West African Gas Pipeline Company Ltd v Willbros Global Holdings Inc

This is an application by the Defendant, Willbros Global Holdings Inc (“WGH”) against the Claimant, West African Gas Pipeline Limited (“WAPCo”) for wasted costs. WGH says that WAPCo has failed to provide proper disclosure and seeks an order that:

WAPCo is a company incorporated in Bermuda and has its principal offices in Accra, Ghana. It is jointly owned by a consortium of international oil companies and West African state oil and power generation companies.

Under a contract dated 22 December 2004 WAPCo engaged Willbros West Africa Inc (“WWAI”) as the EPC contractor for the onshore works for the West African Gas Pipeline (“the Pipeline”) which was to be constructed to supply natural gas from Nigeria to Benin, Togo and Ghana.

In February 2008 WAPCo served a notice of termination on WWAI and then completed the Pipeline project using other contractors.

WGH is a company incorporated in Panama with its headquarters in Houston, Texas. WGH provided a guarantee in relation to the contract between WAPCo and WWAI.

In these proceedings WAPCo seeks payment from WGH under that guarantee of some US$273,748,113 as the additional costs of completing the Pipeline following the termination.

On 30 July 2010 WAPCo commenced these proceedings against WGH. Preliminary directions were given on 3 September 2010 and there was an order for the provision of further information by WAPCo to WGH, including a schedule explaining the additional costs that WAPCo had pleaded in Schedule 1 to the Statement of Claim. Pursuant to those directions WAPCo provided further information and WGH then served its Defence on 29 October 2010.

On 12 November 2010 the court made detailed directions for the progress of these proceedings, leading to a trial of 6 to 8 weeks in June 2012. That order provided for the parties to give standard disclosure by 29 April 2011.

WAPCo served a Reply on 13 January 2011. At a case management conference on 20 January 2011 WAPCo was ordered to provide early disclosure of various documents including a copy of its drawing register and such as-built drawings as then currently existed. WAPCo was also ordered to progress early disclosure of programming information, including the programme and monthly progress reports for the works.

On 27 May 2011 the date for standard disclosure was varied so that WGH was to give standard disclosure of hard copy documents by 10 June 2011 and of certain electronic documents by 20 June 2011. WAPCo was ordered to provide disclosure of certain documents on 20 June 2011, 22 July 2011 and 21 August 2011.

On 29 July 2011 a further case management conference was held at which both WAPCo and WGH sought and obtained orders in relation to disclosure and a further case management conference was ordered for 6 October 2011.

On 29 September 2011 WGH issued an Application seeking a number of orders in relation to disclosure by WAPCo. First, WGH sought an explanation of WAPCo’s approach to disclosure and the “high level review” which WAPCo said had been carried out to determine which folders of documents stored on two shared drives, the WAGP shared drive and the WAPCo shared drive, were to be disclosed. Secondly WGH sought an order that WAPCo should search for and disclose relevant documents relating to a further 85 custodians. Thirdly an order was sought that WAPCo should provide a disclosure list that properly described the documents that it had disclosed, together with fully searchable OCR versions of each PDF document that it had disclosed. Fourthly WGH sought an order that WAPCo was to provide copies of documents which WGH had identified as being missing from WAPCo’s disclosure.

That application was dealt with at the hearing on 6 October 2011 and a number of orders made. First, WAPCo was ordered to search for missing documents and categories of documents and to provide disclosure in two tranches on 24 October 2011 and 4 November 2011. Secondly, WAPCo was ordered to review redacted documents and provide, by 4 November 2011, un-redacted documents in so far as the redactions were not correctly applied. Thirdly, WAPCo was to give disclosure by 24 October 2011 of an initial batch of 15 of the 85 further custodians to be chosen by WGH and WGH were given liberty to apply in respect of further custodians. Fourthly, WAPCo was ordered to provide a further disclosure statement, signed by WAPCo and a partner of WAPCo’s Solicitors, Herbert Smith LLP, dealing with the further searches for the missing documents and documents from custodians and also providing reasons for any redactions. Fifthly WAPCo was ordered to identify the extent to which OCR text versions of disclosed PDF documents had not been provided in searchable form and how it intended to deal with this. Sixthly WAPCo was ordered to provide WGH with supervised access to its Sun accounting system, including the AP module and was to provide WGH’s forensic accounting expert with access to such other accounting materials as would normally be required by such an expert.

Other orders were made relating to an aspect of specific disclosure by WGH, the provision of an amended Defence by WGH and directions for an application by WGH for security for costs. At the conclusion of the hearing I heard submissions on costs and decided that the appropriate order should be “costs in the case”.

On 7 October 2011 WGH’s Solicitors, Pinsent Masons LLP, wrote to Herbert Smith about a missing email in an email chain. As a result of this request, on 11 October 2011 WAPCo disclosed an email from the project director of the Pipeline project, Mr Nance, dated 14 May 2008 together with an attached cost estimate. In that letter Herbert Smith confirmed that this document had not been previously disclosed and said that whilst it was caught by WAPCo’s searches for documents, it was mistakenly marked as not being disclosable during the review process.

On 10 October 2011 Herbert Smith wrote to Pinsent Masons about OCR versions of disclosed PDF documents. They stated that they had disclosed 70,247 PDF documents and had identified 3,403 which had no text available for text extraction and they said they were seeking to establish whether it was possible to provide OCR versions of those documents. In respect of the remaining 66,844 documents they said they had, since 6 October, identified 17,199 documents where the OCR version may not be in a searchable form and they were seeking to identify documents, such as drawings or photographs, which could not be provided in searchable OCR versions. In relation to the remaining documents they were investigating whether it was possible to provide better OCR versions. They indicated that they would be in a position to respond on these points by 24 October 2011.

On 24 October 2011 Herbert Smith wrote to Pinsent Masons in relation to the 3,403 documents with no text available. They said that they had engaged an external litigation support provider, Hobs Legal Docs Limited (“Hobs”) and, to the extent that it had been possible to provide OCR versions, they attached a CD containing those versions. In relation to the 17,199 documents, not in a searchable form, they enclosed OCR versions of those documents where possible. They said they had also requested Hobs to provide information on the likelihood of better quality searchable OCR versions being available and that Hobs had generated a confidence percentage for each of the documents confirming the possibility of generating a good quality searchable OCR version. They enclosed an excel spreadsheet and 20,480 replacement OCR files on CD.

Also on 24 October 2011 Herbert Smith wrote to Pinsent Masons saying that it was not going to be possible to provide the next tranche of disclosure on that day. They said that, when carrying out checks, it became apparent that there had been a problem with the de-duplication procedures used by Hobs in that they had not properly identified a large number of duplicate documents. They said they were arranging for the next tranche to be de-duplicated and would write again as soon as possible.

In that letter they also referred to the list of 15 custodians and said that documents for only 8 of those 15 had been obtained. In view of this, they said that WAPCo was also searching for and would review documents in respect of those remaining individuals on the list of 85 custodians and would confirm the list of further custodians in respect of whom data had been obtained as soon as the process had been completed. They confirmed that they would provide standard disclosure for the 8 individuals by 4 November 2011. They said:

“In view of this, our client is also searching for and will review documents in respect of those remaining individuals on the list of 85 custodians in the Second Schedule to the draft Order enclosed with your first letter of 23 September 2011. We will be writing to you shortly to confirm the list of additional individuals in respect of whom data has been retained as soon as the process of identifying the relevant custodians in that regard has been completed. Whilst our client does not accept that all of these custodians are likely to have relevant documents, this will allow any remaining disclosure issues to be addressed more quickly than if an incremental approach is adopted.”

On 28 October 2011 Herbert Smith wrote to Pinsent Masons concerning a number of topics arising from WAPCo’s disclosure. In relation to de-duplication they said that, as a result of checks carried out on 24 October 2011, it had become apparent that there had been a problem with the de-duplication process used by Hobs and that a significant proportion of duplicates had not been removed.

In relation the failure to disclose the e-mail from Mr Nance and its attachment, Herbert Smith said that part of the review of WAPCo’s documentation had been undertaken by Mindcrest, a litigation support company based in India. They said that the review of documents carried out by Mindcrest was subject to supervision by lawyers from Herbert Smith. They stated that they had asked Mindcrest to carry out a further review of the documents previously provided and also asked that the review should be conducted by reference to WGH’s amended defence. They said that this initially involved a re-review of all the documents disclosed by WAPCo on 9 September 2011 and that, as a result, about 10% of the documents previously identified from that tranche of disclosure as not being disclosable were re-designated as being disclosable. They said that the documents identified as a result of this re-review would be de-duplicated and made available to WHG.

In relation to the failure to disclose documents on WAPCo’s Livelink system, they said that, following the hearing on 6 October, a senior associate from Herbert Smith travelled to WAPCo’s offices in Accra to carry out a further search of the Livelink system and investigate why documents had not been provided. They said that these searches identified that some folders within the system were mistakenly not provided to Herbert Smith when they were given a copy of Livelink. Herbert Smith said that copies of these folders had been taken and de-duplicated and then reviewed by Herbert Smith rather than Mindcrest. They stated that, because of problems with de-duplication, further de-duplication would be needed before the documents could be disclosed.

In relation to custodians, Herbert Smith said that both WAPCo and Chevron had carried out searches relating to all 85 custodians and that, in addition to the 8 individuals from the list of 15, documents had been identified from 31 further custodians. They also said that it had come to their attention that some data had not been sent to them in respect of custodians listed in the schedule to the Order of 29 July 2011 and they would disclose further documents from 11 custodians.

In relation to redactions, Herbert Smith referred to their letter of 30 September 2011 and paragraph 40 of Mr Baily’s third witness statement where WAPCo had agreed that redactions were incorrectly applied in certain documents identified by Pinsent Masons and said that redactions were being further investigated. They said that it appeared that the primary reason for documents either being redacted or not being redacted was the failure to de-duplicate documents adequately. They said that WAPCo would provide un-redacted copies of any disclosed documents in respect of which redactions were found to have been incorrectly applied.

In relation to difficulties in searching, Herbert Smith referred to Pinsent Masons letters of 19, 26 and 27 October referring to those difficulties. They said they had investigated the matters concerning the “date” and the relevant “title/description” field in WAPCo’s database. In relation to Pinsent Masons’ comment that the document date was often the date on which the document was created or sent, Herbert Smith said that it was usual to rely on the metadata to populate the relevant “date” field and stated that WGH had adopted the same method. In relation to problems with the “original filename” field and Pinsent Masons’ reference to a document with a title “Red Spade Procedure”, Herbert Smith said they had identified that the “original filename” field in the database sent to Pinsent Masons on 20 June 2011 was missing or corrupted in certain instances. They said that they had generated a new set of “original filename” data in relation to the documents disclosed on 20 June 2011, insofar as the filename data was available from the metadata in the original document and they provided a new database to Pinsent Masons.

On 7 November 2011 Herbert Smith provided 10,100 documents to Pinsent Masons relating to missing documents referred to in the Schedule to the order of 6 October 2011, documents arising from the re-review by Mindcrest and an electronic copy of Mr Nance’s email.

On 22 November Herbert Smith provided a further 4,760 documents which were folders of documents stored on WAPCo’s Livelink system but not disclosed previously.

On 21 November 2011 WGH issued the application in which, at paragraphs 1 and 2, they sought the cost orders with which I am now concerned. In it they sought further disclosure at paragraphs 3 to 6, by reference to the draft order which they had served on 11 November 2011.

At a case management conference on 1 December 2011 further orders for disclosure by WAPCo were made as a result of WGH’s application of 21 November 2011. Orders were made for disclosure of documents arising from the re-review by Mindcrest and the review of redacted documents, as well as orders for disclosure of documents of custodians and in relation to duplicate documents which had previously been disclosed by WAPCo. An order was also made for a list identifying disclosure document numbers for missing documents and for documents arising from the Mindcrest re-review, together with a further disclosure statement.

Orders were also made in relation to the disclosure by WGH on WAPCo’s application dated 18 November 2011, as well as directions as to WGH’s Amended Defence and expert evidence. A further case management conference was fixed for 19 January 2012 to deal with WGH’s application for costs in paragraphs 1 and 2 of the application of 21 November 2011, as well as further directions to take the mater to trial in June 2012.

Following that case management conference, Herbert Smith disclosed the following documents from WAPCo:

On 23 December 2011 a further disclosure statement was served, signed by WAPCo’s general counsel and by Mr Baily. Within that disclosure statement additional documents were identified for future disclosure. First, in paragraph 30 of that statement, it was stated that there were further hard copy documents stored at Lagos Beach Compressor Station which had not been scanned and uploaded to the Livelink system. Secondly, in paragraph 51 of the disclosure statement it was stated that 2,427 further documents of a custodian, Mr Joey Marsh, had been located and were being reviewed for disclosure, as soon as possible.

Mr Stuart Catchpole QC who appears on behalf of WGH submits that, in the light of matters which have occurred since 6 October 2011, the picture of WAPCo’s disclosure is now dramatically different to that apparent at the hearing. He says that, because of that, it is now appropriate for the court to revisit the costs order made at that hearing either under the provision for “liberty to apply” in the order made on 6 October 2011 or under the court’s power to vary or revoke an order under CPR 3.1(7). He submits that because of that different picture, the court should now make an order that the costs should be WGH’s in any event.

He further submits that, taking account of matters both before and after the hearing on 1 December 2011, the appropriate order should be for WGH to have the costs of the hearing on 1 December 2011.

In addition Mr Catchpole submits that the whole process of WAPCo’s disclosure has now been shown to have been wholly inadequate. He refers to the inadequacy of the initial “high level review”; the failure properly to gather together the documents from WAPCo’s e-Rooms, the WAPCo shared drive, WAGP’s shared drive and the Livelink system; the failure of Mindcrest properly to review the documents; the failure of Hobs to de-duplicate the documents; the failure of WAPCo’s local lawyer in Accra properly to provide disclosable documents; the failure to provide reasonable OCRs; the failure to provide a properly searchable database; the failure to make consistent and appropriate redactions and the failure to obtain documents from the relevant custodians.

He submits that WAPCo’s disclosure has been provided in a piecemeal manner and in a form which was not properly searchable and has contained many duplicates. As a result, he says that WGH has wasted costs in dealing with these problems and that this has required additional work by solicitors, by WGH’s litigation support provider, Equivalent Data (“EQD”) and by experts in dealing with WAPCo’s disclosure. He refers to the evidence in the ninth witness statement of Mr Mark Roe, a partner in Pinsent Masons and to the evidence of Mr Neil White, a vice president of Willbros United States Holding Company Inc, who deal with wasted costs and submits that the court should base its assessment of the impact of WAPCo’s failure by reference to the overall costs of £1.8million set out in those witness statements.

Ms Fiona Parkin QC, who appears with Mr Omar Eljadi on behalf of WAPCo, submits that this is not a case where the court could or should vary or set aside the order of 6 October 2011. She submits that proper order was “costs in the case” and there has been no change in circumstances since that hearing which would justify a different order. She submits that the same applies to the hearing on 1 December 2011 which was arranged as a regular case management conference.

In relation to WAPCo’s disclosure she fairly accepts that there have been failures but submits that these have to be considered in the context of this complex and difficult international litigation and she refers to instances of failures by WGH to support the fact that such failures occur. She accepts that disclosure has been given over a prolonged period of time but submits that the principle of giving disclosure by tranches was, in part, a suggestion from WGH. She submits that given the way in which WGH’s Defence is pleaded the scope of disclosure has been broad and has had to reflect changes introduced by the Amended Defence. She submits that WAPCo have given disclosure of the 85 custodians without accepting the relevance of all the documents and that no conclusion should be drawn from that disclosure. She submits that it is inappropriate for the court, at this stage, to come to any conclusions as to the disclosure by WAPCo as the court would need to know to what extent the documentation has, in the end, proved relevant at the trial.

She also submits that the costing put forward both by Mr Roe and Mr White cannot reflect wasted costs. She submits that by serving evidence in tranches all that has happened is that WGH’s solicitors, litigation support team and experts have had to review documents at different times instead of at the same time and that the review process would have been the same for each of the documents whether carried out at one time or at different times. Accordingly she submits that this is not a case where it is either appropriate to make an order for wasted costs or where the evidence supplied by WGH justifies such an order.

There are three elements of cost sought by WGH; the costs of the hearing on 6 October 2011, the costs of the hearing on 1 December 2011 and the claim for wasted costs in dealing with WAPCo’s disclosure. Before I consider those three elements, it is appropriate for me to set out some conclusions on the facts as they appear from the evidence filed on this application which I bear in mind had not been in the subject of any cross-examination. In doing so, it seems to me that the allegations of failure by WAPCo fall into the following categories:

I shall deal with each of those categories in turn:

The question of the adequacy of Mindcrest’s review of documentation for disclosure arose after the hearing on 6October 2011 when Pinsent Masons wrote on 7 October 2011 identifying that the email from Mr Nance of 14 May 2008 and its attachment could not be located within WAPCo’s disclosure. Herbert Smith wrote to Pinsent Masons on 11 October 2011 enclosing a hard copy of the e-mail and its attachment. They said that whilst the document was caught by WAPCo’s searches for documents it was mistakenly marked as not being disclosable during the review process. In their letter of 18 October 2011 Herbert Smith explained that the email was reviewed by a reviewer from Mindcrest but mistakenly marked as not being disclosable. They said they had raised the matter with Mindcrest who were undertaking further reviews to ascertain whether this had occurred in relation to any other documents. They anticipated that the checks would be complete during the week commencing 24 October 2011.

Herbert Smith wrote again by way of further explanation on 28 October 2011. They said that the original review by Mindcrest had been subject to supervision by lawyers from Herbert Smith who had provided initial briefings and established escalation procedures. They had also carried out quality checks of samples of each batch of reviewed documents. Herbert Smith said that the checks which had been carried out by way of re-review of all the documents disclosed by WAPCo on 9 September 2011 had resulted in about 10% of the documents previously identified from that tranche of disclosure as not being disclosable, now being designated as disclosable. They said that in addition Mindcrest had now been instructed to re-review all the documents previously identified by them as not being disclosable. In that letter Herbert Smith also raised an issue of the increased scope of disclosure in the light of the draft amended Defence and the particularisation of the allegations.

In WAPCo’s disclosure statement dated 23 December 2011 at paragraph 58 it was stated that sample checks had revealed that certain documents would fall to be disclosed in the proceedings but stated that “a small number...ought to have been disclosed on the basis of the original pleadings, but most...now fall to be disclosed on the basis of the matters raised in the Amended Defence”. The Mindcrest review led to significant further disclosure being made in the form of a substantial part of 10,100 documents disclosed on 7 November 2011 and the whole of some 7,898 documents disclosed on 9 December 2011. There were also some 69 documents disclosed on 16 December 2011. Whilst I accept that in the course of the re-review Herbert Smith may have widened the scope of documents which would properly form the basis of standard disclosure on the basis of the matters pleaded by WGH, including those further particularised in the Amended Defence or further information, it is clear that the need for the re-review was the failure properly to disclose Mr Nance’s e-mail and that a significant number of documents disclosed as a result of that review should have been disclosed at an earlier stage.

In July and August 2011 Pinsent Masons wrote to Herbert Smith raising various concerns as to WAPCo’s disclosure. On 23 September 2011, prior to issuing the application of 29 September 2011 Pinsent Masons wrote to Herbert Smith setting out a schedule of some 265 items under various headings where Pinsent Masons said they had identified documents or categories of documents missing from WAPCo’s disclosure.

That letter and the application were responded to by Mr Baily’s third witness statement dated 4 October 2011. In the schedule to that witness statement, Mr Baily sets out each of the requests and then states whether the documents had been disclosed, would be disclosed, would be searched for or did not exist. At paragraph 37 of the third witness statement Mr Baily says that the outstanding documents were located as a result of specific searches on WAPCo’s Livelink document storage system. He said that the undisclosed documents were not provided because they were not part of the copy of the Livelink system provided to Herbert Smith at the time. This led to the order made on 6 October 2011 for further searches for and disclosure of documents within those categories in the schedule attached to the order.

As explained in Herbert Smith’s letter of 28 October 2011, following the hearing on 6 October 2011 a senior associate from Herbert Smith went to Accra to carry out a further search of the Livelink system and investigate why documents on that system had not been supplied to Herbert Smith earlier. Certain folders were identified which had not been previously provided as part of the copy of Livelink supplied to Herbert Smith. As a result, additional documents in certain further folders were therefore reviewed.

A fuller explanation was given in paragraph 35 of the disclosure statement of 23 December 2011. One source of documents was e-rooms, a document management system maintained by Chevron. In November 2010 these documents were migrated onto Livelink, together with documents from the WAPCo shared drive and parts of the WAGP shared drive. The migration of the e-rooms documents was completed on 30 April 2011. Herbert Smith requested a lawyer engaged by WAPCo and the person who carried out the migration to send a complete copy of documents from Livelink, other than those from the e-rooms which had previously been sent to Herbert Smith. A hard drive containing the documents from Livelink was received on 17 June 2011. When certain documents were requested by Pinsent Masons in August 2011 it became apparent that they were to be found on the copy of Livelink kept in Accra but not on the version of Livelink sent to Herbert Smith in June 2011. It was then discovered that there had been a misunderstanding and the e-room documents on the copy of Livelink supplied to Herbert Smith were only additional e-room documents migrated onto Livelink since January 2011. The version of Livelink provided to Herbert Smith therefore had missing e-rooms documents.

This led to an associate from Herbert Smith going to Accra on 13 and 14 October 2011 to ensure that all potentially documents from Livelink were searched and reviewed. He carried out a review of all folders and sub-folders on Livelink and this led to further folders and sub-folders being identified and a copy of a hard drive of those further documents was provided to Herbert Smith on 14 October 2011. The resulting 4,720 additional documents were then disclosed on 18 and 22 November 2011.

In the disclosure statement Herbert Smith explained that there was a further error in relation to the e-room documents. They were provided in mid-2009 with an initial tranche of documents and certain folders from the e-rooms. In December 2010 a complete set of e-room documents was received by Herbert Smith. It was then de-duplicated to remove the e-room documents received in mid-2009 and send to Mindcrest to review for disclosure. However Herbert Smith had not completed the review of the documents received in mid-2009 and because those documents were not included in the documents sent to Mindcrest for review, they were not all reviewed. The mistake came to light at the end of August 2011, as set out in paragraph 29 of the disclosure statement of 23 December 2011. They were then reviewed and disclosed as part of the 10,100 documents disclosed on 7 November 2011.

Finally, in paragraph 30 of the disclosure statement it has also now come to light that documentation stored at Lagos Beach Compressor Station has not yet been scanned and uploaded into Livelink meaning that further documents will be disclosed.

This had led to further disclosure of a significant part of the 10,100 documents disclosed on 7 November 2011, 4,760 documents disclosed on 22 November 2011 and would lead to further documents being disclosed which are located at the Lagos Beach compressor station.

As set out in Herbert Smith’s letters of 24 and 28 October 2011, while carrying out checks on 21 October 2011 it had become apparent to Herbert Smith that there was a problem with the de-duplication procedures used by their external litigation support and data processing provider, Hobs and that they had not properly identified a large number of duplicated documents. On 28 October 2011 Herbert Smith said that investigations by Hobs had indicated that the de-duplication issue arose because of two aspects. First, documents that originated from archive files were not de-duplicated properly due to an oversight by personnel at Hobs. Secondly there was a separate issue with the software used by Hobs which had resulted in certain documents not being de-duplicated even where the relevant data showed that they were duplicates. They said that whilst Hobs de-duplicated a large number of documents when processing the various tranches of WAPCo’s disclosure, a significant proportion of duplicates had not been removed.

In the disclosure statement the reason for the failure to de-duplicate is set out in more detail and it is stated that to address the issues regarding de-duplication, WAPCo had engaged Ernst and Young to provide electronic document management services in the future. They refer to various issues which were then identified by Ernst and Young and at paragraph 88 they say that “the cause of the issues regarding de-duplication are technically very complex and multi-faceted and whilst Herbert Smith and [WAPCo] sought to address these issues in the shortest possible time, the investigation and provision of reliable solutions has required some time.”

In a letter dated 20 December 2011 Herbert Smith identified the number of duplicates in each tranche of WAPCo’s disclosure and, in particular, that there were 24,341 duplicates in disclosure on 20 June 2011, 2,604 duplicates in disclosure on 25 July 2011 and 13,328 duplicates in disclosure on 9 September 2011 with smaller numbers of duplicates in other tranches of disclosure.

On 22 September 2011 Pinsent Masons wrote to say that in the course of reviewing WAPCo’s disclosure they had noted that a number of documents which had been redacted had also been disclosed without the redactions. They identified a number of inconsistencies and sought an explanation together with a review of the redactions that had been made. On 6 October 2011 an order was made substantially in those terms, Mr Baily having stated in his third witness statement, prior to that hearing, that WAPCo agreed that redactions had been incorrectly applied. In the letter of 28 October 2011 Herbert Smith said that it appeared that the primary reason for the disclosure of documents that either should or should not have been redacted was the failure to de-duplicate documents adequately. In the Disclosure Statement of 23 December 2011 a table was provided which identified documents where WAPCo had either maintained previous redactions or had redacted documents in the further tranches of disclosure after 6 October 2011, together with the reasons for the redactions.

This error in making redactions led to 1,074 document being disclosed on 9 and 14 December 2011 and 222 documents being disclosed on 23 December 2011.

At the hearing on 29 July 2011 an order was made that WAPCo should provide standard disclosure of documents in the custody of 40 custodians identified in the first schedule to that order.

On 6 October 2011 WGH sought an order that WAPCo should search for and disclose relevant documents relating to 85 further custodians. At that hearing I was not persuaded that documents from 85 further custodians should be immediately disclosed. Instead I ordered that WGH should identify 15 custodians and that WAPCo should give disclosure in relation to those additional custodians, with liberty to WGH to apply for disclosure from further custodians. In this way, depending on whether further documents were disclosed as a result of the searches of the 15 custodians, it might or might not be appropriate to order disclosure from further custodians.

On 24 October 2011 Herbert Smith wrote to say that documents had been retained in respect of only 8 of the 15 custodians. In view of this they said that WAPCo was searching for and would review documents in respect of the remaining 85 custodians.

On 28 October 2011 in their letter Herbert Smith said that both WAPCo and Chevron had carried out further searches and that, in addition to the documents of the 8 custodians, they had identified documents from further custodians and in addition further documents from the original custodians. In the disclosure statement of 23 December 2011 Herbert Smith said that they had liaised with both WAPCo and Chevron and identified further documents which they were disclosing.

The searches in respect of custodians led to documents being disclosed on 16 December 2011. There were 9,528 documents from the 8 custodians out of the 15, 6,012 documents from the further custodians out of the 85 and 7,458 further documents for the original custodians.

At the hearing on 6 October 2011 an order was made directing Herbert Smith to identify the extent to which the OCR versions of WAPCo’s PDF documents were not in a searchable form. Herbert Smith provided that information in their letters dated 10 and 24 October 2011 and provided 20,480 replacement files on 24 October 2011 which replaced files in the database which might not have been in a searchable format. As Herbert Smith pointed out in their letter dated 2 November 2011, under the electronic disclosure process agreed by the parties, WAPCo had agreed to provide OCR versions of disclosed documents in accordance with CPR PD31B. This provides at paragraph 34 that “if OCR versions are provided they are provided on an “as is” basis with no assurance to the other party that the OCR versions are complete or accurate.” Whilst that is correct, there were evidently a number of documents where the OCR version was originally inadequate.

This issue was raised at the hearing on 6 October 2011 and was followed up in correspondence by Pinsent Masons of 19, 26 and 27 October 2011. It is clearly an important aspect of electronic disclosure, particularly where documents are not individually listed, that there should be a searchable database. That database requires fields such as “date” and “title” of documents to be completed and the electronic disclosure process agreed between the parties provided for that in this case. On 28 October 2011 Herbert Smith, having investigated difficulties which Pinsent Masons had encountered in identifying certain documents, said that in relation to the document “date/sort date” the document “date” was often the date on which the document was created or sent and derived from the document’s metadata. In relation to the “original filename” field the investigation by Herbert Smith’s litigation support personnel had identified that this field was either missing or corrupted in certain instances in the data disclosed on 20 June 2011. As a result they generated a new set of “original filename” data and in this way were able to identify the documents which Pinsent Masons were having difficulty locating. That database was served on 28 October 2011.

Disclosure in complex international construction projects is always difficult but there is no doubt that WAPCo’s disclosure in this litigation has caused a number of additional problems. Those problems, particularly in the context of electronic disclosure, mean that time and costs have been wasted as a result of errors made in providing WAPCo’s disclosure. I accept that there must be some give and take between parties and their solicitors in relation to difficulties which inevitably arise in the course of e-disclosure and require to be dealt with by cooperation by the parties and their lawyers. However there will be cases where the court may properly exercise its discretion and make an order for one party to pay costs under CPR44.3 if, having regard to all the circumstances, the conduct of a party in relation to disclosure justifies that order. It is, in my judgment, only generally in cases where there had been a mistake or error which has had significant consequences in terms of time and cost that the court will generally make an order for costs which have been wasted.

In the present case I do not consider that the difficulties in respect of searchable OCR copies or the corrupted “original filename” field are sufficient to merit an order for wasted costs. OCR copies of PDF files are never perfect. In this case there were a number that were unintelligible. It is difficult to know precisely how many came into the unintelligible category but I am not persuaded on the evidence that this was due to any error or that the problem was any greater than might be expected with the quality and type of documents on this project.

In relation to the “original filename” field it is evident that the problem was that there was a corrupted field or a missing field in the database which had not been properly populated from the metadata. Again I am not persuaded on the evidence that this was the type of error for which a party should bear wasted costs. Once the problem was identified Herbert Smith had it rectified with a minimum of delay.

In my judgment the mistakes or errors in disclosure which do sound in terms of wasted costs are essentially because of three problems. The first is the failure properly to de-duplicate documents which has inevitably led to wasted time and costs in reviewing a number of copies of the same document. Whilst I accept that de-duplication of electronic documents has a number of technically complex facets, if appropriate software is properly applied it can remove multiple copies of the same or similar documents. In this case, the extent of the failure of de-duplication set out in Herbert Smith’s letter of 20 December 2011 indicates that there was a serious failure in the de-duplication process. Where that happens, I consider that it is a case where the Court should properly exercise its discretion to deal with the costs wasted by that error. Whilst inconsistent redactions or inappropriate redactions raise some different issues, I consider that, as Herbert Smith have identified, the underlying reason for the difficulty in inconsistent redactions was the failure to de-duplicate properly and that, in the circumstances, this is the element of wasted costs which is properly to be dealt with arising from the problem with redactions.

The second main area of difficulty has been the failure by WAPCo to gather together or “harvest” a consistent and complete set of electronic data for the purpose of electronic disclosure. This was not a case where there are particular complexities in the important initial process of identifying the repositories of electronic documents, contacting custodians and identifying relevant folders and sub-folders so as to ensure that a comprehensive compilation of electronic documents is obtained. There were a number of errors identified above, in particular, the provision of a copy of Livelink with incomplete e-room documents, the failure until 14 October 2011 to obtain a copy of the relevant folders and sub-folders on Livelink and the failure, in consultation with the relevant custodians, properly to gather those custodians’ documents. It is evident that a considerable amount of disclosable documentation has now been disclosed from the additional custodians and that is documentation which should have been gathered together initially. Another aspect which has come to light is the incomplete disclosure of the documents stored at the Lagos Beach Compressor Station. I consider these to be serious mistakes and from the evidence it is apparent that the mistakes resulted from an inadequate initial review and gathering together of a complete set of electronic documentation.

A third and significant difficulty arose because of a failure properly to review documents which were located in the searches of the electronic data base. There was, first, the error in failing properly to review all the pre-December 2010 e-Room documents. Then, secondly, there was the further review following the failure to disclose the email from Mr Nance with its attachment which was evidently a document which should have been disclosed but was not. The failure to disclose that document brought to light the inadequacy of the review of the documents carried out by Mindcrest. I consider that the documents which arose because of a re-review by Mindcrest were substantially documents which should have been disclosed earlier. Whilst I accept that there was some disclosure which might arise from the better particularisation or the amendment to the Defence, I am far from persuaded that this was a significant cause of the further documents thrown up by the re-review. I say this because, on analysis, I do not consider that the particularisation or amendment of the case could have had a significant effect on the wide scope of the documents which would have been disclosable initially. Rather, the clear failure to disclose the e-mail from Mr Nance and its attachment indicates a failure of WAPCo’s disclosure system.

I now consider how and to what extent these conclusions should be reflected in an order for costs against WAPCo.

WGH seeks to vary or revoke the costs order of 6 October 2011 under CPR 3.1(7) or under the liberty to apply in that order. I consider that the guidance given by the Court of Appeal in Roult v North West Strategic Health Authority [2010] 1 WLR 487 is applicable to the court’s power to vary or revoke orders such as the costs order in this case. That decision indicates that, in general, the court may vary or revoke an order under CPR 3.1(7) when the original order is made on the basis of erroneous information, whether that information was given accidentally or deliberately, or if subsequent events, unforeseen at the time of the order, have destroyed the basis on which the order was made. Whilst it is evident that, in the context of case management directions, a more liberal approach is appropriate, in the context of other orders, including costs orders, I consider that the guidance in Roult should generally apply.

Whilst the order of 6 October 2011 included a “liberty to apply”, the court, in my judgment, would need good grounds to vary or revoke the costs order under that provision and, for practical purposes, those grounds are likely to be the same as would apply to the power under CPR 3.1(7). The “liberty to apply” would not, in effect, give the court the right to consider an appeal against the original order.

In this case the hearing on 6 October 2011 was one of a number of regular case management conferences in this complex international construction dispute. As I have said in dealing with the appropriate costs order on other case management conferences, the parties are encouraged to bring matters before the court for resolution rather than entering into long running correspondence, with the time and costs consequences that this entails. As a result at each of the case management conferences various applications are made and dealt with which might in other circumstances have been resolved by the parties in the course of correspondence without any application and such correspondence would, generally form part of the costs of the case. In general, therefore the costs order which I have made at such case management conferences is that the costs should be “costs in the case”, instead of considering the extent to which on each issue a party has won or lost on that issue. There is inevitably a degree of “swings and roundabouts” when case management conferences are looked at overall. It was on that basis that I came to the conclusion that, despite dealing with the WGH’s application for disclosure dated 29 September 2011, amongst other matters, the costs order for the matters considered on 6 October 2011 should be “costs in the case”.

I accept that after 6 October 2011 it has become clear not only that there were significant deficiencies in WAPCo’s disclosure but also why there were those deficiencies. In addition, WGH now points out that deficiencies which, as it now appears, had become apparent by 6 October 2011, were not explained to the court at that hearing. In those circumstances, in order to consider whether I have jurisdiction to and should vary or revoke the order of 6 October, I need to consider the background to the hearing on 6 October 2011.

Orders had been made in May 2011 which led to WAPCo giving disclosure in June, July and August 2011. There was then a case management hearing on 29 July 2011 when I made a number of further orders concerning disclosure. Those were then to be complied with during the course of August 2011, with a review case management conference set for 6 October 2011.

On 19 August 2011 Pinsent Masons wrote to Herbert Smith raising concerns about disclosure of minutes of certain WAPCo and shareholder meetings. They also complained about inadequacies in WAPCo’s list of documents. Herbert Smith responded to that letter on 28 August 2011, identifying the location of certain minutes within their disclosure, indicating that certain other documents were to be disclosed and explaining the position in respect of their clients list.

On 24 August 2011 Pinsent Masons wrote to Herbert Smith on another aspect of disclosure, concerning the custodians from whom WAPCo had disclosed documents. They identified in that letter a list of 85 further custodians and sought confirmation that WAPCo would search for the documents of those individuals. On 30 August 2011 Herbert Smith responded to that request and, in summary, expressed the view that it was disproportionate for WAPCo to search for documents relating to further custodians.

On 14 September 2011 Herbert Smith wrote to Pinsent Masons concerning matters dealt with in the fourth witness statement of Mr Roe, dated 12 August 2011 which was produced in relation to an order for disclosure against WGH made on 29 July 2011. They also wrote to Pinsent Masons on 15 September 2011 concerning the scope of disclosure by WGH.

On 27 September 2011 Pinsent Masons wrote to Herbert Smith concerning inconsistent redactions of passages within the documents which had been disclosed.

On 23 September 2011 Pinsent Masons wrote to Herbert Smith summarising various concerns about disclosure and enclosing a draft order that they would be seeking on 6 October 2011. The relevant application was then issued on 29 September 2011, supported by Mr Roe’s fifth witness statement, dated 29 September 2011. It was responded to by Mr Baily in his third witness statement, dated 4 October 2011. At the hearing on 6 October 2011 I made orders against WAPCo which required them to search for further documents, to review redacted documents, to provide a further disclosure statement, to search for documents of 15 further custodians, to identify the extent of unsearchable OCR text versions and to give supervised access to its Sun accounting system. I also made an order against WGH in respect of disclosure and dealt with pleadings and direction for the application by WGH for security for costs.

From that summary of the position it can be seen that the preponderance of orders were made against WAPCo in relation to disclosure. In dealing with costs, Mr Catchpole submitted that on that basis WGH should have the costs of the application and Miss Parkin submitted that the costs should be costs in the case. Issues of disclosure had been raised by WGH and responded to in correspondence and brought together with some new points in the application of 29 September 2011. A number of those items had been agreed in Mr Baily’s third witness statement or in skeleton arguments or at the hearing. Whilst I accepted that WGH had succeeded in obtaining orders for disclosure against WAPCo, I applied the general approach which, as set out above, I had applied on previous case management hearings and ordered “costs in the case”.

On this application to vary the costs order made on 6 October 2011, Mr Catchpole submits that since the hearing on 6 October 2011, the scope of and reasons for the deficiencies in WAPCo’s disclosure have become apparent. He submits that at the hearing on 6 October WAPCo was protesting that there was no systematic problem with disclosure and that it was normal to have some documents which were missing and were located as a result of further searches. He says that this did not accurately reflect the situation.

He also refers to paragraph 29 of the disclosure statement of 23 December 2011 which shows that Herbert Smith were aware in August 2011 that there had been an incomplete review of the original 2009 tranche of WAPCo’s e-Room documents by Herbert Smith which had led to the erroneous exclusion of those documents from the scope of Mindcrest’s document review and yet this was not mentioned prior to or at the hearing on 6 October 2011.

On this basis he submits that the original costs order made on 6 October 2011 was made on the basis of erroneous information and/or that subsequent events have destroyed the basis upon which I made that order.

Ms Parkin accepts that there are deficiencies in WAPCo’s disclosure and that since 6 October 2011 the reasons for those deficiencies have come to light but she submits that the original reason for making the order of “costs in the case” still stands. She says that the orders made on 6 October 2011 reflected, in a number of respects, the position accepted by WAPCo before and at the hearing on 6 October 2011. She submits that, whilst orders were made against WAPCo, applying the principle that I applied to other case management conferences, the order of “costs in the case” was still appropriate. She submits that the original costs order made on 6 October 2011 was not made on the basis of erroneous information and that subsequent events have not destroyed the basis upon which I made that order.

I consider that Ms Parkin’s submissions are correct. The real difficulties have arisen in dealing with documents which have been disclosed after 6 October 2011 because of the deficiencies that have now become apparent. I do not consider that those deficiencies or the reasons for those deficiencies mean that I made the costs order on 6 October 2011 on an erroneous basis. There had evidently been incomplete disclosure and it was necessary for WAPCo to search for documents and that was the basis on which I made the order. Nor do I consider that I would have made significantly different underlying orders on the applications which were made on that date had I known of the deficiencies and the reasons for the deficiencies. I am therefore not persuaded that this is a case where the power to vary or set aside the costs order of 6 October 2011 has arisen, whether under the CPR or the provision for liberty to apply.

In any event, I do not consider that had I known, for instance, that there had been a failure properly to review a tranche of WAPCo’s documents, this would have led to a different costs order in respect of the applications I dealt with on 6 October 2011. I would have been likely to have made the same orders that documents should be searched for but I do not consider that I would have made a costs order providing for WGH to have the costs of the application of 29 September 2011, given the circumstances of that application and the nature of the hearing on 6 October 2011.

At the hearing on 1 December 2011 WGH raised a number of issues relating to WAPCo’s disclosure as well as costs applications contained in WGH’s application issued on 29 November 2011. Orders were made in relation to WAPCo’s disclosure and directions were given for the costs applications, which are now being dealt with in this judgment, to be heard on 19 January 2012. In addition, directions were given for the future conduct of the proceedings relating to pleadings and expert evidence, together with orders in respect of WGH’s disclosure based on WAPCo’s application issued on 18 November 2011.

The deficiencies in WAPCO’s disclosure and the reasons for the deficiencies had become apparent prior to the hearing on 1 December 2011 and, in particular, they were summarised in Herbert Smith’s letter of 28 October 2011. In response, on 11 November 2011, Pinsent Masons had identified various orders which they would be seeking against WAPCo as a result of that letter of 28 October 2011 from Herbert Smith. In their application dated 21 November 2011 they sought, in addition to the orders for costs, various other orders set out in the draft order attached to Pinsent Masons’ letter of 11 November 2011.

In his fifth witness statement Mr Baily dealt with the matters raised in the Application of 21 November 2011. He agreed to provide further disclosure in respect of most of the categories sought in the draft order and an order was made in substantially the terms of that draft order. As can be seen from the orders made on the application of 21 November 2011, they were made to deal with the deficiencies in disclosure which I have found were caused by errors in WAPCo’s disclosure. The orders covered the Mindcrest re-review, redactions, further custodians and de-duplication and included the disclosure statement which has now explained the errors.

Those orders and the need for WGH to deal with those matters after the hearing on 6 October 2011 justify, in my judgment, a different approach in relation to the costs of paragraphs 3 to 6 of the application of 21 November 2011. Both under the general principle that costs should follow the event and by reference to WAPCo’s conduct in relation to disclosure in the context of the orders which I was asked to make on that occasion, I consider that the costs of paragraphs 3 to 6 of that application should not be costs in the case. Rather, in my judgment, the work on WAPCO’s disclosure carried out by WGH after 6 October 2011 and caused by the deficiencies in WAPCO’s disclosure and the necessity to bring the application of 21 November 2011 justify a different order. In those circumstances, the appropriate order is that WGH should have their costs of the applications in paragraphs 3 to 6 of the application of 21 November 2011, in any event.

As set out above, because of the failures in WAPCo’s disclosure process there are a number of aspects where WGH is entitled to have the costs wasted by certain failures. First there is the failure to carry out proper de-duplication. The process of e-disclosure does not always allow for perfect de-duplication of electronic documents. However, in this case I consider that there is a substantial element of unnecessary duplication which resulted in WGH having to consider, a number of times, duplicate copies of the same document. That I consider should be reflected in a costs by WAPCo having to pay 80% of WGH’s costs of dealing with the duplicate copies identified in Herbert Smiths’ letter of 21 December 2011.

Secondly, mainly as a result of the failure to de-duplicate the documents properly WGH had to analyse inconsistent redactions in documents. That again is an area where WAPCo should bear WGH’s costs. I consider that the best way of reflecting the wasted costs element in dealing with inconsistent redactions made by WAPCo is by ordering WAPCo to pay 80% of WGH’s costs of dealing with redacted documents disclosed by WAPCo.

Thirdly there is the failure to gather together documents and then carry out a proper review process. This has led to the need for WGH to carry out a more prolonged disclosure exercise than would otherwise have been the case. I accept, though, that if complete disclosure had been given at the appropriate time and in the tranches ordered, WGH would have had to review those documents, in any event. However, there are inevitably increased costs when the disclosure process becomes disrupted and it becomes necessary to review documents over a prolonged period. In this case, because disclosure of many documents was only given in October, November and December 2011 there has been an element of increased cost. People have had to carry out extra reviews and searches of disclosed documents and have had to return on a number of occasions to deal with disclosure of further documents. In order to reflect the disruptive effect on the whole disclosure process, it is convenient to make an order which relates only to the additional tranches of documents rather than the whole disclosure process. In such circumstances, I consider that this should be dealt with by an order for WAPCo to pay 50% of the costs of dealing with and reviewing the following documents:

In summary therefore my conclusion on costs is as follows:

It follows that I do not consider that any special costs order should be made in relation to the OCR copies or the database.

In his ninth witness statement Mr Roe has set out an assessment of the costs which he says have been wasted in dealing with WAPCo’s incomplete, inadequate and piecemeal disclosure. In summary for the period 1 July 2011 to 31 December 2011 WGH claim £408,802.00 wasted legal costs, £248,533.47 for additional work carried out by EQD and the Houston-based review team and £1,153,000.00 for wasted costs incurred by WGH’s experts and advisors.

At appendix 2 to that witness statement Mr Roe sets out an analysis of WGH’s total legal costs, the total time spent on WAPCo’s disclosure in terms of corresponding with Herbert Smith on issues of WAPCo’s disclosure, an assessment of approximate wasted costs and, separately, the costs of and included in the statement of costs for the hearings on 6 October and 1 December 2011. At appendix 3 Mr Roe sets out an analysis of the wasted costs of EQD. That includes figures for wasted costs in reviewing WAPCo’s disclosure of £155,479.55, wasted costs in searching WAPCo’s disclosure of £87,553.92 and additional costs of uploading, hosting and ring-fencing additional tranches of documents and duplicate documents of £5,500. This gives a total of £248,533.47. The witness statement of Mr White sets out an assessment of wasted costs by experts and advisors engaged by WGH being £365,000 for Chess Consultants, and £284,000 for Warner Construction Consultants, £120,000 for Driver Global Consultancy, £370,000 for GL Noble Denton and £10,000 for counsel, Dee Dee Stephens.

On the basis of those figures I do not feel able to carry out a summary assessment or make an accurate allocation of the costs claimed by WGH to the categories of cost that I have held to be recoverable by WGH from WAPCo. Whilst WGH’s legal costs have been broken down as I have explained, it is not possible to assess what costs were spent under each of the heads that I held to be recoverable. Equally the costs of reviewing and searching WAPCo’s disclosure by EQD cannot properly be assessed from the information provided.

My greatest concern is about the wasted costs which have been assessed by the experts and advisors and included within Mr White’s witness statement. It is not clear how the individual consultants assessed the round figure estimates and therefore how the information provided to Mr White relates to the assessment of the costs which I have held to be recoverable.

In my judgment, because of those difficulties, the appropriate way to proceed is by way of a detailed assessment of the relevant costs.

However, this is a case where I consider that I can come to certain conclusions as to an appropriate payment on account for those costs by making appropriate discounts for the uncertainties which I have identified. Whilst the cost of dealing with duplicate documents and redactions will have been incurred prior to October 2011, I intend to approach the payment on account by consideration of the costs incurred in and after October 2011.

In relation to WGH’s legal costs, I propose to allow 50% of the figures in appendix 2 to Mr Roe’s witness statement for wasted costs in the months October, November and December 2011. That amounts to 50% of £125,457.00 (£54,782.50 + £42,408.00 + £28.266.50), that is £62,728.50.

In relation to the costs of EQD I consider that the figure should be 30% of the costs of reviewing and searching WAPCo disclosure in October, November and December 2011, together with 50% of the costs of uploading, hosting and ring fencing duplicate documents within WGH’s database. That amounts to 30% of £61,479.31 (£19,954.23 + £20,858.39 + £20,666.69) or £18,443.79 for review of WAPCo’s disclosure; 30% of £47,284.16 (£22,512.73 + £18,579.07 + £6,192.36) or £14,185.25 for searching WAPCo’s disclosure and 50% of £4,677.42 (£2,451.61 + £1,838.71 + £387.10) or £2338.71 for uploading hosting and ring- fencing duplicate documents. The total of those sums for EQD is £34,967.75.

In relation to the costs of experts and advisor, Miss Parkin raised issues as to the role of GL Noble Denton who had not been nominated as an expert. Their costs represent the largest amount claimed. I consider that in assessing a payment on account, I should make no allowance for the costs of GL Noble Denton. On the basis of my concerns as to the information provided, I consider that the costs should be limited to 5% of the sums alleged to be wasted within Mr White’s statement, excluding GL Noble Denton. The total would therefore be £779,000 and I allow a figure of £38,950.

Accordingly the overall payment on account which I allow is £135,000 based on the overall total of £136,646.25 (£62,728.50 + £34,967.75 + £38,950.00).

In relation to the costs which I have allowed of the application of 21 November 2011 I consider that those should be dealt with together with the costs of paragraphs 1 and 2 of that application at the further case management conference which has been fixed for 9 March 2012.

As a result, I make the following orders:

Subject to any submissions by the parties I propose to deal with any applications arising from this judgment at the hearing on 9 March 2012.