The MoD on the disclosure naughty step again: indemnity costs where disclosure conduct falls outside the norm

The UK’s Ministry of Defence has, unfortunately for it, become the reverse poster child for disclosure by UK government departments. Its most recent reverse comes in a judgment by Mr Justice Fraser in Serco Ltd v Secretary of State for Defence [2019] EWHC 515 (TCC) (28 February 2019).

My thanks to Litigation Futures for spotting this and for its helpful summary.

I have more sympathy for the MoD over the 2010 Al-Sweady judgment than I did when I first wrote about it (see Al-Sweady v Secretary of State for Defence: blame for e-Disclosure failures gets personal – and public.

This is partly because of what we now know about the origin of those proceedings, and partly because of other factors, including lack of investment in IT systems, the nature of military operations, and the need for military secrecy. The judgment’s continuing value as a source of instruction lies in its lessons about the importance of explaining properly and timeously what the problems are, and for the fact that a named army officer was criticised personally for his work by the Court of Appeal. I wrote this, quoting the Court of Appeal:

Accordingly, if [insert your own name here] continues to be put forward as a principal or even a significant witness in judicial review proceedings or if he is in any way responsible for disclosure, it is our view that any court seized of those proceedings should approach his evidence with the greatest caution.

The words in brackets which stand substitute for the officer’s actual name are mine. I added that “I would work quite hard to ensure that the name in that sentence was not mine”.

The 2016 case Eaglesham v The Ministry of Defence provoked less sympathy (I wrote about it with the heading Defence struck out for disclosure failures, which gives some idea of the story).

Eaglesham is significant partly because of a very late application for relief from sanctions for failure to comply with a disclosure deadline, and partly because of the unhelpful state in which disclosure was given – duplicated, in random order, from unidentified sources and with many documents which were undated – all, as the judge said, “singularly unhelpful in a case in which the defendant’s state of knowledge of particular dates is crucial”.

The upshot was that the MoD’s defence was struck out purely for disclosure failures, which is an object lesson in itself.

There are some echoes of all this in the Serco case. It was a procurement case – Serco had been unsuccessful in a significant procurement exercise. As the judge observed, procurement raises particular difficulties for an unsuccessful bidder because “the reasons for his failure are within the peculiar knowledge of the public authority”. The challenger “ought to be provided promptly with the essential information and documentation relating to the evaluation process actually carried out, so that an informed view can be taken of its fairness and legality.”

There is, therefore, an obligation to be both open and prompt in disclosure, even before the issue of proceedings.

The judgment is short and worth reading. The judge’s two-fold focus, in disclosure terms, was expressed thus:

The first is the general way in which litigation should be conducted under the CPR. Under CPR Part 1.3 “Duty of the parties”, the parties are required to help the court to further the overriding objective. The overriding objective, which is at Part 1.1, includes at 1.1(2)(b), saving expense; at (c) dealing with the case in ways which are proportionate; at (d) ensuring it is dealt with expeditiously and fairly; and at (e) allocating to it an appropriate share of the court’s resources.

The judgment is about the costs of an application about disclosure. What was the proper order for costs where the MoD had left it until the very last minute to concede that much of the documentation should have been produced?

The judge said:

It is obvious to me the MoD has not begun to grapple with its obligations in terms of disclosure, either generally or in the context of this application, until an extraordinarily late stage. I should also say that until yesterday, the MoD, having accepted that it needed to provide this documentation, was still maintaining that the correct order for costs should be costs in case. That is not a sensible position and it was helpfully abandoned yesterday afternoon. However, this application should never have been required. The MoD should have voluntarily provided this documentation months ago.

He went on:

the MoD appears, and if properly advised, should always have realised, that it could not possibly to argue before the High Court with any degree of seriousness that Serco is not entitled to these documents. The fact that the MoD devoted rather fewer resources to an application which they probably never intended to contest with any seriousness, is probably a point against the MoD in this respect.

The judge went on to award £79,274.68, of which the judge said:

The astute will notice that this is the exact figure on the summary assessment schedule that Serco are seeking by way of its costs. It should therefore sensibly be concluded that my award on costs is made on an indemnity basis against the MoD, and I am doing that because, as far as I am concerned, its conduct in respect of the disclosure has fallen well outside the norm and is entirely suitable for, and justifies, an award of indemnity costs.

As I said above, the judge began by setting out the principles derived from the overriding objective. The usual upshot from such a recital are judgments which cut down claims for disclosure costs, not least as part of a court-led policy designed to encourage close and early focus on reducing both volumes and expense.

That cuts both ways, and there are times when a party must incur costs in order to maintain its right to proper disclosure. This judgment makes it clear that a defaulting party will be hit with large penalties in costs if its conduct defeats the overriding objective.

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About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
This entry was posted in Discovery, eDisclosure, eDiscovery, Electronic disclosure. Bookmark the permalink.

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