Earles v Barclays Bank plc; [2009] EWHC 2500 (Mercantile); [2009] WLR (D) 309

PRACTICE — Discovery — Electronically stored information — Resolving issues of primary fact — Obligation to preserve key contemporaneous commercial documents — Whether failure to do so to be reflected in costs — CPR rr 31.4, 31.6, 44.3

Earles v Barclays Bank plc

[2009] EWHC 2500 (Mercantile); [2009] WLR (D) 309

QBD (Birmingham): Judge Simon Brown QC: 8 Oct 2009

Although there was no duty on the parties to preserve documents prior to the commencement of proceedings, after proceedings had begun, the situation was radically different. That was particularly so in relation to electronic information stored by a bank.

Judge Simon Brown QC, sitting as a High Court Judge in the Queen’s Bench Division in the Birmingham District Registry, Mercantile Court, so held on 8 October 2009 when dismissing the claim by Timothy Duncan Earles against Barclays Bank plc.

JUDGE SIMON BROWN QC said that this was the type of action, between a customer and his bank, which had become increasingly prevalent in the mercantile court, following the recent economic downturn and banking credit crisis. In order to resolve the primary issue of whether telephone calls were made or e-mails sent on five occasions and their content, disclosure of contemporaneous documents had been required. Since 2000 most key contemporaneous commercial documents had been contained in Electronically Stored Information (“ESI”) and over 90% of communications were now recorded in that form, which were “documents” under CPR r 31.4 and 31PD.2A. The abundance of ESI meant that potential litigants, such as banks, needed to anticipate having to give disclosure of relevant documentation efficiently and effectively. In the case of documents not preserved after the commencement of proceedings, the defaulting party risked adverse inferences being drawn for “spoilation.”

Although the defendant had been successful against the claimant and prima facie entitled to its costs, his Honour said that in a short trial of a very simple factual issue, the court’s task had been made immeasurably harder because the defendant had failed to give disclosure of the transfer sheets relevant under the narrow test of CPR r 31.6 to the primary issue in the case. In-house counsel for the defendant should also have procured and retained one of the key witness’s e-mail account and telephone records and discussed the electronic disclosure of the claimant and witness’s telephone and e-mail records well in advance of the case, as provided by 31PD.2A. The disclosure of the key documents in the case was absolutely essential to a court if it was to achieve the accurate and efficient fact-finding sought by the parties to civil litigation. The conduct of electronic disclosure by the defendant and its lawyers fell far below the standards to be expected of those practising in the civil courts and would be taken into account, under CPR r 44.3, in assessing the award of costs to the successful party. The schedule of costs of the defendant was disproportionate to the sums and issues involved and contravened the overriding objective. When making a costs transference order, it was only fair and just that the bill of costs adopted by banks which came before the Mercantile Court in Birmingham set rates which lay within the Birmingham cost guidelines. It would have been preferable if costs management had been applied during case management and at the case management conference, following the example set by the pilot scheme in the Birmingham Mercantile Court as part of the Review of Costs in Civil Proceedings by Jackson LJ. Accordingly, the proportionate and fair award for costs was that the unsuccessful claimant should pay the successful defendant 25% of its schedule of costs amounting to £38, 517·81.

Appearances: Paul Dean (instructed by Lodders Solicitors LLP, Stratford upon Avon) for the claimant; Katherine Watts (instructed by Simmons & Simmons) for the defendant.

Reported by: Georgina Orde, barrister