The High Court has shown its willingness to make an order requiring disclosure to a Court-appointed independent e-disclosure provider where a party has failed to conduct its disclosure exercise properly. Terre Neuve SARL and others v Yewdale Limited and others [2023] EWHC 677 (Comm) serves as a useful reminder for in-house lawyers of the importance of engaging adequately with disclosure.
Between October 2008 and October 2012, the Claimants paid a significant sum into a scheme operated by the Defendants for the purposes of “tax optimisation”. The Claimants later alleged that the monies paid into the scheme were misappropriated and sought to bring claims against the Defendants for organising and facilitating the misappropriation of the funds under French and Swiss law.
Settlements were reached between the Claimants and a number of other defendants. However, a dispute remained between the Claimants and the Fourth, Sixth, Seventh and Tenth Defendants (known collectively as “the Yewdale Defendants”). The current dispute arose following concerns that the Yewdale Defendants’ disclosure exercise was deficient. The disclosure exercise was extensively criticised by the Claimants on the basis that (a) no native documents had been provided; (b) not all data sources had been reviewed; (c) some categories of documents were missing in their entirety; and (d) the obligation to disclose adverse material had not been properly understood. Accordingly, the Claimants issued an application seeking an unless order requiring that the Yewdale Defendants supply a number of documents to an independent Court-appointed e-disclosure provider. The Yewdale Defendants sought to defend the application by asserting that they did not hold and never did hold the documents the Claimants were requesting and that some documents, including USB data, were being held in other jurisdictions and so could not be provided without the relevant authority’s approval.
Whilst acknowledging that these types of orders can be intrusive, as well as increase the risk of satellite litigation and introduce significant additional costs, the High Court ultimately decided to make the disclosure order. In determining whether this type of order would be proportionate, the Court considered a number of factors including the level of intrusion, the likely cost of the disclosure exercise compared to the value of the claim, how convincing it was that the relevant party had failed to engage adequately with disclosure and the overall importance of the documents in the context of the litigation.
Applying the list of factors, Foxton J observed that there were alternative means available to address some of the relevant issues at play and that an order requiring the Yewdale Defendants to deliver their electronic devices or provide access to email accounts containing personal information was considered to be particularly intrusive. Nevertheless, the High Court recognised (a) that some of the documents had a significant impact on the litigation; (b) that there were legitimate concerns regarding the authenticity of some materials which had already been disclosed; and (c) that some electronic documents had not been reviewed at all. For these reasons, the High Court decided to make an unless order requiring a number of data sources and hard copy documents to be provided to an independent e-disclosure provider appointed by the Court (with a subsequent review by independent Counsel).
Don’t be complacent when engaging with litigation disclosure. If you fail to engage properly with your disclosure exercise, you may come under scrutiny and you could ultimately be forced to disclose material to an independent third party.
For more information, please contact our Commercial Disputes team.
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