-action inquiries; and the opportunity which the complainant has to make his case without pre-action disclosure.”

It is appropriate next to refer to paragraph 92 of the judgment, which bears upon the submission of Mr Samek to which I have referred. Lord Justice Rix there said:-

“In such circumstances, unless there is some real evidence of dishonesty or abuse which only early disclosure can properly reveal and which may, in the absence of such disclosure, escape the probing eye of the litigation process and thus possibly all detection, I think that the court should be slow to allow a merely prospective litigant to conduct a review of the documents of another party, replacing focused allegation by a roving inquisition.”

Then, and finally so far as this judgment is concerned, in paragraph 95, the learned Lord Justice said:-

“In my judgment, the more focused the complaint and the more limited the disclosure sought in that connection, the easier it is for the court to exercise its discretion in favour of pre-action disclosure, even where the complaint might seem somewhat speculative or the request might be argued to constitute a mere fishing exercise. In appropriate circumstances, where the jurisdictional thresholds have been crossed, the court might be entitled to take the view that transparency was what the interests of justice and proportionality most required. The more diffuse the allegations, however, and the wider the disclosure sought, the more sceptical the court is entitled to be about the merit of that exercise.”

Mr Samek told me in the course of his submissions that he had conducted a search of reported decisions to see whether an order for pre-action disclosure has thus far been made in a case in which the applicant suggested that the cause of action that he might wish to pursue was based upon fraud or dishonesty or wrongful conduct. Mr Samek told me that he had not been able to identify any such case. He did not go so far as to submit that I should conclude from that, or indeed from any other circumstance, in particular from the observations of Lord Justice Rix, that it would never be appropriate to make an order for pre-action disclosure in a case in which what was suggested was fraud or dishonesty.

In my judgment, what appears from the judgment of Lord Justice Rix relevant to cases in which fraud or dishonesty or wrongful conduct is suggested is this. First, that the Court should be cautious in approaching the issue of ordering pre-action disclosure in such cases. In particular, the Court should be astute to avoid making an order the effect of which is to grant the applicant a “roving inquisition” through the respondents’ documents. While it is a matter of fact and degree dependent upon the circumstances of each individual case, the more clearly the applicant has defined the claims which he is minded to pursue, and the more tightly constrained the disclosure sought in the context of the identification of the claims which the applicant is minded to pursue, the more likely it is, even in a case of fraud or dishonesty or unlawful conduct, that the Court might come to the conclusion that it was appropriate, if all of the necessary conditions were satisfied, to exercise its discretion in favour of making an order for pre-trial disclosure.

Mr Béar drew to my attention some observations of Mr Justice Langley in XL London Market Ltd v Zenith Syndicate Management [2004] EWHC 1182 (Comm) The particular passage to which Mr Béar drew my attention starts at paragraph 22, where Mr Justice Langley said:-

‘22. To establish jurisdiction to make an order the applicant must show that:

i)

Both applicant and respondent are likely to be parties to subsequent proceedings in the sense that if proceedings are subsequently brought they may or may well be parties to those proceedings.

ii)

The documents in question must be such as would be subject to standard disclosure in such proceedings and so must be documents on which the respondent would rely or which would support the applicant’s case or which would adversely affect the case of either party. It follows that the issues in any subsequent proceedings must be sufficiently clear to enable this requirement to be addressed. There is a particular need for caution and focus when an allegation or possibility of fraud is involved. Whilst some of the evidence might be said to hint at the possibility of such an allegation in this case it is not suggested that a cause of action in fraud is or might be available and I propose to address the issues without regard to that possibility.

iii)

There is a real prospect of an order being fair to the parties if proceedings are started, or that it will assist them to avoid proceedings or will save costs.

23.

If the jurisdiction tests are satisfied it remains a matter for the court’s discretion whether an order should be made which will depend on “all the facts of the case” but “important considerations” will be “the nature of the injury or loss complained of; the clarity and identification of the issues raised … the nature of the documents requested; …; and the opportunity which the complainant has to make his case without pre-action disclosure”.

It has, of course, to be kept in mind, as Ms Blanchard submitted, that, by definition, this is a jurisdiction which typically will involve some element of speculation and may not lend itself to precision. It is a powerful argument against an order that the applicant can well make a case without disclosure. It follows that an applicant will often, if not usually, be unsure of the specific nature of any case he may have and indeed one of the salutary objectives of the rule is to resolve claims without proceedings. In this case, Ms Blanchard was entirely straightforward in saying that XL London and Brockbank did not know what had gone wrong, were not able to make specific allegations of negligence, and had not determined to sue come what may. But I agree with her that such a picture far from being necessarily fatal or even damaging to the applicant will often be a proper context for addressing the provisions of the rule. In this case, the substance of the application (which is not factually in issue) can be put shortly …”’

I do not, however, need to put it for the purposes of this judgment.

What I derive, with respect, from that passage from the judgment of Mr Justice Langley is that the approach suggested by Mr Justice Langley does not differ from the approach which it seems to me I should adopt, in particular, where, unnecessarily for the purposes of his decision, Mr Justice Langley commented that “there is a particular need for caution and focus when an allegation or possibility of fraud is involved”. In my judgment, it is material, whilst having that in mind, also to have regard to the passage at the beginning of paragraph 24, which I have read, as to the context in which an application for pre-trial disclosure is likely to be made. Mr Samek urged upon me to take notice, as I do and have done, that in this case Mr Justice Langley was concerned with a professional negligence case and not concerned, and plainly not concerned, with any allegation of fraud, dishonesty or wrongful conduct. But that, in my judgment, does not invalidate in any way the totality of the observations of Mr Justice Langley. It simply means that it is appropriate in this case, as it was unnecessary for Mr Justice Langley, to proceed with that degree of caution which I have already identified.

My attention was also drawn to a passage in the judgments of the Court of Appeal in the Bermuda case to which I have already referred. That was reported in [2001] Vol 1 Lloyd’s Reps: Professional Negligence at 392, as I have already said. My attention was drawn in particular by Mr Béar to paragraph 27, where Lord Justice Waller said:-

‘As I see it the judge directed himself impeccably in this case. He identified the issues between the parties. He formed the view that KPMG had no “knock out” answer to BISL’s case, and Mr Knowles did not challenge that view of the judge. He considered whether KPMG’s duty of standard disclosure would apply to the documents being sought and on that basis excluded the 1991 and 1992 years of the audit files and commenced the tax agent files as from 1st April 1992. He then considered whether the pre-action disclosure was desirable and formed the view it was on the following bases. (i) There would be a saving of costs, since those pleading BISL’s case would with the documents be likely to be able to plead their case with more particularity and without the need for later amendment and/or reamendment. (ii) KPMG had already reviewed the documents and thus it was no burden to hand them over. (iii) He further thought that the production might assist in the disposal of the case without the commencement of proceedings either because BISL’s advisers would be able to see that no criticism could be made of KPMG and/or that the causation arguments of KPMG were sound, or because a document demonstrated some support for BISL’s case which might persuade KPMG to shoulder some part of the burden.’

Mr Béar submitted that those benefits were to be obtained in the present case if I were to accede to the application. But, again, I remind myself that Mr Samek submitted, rightly, that that case was a professional negligence case.

In my judgment, the Applicants in the present case have satisfied all of the requirements which are set out in CPR Part 31.16(3). As I have said, the first two are not in dispute.

So far as the third is concerned, the issue was whether the extent of the disclosure which was sought on this application fell within the ambit of standard disclosure. Miss Lucas submitted that the categories of document of which the Applicants were seeking disclosure at this stage, in effect, amounted to requiring the Respondents to give full standard disclosure up front, with there being nothing which would remain to be the subject of standard disclosure in the event that an action was commenced. Mr Samek submitted that the categories of document, in particular those in subparagraphs (1) to (7) were imprecisely drawn and were wider than would fall within the scope of standard disclosure. Mr Béar, in his closing submissions, demonstrated, in my judgment entirely convincingly, that there was a whole range of categories of document which would remain to be dealt with in the context of standard disclosure in the event that litigation was commenced on the part of the Applicants. I, therefore, reject the submission of Miss Lucas that, in effect, the Respondents were being required now to give full standard disclosure.

It is right to say that Miss Lucas also submitted, as Mr Samek submitted, that the categories of documents were widely drawn. Mr Béar sought to deal with that criticism to an extent by indicating in the course of his submissions that the Applicants limited in point of time the documents disclosure of which was sought to the period from 1st January 2005 to 30th September 2006. It was also clarified in the course of Mr Béar’s submissions that in the first category of document the reference to Mark Weston was intended to be a reference to Mr Weston in his private capacity and not in his former capacity as chief executive officer of the Second Applicant. In my judgment, that is sufficiently plain as a matter of language simply from reading the category as formulated in the draft order which has been put before me. But it is a matter which has been put beyond doubt by Mr Béar as I have indicated.

The effect of the submission of Mr Samek that categories (1) to (7) were widely drawn, whilst accepting that categories (8) to (15) were not susceptible to the same objection, would have had the effect in practical terms that Mr Weston had to give no disclosure at all, because it is fairly plain that, perhaps with the exception of category (12), categories (8) to (15) all relate, and can only sensibly relate, to the other Respondents. That is, of course, not an objection to the submission of Mr Samek, but, looking at the categories set out as (1) to (7), I am satisfied that they fall within the scope of standard disclosure in relation to a claim against Mr Weston for breach of his fiduciary obligations to the Applicants by making contact with the first two Respondents, seeking a job first of all. Secondly, in so far as the Applicants contended that the evidence showed that it was arguable that Mr Weston had colluded with the First and Second Respondents to establish or develop the Third Respondent as a means of eliminating the Applicants from the market and thereby causing damage, the categories of document in (1) to (7) fell within standard disclosure in respect of such a claim. Moreover, some at any rate of them fell within the scope of a claim against Mr Weston for breach of confidence in the communication with Mr Spindler on 7th June 2005 and the production to Mr Spindler and through him to the First and Second Respondents of the documents attached to that email and, in particular, the financial information and the management accounts attached to the options document.

I then turn to the fourth requirement, that disclosure before proceedings have started is desirable in order “(i) to dispose fairly of the anticipated proceedings; (ii) assist the dispute to be resolved without proceedings; or (iii) save costs.” The main focus of my attention so far as that requirement is concerned I am bound to say is “(ii) assist the dispute to be resolved without proceedings” and “(iii) save costs”, because as it seems to me those benefits feed the first element, “dispose fairly of the anticipated proceedings”. I make plain that it is clear that the Applicants do not have to satisfy each of those three categories: any one of them will do.

So far as the second category, “assist the dispute to be resolved without proceedings”, is concerned, Mr Shinkins, in his second witness statement, in a passage to which I have referred, made plain that if this application is successful, then the intention of himself and his colleagues is to consider the documents which are produced on disclosure with a view to deciding whether to commence litigation. It was submitted strongly by Miss Lucas on behalf of the first three Respondents and also by Mr Samek on behalf of the Fourth Respondent that I should approach that assertion of Mr Shinkins with caution. It was submitted that, looking at matters broadly, and in particular looking at the letters written on behalf of the Applicants by their solicitors in the period between July 2006 and the issue of the applications before me, it was plain that Mr Shinkins was determined to commence a claim come what may.

There are a number of difficulties in that submission. The first is that, as Miss Lucas and Mr Samek urged upon me in relation to the witness statements on behalf of the Respondents, I am not in a position on the hearing of this application to make any findings of fact about matters which are in dispute. Mr Shinkins has said plainly that he and his colleagues want to assess whether to commence proceedings once disclosure of documents has been obtained.

I cannot say that is wrong. I have to accept that on its face. Moreover, I do not accept in fact that there is any reason to doubt the veracity of Mr Shinkins on that point. It is right that a firm position has been advanced on behalf of the Applicants in solicitors’ correspondence, but, simply as a matter of common sense, one would suppose that any rational and sensible person who was thinking of commencing litigation would want to review all available information before deciding whether that would be a sensible course or not. It has been emphasised to me on all sides that the applications before me have generated very great expense. A figure of a quarter of a million pounds has been suggested to me and does not seem to be disputed by anyone. It is obvious that, if any proceedings are to be commenced on behalf of the Applicants, the cost of those proceedings, if bitterly fought to a conclusion, are likely to be very great. Therefore, simply as a matter of common sense, it seems overwhelmingly probable that Mr Shinkins is right when he says that the Applicants wish to consider all available information before making a decision as to whether to commence litigation. If Mr Shinkins took any other view, he would be like the punk in Dirty Harry responding positively to Clint Eastwood’s question whether he felt lucky, and thereby being exposed to the same unfavourable outcome.

So I am persuaded, on the totality of the evidence, that the requirements in CPR 31.16(3)(d)(ii) are satisfied, because Mr Shinkins will consider any documents which are produced pursuant to an order made by me before coming to any conclusion as to whether a claim should be pursued. I am also satisfied that, given that the position of the Respondents is plain, that nothing untoward giving rise to loss to the Applicants has happened and, therefore, the Applicants have no legitimate grounds for complaint, Mr Shinkins will consider whether the documents produced, if I make an order for production of documents, support that position or not. Plainly, if documents were produced which did support that position, Mr Shinkins and his colleagues would have to be lunatics to commence proceedings against the Respondents.

I take into account, although it was not a matter that was specifically urged upon me by Mr Béar, nor specifically objected to on behalf of the Respondents, but it seems to me to arise simply as a matter of common sense, that if I make an order for disclosure and if, contrary to the position adopted in the Respondents’ witness statements, the documents produced tend to support the inferences which Mr Shinkins has been inclined to draw, then it may be that the Respondents are correspondingly more inclined not to run the risk of proceedings being commenced.

It is obvious, in my judgment, that if proceedings were commenced now, without the benefit of pre-action disclosure on behalf of the Applicants against the Respondents, the allegations which the Applicants would feel able to make would be limited. They would be limited in effect, at their highest, to reciting the facts which I have recited in this judgment as they appear from the position of the Applicants, and saying that the inferences which the Applicants were inclined to draw before receipt of the witness statements from the Respondents ought to be drawn. Those bases of claim, in my judgment, would seem to an objective observer required to assess them to be lacking in particularity, speculative to a degree and tendentious. They would, therefore, be likely to be exposed to challenge on the grounds either that they were insufficiently precise to disclose a cause of action or that further information under Part 18 was required of a great amount of detail in order to justify the allegations which were made.

In either event, what the future would hold would be likely to be Court hearings on those issues, the need to generate documentation in relation to those issues, the need undoubtedly at some stage, if a claim survived long enough to get to that point of standard disclosure in the regular course of the litigation, for extensive repleading of the Applicants’ case. All of those costs would be likely to be saved if pre-trial disclosure were ordered now. From the point of the view of the Applicants, proceeding in this way, in my judgment, it would be a fair means of disposing of the anticipated proceedings. Would it be fair to the Respondents? Why not?

No evidence has been put before me that there would be any difficulty in identifying any of the documents which would fall for disclosure if I were to make an order in the terms sought. Counsel in submission have postulated rather fanciful documents which might be caught by orders in the terms which the Applicants seek. By way of example, it was suggested to me that, if Mr Weston had long-standing social relations with Mr Spindler or any other member of senior management of the First or Second Respondents, then contact between them to arrange a social engagement, a dinner, a meeting in a public house or playing golf would be caught by an order in the terms of item (1) which I have set out. Perhaps so, but Mr Weston has not said that he was socially acquainted with Mr Spindler or any senior executive of the First or Second Respondent.

It was suggested that the bulk of the documents included in various of the categories (and I think item (5) was that which was specifically alighted upon by Mr Samek) would be bulky and largely irrelevant. If that point were to be taken, then that is something that I would have been expected to have been told in evidence filed on behalf of the Respondents. In fact, as I have said, the Respondents have not sought to deal in any way, shape or form with any difficulty in providing any of the documents disclosure of which is sought.

On the contrary, so far as Mr Weston is concerned, the main focus on the facts which I have explained is on his email traffic. So far as that is concerned, he specifically said in his witness statement at paragraph 82(6) that he had undertaken a search of his emails, looking for a particular email which he said he had not been able to find, but in the course of that indicating that he appears to retain possession of all relevant emails and that he has been able to undertake a search through them. It is also right to say that Mr Weston attached to his witness statement examples of various emails which he had generated in the past, including going back to the summer of 2005. So, in my judgment, the requirements to be satisfied, before I move on to the question of discretion, are satisfied. I, therefore, turn to the question of discretion.

As was made clear by Lord Justice Rix in Black v Sumitomo Corporation, the specific requirements to be satisfied in CPR 31.16(3), and especially (d), shade into the matters which it is relevant to take into account in exercising the discretion of the Court. I recognise that and, consequently, I do not intend to go, under the guise of discretion, again through those aspects which I have indicated I have taken into account in considering CPR 31.16(3)(d). There are, however, a number of other matters which do merit specific attention under the heading “discretion”.

The first is that it was strongly suggested by Miss Lucas on behalf of the First to Third Respondents, and also suggested by Mr Samek on behalf of the Fourth Defendant, that at the moment the Applicants are in a position to commence proceedings against the Respondents. If that is what they want to do, they have all of the information which they need. However, there is a tension in that submission because, at the same time, it has been submitted vigorously by both Miss Lucas and Mr Samek that actually the case which the Applicants wish to pursue is fanciful, lacking in substance and doomed to fail.

In my judgment, therefore, the proper approach in the exercise of my discretion is to recognise that the Applicants are in a quandary. The Applicants perhaps could just about plead a case of some sort against the Respondents, but, as I have explained, anything that could be pleaded would be vulnerable to attack. On the other hand, before committing themselves to the risk of considerable abortive expense, in the face of denials of any significant or prejudicial impropriety on the part of the Respondents, the common sense of the position is that the Applicants should have an opportunity of considering all of the material disclosure of which is sought.

Miss Lucas has also urged upon me that I should take into account, and lay great weight upon, the Respondents’ witness statements and the effect of them, that is to say that the Applicants have no legitimate ground of complaint. Obviously, I do take those statements into account. However, at this stage, I am plainly not in a position to form any view at all as to whether, if challenged in cross-examination in the fullness of time, the makers of the witness statements may be dislodged from the clear position which each of them now adopts.

However, it is important in looking at the Respondents’ witness statements, as it seems to me, to take into account the point that I have already made that no documents of any sort, bar one minor one, have been produced in support of the accounts which any of the Respondents’ witnesses have given. Bearing in mind the terms of the emails of Mr Weston which I have set out already in this judgment, there must be a real possibility that there are further documents which put in context those documents and show whether, as the Applicants suspect, they have grounds for complaint or, as the Respondents contend, they have not. Consequently, in my judgment, that is a factor tending towards making an order in the terms sought.

An issue was raised by Miss Lucas in relation to whether, as a matter of law, a complaint by the Applicants based on an implied contract as to the fairness of the tendering process, was sound or not. Miss Lucas submitted that the cases thus far go no further than to indicate that a local authority is under such an obligation by virtue of an implied contract. Miss Lucas accepted that that point on its own does not dispose of the application, because other grounds of complaint are advanced, but she submits that I should take into account that point in deciding how to exercise my discretion.

Due to time constraints, I do not intend (although I would otherwise have been tempted) to analyse the relevant decisions and indicate a preliminary conclusion on them. It is sufficient to identify the relevant cases as Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195; Fairclough v Port Talbot Borough Council [1992] 62 Building LR 86; and Pratt Contractors Limited v Transit New Zealand [2004] Building LR 143. In the circumstances, I would say no more than that my inclination, at any rate, is that there is no reason to suppose, and there is certainly no indication in any of those cases, that the courts deciding those cases intended that that line of case should be limited to a case in which the person inviting the tenders was a local authority.

The remaining matter which requires specific mention in the context of discretion is proportionality. Mr Samek, in particular, urged upon me that requiring Mr Weston to give disclosure in all of the categories which I have set out in this judgment would be disproportionate.

I am sympathetic to that submission to this extent. It does seem to me that it would be disproportionate if I were to order the First to Third Respondents to give disclosure in categories (8) to (11) inclusive, (13), (14) and (15) and also to require Mr Weston to give disclosure of documents in those categories. Therefore, I am minded to make an order in the case of Mr Weston in respect of categories (1) to (7) inclusive and (12) only. But it does not seem to me that any serious issue of proportionality arises in the case of the First to Third Respondents.

In the result, it seems to me that the Applicants have solid grounds for supposing that Mr Weston may have been in breach of his fiduciary obligations before he left his employment and that he and the First and Second Respondents may have colluded together to create Centech to the prejudice of the Applicants. The Applicants also have solid grounds to suppose that the tender process in relation to Kellingley Phase 2 was conducted irregularly. The answers to these suspicions advanced on behalf of the Respondents may be sound, but whether they are or not depends upon whether the other contemporaneous documents which it seems are likely to exist support the Respondents’ version.

In reality, what the Applicants face, subject to the outcome of this application, is a choice between venturing forth with some information to support their suspicions in the face of blanket denials of wrongdoing and hoping that all will turn out all right, notwithstanding that they probably do not have the full picture and are, as it seems to me, vulnerable to striking out, or making an informed decision, in the light of the production of all relevant material which the Respondents have steadfastly thus far declined to produce. So, in the exercise of my discretion (and if, as Mr Samek suggested, it may be that this is the first time it has happened in a case of alleged impropriety, then someone has got to be first) I accede to the application under CPR 31.16 in the case of the First to Third Respondents in respect of all categories and in relation to Mr Weston in respect of categories (1) to (7) inclusive and (12) categories sought.

Following the success of the Applicants on their application under Part 31.16, I have to deal with the question of costs. The ordinary order in such a case is prescribed in CPR Part 48.1. At (2), the general order is that “the court will award the person against whom the order is sought his costs (a) of the application, and (b) of complying with any order made on the application”.

It is not in dispute between the parties that it is appropriate for me to say that the Respondents should have their costs of complying with the order which I have made. The issue which has been in dispute between the Applicants and the Respondents is what order I should make about the costs of the application.

Mr Charles Béar QC, on behalf of the Applicants, has submitted that, in the particular circumstances of this case, it is appropriate for me to order the Respondents to pay the Applicants’ costs of the application. Unsurprisingly, Miss Bridget Lucas, on behalf of the First to Third Respondents, and Mr Charles Samek, on behalf of the Fourth Respondent, submit that that would not be appropriate and that the appropriate order in this case is the general order, so that the Respondents should have their costs of the application as well as the costs of complying with my order.

Bearing in mind that it is now very late in the day, I am going to give a very short reason for the conclusion to which I have come, which is that the Respondents should pay the Applicants’ costs of the application. The reason is this. It was plain to the Respondents what were the facts upon which the Applicants were basing themselves in seeking the relief which they have achieved, because the Respondents decided to prepare extensive witness statements in opposition to the application. There can have been no lack of certainty on their part as to the facts upon which the Applicants were seeking to rely.

There has been a bit of dancing around in relation to what the legal consequences of those facts might be, but that, in my judgment, does not point to it being inappropriate to make the order which I have indicated. The fact of the matter is that the Respondents have chosen to react to the application partially by preparing extensive witness statements, making clear indications of the position of each witness as to the accuracy of the facts, but without seeking to support that position by producing any documents. They have sought to create a position, as it seems to me, and deliberately sought to create a position, in which the Applicants were confronted by a wall of witness statements which looked impressive and intimidating. However, having agreed to that extent to engage in the process of responding to the Applicants’ concerns, they have declined to go so far as to produce the documents which I have ordered should be now produced. In other words, they have sought to fend off the Applicants without providing contemporaneous documents which might have allayed their concerns. For those reasons, briefly stated, the Applicants should their costs of the application against the Respondents.