Elliott Group Ltd & Ors v GECC UK & Ors

By an application dated 24^th February 2010, the claimants seek an adjournment of the trial currently fixed for hearing on 12^th July 2010. Instead, they seek the ordering of a new timetable, which would lead up to a trial at the end of October 2010. The application is made on 3 grounds: the unexpected amount of electronic disclosure on the claimants’ side; the delays to the experts’ testing regime; and the desirability of a structured ADR. Those last two points are linked and, as we shall see, they are of limited scope.

Pursuant to a sale and purchase agreement (“the SPA”), the defendants sold the claimant companies which hired and sold portable modular units, to be used as temporary accommodation and the like. It is the claimants’ case that the defendants were in breach of various warranties included within the SPA, because of problems with the units themselves. The principal complaints are:

Welding: the claimants say that the welds on the corner posts are defective and that they suffer from lack of penetration, misalignment, lack of fusion, undercutting, pores/blowholes and/or incomplete filling of grooves. This is a workmanship defect.

Potential collapse: the claimants also say that, even if the welds on the corner posts had been perfect, the units would nevertheless have been subject to the risk of collapse when or if they were used in certain configurations. This is a design defect.

The total sum claimed in these proceedings is in the region of €12 million. The claims are denied in their entirety by the defendants.

The proceedings have already had a relatively long history. Although I was taken to a number of the earlier documents, I do not consider that many of them are relevant to the issue which I have to decide today. However, I note that the claim form was served on 22^nd January 2009 in the Commercial Court. The case was transferred by Flaux J to the TCC in June and, following a long-running debate about the adequacy or otherwise of the claimants’ original pleading, in July 2009 the claimants served their amended particulars of claim, which was supported by a number of detailed schedules. The defence were served in November 2009, pursuant to an order made by Ramsey J at the Case Management Conference on 16.10.09.

At that CMC, Ramsey J set out a list of directions to lead up to the trial on 12^th July 2010. It is important to note that those directions were ultimately made by consent, although they came at the end of a relatively significant dispute between the parties, in that the claimants were seeking a timetable leading up to a trial in November 2010, whilst the defendants were seeking a timetable leading up to a much earlier trial date in May 2010. Unsurprisingly perhaps, the defendants now contend that the claimants’ application to adjourn, thereby significantly extending Ramsey J’s timetable, is designed to give them what they originally wanted, namely a trial (and a likely judgment) some two years after the claim was commenced. However it seems to me that is not an entirely fair representation of the claimants’ position. I accept that the fact that the dates now sought by the claimants are very similar to the dates they originally wanted is more of a coincidence than any form of tactical manoeuvre.

Ramsey J’s directions included the following:

Disclosure: Disclosure was to be by list by 5^th February 2010. That was, on one view, a relatively generous time, since it was four months after the case management conference and over a year after the proceedings had started.

Witness Statements: The date for the exchange of witness statements was 19^th March 2010. It is the potential delay to that date which is the most important for the purposes of this afternoon.

Experts: Ramsey J allowed the parties to call four experts (in welding, structural engineering, French law and quantum). He ordered that their statements under CPR 35.12 should be completed by 16^th April and their reports were to be exchanged by 7^th May 2010. He fixed the Pre Trial Review for 21^st May 2010.

The applicable principles on an adjournment application can be traced back to the overriding objective in CPR 1.1; the notes in the White Book at paragraph 3.1.3; and the decision of the Court of Appeal in Boyd and Hutchinson (a firm) v Foenander [2003] EWCA Civ 1516. In particular, the court must endeavour to ensure that:

the parties are on an equal footing;

the case is dealt with proportionately, expeditiously and fairly;

a proportionate and appropriate share of the court’s resources is allocated to the case, taking into account the need to allot resources to other cases.

In paragraph 9 of the judgment in Fitzroy Robinson v Mentmore Towers No 2 [2009] EWHC 3070 TCC, I identified a number of particular matters which may be relevant to a contested application for an adjournment, although at least some of these are specifically referable to applications made at the eleventh hour. They were:

“(a)

The parties’ conduct and the reason for the delays;

(b)

The extent to which the consequences of the delays can be overcome before the trial;

(c)

The extent to which a fair trial may have been jeopardised by the delays;

(d)

Specific matters affecting the trial, such as illness of a critical witness and the like;

(e)

The consequences of an adjournment for the claimant, the defendant, and the court”

In essence, on an application of this sort, the court is faced with a balancing exercise between, on the one hand, the obvious desirability of retaining a fixed trial date (which promotes certainty) and avoiding any adjournment (which can only add to the costs of the proceedings) and, on the other, the risk of irredeemable prejudice to one party if the case goes ahead in circumstances where that party has not had proper or reasonable time to prepare its case.

With those principles in mind I turn to deal with the grounds of this application for an adjournment.

The claimants say that, at the time of the CMC in October 2009, they made a mistake, because they underestimated the amount of documents, particularly electronic material, which they were likely to have in their possession. In particular, they say that they had understood that, at the time of the SPA, the desktop and laptop computers belonging to the companies that they were buying had been wiped clean. Thus the claimants thought that the amount of pre-SPA electronic material which they would have to disclose in these proceedings would be very limited. They contend that this material is in fact much greater than they originally envisaged. In particular, they say that they have discovered back-up tapes in relation to the Steenvoorde server covering the period prior to the SPA. Steenvoorde was the centre of one of the sale companies and the place where the vast majority of these units was manufactured.

The current position in respect of the claimant’s disclosure of electronic material is as follows:

General electronic disclosure: the data has been uploaded, and there are something like 25,000 documents. As a result of an exercise agreed by the parties, they are hosted by reference to relevant dates and agreed search terms. The remaining task which needs to be undertaken is a review for the purposes of relevance. Although the documents fit both the dates and the agreed search terms, it does not automatically follow that they are relevant.

Steenvoorde: in relation to the Steenvoorde documents, the position is that they have been uploaded so that they can be hosted. The search terms are being run at the moment. It is thought that the documents will be in a similar state to the 25,000 general documents at some point over the next day or so. A relevance check/review will then be necessary. It is thought that there may be significantly more Steenvoorde documents.

Thus it would appear that, in relation to electronic disclosure, the claimants are more advanced in relation to the 25,000 general documents although, as I have indicated, they are not behind by very much in relation to Steenvoorde. It seems to me that the major task remaining in relation to both sets of electronic documents is the relevance check/review.

My initial view was that it would require a very strong case for the trial to be adjourned merely because the claimants’ disclosure was a more extensive task than they had originally contemplated. That initial view was further strengthened by a number of matters raised by the defendants in argument. In short, they were:

Scope of the disclosure task.

Delays.

Resources.

All of that said, there are two much more important reasons why I have concluded that, on the material with which I have been provided today, the disclosure exercise does not warrant an adjournment of the trial. Those two reasons are concerned with the likely length of time that the disclosure exercise will take and its knock-on effect; and the issue of prejudice.

As I have said, the remaining tasks in relation to disclosure are essentially the relevance check/review. That will obviously take time, although it seems to me that it can be done in two tranches: the 25,000 documents first, and the Steenvoorde documents thereafter. It seems to me that, in relation to the 25,000 documents, the check/review should be completed during the course of the next 7 days, which would give rise to a date of 8^th March for disclosure of those documents. Again on the basis of the material before me, I would allow a further week, that is to say until 15^th March, for the disclosure of the Steenvoorde documents. It seems to me that, with the devotion of proper resources to these tasks, the disclosure exercise can be completed by 15^th March.

That will obviously mean a delay (of nearly 6 weeks) to the original date for disclosure ordered by Ramsey J. The question is whether that delay will cause prejudice to the claimants. I do not consider that there is any real evidence that this delay would cause such prejudice. In both Ms Ludlow’s witness statement, and in Mr Lewis’s helpful written submissions, there is a tendency automatically to equate delay with prejudice. That is not an equation which I accept. There could only be prejudice if the late disclosure revealed a whole series of critical documents, which had never been seen before, and which will have a major impact both on the allegations in the case, and on the time necessary for the preparation of the witness statements. That seems to me to be the sort of analysis which might give rise to a finding of potential prejudice due to the delays in disclosure. But there is no such evidence in the present case, and no such analysis.

The general point made in the witness statement is to the effect that a detailed review of the electronic disclosure will have to be undertaken with the witnesses of fact. But that is as far as the evidence goes. There is nothing to indicate what would be involved in that exercise, how long it might take, what additional work might be created by the electronic disclosure which had not been anticipated, whether all of that would give rise to an extended time for the preparation of witness statements beyond that which had already been envisaged, and whether any such additional preparation time can be accommodated in a new and tighter timetable before trial. Thus, as things presently stand, it cannot be said that the delays to the disclosure exercise have caused any specific difficulties, let alone prejudice, to the claimants.

In truth, the most detailed exercise presently before me as to the possible effect of the electronic disclosure on the witness evidence is that set out at paragraphs 26.6-26.8 of Ms Jefford’s skeleton. This analysis records that, in relation to the five potential witnesses of fact to be called by the claimants, only two would be even potentially affected by the electronic disclosure, namely Jerome Pouzou and Claudia Martins. Those are the two names which can also be found in Miss Ludlow’s witness statement on behalf of the claimants. Even if one assumes that they will have to consider additional documents arising out of the electronic disclosure exercise when they prepare their witness statements, there is nothing to say that that cannot be done relatively promptly.

Standing back a bit from the detailed analysis, it seems to me that it is perhaps unsurprising that specific evidence of prejudice arising out of the delays to the electronic disclosure cannot be provided. As I debated with Mr Lewis during the course of argument, at root this is a case about defects. One series of allegations concerns design and the other concerns welding defects. Conventionally, this type of case involves a consideration of what was actually designed and built (i.e. the physical structure) and a critique of that design and construction by reference to physical evidence (cracks, leaks etc), technical documents, applicable regulations and (ultimately) experts’ reports. Unlike allegations about delay or repudiation, disputes about defects do not often require any detailed consideration of contemporaneous evidence, whether written or oral, because the process by which the defective design or construction (if that is what it was) was achieved usually does not matter at all to either side.

Thus, in my experience, it is rare for witness statements or the contemporaneous documents to shed much light on a defects dispute: if the design or construction problem had been identified at the time it would have been recorded in the documents, and it would have been rectified, so there would be no subsequent claim. It is true that there may sometimes be a memo or an instruction record which can constitute clear evidence that, even at the time, it was apparent that there was a problem which was not being rectified, but in my experience such material is all too rare.

I accept Mr Lewis’s submission that this is a case in which the absence of written specifications and quality control/health and safety documentation may give rise to a separate strand of allegations against the defendants, and that the electronic disclosure may be relevant to that part of the case. However, those allegations have already been pleaded by the claimants against the defendants, so it has always been the claimants’ case that such documents did not exist. The further electronic disclosure may justify the claimants’ originally pleaded stance (by confirming the negative), or it may serve to undermine it (because such documents may be shown to exist, after all), but either way, the task of preparation of witness statements would be unlikely to be significantly extended.

Thus, for these reasons, I do not believe that the witness statements will need a large amount of additional preparation time. I have identified the dates that I think are appropriate for the electronic disclosure. I accept that these will mean that the exchange of witness statements will also have to be delayed. The date currently proposed by Ms Jefford is 8^th April, but it seems to me that that is too soon, given the dates for electronic disclosure and the need to ensure that the witness statements are as full as possible. Accordingly, I would propose the date of 23^rd April 2010 for the exchange of witness statements. That delay to witness statements will have a knock-on effect in relation to the experts, and I will return to that below, but that delay does not warrant the adjournment of the trial. There is still almost three months between my proposed date for the exchange of witness statements and the start of the trial.

The claimants’ pleaded case in respect of the defects is based upon one set of tests on the units which have already been carried out. Experts in two of the agreed disciplines (namely welding and structural engineering) have largely agreed the necessary testing regime for further tests and some further tests have already been carried out. It is anticipated that this further testing programme will be completed some time in April, although it is not clear precisely when.

It seems to me clear that:

The experts can deal now with the original testing and its results. They can meet and agree their CPR 35.12 statement in relation to that original testing and results. There is no reason for that to be delayed at all.

The results of the current testing can be discussed by the experts on an ongoing basis. They will be completed in a few weeks’ time anyway. I cannot see why, in those circumstances, there needs to be any significant delay to the experts’ statements and reports. I also consider, for the reasons already explained, that in a defects case like this, there is little direct connection between the content of the witness statements and the experts’ discussions and reports on the defects.

In those circumstances, I would propose that the CPR 35.12 statements should be exchanged by the experts on 7th May 2010 and, allowing them 3 weeks for their experts’ reports (limited to those matters on which they do not agree), those could be exchanged on 28^th May. That would then allow a bit of time before the PTR, which I would presently fix for 18^th June 2010.

In relation to the experts, Mr Lewis very properly and very fairly accepted that if (as I am) I was against his application to adjourn the trial as a result of the delays to electronic disclosure, he could not rely on the delays to the testing regime to justify an adjournment. It seems to me that that must be right because, even on the claimants’ case, the delays to the testing have not been so significant that, of themselves, they justify an adjournment of the trial. He did, however, indicate that there was an additional by-product of such an adjournment which would be advantageous to the parties, namely that a delay to the trial would allow a structured ADR to take place.

I am not sure that it could ever be a good ground for an adjournment of a fixed trial date to say that the proposed adjournment would allow the parties an opportunity to settle the case. I said something similar in Fitzroy Robinson. It seems to me that, once started, court proceedings have to be brought to a conclusion as expeditiously and cost-efficiently as possible. Civil proceedings are expensive. It is not cost efficient to delay a trial or the process leading up to it on the basis that, if the parties were granted a bit more time, they might settle the case. Every day is a new opportunity for the parties involved in civil litigation to resolve their differences, using whatever settlement or ADR process they choose, but effective case management requires the court, not only to do what it can to facilitate such a process, but also to recognise that, despite their good intentions, the parties may fail to avail themselves of that opportunity, and that a trial may be necessary, after all.

For all those reasons, I consider that this case can be properly and fairly prepared in the time remaining before the trial on 12^th July 2010, some four and a half months from today. I have indicated during the course of this judgment the dates I would propose for the updated timetable.