Phaestos Ltd & Anor v Ho

This revised case management hearing was fixed on Wednesday for an hour-and-a-half, starting at 8.30 in the morning. It was listed for an hour-and-a-half and the purpose was, as I made clear on Wednesday, that the Court should finally deal with, and dispose of, issues relating to the scope of electronic disclosure on the part of the claimants, primarily. It is clear that substantive agreement on the defendants' electronic disclosure had been reached.

From the transcript which the claimants have kindly paid for and provided to the Court, page 21, I said this:

Also, at that hearing, Mr Ciumei, junior counsel instructed on behalf of the claimants, sought extra time to comply with the order which I had already made, and it was a final order that further information relating to quantum be made. I had ordered that it be provided by 27 March 2012. Mr Ciumei, on instructions, sought an extension to Maundy Thursday, 5th April. I refused that application. Of the two grounds advanced, the major ground advanced was that the claimants, for reasons best known to themselves, were planning to instruct Herbert Smith as their new solicitors in place of Bird & Bird. There was no suggestion, and indeed there is still no suggestion, that Bird & Bird's services have been dispensed with on the grounds of any dissatisfaction with the competence or quality of service which they had provided to their clients to date.

I said this at paragraph 20 of the judgment which I handed down orally on that date:

What has happened is (and I will come to the detail) that the claimants and defendants have been in discussion in a rather desultory way over much of the last six or seven months in relation to electronic disclosure. I will come to the reasons for the fact that progress has been slow on that later. Before the meeting of the parties in the courts this week, there had been some real progress in relation to electronic disclosure. The solicitors had helpfully met, and substantially agreed on much of the form of the order, and there were a number of matters left outstanding for resolution by the court.

At the meeting before the court on Wednesday, Mr Ciumei, who has clearly been given an enormous amount of work to do by his solicitors and clients, was not in a position that day to deal with the question of electronic disclosure. Contrary to suggestions which I made some weeks ago, the claimants have not seen fit to bring in additional counsel to assist; Mr Goulding QC, who is the leader retained by the claimants, has gone on no doubt a well-deserved holiday this week, and so he is not available. It has all been landed on Mr Ciumei's desk, with no additional counsel assistance.

I was not unsympathetic to that, so I adjourned the question of electronic disclosure and its final resolution until today. I made it clear, as I said, that the solicitors should meet, and I was assured that it was expected that instructions would be received from the claimants before midday on Thursday, 15th March, and that a without prejudice meeting could take place in the afternoon further to narrow down matters in issue. That has not happened. One of the reasons for that may be that Messrs Herbert Smith have now been formally instructed and I am told, and I accept, that Bird & Bird have applied to come off the record and Herbert Smith have applied to come on the record so far as this litigation is concerned. I am also told, and have no reason to doubt, that Messrs Bird & Bird are still retained, albeit not on the record, and they are retained, no doubt, to provide appropriate further assistance.

Mr Ciumei, and I do not criticise him for this, took the best part of an hour of the hour-and-a-half hearing effectively applying for further time for the parties to try to agree matters relating to electronic disclosure.

Messrs Herbert Smith, doubtless as quick off the mark as they could be, sent, just before 8.30 pm last night, a six-page letter to the defendants' solicitors, which obviously the court did not see until this morning. Essentially, the consent draft order attached (doubtless hoping for consent) was to the effect that a further 12 days or so be provided for the parties to seek agreement, in relation to certain elements of the electronic disclosure exercise, and that finally that the parties should use reasonable endeavours to agree the list of key word searches to be applied by 10th April 2012. It would only be if the parties were unable to reach agreement in relation to the scope of disclosure of electronic documents by 13th April 2012 that either party would have liberty to apply to the court for further directions.

I now need to go back to the background to all this. I am not going to reiterate the background to the case, which is referred to in the judgments which I have already handed down, perhaps in rather more detail in the draft judgment, which the parties have, in relation to the claimants' strikeout application and the defendants' application for security for costs. That judgment is due to be handed down next week, due to Mr Goulding's absence on holiday.

The proceedings were initially started against Dr Ho in 2009. I am told that some disclosure had been exchanged between the parties. However, when the proceedings against Dr Gover were commenced in April 2011, there was not, at that stage, a formal order relating to disclosure in relation to him.

The defendants' solicitors wrote to the claimants' solicitors on 18 August 2011, setting out in detail what their proposals were in relation to electronic disclosure. That was supported by a draft witness statement from Mr Arben, one of the defendants' solicitors, which also had attached to it, as is not uncommon in these cases, a detailed draft order. That letter asked for comments from the claimants' solicitors.

There then followed some correspondence, which could be described as "desultory", between the solicitors. On 19 September 2011, the defendants' solicitors, Wragge & Co, wrote, saying:

Messrs Bird & Bird for the claimants responded to the electronic disclosure request, by their letter of 4 October 2011. At this stage they had taken, doubtless seeking instructions, just under two months to respond. They said:

Wragge & Co responded reasonably promptly on 14 October, and sought to address the fear that the proposal that they had put forward would take years to complete. They offered to assist with guidance as how best to manage the process in a cost efficient and proportionate manner. Bird & Bird, even more promptly, replied on the same day. They referred to the draft order attached to Mr Arben's draft witness statement, and said that the claimants would conduct a review of all e-mail documentation relating to the key custodians, and the “above filters would be applied to any remaining documentation” caught within the above. They said, amongst other things, that they intended:

Wragge & Co responded less promptly ten days later challenging a certain amount of what was said by Bird & Bird, suggesting that they need only comment on the proposal that had been sent to Bird & Bird. Bird & Bird responded on 2 November 2011, raising issues about the manual review which they thought was being called for in the draft order.

It is quite clear, therefore, that Mr Justice Ramsey was envisaging resolution of matters relating to electronic disclosure by no later than 5 March 2012. He clearly envisaged that thereafter the electronic disclosure exercise would not be a simple one, but that it might stretch to two or three months’ worth of work, if not a little more. There was going to be rolling disclosure of the electronic documentation, but with a final date on 2 July 2012. These dates, I am confident, were carefully selected to provide a good prospect of securing that the trial takes place and commences in January 2013.It is therefore important, given what is in issue in this case, both in terms of liability, causation and quantum, that these timetables are kept to. There is no good reason why they could not be kept to.

The claimants, through their solicitor, Mr Wayne, put in their response on the electronic disclosure on 10 February 2012. I am not going to go into the detail of that, save to refer to several paragraphs.It is not an unhelpful response in that it begins to make clear what they say the appropriate custodians should be and they look at key words and key word searches, date ranges and the like. He accepts, doubtless on instructions, that one of the key custodians in relation to the search should be Ms Elena Ambrosiadou, who I have referred to elsewhere as "EA"; I hope she does not mind. She is on any count a key player in the matters which are in issue in these proceedings. It is said that she is the effective owner and controller of the IKOS Group. That may or may not be right, but that is certainly what is said and it is certainly clear that on any count she plays a major role. It has been confirmed by counsel for the claimants today that she is indeed the chief executive of IKOS CIF Limited and she certainly has been, in the past, a director and shareholder of Phaestos Limited.

The witness statement again, doubtless on instructions, identifies that the claimants were proposing searches to the mailboxes of a number of custodians, including EA. He says, at paragraph 56:

He then refers to the possibility of connector or proximity searches and, in paragraph 58, he looks at certain key word searches and connector phrasing. In paragraph 63, he identifies the locations from which the data will be collected. He identifies a number of servers based in different parts of Europe, including Cyprus and Frankfurt.

The defendants responded to that on 27February 2012. I am not going to go in detail to that, but they undoubtedly modified their proposals in the light of what Mr Wayne had said in that statement. They identified, for instance, in addition to what Mr Wayne was talking about, some additional custodians, some other electronic documents or classes of electronic documents that should be searched for as well, which appeared to be in issue.

On 28 and 29 February 2012 I heard the defendants' application for security for costs and the claimants' application to strike out the surveillance claims in the counterclaim. On 2 March 2012, the claimants filed, pursuant to a final order which I had granted about a fortnight before, their response to the defendants' requests for further information which had also been served in August 2011. The parties convened before the court on 5 March, with a 2½ hour hearing listed. I had thought that this would be sufficient to deal with everything, but the claimants pursued an application for a split trial, in between liability and quantum. In a judgment which I gave, I rejected that application for the reasons contained in that judgment.

There was little time left on 5 March to deal with electronic disclosure, so it was that I fixed 8 March 2012 for a hearing, again for three hours in the afternoon, to deal with what I hoped was going to be the balance. Obviously the court has been too optimistic, because all that hearing was taken up with were other matters, including the question of amendments to the Particulars of Claim and other matters, including one issue about custodians on the claimant’s electronic document search. I made it clear at the meeting before the court that it was vital that the parties progressed with the electronic disclosure exercise. At pages 67 to 69, going into page 70, of the transcript, I made it clear that irrespective of whose fault any delays in reaching agreement was, as follows:

Indeed, it did happen, on Thursday 8 March 2012, the following day. It is clear that a substantial measure of agreement was reached, although there were clearly defined areas of disagreement. Thus it was that we got to Wednesday of last week, and how the court and the parties have got to where they are today.

It seems to me, having set that history out, that it is necessary to consider whether the exercise of the court becoming involved in making decisions on electronic disclosure can go ahead. I have absolutely no doubt that it can go ahead. I say this primarily for this reason that the claimants have known for a very long time now that the court was anxious to resolve any outstanding issues. There is an agenda from which the court can work, which is the draft order produced by Mr Tozzi QC on behalf of the defendants, which identifies those substantial areas which have been agreed between solicitors and those relatively few items that have not been agreed. It does not seem to me that that should prove difficult. Certain it is that the claimants have had more than enough time to take instructions from their clients.

As I have said before, I do not see that the fact that Herbert Smith have come on board as new solicitors only yesterday, should make any difference because first the claimants instructed Herbert Smith with their eyes open, knowing that these matters were still up in the air. Secondly, and as importantly, the claimants have still retained Bird & Bird, who are the solicitors who have detailed knowledge of the scope and extent of what it is that can and should be provided by way of disclosure. A substantial measure of agreement has been reached and it would be a waste of resources and a waste of cost, if the work that the former solicitors did was not capable of consideration. I was assured on Wednesday that instructions would be received by midday yesterday, and I have no reason to believe that they could not have been obtained by then, on all the outstanding matters in issue. Whether in fact instructions were given and whether Herbert Smith have had time to take them on board, I know not, but that there was an opportunity to give and secure instructions is absolutely clear.

A number of points have been forward by Mr Ciumei which are referred to in the letter received late yesterday evening from Messrs Herbert Smith. The first point (from the letter) is that:

There is then a discussion in the letter about the range of storage devices. Again, the point they make is:

Then, slightly surprisingly, a point is raised in relation to EA. It is said:

Again, I do not see that this is a valid reason for postponing the court's resolution. If it be the case that EA's e-mails are on a server owned by a different company within the group, then there will have to be the clearest explanation by way of witness statement as to why e-mails from that server are not disclosed. The order which the defendants seek does talk about the documents being provided from particular e-mail servers, and it does talk about e-mail servers within the control of the claimants. If it is to be said, in answer to any order which the court may make today, that these servers are beyond the control of CIF or the other two claimants, then that will need to be supported by a witness statement. It seems to me that the only person who could sensibly give that statement is Ms Ambrosiadou herself.

I will make an appropriate order when I come to dealing with the order as to the date by which any such objection can be taken. The court will then have to resolve any issue that arises. I have indicated an argument, although I will not make an order today, that if there is an issue about this it may well be that Ms Ambrosiadou will have to attend and tender herself for cross-examination, albeit on an interlocutory basis.I will not make an order about that today.

Next, it is said that there is other electronic documentation and it is said:

Then we come to the search terms. Another point relates to linkages, but there is likely to be some agreement about that in terms of, I am told, about linking word ranges between the parties. I reject the approach put forward by the claimants.

Another major reason for refusing the claimants' application, in effect, to extend the time for agreement of electronic disclosure protocol is that, on the timetable put forward by Messrs Herbert Smith for the claimants, that would take matters to mid-April 2012, at which stage there could well be disagreement between the parties. That would be very unfortunate, and I do not have, or did not have, any confidence, at least, that there would be agreement between the parties by mid-April. The problem would then be that the court would have to be reconvened to deal with issues relating to electronic disclosure, and one would get to the stage where the court would have to issue an order in the second half of April, and that would or could well seriously impact on the ultimate disclosure date, the long-stop date identified by Mr Justice Ramsey of 2nd July 2012. If that went, then the whole timetable is at risk, because the experts, for instance, would need to review substantial elements of the electronic disclosure; witness statements might well be dependent on large parts of the electronic disclosure; and there is the very real potential for delay to the trial date. Therefore, the giving of any further time beyond dealing with matters today is one which the court does not want to run the very real risk of, and therefore the real fear of serious delay and disruption to the trial programme is another major reason why I am not prepared to give the parties yet more time to seek to agree the electronic disclosure protocol.

What I want to do now is move on and do what I said should be done today, which is to look at the order and make the appropriate orders. I will hear the parties at the end of today about the costs that have been thrown away by the first 2½ hours today.

I will now give my ruling on the orders that should be made in relation to electronic disclosure. In relation to the electronic disclosure to be made on behalf of the defendants, there is substantial agreement, subject to one typing error, which has been agreed between the parties. I propose, therefore, to say no more about that, other than that will be the order which the court will make.

So far as the order relating to electronic disclosure by the claimant, surprisingly, when the court embarked on this exercise, Mr Ciumei, on instructions, indicated that he was unlikely to say much in opposition to the order that was being sought. He has, however, helpfully contributed on several matters which have led to the withdrawal or changing of parts of the proposed order.

I am satisfied that the order now proposed, as amended during the course of submissions by Mr Tozzi QC and by Mr Ciumei, is an appropriate order to make. It is of course within documentation, or locations where documents are maintained or retained, and to documents in the possession or control of the claimants.

I have already indicated that if there is to be a declining, on the part of the claimants, to provide disclosure of the e-mails to and from EA, which are on a server said to be held by IKOS AM Limited, then I will require, and it will go in the order, that no later than midday on 26 March 2012 a witness statement is filed with the court and served on the claimants from EA (at least, if not also from others) explaining precisely what the position is and why she or others cannot secure disclosure of those relevant documents otherwise disclosable documents on that e-mail account.

It seems to me that that is a proportionate thing to do, because it is clear, from everything I have heard in this case so far, that EA has a substantial measure of control, either directly or indirectly, through trusts, other companies or otherwise, over the IKOS Group. She is the chief executive of IKOS CIF Limited, she clearly has had connections with the other two claimants, and she certainly appears to have a detailed involvement with the workings of other members of the IKOS Group companies. She is the one, it seems to me, who is likely to have the greatest understanding of matters relating to why disclosure of her e-mail account should not broadly be given within the parameters of the electronic disclosure order. That should not be a difficult exercise for her. Indeed, I hasten to say that Messrs Herbert Smith, although they by no means promise that the disclosure of the IKOS AM e-mail account in the name of EA, that it will be disclosed, nonetheless, they make it clear that, at least by inference, there is a reasonable prospect that that is feasible. I can understand that it might take a little bit of time to set up, and it seems to me that ordering that a witness statement be served from her on or by 26 March, which is ten days from now, is a reasonable and proportionate thing to do, and so that will go in the order as well.

It is agreed that the costs of, and occasioned by, the claimants' application earlier today should be borne by the claimants in any event. The only issue is whether it should be on an indemnity basis. I am wholly satisfied that this is an appropriate case for an indemnity basis. The court has made it clear, on at least two previous occasions, and probably more, that the question of electronic disclosure and any issues arising out of it were to be dealt with at the latest by the end of this particular week, preferably earlier. Earlier orders talked about getting it resolved on or by 5th March 2012.

The claimants and their solicitors, collectively, have had more than enough time to "get their act together" on this, and whilst I do not suggest, and certainly do not imply, any criticism at all of the claimants' new solicitors, Herbert Smith, who came on the record only yesterday, needing some time to, as I have said before, "get their feet under the table" and seek to understand what is involved with the electronic disclosure process, it does seem to me, as I have said before, that the claimants changed solicitors with their eyes open, and they must have known that, by doing so, they were likely to bring about a disruption to the progress required by the timetable.

That is coupled with the fact that they still retain Bird & Bird, who have done an enormous amount of work on the electronic disclosure exercise and have been extremely helpful in reaching a large element of agreement between the parties; I have no doubt that, if they had been permitted to have yet further discussions, there would have been even more agreement.

I couple that with the fact, and I regard this as extraordinary, that, once it was clear that the court was going ahead to resolve any issues on the disclosure issue, the claimants, through counsel, have made it clear that they do not have any particular comments that they wish to press before the court today. So, in a sense, the application to adjourn has been a complete waste of time, not only of the court's time, which is perhaps less important, but of everyone else's time and cost. In my view it is quite clear that the claimants have put their solicitors and counsel in an impossible position today by requiring them to take a wholly unreasonable stance to seek yet further delay and disruption to the timetable.

I have been assured now on three occasions by counsel for the claimant that there is no intention, and never has been any intention, on the part of the claimants, and certainly not of solicitors and counsel, to delay and disrupt the timetable and the process. Yet on each of the three occasions, and possibly more, the claimants have sought to do just that. I have made it clear that, absent good reason, the timetable set by the court, by Mr Justice Ramsey as long ago as early December 2011, should be kept to, unless there are good supervening reasons why not. Therefore, this is a case for indemnity costs.