Express Medicals Ltd v Network Rail Infrastructure Ltd

This is an application on the part of the claimant under the Civil Procedure Rules Part 31.19(5) for the inspection of documents disclosed by the second defendant. Proceedings against the first defendant having been discontinued, I shall in this judgment call the second defendant the defendant. The matter arises in this way. The claimant, Express Medicals Limited, carries on business as a supplier of occupational corporate healthcare services to the rail, transport and construction industries. The defendant Network Rail Infrastructure Limited, formerly called Railtrack plc, carries on business operating a network providing a service to the public in the field of transport by railway. It is a utility for the purposes of the Utilities Contracts Regulations 1996 as amended (the regulations). On 2nd August 2002 the defendant sent to the claimant an invitation to tender for the provision of corporate occupational healthcare and related services. The defendant also sent out such invitations to others. It is said that the regulations applied to the defendant’s tender procedure, and that in consequence the defendant was required to comply with the requirements of the principles of transparency and equality of tenderers established as enforceable Community obligations. Those obligations included an obligation that tenders should be accepted only on an equal basis so that a tender not complying with the terms of the invitation to tender should not be entertained unless any equivalent non-compliance on the part of other tenderers was waived. They also required that no contract should be awarded on any basis that involved any material or substantial change in any essential term of the contract contemplated in seeking tenders for that contract, including a term as to the scope of services to be provided.

On 27 August 2002 the claimant submitted a tender to the defendant in response to the invitation of 2 August. That tender related to some only of the services included in the invitation, including drug and alcohol testing and provision of medical examinations. On 30 August 2002 the defendant responded to the claimant’s tender by undertaking to carry out a separate tender procedure for random drug and alcohol testing at a later stage, and to invite the claimant to submit a tender for those services. It is said that by reason of the foregoing matters there was an implied contract between the claimant and the defendant containing terms reflecting the requirements mentioned in paragraph 1 above, among other terms.

One of the tenderers was a company called Nationwide Healthcare Connections Limited (Healthcare). In response to its tender, the defendant awarded a contract (“the first Healthcare contract) to Healthcare for some only of the services described in the invitation to tender.

The defendant sent to the claimant (and to others) a further invitation to tender on or about 31 October 2002. That invitation related to the provision of unannounced drug and alcohol screening. It is claimed that that invitation gave inadequate information in that it did not indicate either the volume of service to be provided or the locations where the service was to be provided. The claimant did not submit a tender in response to that invitation. A contract (the second Healthcare contract) between the defendant and Healthcare for random drug and alcohol screening was made on 28 March 2003. It is said that the terms of that contract included a greater scope of service provision than was sought in the request for tenders of October 2002.

The claim is for damages for breach of the obligations mentioned in paragraph I above and for breach of the implied contract mentioned in paragraph 2 above, It is said that the defendant failed properly to consider the tender of the claimant, gave unfair or improper advantage to the tender of another tenderer in assessing tenders, and awarded contracts to Healthcare without advertising or seeking a tender from the claimant in respect of those contracts.

The principal allegation for present purposes is that Healthcare was a small organisation and in consequence could not have supplied services to the extent required by the invitations to tender. Thus it was to be inferred that the first Healthcare contract and the second Healthcare contract were entered into by the defendant on a basis that materially differed from that on which tenders were sought in the invitations to tender, in particular as to the scope of the services.

On 28 November 2003 I made an order that all questions of liability were to be tried first. In relation to the trial of liability, I made an order that disclosure was to be on the standard basis save that the defendants might obliterate the prices tendered. Documents disclosed by the defendants under the order were not to be shown to any persons other than the claimant’s legal advisers without further order.

Pursuant to those orders the defendant served a list of documents which was divided into two categories, category A and category B. In relation to the documents in category A, the list contained a notice to the effect that the defendant’s solicitor did not object to the inspection or copying of those documents in accordance with the terms of my order, but that the defendant had obliterated not only prices but also names and personal details “where not relevant”. The documents in category B were described as tender returns received from parties other than Healthcare and the claimant and presentation materials. In relation to those documents, the list contained a notice to the effect that the defendant’s solicitor objected to their being inspected by the claimant, save for the first page and an indication of the number of subsequent pages. The ground of objection was stated to be that the defendant owed confidentiality obligations to the parties and the body of such documents was not relevant to the proceedings.

Mr Bowsher did not pursue his application for disclosure of documents in category B, whilst reserving his position. In relation to the documents in category A, Mr Williams conceded that subject to the obliterations, they could be inspected by the claimant, in particular by its directors. The issue before me, therefore, was simply as to the extent of the obliterations. Mr Bowsher conceded that the prices were not relevant to the question of liability, and accordingly that the obliteration of the prices could remain, again reserving his position on that point in relation to the other issues in the case. Healthcare, though not party to the proceedings, had notice of the application and were represented before me by Mr Griffiths of counsel. He sought some additional obliterations, but subject to that he did not object to inspection by the claimant.

Part 31.19(3) of the Civil Procedure Rules provides that a party claiming a right or duty to withhold inspection of a document must state in his list of documents that he has such a right or duty and give the grounds on which he claims it. Under Part 31.19(5), a party may apply to the court to decide whether a claim made under paragraph (3) should be upheld. Mr Bowsher submitted that the defendant had made no statement under Part 31.19(3). That is true in relation to the documents in category A. He submitted that it followed that paragraph (5) did not arise. It was for the defendant to make an application, and it had not done so. Accordingly, he submitted, the claimant had, without more argument, a right of inspection under Part 31.3(l).

I reject that submission. The claimant’s rights of inspection are governed not only by the rules but by the terms of my order. Moreover, the defendant’s concession that inspection of the documents in category A need not be confined to the claimant’s legal advisers was made on the basis that it could argue that the obliterations should stand. It matters not which party has made this application. I shall decide it on its merits.

Apart from references to prices, the obliterations are of the names and personal details, including contact details, of “front line” medical staff and the names and contact details of referees. As to the medical staff, the numbers and generic qualifications (such as nurse, doctor) and professional qualifications (such as MA, BM, DRCOG) have not been obliterated. The names of managers and marketing staff have not been obliterated.

The following classes of document have not been subjected to obliteration:

The following categories of document contain obliterations made by the defendant:

Further obliterations were sought by Healthcare and supported by the defendant. Those obliterations related to the identities of the staff, in addition to the medical staff, of Healthcare, and to its business plan, that is to say the set of services, offered in the tender. Thus I can summarise the categories of information the obliteration of which was in issue as identities of staff, identities of clients (which appear in the information as to referees), and business plans.

In spite of the wording of the defendant’s list in relation to documents in category A, the argument before me turned not only on relevance but also on confidentiality. I shall consider the question of confidentiality first.

I have been referred to authorities on the disclosure of documents. Those authorities are also of guidance in relation to the inspection of documents. The first case is Science Research Council v Nassé [19801 AC 1028, HL. Lord Scarman said (at 1088E and 1089H) that if the document is necessary for fairly disposing of the case, it must be disclosed notwithstanding its confidentiality. But the factor of confidence does impose upon the tribunal the duty of satisfying itself that justice requires disclosure. Lord Wilberforce, doubting whether the expression “a balancing process” was more than a rough metaphor, said that the process was to consider fairly the strength and value of the interest in preserving confidentiality and the damage which might be caused by breaking it; then to consider whether the objective – to dispose fairly of the case – could be achieved without doing so, and only in a last resort to order discovery, subject if need be to protective measures (at 1067E). He too had said (at 1066A and 1065H) that if discovery was necessary for disposing fairly of the proceedings, discovery must be ordered notwithstanding confidentiality. But relevance alone, though a necessary ingredient, did not provide an automatic sufficient test for ordering discovery.

Since Science Research Council v Nassé was decided, the Civil Procedure Rules have been introduced. The emphasis has changed. It is clear that a balancing exercise may now be required. In Simba-Tola v Trustees of Elizabeth Fry Hostel and Another [2001] EWCA Civ 1371 paragraph 27, Keene LJ, with whom Mance LJ agreed, said that Nassé was concerned with the balancing exercise which might be required where disclosure was sought of confidential documents.

I was also referred to the decision of the Court of Appeal in Fryers v Home Office [2003] EWCA Civ 655. In that case Scott Baker LJ in paragraph 38 expressed the view that there was no absolute rule that if disclosure of a document were shown to be necessary in the interests of the litigation, that need overrode confidentiality. The court had a discretion whether or not to order disclosure where disclosure was necessary in order to dispose fairly of the claim or to save costs. But the public interest in ensuring a fair trial was of the utmost importance and one that inevitably weighed heavily in any balancing exercise. However, that was a case of third party disclosure. The relevant rule was Part 39.17, and Scott Baker LJ based his decision on the wording of that rule. That rule does not apply in the instant case.

The invitation to tender dated 2 August 2002 and the invitation to tender dated 31 October 2002 each contained the following provision in clause 11:

I am satisfied that the information contained in the invitations to tender and in the tenders was confidential, in so far as it was not in the public domain. But I must consider the importance of the confidentiality in each case. I accept the evidence of Alison Brown, a director of Healthcare, that the business in which Healthcare is involved is extremely competitive. Healthcare is one of a number of competitors involved in the business, but there is only a relatively small number of customers and potential customers for services of the sort that Healthcare provides. Competition is keen. Matters such as price, ideas as to how to deliver services most effectively and innovatively, and lists of clients and of professionals willing and able to service the needs of those clients are all closely guarded secrets whose disclosure to competitors would do great damage to Healthcare’s competitive edge. Over the years Healthcare and the claimant have been head-to-head competitors. That history of competition has been against the background of the strict preservation of confidentiality in their business information.

Regarding the identities of Healthcare staff, I am satisfied on the evidence of Alison Brown of the following. In common with other service providers in the field of medical services, Healthcare engages medical and other trained staff. The number of staff who are suitably qualified is small. The names, qualifications, contact details, and the areas in which they are able and willing to work are an important confidential resource. It would be prejudicial to the business of Healthcare if any competitor were alerted to the identities or contact details of such members of staff, because the competitor would then be able to approach them or would be better informed about the duties for which such staff might be recruited. Such approaches might undermine the stability of the workforce and prejudice Healthcare’s ability to service existing contracts or to win new business.

Mr Bowsher argued that if the claimant were able to offer better terms to the staff of Healthcare than their existing terms of employment such offers might be welcomed. I accept that that might be so.

Mr Griffiths cited the case of Dawnay, Day & Co Ltd v D’Alphen [1998] ICR 1068 where Evans LJ, with whom Ward and Nourse LJJ agreed, said (at 1111A), that an employer’s interest in maintaining a stable, trained workforce was one which he could properly protect within the limits of reasonableness by an undertaking not to solicit or entice away an employee. Mr Bowsher submitted that that decision, relating as it did to the enforcement of restrictive covenants, was peculiar to employment contracts and did not address the question whether the information was capable of protection in this case. I accept that it did not directly address that question. But given that an employer has a legitimate interest in maintaining the stability of his trained work force, in my judgment Healthcare clearly has a legitimate interest in maintaining confidentiality in relation to it.

As to the identities of clients of Healthcare, I accept the following evidence of Alison Brown. Healthcare regards the identities of its customers as highly confidential. Its customers cannot simply be selected from the public at large. The number and identity of users of specialist medical services is small and not easy to ascertain. Healthcare does not want its competitors to have confidential information about the names and contact details of its customers. The names of referees which appear in the documentation of which the [claimants] seek unrestricted disclosure are the names of customers with full contact details. These Healthcare wishes to remain confidential.

The only evidence to the contrary is a single sentence in a witness statement of Christopher John Hough, solicitor acting for the claimant, stating “Nor does it seem to me that the extensive blanking out carried out by the defendant in the documents can be justified by reference to claims of irrelevance or confidentiality”. Mr Bowsher submitted that it seemed unlikely that the fact that Healthcare provided services for the referees in question was in any real sense a secret, and it was hard to know how release of the names of those presumably loyal customers could damage Healthcare. No concrete example of such potential damage had been identified.

In my judgment it is trite law that lists of clients are capable of protection as commercially confidential information. I accept that references to referees and their contact details in the disclosed documents constitute confidential information.

As to business plans, the defendant in its invitations to tender was seeking responses showing an innovative approach. Under the heading Contract Evaluation Criteria, the invitations to tender expressly sought the most economically advantageous offer, having regard to, among other things, innovation of response and approach. Neil David Talbot, a solicitor employed by Kennedys, acting for the defendant, expressed the belief in his witness statement that each of the other tenderers, but especially Healthcare given its success, would be much concerned were it to become aware that the claimant, a competitor in a small, close-knit and highly competitive industry, would be able to consider the innovative ideas it had submitted in confidence.

Alison Brown gave evidence that the nature of the services which Healthcare provided to its customers was confidential. There was no such thing as a standard set of services in the business. Healthcare’s business was individually devised for its customers, and was not a matter of public knowledge. It would materially assist its competitors to be able to emulate its proposals and practices for the purposes of competing with Healthcare for the same business.

I am satisfied that the business plans of the tenderers, and specifically those of Healthcare, constitute confidential information. Alison Brown stated that Healthcare regards it as essential to retain the confidentiality in its business information. I conclude that the confidentiality in each of the three categories of confidential information in question, namely identities of staff, identities of clients, and business plans, is important to Healthcare. It is also important to the defendant. Mr Talbot said in his witness statement that he understood that the defendant was concerned that if it became common knowledge that the claimant had succeeded in obtaining full details of other companies’ confidential tender submissions, or the terms of the contracts subsequently let, there might be a reduction in the number or quality of future tenders for fear that the defendant might not be able to restrict access by competitors to the confidential information required in tender responses. I accept that evidence and I accept the reasonableness of the concern expressed. That evidence of Mr Talbot is supported by evidence of Alison Brown. She said that without a confidentiality agreement, participation in a tender process would be unattractive, and other means of obtaining business would be more attractive, because surrendering vital commercially confidential information to competitors has implications for the business which go beyond success or failure in any particular tender exercise. Alternatively, business can be awarded without a process of public tender, in which case the parties negotiate individually but still on terms of confidentiality the usual way.

I turn now to consider the possible effect of the actual and proposed obliterations on the conduct of the trial. The claimant alleged that Healthcare was not capable of performing the contracts in accordance with its tenders. Mr Bowsher submitted that the claimants needed to know the identities of the staff in question in order to be able to check on their qualifications, experience and competence. It was not sufficient to know the qualifications set out in the tenders, since the persons concerned or Healthcare might have given incorrect information. The claimants needed to be able to check whether the persons concerned actually had the qualifications claimed. The claimant also needed to know the identities of the staff in order to check their general capabilities for the work, including their experience on railway work. It also needed to check whether the persons concerned were available to Healthcare at all.

The relevant pleading in the particulars of claim (paragraph 16) is an allegation that Healthcare was not capable of providing all the services for which tenders were sought in the invitation of 2 August 2002. The relevance of that allegation appears in paragraph 19c of the particulars of claim, where the court is invited to draw an inference that the first Healthcare contract was entered into by the defendant on a basis that varied in a material or substantial respect from that on which tenders were sought in the invitation to tender, in particular as to the scope of the services to be provided. Inspection of the documents with the present and proposed obliterations will still show the numbers and qualifications of the staff the subject of the contract. If those numbers or qualifications are themselves inadequate, that inadequacy will appear on inspection, given the existing and proposed obliterations. If they are not inadequate, any shortfall in compliance with the numbers or qualifications or in performance will constitute a breach of contract, not a variation of it. Any written variations in the invitations to tender will also appear on inspection. Mr Bowsher submitted that if the staff offered for the performance were incapable or too few, there must, in the absence of a breach of contract, of which there was no evidence, have been either some oral arrangement before the contract was made, not recorded in the contract, or some waiver or relaxation in the course of performance. Mr Bowsher was not at present seeking documents relating to the implementation of the contract.

In my judgment, the application for inspection of the names of the staff is a fishing expedition, undertaken in the hope of finding something of which a specific allegation can be made. It was not suggested that a search for the qualifications and experience of the staff was at all likely to show that any person concerned did not have the required qualifications or experience. In my judgment, the identities of the staff are at most a peripheral matter. Knowledge of them is not necessary for the fair trial of the case.

Mr Bowsher submitted that the competence and track record of the tenderers was an essential component of the tender assessment process. The claimant was unable to compare its own competence and track record with that asserted by Healthcare without seeing who had been put forward as referees, so as to understand what it was that was being said of Healthcare. I reject that submission. Knowledge of the identities of the referees is not necessary for a fair trial of the case.

In relation to business plans, Healthcare sought the obliteration of only three fairly short passages. One was contained in the response of Healthcare to the first invitation to tender. One was in the first Healthcare contract. The third was among the miscellaneous documents concerning the evaluation of the tender of Healthcare for, and the award of, the second Healthcare contract. The issues which Mr Bowsher submitted were relevant to this matter were these. First, whether the first Healthcare contract or the second Healthcare contract was entered into on the terms required by the relevant invitation to tender. Secondly, whether there was a reduction in the requirements of the invitations which should have gone to all those whose bids had been rejected. Thirdly, there might be substantial issues as to who produced which innovative ideas.

The passages in question describe, or comment on, the way in which the contracts are to be carried out. In my judgment, they cannot detract from the terms of the contracts that have not been obliterated. They can throw no further light on the question whether the contract was in accordance with the invitation, or whether there was any reduction in the requirements. The third issue mentioned by Mr Bowsher is not an issue in the case.

I am satisfied that none of the matter that has been obliterated or is sought to be obliterated needs to be seen by the claimant or its directors in order that the trial of the preliminary issue be fair. Accordingly, the claimant’s application fails. If I have to weigh the desirability of allowing the claimant and its directors inspection of the obliterated matter against the desirability of preserving confidentiality, the balance in this case comes down heavily in favour of preserving confidentiality. I should add that three passages relating to pricing (on pages 150, 404 and 420 of the bundle before the court) have not been obliterated by the defendant. Healthcare desires those passages to be obliterated. They should be obliterated for the trial of the preliminary issue. I understand that there is no controversy about that.

In case there should be any difficulty over the implementation of this decision, I give liberty to the parties and to Healthcare to apply.