Mueller Europe Ltd v Central Roofing (South Wales) Ltd

The Pre Trial Review (“PTR”) in this case was fixed for 23^rd November 2012. At the hearing, there were seven separate applications which were nothing to do with the PTR itself, concerning pleadings, disclosure and evidence, all of which had to be dealt with due to the proximity of the trial. Although we were able to deal with most of the substantive matters at the hearing (because the court manager was able to list it for a day), it was necessary for me to reserve judgment on two applications, one concerned with electronic disclosure and the other with the documents generated by the independent fire assessor appointed by the defendant’s insurer immediately after the fire. This Judgment therefore principally deals with those two matters although, as will be noted below, I am using it to reiterate three matters of wider importance identified at the hearing.

This case concerns a fire which destroyed much of the claimants’ copper piping factory in the West Midlands on 9^th November 2008. There is no dispute that the fire was caused by radiant heat from one of the gas heaters in the factory, which ignited a scaffolding deck that had been erected by the defendant in order to carry out re-roofing works at the factory. The claimant’s case is that the defendant failed to identify the roof heaters as a fire hazard and/or failed to ensure that the roof heaters had been isolated and that, because the scaffold deck was less than a metre from the gas heaters in question, a fire was all but inevitable.

The damages claimed total around £23 million. The reinstatement of the factory is said to have cost just less than £10 million, and the new equipment cost another £8 million. The business interruption claim is in the order of £5 million. The claims are contested, and the defendant also raises a number of matters by way of contributory negligence. The trial, embracing both liability and quantum, is due to start on 12^th January 2013.

The first issue of wider application concerns the times by which counsel are required to lodge their skeleton arguments or notes in advance of any interlocutory hearing. The TCC Guide indicates these times (which vary, depending on the nature of the hearing) in bold type. For a PTR, pursuant to paragraph 14.2.2 of the TCC Guide (which can be found at paragraph 2C-124 at page 476 of Volume 2 of the White Book), counsel’s notes are required by 4.00pm one clear working day before the hearing. In this case, that did not happen, and counsel’s notes were provided at various times during the course of the working day before the PTR. Mr Eklund’s second note was sent at 9.50 pm, a time when, perhaps surprisingly, neither my clerk nor I are habitually in The Rolls Building.

Of course, the judges in the TCC understand that counsel are busy, and that there are times when it is a struggle for them to supply skeleton arguments or notes by the times stipulated in the TCC Guide. But those times are not there just for the sake of it; they are designed to ensure that the judge has had a proper opportunity to undertake the necessary reading and preparation before the hearing commences. If counsel’s skeleton arguments or notes are provided late, then the risk is that the judge will not have had time to do that reading, which in turn means that he or she cannot do the job in the way that the parties (and the judge) would like; and hearings take longer or, worse still, have to be adjourned. It is therefore in the interests of everyone, but particularly the litigants, for these time limits to be met.

It is not as if the stipulated times in the TCC Guide are draconian, or require documents many days before the hearing itself. For most post-CMC applications, the skeleton argument or note has to be provided not later than 1.00pm the day before the hearing (see paragraph 6.5.4 of the TCC Guide). It is only if the application is going to last more than half a day (paragraph 6.5.5) or is a Pre Trial Review (paragraph 14.2.2) that the TCC Guide stipulates 4.00pm one clear day before the hearing. It could not, I think, be said that those times were unreasonably in advance of the hearing itself.

This case also provides another reason why it is so important that these requirements are met. In the claimant’s note, provided to me after I had gone into court on 22^nd November 2012 (the day before the PTR), I was informed that I was required to do four to five hours of pre-reading before the hearing. How can a judge even embark on such extensive pre-reading when he does not know until too late that he is required to do any at all?

The revamping of the TCC Guide in 2005 was an important step in the rebranding of the court. In compiling its detailed provisions, Jackson J (as he then was) took careful consideration of the views of the users. The time limits for the provision of counsel’s skeleton arguments and notes arose out of that process. But compliance has deteriorated in recent years, and that is hampering the efforts of the TCC judges to deal with full lists and long hearings as efficiently as possible. For these reasons, the continued failure to meet these deadlines will, in the future, be met with a tougher response than hitherto, and is more likely to lead to adjourned hearings and wasted costs orders.

The second issue of wider application is the tendency for parties to overload the PTR with a wide variety of other applications. Here, the matters relevant to the PTR itself took no more than 30 minutes of court time. The rest of the day was concerned with other issues altogether. Whilst a few of these could perhaps be said to have arisen recently, many more of them arose weeks, if not months ago, and could, and should, have been the subject of separate applications in September or October. There is a tendency amongst solicitors to wait until the PTR, because that is a date already fixed with the court, and then try and have a wide-ranging catch-up session at that late stage.

Such a process is fraught with danger for two obvious reasons. The first is that, as here, it can be impossible to deal with all of the interlocutory applications, and the PTR issues, and the costs disputes, and the summary assessments, at one hearing. The second is that, if interlocutory matters are left as late as the PTR, then the outcome of a particular application may be different to that which would have eventuated if the application had been made earlier. If all parties want to keep the trial date, then an application that is left until the PTR will inevitably be decided against that background; that may mean that relief is refused (because of the proximity of the trial date) when in other circumstances it might have been granted.

Obviously, this is ultimately a matter of fact and degree. But the fact that there were seven separate interlocutory disputes between the parties in this case, two of which took over an hour each to argue and which have led to this reserved judgment, make plain that the parties ought to have addressed these issues much earlier than the PTR.

At the PTR on 23^rd November 2012, I made an order that the defendant’s expert accountant had to provide her report by 4.00pm on Monday 3^rd December 2012, and that if she failed to do so, she would be debarred from giving evidence. I gave brief reasons for that decision at the hearing, but there is a third point of wider application which arises out of that order.

In this case, Edwards-Stuart J originally gave directions on 21 October 2011. Part of those directions involved the experts meeting and producing a joint statement pursuant to CPR 35.12 (3), with their reports being served thereafter. That same approach was adopted by HHJ Waksman QC in his subsequent order in this case on 25^th July 2012.

In the Queen’s Bench Division generally, it is unusual for experts’ meetings and joint statements to precede the service of their reports. However, because of the range and complexity of the issues in many TCC cases, it is more common for this sequence to be ordered here. This has a number of obvious advantages. It allows the experts to meet and to identify those matters on which they can agree. That agreement can then be recorded in writing so that the experts do not need to address such matters in their reports: this can save a huge amount of time and cost. Instead, once the joint statement has recorded those matters on which they disagree, the experts’ reports can focus exclusively on those issues. This all saves time, and costs, and leads to a more focused approached by the experts. This was what the court intended to happen here.

Unhappily, the defendant’s expert accountant, Ms. Sally Longworth, failed to engage in this process. As a result, although the accountancy experts met in September and October 2012, their joint statement, which was not signed off until November, is singularly unhelpful. Although the claimant’s expert accountant sets out figures, and identifies the documentary support for the various heads of loss, Ms. Longworth repeatedly responds that “SL is not in a position to quantify loss and will advise quantum in her report”. This comment, and other responses very like it, is repeated throughout the joint statement. In consequence, it appears that the claimant and the claimant’s accountancy expert will learn, for the first time, the detail of the defendant’s case on quantum when Ms Longworth’s report is exchanged. There will then need to be further meetings and, potentially at least, further supplementary reports. All of that is contrary to the directions originally set in this case.

I am in no doubt that, on the material before me, Ms. Longworth is responsible for this. Although Mr. Eklund sought to suggest that some documents had been provided late, it is quite clear that the further documents provided in October were not extensive, and that the bulk of the quantum documents had been disclosed prior to the commencement of the litigation last year. For that reason, I was in no doubt at all that, in accordance with the principles in Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463, a limited form of ‘unless’ order was justified.

It is becoming too common for experts who are ordered to meet and produce a joint statement first, either to pay lip-service to that arrangement and to produce a joint statement which is of no help at all (as here), or to ignore the requirement for a joint statement and push on with their own reports regardless (as happened in Trebor Bassett Holdings Limited v ADT [2011] EWHC 1936 (TCC)). The unfortunate impression is being created that some experts do not get on top of the case until very late in the piece, and are therefore seeking to avoid committing themselves to anything too early. Self-evidently, that is not the right approach.

The first of the specific matters on which I was obliged to reserve judgment concerned electronic disclosure. The claimant has long been concerned about the electronic disclosure provided by the defendant because, although at the time of the re-roofing contract, and subsequently, the majority of the communications between the parties were by email, the defendant has disclosed almost no emails at all. The reason given in the past has been that the defendant company moved offices in 2010 and replaced their computer system, transferring only what was considered important material onto backup discs.

On 28^th May 2012, the claimant issued an application for an order that, amongst other things, the defendant carry out a search for electronic documents using specified keyword searches, a specified list of custodians, and a date range. That application was considered by Judge Waksman on 25^th July. The judge concluded that the defendant’s response (which was that Mr. Davies, the defendant’s Managing Director, had undertaken the necessary search), was inadequate. It appears that the judge was concerned that the backup discs had not been searched and that Mr. Davies may not have the appropriate expertise. Accordingly, the judge ordered as follows:

Mr. Davies served a further short statement which set out briefly the search he carried out on the two CD ROMs containing retained material, saying that was how he had carried out previous searches. He also used the search facility on the defendant’s existing computers. He also said that he spoke to the defendant’s IT contractor, Mr. Truelove, who confirmed that he was following the proper method. No further documents were produced as a result of these searches.

The claimant’s IT advisor is Mr. Stuart Clarke of Millnet Limited. He has considered Mr. Davies’ statement and has set out the various reasons why those searches (of both the CD Roms and the computers) were not likely to have been effective. Importantly, he concludes that it is likely that the searches undertaken by Mr. Davies will not have searched the content of the files on the CD Roms, and that the search software used could not access some or all of the material. In addition, in his second statement, Mr. Clarke notes that some of the emails printed off after the defendant company moved offices had not been stored on the CD Roms, as had been suggested, but were on other hard drives or networks.

Accordingly, the claimant seeks an order that the defendant carry out a search of its computers, backup CDs and network drive for the documents previously identified, with the search to be carried out “on the defendant’s behalf by a suitably qualified information technology consultant experienced in electronic disclosure”. Mr. Clarke’s statement estimates that a proper search of the defendant’s CDs and computers is likely to take about eight hours and would cost about £1,200. Mr. Moody, on behalf of the claimant, therefore maintains that such an order is proportionate.

In response, Mr. Eklund maintains that this is simply a re-run of the application advanced before Judge Waksman, and submits that the defendant has complied with the judge’s order, so that there is no scope for any further order. In addition, he maintains that the court does not have the jurisdiction to order the search to be done by a suitably qualified IT consultant.

I accept that this is, in large measure, a re-run of the application advanced in front of Judge Waksman, but I do not accept that, merely because it is a repeat, the claimant is prevented from making the application at all. Judge Waksman was concerned to provide a practical solution to what he obviously felt was inadequate electronic disclosure. That explains his careful order, requiring a statement from the defendant and the further search. The real question is whether the defendant has complied with the order, or whether the problems which led to the order in the first place remain outstanding.

In my view, whilst Mr. Davies of the defendant has plainly done what he can to comply with the order, the fundamental difficulty is that he does not have the expertise to do so. Paragraph (a) of the order required a search of the back-up tapes and CDs. It is implicit in that order that the search should be a meaningful and effective search. The evidence from Mr. Clarke demonstrates that it was not. To that extent therefore, through no fault of his own, Mr. Davies has not complied with that part of the order. Similarly, although paragraph (c) has been complied with, because there is a statement from Mr Davies saying how the searches had been carried out, the evidence is that those searches were inadequate, so that the underlying problem identified by Judge Waksman has not been addressed.

For those reasons, and subject to the jurisdiction issue, it seems to me appropriate to make an order requiring the search to be carried out by a suitably qualified IT consultant. Such an order is necessary in order to comply with the overriding objective. Moreover, the evidence also demonstrates that such an order would be proportionate: expenditure of about £1,200 must be proportionate in a case where the damages claimed are £23 million. That then leads on to the final question: is the court entitled to order an electronic search to be performed by a third party?

Pursuant to CPR Part 31, the court has power to order a search for particular documents; pursuant to new Practice Direction 31B, the court can order such a search in relation to documents held electronically. As a matter of principle, I conclude that, if an order to search for electronic documents can only be complied with if it is undertaken by somebody with expertise in that field, then the court has the jurisdiction to order that the search should be carried out by such a person; otherwise, the court will be making an order with which the party against whom it is made will never be able to comply. That would not be in accordance with the overriding objective.

A party in this sort of litigation is assisted by a number of different people to comply with court orders, including its solicitor and its experts. Orders are made against that party where, in reality, actual compliance is required by the third party advisor; for example, the ‘unless’ order against Ms. Longworth, the defendant’s expert accountant, will be something with which she has to comply, although the order is ultimately against the defendant, and carries with it a sanction that would harm the defendant, not Ms Longworth. Similarly, I can see no reason why, in principle, an order should not be made against a party requiring a search of electronic documents, to be undertaken by a suitably qualified person on behalf of that party.

For all of those reasons, therefore, it seems to me that I should make an order in the terms of paragraph 1 of the application dated 9^th November 2012, adding that the searches should be of ‘network drives’, as well as the CDs and hard drives. The costs of such an order will be reserved; like all applications relating to disclosure, the costs may turn on whether or not the exercise has led to a concrete result. If in fact it turns out that Mr. Clarke is wrong, and/or that there are no further documents, then the defendant may have an argument for its costs of undertaking the exercise.

Mr. Jones was a former fire officer who was working as an independent fire investigator/assessor at the time of the fire. He was instructed by the defendant’s insurers, Quinn, to investigate the fire at the claimant’s factory. His report has been disclosed, but not the contemporaneous notes on which they were based. Very recently, in circumstances which have not been adequately explained, a bundle of Mr Jones’ photographs has been belatedly disclosed. In addition, there is a contemporaneous statement taken by Quinn from someone described as “the policy holder”, of which Mr. Jones has a copy, but which again has not been disclosed. The claimant’s application focuses on Mr Jones’ notes and this witness statement.

After a fire of this sort, the relevant insurers often engage their own independent assessors to investigate the cause of the fire. The material produced by those assessors is often invaluable when, years later, there is a dispute about the parties’ respective responsibilities for the fire. The assessors invariably interview all those who might have relevant evidence, as Mr Jones did here, and they take photographs of the aftermath of the fire. These can often constitute the most reliable material from which both the cause and the effect of the fire can be worked out. The importance of this contemporaneous material (and particularly the notes of the interviews) cannot be underestimated: see Wessanen Foods v Jofson [2006] EWHC 1325 at paragraphs 213-216.

Judge Waksman, mindful of the various orders that he had made against the defendant which already required a good deal of work, dealt with the question of Mr. Jones’ notes by ordering that the claimant could write to Mr. Jones seeking those notes. They did so. Mr. Jones replied to say that he had been contacted by Peter Maxwell, the Regional Claim Manager with Quinn, sometime during 2011 and that, at that time, he gave Mr. Maxwell his report, his photographic log and, he said subsequently, his notes. The claimant then took the matter up with Quinn Insurance. In a letter dated 24^th September 2012, Mr. Gillett of Quinn, indicated that they had found a CD-ROM of Mr. Jones’ photographs, but that there were no additional notes accompanying those photographs. Further attempts to obtain the notes proved unsuccessful; hence the application to the court.

Mr. Eklund’s principal submission was that this material had been dealt with by both Mr. Gore, the defendant’s solicitor, and Mr. Maxwell, in different witness statements and that, in those circumstances, no further order should be made. He maintained that the statements from Mr. Gore and Mr. Maxwell essentially made clear that these notes were not in the defendant’s possession.

It is, however, necessary to look at the detail of those statements. Mr. Gore, in a statement of June 2012, said at paragraph 10 that “Mr. Maxwell of my instructing insurers paid a visit to Mr. Jones, who is an independent consultant and not employed by the defendant’s insurers. I am advised by Mr. Maxwell that Mr. Jones does not have the notes referred to. For the avoidance of doubt (as per the list produced) nor do the defendants”. On analysis, this does not say anything that is not agreed: Mr. Jones does not have the notes, as he has made plain, and there is no reason to believe that the defendant had, or should have had, the notes. Mr. Jones says he gave the notes to Mr. Maxwell, so that there is every reason to believe that Mr. Maxwell has the notes, but that is not something that Mr. Gore addresses in his witness statement.

Similar difficulties affect the statement from Mr. Maxwell, dated 25^th October 2012. He says that he paid a visit to Mr. Jones in March 2012 “to establish whether he had any further material relating to the case, such as notes, in addition to his report. He did not hand over any document at that time; he certainly did not hand over any notes…I have no further documents relevant to this dispute which have not already been disclosed”. The problem with this statement is two-fold. First, in March 2012, Mr. Jones would not have had any further material relating to the case, because he says he had already given it all to Mr. Maxwell. Secondly, although Mr. Maxwell says in terms that the only document emanating from Mr. Jones was the report, we now know that Quinn Insurance have had, and have very belatedly disclosed, Mr. Jones’ photographs (about which Mr. Maxwell makes no mention at all). If Mr Maxwell was right, what is the explanation for the belated appearance of the photographs?

Taking the point of principle first, I agree with Mr. Moody that the submission that these notes are not in the possession of the defendant, as opposed to those acting on their behalf, and are therefore not disclosable, is a bad one. Pursuant to CPR 31.8, what matters is whether these documents are in the control of the defendant. Documents in the possession of the defendant’s insurers are within their control; they could call for their inspection at any time. Thus, if I am satisfied that there is at least an arguable case that these notes are or were in the possession of the defendant’s insurers, I can order their specific disclosure.

On balance, on the evidence, I am persuaded that these documents (which would plainly be relevant if they could be found) are or were in the possession of Quinn Insurance. Mr. Jones says there were such notes and they were given to Mr. Maxwell in 2011. Mr. Jones has already been proved right that there were photographs, although Quinn did not provide those until this latest round of requests. Accordingly, I consider that Quinn/Mr Maxwell need to undertake a proper search for Mr. Jones’ notes, and to produce a statement saying what searches they have undertaken to find them and, if they have not been found, what has happened to them. It is important to note that, contrary to some of the evidence emanating from Quinn, these notes do not necessarily ‘accompany’ the photographs; they are Mr. Jones’ freestanding notes from which his report was subsequently compiled.

The other particular element of the disclosure application arising out of Mr Jones’ involvement is the existence of the statement from “the policy holder” (presumably Mr. Davies, the managing director of the defendant) to which Mr. Jones referred in his dealings with the claimant’s solicitors. Mr. Jones has a copy of that statement electronically on file but an order cannot be made against him because that document is not in the defendant’s control. Mr. Jones has made plain that the statement was provided to him by Quinn Insurance and was taken by the Regional Claims Manager. It is therefore a fair inference that Quinn have a copy of this document themselves.

It was difficult to discern what objection the defendant could have to including this statement in a list of documents. It plainly exists and the strong inference is that it is in Quinn’s possession. The suggestion that it was not in the defendant’s control is erroneous for the reasons that I have already given. Any question of privilege could only be asserted once the document has been listed; it would then be a separate argument for another day. Thus an order for the specific disclosure of the witness statement of the policy holder allows the defendant the opportunity, if it so chooses, to claim privilege, which argument could then be subsequently addressed. In all the circumstances, I make an order for specific disclosure in respect of the statement.

At paragraphs 2(c) and (d) of the application, the claimant also seeks any other document given to or generated by Mr. Jones and, at paragraph 2(e), any other documentation obtained or generated by the defendant’s public liability insurers. I am not prepared to make an order in those terms. It seems to me that it is much too wide. The detailed material before the court identifies the probable existence of the notes, and the definite existence of the statement. Those documents would plainly be relevant under the standard disclosure test and should therefore be disclosed as noted above. But there does not appear to be any other documentation generated by or given to Mr. Jones, and I am not prepared to make an order in those circumstances. It follows that I certainly am not prepared to make the order at 2(e) in relation to any other documentation obtained or generated by Quinn; no such documentation has been identified and I consider that such an order would, again, be much too wide.

The order under 2(a) and (b) is for specific disclosure of the notes and the witness statement so, again, the costs should be reserved until the full impact of that exercise can be assessed.