An article by Professor Peter Hibbert of the College of Law in the Commercial Litigation Journal explores the extent to which English law includes the concept of spoliation of evidence. Why does this arise now, and what are the implications for disclosure in England & Wales?
The judgment of HHJ Simon Brown QC in Earles v Barclays Bank Plc  EWHC 2500 (Mercantile) (08 October 2009), is interesting for various reasons. It captured attention mainly for the costs penalty suffered by the defendants as a result of their failure to disclose documents directly relevant to the central issue; no less important, in my view, was the judge’s careful analysis of the primacy of contemporaneous documents as evidence, distinct from the formalities which the rules provide for disclosing it.
At a yet different level are the questions which arose as to the extent of the duty to preserve documents which might be required in future litigation. Although it is commonly thought that the US test is more stringent than the one provided by English law, that is really because the penalties for getting it wrong in the US (in the form of sanctions) are more severe than in the UK. But if the fear of losing your costs may weigh less heavily than the US fear of sanctions, the risk that you might actually lose the case for want of documents which would prove your position should also have a place in deciding what to keep and what to destroy.
Neither jurisdiction requires that companies keep everything and, whatever the standard derived from statute, the rules, or case law, the key question is one of timing – at what point did a party become aware, or should it have become aware, that documents might be required for litigation?
Banks have a particular problem here, partly because of the number of customers with whom they deal, but also because of the longevity of some of the relationships and the potential for those relationships to go wrong and lead to litigation – the judge in Earles draws attention to the increased risk of this in time of recession. At what point should a bank conclude that a customer relationship may turn litigious? Is it at first time that the customer exceeds his overdraft limit? Is it perhaps it is when the first warning letter is sent? How does a bank decide what is right when the test (like any test which includes the words “ought to have known”) is necessarily hard to pin down
The Earles judgment inspired Peter Hibbert, an Associate Professor at the College of Law in Birmingham, to write to The Times on this subject, and it was his letter which gave rise to my article of 23 December called Letter in the Times about destruction of ESI. Peter Hibbert has now written an interesting article called Burning your books, the first of two articles examining pre-action spoliation of evidence in English law and which look at wider principles than arose in the Earles case. The first of these articles has now been published by the Commercial Litigation Journal which has kindly agreed to let me publish it here. Part two will appear in the next edition and I hope to be able to bring that to you as well.
I should perhaps make it clear that I am extremely nervous of anything which may drive up the standard applied to questions of preservation. That is not because I have any sympathy for those who, whether carelessly, negligently, wilfully or out of bad faith destroy documents which ought to be available to bring or defend claims; they deserve all they get in terms of adverse costs orders. The US experience, however, shows us that compliance with the tests rapidly becomes an object in itself, divorced from the question whether the “missing” documents actually had any evidential value. That leads to a focus on risks which have nothing to do with the outcome of litigation, and that in turn takes the eye off the real purpose of a document retention policy and the software and processes needed to support it.
We do need to have the debate, however. The Earles judgment shows judicial awareness that technology exists to manage both the in-house problem and the disclosure / discovery exercise. It seems unlikely that parties will henceforth get way with unsubstantiated assertions that it was too difficult to comply with the document retention / litigation readiness obligations necessary to bring or defend a claim. What remains open is what those obligations actually are, and Peter Hibbert’s article Burning your books will kick-start an interesting debate.