The question of control in the context of preservation and disclosure is a factual one that will ultimately require parties to litigation to give careful thought to the nature of their relationships with former employees, but more particularly group entities, agents and third parties. Documents on the personal devices of former employees or generated pursuant to relationships governed by foreign law may nonetheless be deemed to be within a party’s control, whilst those of a party’s subsidiary may not be. This article covers some of the key principles established by the courts in navigating the labyrinth.
The disclosure rules under Practice Direction 57AD are clear that parties must take reasonable steps to preserve documents within their control, and disclose documents which may be relevant to any issue in the proceedings that are or were within its control. Part 31 of the Civil Procedure Rules is similarly clear that the court's jurisdiction to order disclosure extends to documents within the control of the parties to the litigation. The Judge in Pipia v BG Group Ltd1 said of control that it "fixes the universe of documents from which a party's Extended Disclosure is to be generated". Thus, central to establishing who might hold documents which must be preserved and may later need to be disclosed is the concept of "control". Documents which are deemed to be or have been in a party's control are defined within the rules (PD 57AD Appendix 1, 1.1) as including documents:
"(a) which are or were in a party's physical possession;
(b) in respect of which a party has or has had a right to possession; or
(c) in respect of which a party has or has had a right to inspect or take copies."
Practice Direction 57AD 4.2 expressly says that parties are obliged to take reasonable steps to preserve not only their own documents, and those of its employees, but those of its former employees, agents and third parties who may be in possession of documents on a party's behalf, too.
Perhaps not surprisingly, given the complexity of modern business and the breadth of ways in which documents can be stored, held and shared, parties to litigation will need to spend some time carefully identifying who might hold documents which may be deemed to be within their "control" to avoid falling foul of the rules. This identification process can be particularly complex for multinationals or sovereign states as the net of "control" can be especially far-reaching when it applies to them.
The Courts have provided some helpful guidance over the years, mapping out certain underpinning principles that underpin the rules, and in doing so provide some assistance for parties in the challenge of establishing what documents are within their control:
- No automatic control over the documents of a subsidiary: the case of Lonrho Ltd v Shell Petroleum Co Ltd (No. 1)2 confirmed that a parent company does not automatically or necessarily have control over the documents of its subsidiary. Instead, control will only be established where "there is an existing arrangement or understanding…that in practice provides the parent with a right of access to documents held by its subsidiary, or the parent company has a presently enforceable legal right to obtain the documents from its subsidiary."
- Control over documents of a subsidiary can exist even where no presently enforceable legal right to the documents: 40 years after Lonrho, the case of Pipia clarified the decision by holding that a party can have control over the documents of its direct or indirect subsidiaries (or some other third party) even if it does not have a presently enforceable legal right to obtain the documents. It confirmed that an arrangement or understanding that in practice provides the parent with a right of access will be sufficient, even where access does not apply to all documents, but a more narrow class of documents (in which case only those documents will be within the party's control). The Court also clarified that this is distinct from a situation where a third party, if asked to do so, would probably provide documents: such a situation is not on its own sufficient to establish control.
- Documents possessed by third parties as agent for a party fall within a party's right of possession: in Northshore Ventures Ltd v Anstead Holdings Inc3 it was confirmed that the concept of a "right to possession" covers situations where a third party is in possession of documents as agent for a litigant, and that even where, on a strict legal view, no "right to possession" exists, for example because the parties caused the documents to be held in a jurisdiction whose laws would preclude the physical possessor handing them over, it would be open to the English court to find that as a matter of fact the documents were nevertheless within the control of the party. In Northshore it was found that the party to the litigation had a legal right to possession as against a third party trustee, even though the party was no longer a beneficiary under the trust and requests already made of the trustee to hand over documents had not yielded any documents.
- Employees holding documents relating to the affairs of their employer on personal devices can be asked to hand those over to their employer:
- In BES Commercial Electricity Ltd v Cheshire West and Chester Borough Council4, the Judge ordered a party to litigation to request an employee (who was not a party) to produce all books, correspondence and documents under their control relating to the affairs of the defendant and thereafter to use best endeavours to secure employees' compliance with such request, recognising that the employee might have sources of electronic information outside that which may be recorded on work issued devices.
- In Phones4U (in administration) v EE5 the Judge found that:
- it was "prima facie reasonable that in the first instance they should request that their present or former employees or agents should make the [personal] devices available for inspection” on the basis that "if and insofar as an employee of a company, however senior, sends or receives emails or SMS messages in relation to the business of their company…it is clear that they are doing so in the course of their employment. Accordingly, the employer (or principal) has a right to require production by the employee of those documents, including after the termination of the employment or agency";
- "there are no limitations…on who can be asked to participate in the search process. It is obvious that third parties can only be compelled to do anything by an order under CPR 31.17 or another procedure to which they are made a party. But that does not in our judgment mean that the court cannot, as a matter of principle, require the parties to the proceedings to make requests of third parties by way of making a search for relevant documents."
- Where the relationship between a party and non-party is governed by foreign law, the factual position may be different than it would be under English law so that the party may not be deemed to have control: in Various Airfinance Leasing Companies & Anor v Saudi Arabian Airlines Corporation6, the deputy judge rejected a presumption that as current and former senior position holders in the defendant's organisation, there were fiduciary obligations on those individuals to afford assistance to the defendant company for disclosure purposes on the basis that the employment relationships were governed by Saudi law. Deputy Justice Eggers also reached a conclusion of fact that under Saudi law there was no control, based on a presumption that in the absence of expert evidence of foreign law the court could not assume that there was a right of access, however this aspect of the judgment was directly and expressly contradicted in a later judgment dealing with the same issue. As reflected in the Mozambique decision (see further below), a party seeking to rely on foreign law must generally use expert evidence to prove that a particular piece of foreign law operates in the way the party seeking to rely on it says it operates, otherwise the English court’s default approach is to presume that the foreign law is the same as English law.
- Where the relationship between a party and non-party is governed by foreign law, and there is no expert evidence of that foreign law, the court is entitled to assume that the law is the same as English law: in The Republic of Mozambique v Credit Suisse International and Others7, the judge noted that under English law, a court will readily find that a party has control over documents contained on personal email accounts or devices of a current or former employee or office holder who used those email accounts or devices routinely to receive and send electronic communications for the party in question. If the relationship between the party and third party is governed by foreign law and not the subject of expert evidence on foreign law, the judge is entitled to assume that the relevant foreign law is the same as English law (this consciously contradicts the position of the deputy judge taken in Airfinance). Additionally, the decision confirms that the court can order a party to identify which current or former employees it has asked for consent to search for and disclose documents on their personal email accounts or devices, and the extent to which consent has been given, and that where consent has been given, the documents will be in the party's "control" for the purposes of disclosure.
Against the backdrop of what might seem to be quite a broad interpretation of "control" for the purposes of disclosure, it is important to remember that the Court cannot make disclosure orders requiring third parties to do anything in relation to disclosure in proceedings otherwise than by means of CPR 31.17, although the above cases clearly show that this does not prevent the Court from ordering the parties to make requests of third parties. What does prevent the Court from ordering parties to make requests of third parties is where a third party's documents are not deemed to be within the control of a litigating party, and that holds even if the third party would probably provide the documents upon request. A word of warning, though: the Court may draw adverse inferences such that a litigating party may be deemed to have control over a third party's documents as a result of its failure to make "sensible requests" for documents from that third party, on the basis that their reluctance may stem from the knowledge that the third party would respond in a way that demonstrated the existence of an arrangement or understanding amounting to control (Pipia).
Ultimately, the Courts are clear that the question of "control" is a factual one that varies from case to case, guided by the rules and underpinning principles established in the Courts, so careful thought will need to be given to the nature of a party's relationships, and the applicable law governing those relationships, when identifying the pool of documents over which a party may be deemed to have "control".