The judgment in Hands v Morrison Construction Services Ltd [2006] may have related to the special circumstance of an application for pre-action disclosure in the TCC, but it has some messages applicable to e-disclosure generally

We are very short on case law in the field of e-disclosure here, and even shorter on jokes, so to find a joke in a report of an e-disclosure application is a rarity twice over. M Briggs QC is almost certainly not the first to note the pun implicit in the word “terabyte” in the context of intimidating quantities of electronic document sources, but given the paucity of UK sources, his reference to it may well be a first in a UK judgment.

The case is Hands v Morrison Construction Services Ltd [2006] Adj.L.R. 06/16, reported as [2006] EWHC 2018 (Ch). I found it published by NADR, the Nationwide Academy for Dispute Resolution. If that is the only place it lurks in generally available published form then (with great respect to NADR), it is not surprising that it is not more widely known. That is my excuse, anyway, for not coming across it until Ray Werbicki of Steptoe & Johnson referred to it at a conference last week.

The judgment is important not for breaking new ground but because it includes a good recital of the factors which a judge must consider in deciding on the scope of an order for electronic disclosure. It was not a mainstream application, partly because it was for pre-action disclosure under Part 31(16) CPR, and partly because it was heard in the Technology & Construction Court which has its own Pre-Action Protocol. The context is also complicated by the imminent expiry of a limitation period and by pending ADR. It is worth reading, nevertheless, for its wider application.

I will stick here to the points of general relevance to conventional disclosure under Part 31, acknowledging that its actual context was slightly different to the norm, as the judgment makes clear, and for more than one reason. I will also observe at the outset that whilst this was a particularly document-heavy case fought between very large firms of solicitors, the principles should apply, mutatis mutandis, to much smaller cases.

For the purposes of the demand for pre-action disclosure, an attempt was made in correspondence to define the issues, and it was said expressly (at least in a late amendment to the schedule to the draft Order) that the proposed Order shall only apply insofar as such documents fall within the test of standard disclosure set out in CPR r 31.6 in relation to [those] issues. To save you looking it up, that means that disclosure would be only of documents which supported or adversely affected the case of the giving party or another party.

As an aside, these two elements – focusing on the issues which matter and limiting disclosure only to that narrow band of documents, are the most fundamental weapons in the battle to control the costs of e-disclosure. If anyone suggests that the CPR must be modified to cope with e-disclosure, refer them first to these two principles. We do not need any new rules until every court in every case is imposing strict control over these existing requirements.

A chunk of the judgment involves an analysis of the jurisdictional principles specifically relevant to applications for pre-action disclosure, which is worth closer consideration another time. Broadly they are refinements of the normal aims of the (very wide) discretion which the court has to do what is right – will costs be saved?, might litigation be avoided?, can future amendment of pleadings be reduced? These are important in their own right in the general context of early identification of key sources and I will come back to them in a separate article. The key sentence is perhaps the simplest one – that discretion is not confined and will depend on all the facts of the case.

Accepting that the context was a special one, what was said about the categories of documents requested has wider application. The court found that the categories were sensibly focused on the issues identified as critical in the parties’ correspondence. That is not an express part of the jurisdictional requirements in Part 31(16) CPR any more than it is an express part of disclosure generally in the CPR itself. Narrowing the documents to the issues is, however, an obvious use of the court’s discretionary powers, and a key focus of the new Commercial Court Recommendations. I have argued elsewhere that this will have a wide effect on how judges in all courts will interpret their discretion to narrow the scope of disclosure.

What of the scale of the task? The judge said:

The problem is not so much that what is sought is too wide but that treating what is sought as if it were needles and pins the haystack is huge, contains a very large proportion of electronic documents and is not archived in a way which… will make all of them easily found by a search. As Mr Barnes said, reducing the amount of documents sought from two needles to one needle makes it no easier to find in the haystack.

As an aside, the “needles in haystacks” idea is thought by many to be outdated as a metaphor for refining e-disclosure. The volumes are now so large that the problem can be described as looking for a needle in a needle factory.

The scale of the problem is identified at Paragraph 49 of the judgment:

Mr Sinclair says, having clearly given the matter considerable thought, that there are about 550 files of hard copy documents to be searched, about a quarter of which are held by his firm or Morrison’s in-house legal department and the remainder of which are in an archive warehouse. He estimates that the hard copy search exercise would cost in the region of £100,000. As to electronic files, he says that there are 1,855 gigabytes. That is (I am told) 1.855 terabytes of material, on the ten potentially relevant servers. That equates (he says) with 850,000 lever arch files. Uploading these documents on to a database for search and carrying out a preliminary key word selection process would (he says) take in the region of 50 days and cost in the region of £90,000, even before the start of legal review for relevance. Of course, he concedes that only pins, or perhaps a box of pins, would emerge from that electronic haystack. It is easy to say that this is just an exaggeration designed to intimidate (and “terabyte” might be thought to be an appropriate word for that purpose). Indeed, Mr McQuater so submitted.

From this point on in the judgment the points of wider application come thick and fast. You can read it for yourself. I will just quote the key passages, which need little by way of explanation. It does not matter who is being referred to in the passages below – it is the concepts which matter.

He did say that the apparently formidable ambit of the search task could, of course, be narrowed by co-operative discussion. But, while no doubt true, that assertion has not been matched by any attempt to narrow the width of the disclosure sought, or the extent of the search to be made, by or on behalf of Mr Hands, since receipt of Mr Sinclair’s witness statement in mid-May.

..and…

In my judgment, an affidavit (but equally witness statement) of a solicitor with appropriate experience charged with the task of making disclosure should not be lightly rejected. There is long-standing authority in this division that the utmost respect is to be given to information given to the court in
that way by such a person.

..and…

..it is not a complete answer for Mr Hands to say that he will pay the cost. The court must look at the cost of the litigation as a whole. Furthermore, the making of burdensome disclosure creates burdens going beyond mere cost and burdens extending to persons other than just lawyers.

..and…

…cost, delay and duplication of effort are inherently wasteful. But, against that it is fair to say that the cost of doing the uploading of the electronic documents into a database, if done now, would probably not have to be repeated. There would have to be a differently worded key word selection process and, of course, the hard copy documents would, on the face of it, have to be reviewed again if pre-action disclosure was followed by disclosure in the usual course.

Much of the above is relevant to the Part 31(16) point – whether Pre-Action Disclosure was appropriate having regard to all the factors, including the possibility (which cuts two ways when the inter partes costs implications are considered) that the upshot might be the abandonment of the litigation before standard disclosure.

The result was a modified order for pre-action disclosure after a close examination by the court not just of the legal principles but of the practicalities and costs. It is that which makes this judgment worth drawing to your attention. However narrow the context of this particular application, the key thing is that the judge rolled up his sleeves and got stuck into the detail with a keen eye on the costs and other implications.

Perhaps the main point from the passages quoted above is the fact that the burden of heavy disclosure falls on more than just the lawyers. Not the least of those affected is the court – one of the express factors listed as part of the overriding objective is that of allotting to [a case] an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases. [Part 1.1(2)(e) CPR].

Even where, as apparently in this case, the parties and their lawyers were reasonably evenly matched and willing to spend whatever it took to have their fight, the court has its own resources to consider. We are, I think, going to see much more control of this aspect of case management and many more preliminary applications – and not just for pre-action disclosure – where the time spent on them might reduce time and costs later.

If any points arise from this which you would like to discuss, please do not hesitate to contact me.