High Court decision on the consequences of failing to undertake adequate e-disclosure

21 May 2012
By Michael Hayes

West African Gas Pipeline Company Limited v. Willbros Global Holdings Inc [2012] EWHC 396 (TCC)

The claimant company hired a contractor to carry out construction work on a natural gas pipeline in West Africa. The defendant company had provided a guarantee in relation to the contract. The contract was terminated prior to completion of the works, and the claimant issued proceedings under the guarantee seeking payment of the additional costs of completing the pipeline.

On 06.10.2011 there was a case management conference at which the defendant sought an order for further disclosure of documents. The order was granted and the judge ruled that costs would be in the case.

The defendant became aware of many shortcomings in the claimant’s e-disclosure process, including the following:

i) there were documents that had been disclosed both with redactions and without redactions;

ii) the claimant had outsourced to a litigation support company in India, and a significant number of additional documents which should have been disclosed at an early stage were only discovered after the defendant later requested a re-review of the documents; and

iii) an unsuccessful de-duplication process was used by the claimant’s external litigation support and data processing provider, resulting in a lot of duplicate documents being disclosed.

The defendant made an application for the original costs order to be varied or revoked to reflect that the costs should be the defendant’s in any event. It also submitted that they had wasted costs due to the claimant’s disclosure having been wholly inadequate and causing a lot of additional work for the defendant solicitors.

The Court did not agree that the order for costs in the case should be varied or revoked, as it was held that the order had not been made on an erroneous basis. However it was held that the defendant was entitled to the costs that had been wasted in relation to the failures of the claimant company’s disclosure process. The claimant was therefore ordered to pay:

i) 80% of the defendant’s costs of dealing with duplicate documents;

ii) 80% of the defendant’s costs of dealing with redacted documents;

iii) due to a failure to carry out a proper review process, 50% of the defendant’s costs of dealing with certain categories of documents.

Those three categories of costs were considerable and, as a result, the claimant was ordered to make an interim payment on account of those costs of £134,000.

This decision highlights that the courts expect litigants to undertake e-disclosure properly, and are quite prepared to punish non-compliance.