Disclosure of documents - how remote is control?

Command of documents is a key differentiator in any dispute.  Knowing the relevant documents, where they are to be found and how to deploy them can be the difference between success and failure. 

The Courts have long been interested in how parties in litigation approach documents.  The Civil Procedure Rules (“CPR”) require “disclosure” - the process of informing other parties of the relevant documents that are held.  This applies whether the document supports your case or even if it is unhelpful.   In the modern world of course, documents are pervasive - emails, databases, spreadsheets, letters, text messages, videos, metadata - all of these may be subject to disclosure.

But in a corporate group structure, relevant documents may be held by different companies, which may not be party to the claim.  In that case, how does the Court approach disclosure?  The key issue is control, and in Pipia v BGEO Group Ltd [2020] EWHC 402 (Comm), the High Court has provided some helpful guidance on control for the purposes of both CPR 31.8 and CPR PD 51U.CPR 31.8 provides:

(1) A party's duty to disclose documents is limited to documents which are or have been in his control. 

(2) For this purpose a party has or has had a document in his control if - 

(a) it is or was in his physical possession; 

(b) he has or has had a right to possession of it; or 

(c) he has had a right to inspect or take copies of it.CPR PD 51U has this definition:

"Control" in the context of disclosure includes 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. It is well established that the mere existence of a parent/subsidiary relationship does not mean that the parent controls the documents of the subsidiary (Lonrho Ltd v Shell Petroleum Co Ltd (No. 1) [1980] 1 WLR 627).

Control will only arise in one of the following circumstances:i) 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.

ii)Where the parent company has a presently enforceable legal right to obtain the documents from its subsidiary.

In Pipia v BGEO, the Claimant sought documents held by the BGEO's subsidiaries and argued that there was a “control arrangement” (evidenced in letters between BGEO and those subsidiaries).  BGEO resisted, arguing that no such arrangement existed or, to the extent it did, it had been terminated.

The Court analysed the arguments and considered there to be three elements to determining whether a “control arrangement” exists: (i) consent from the subsidiary in respect of documents (or types of documents); (ii) how the documents would be provided; and

(iii) the quality of consent - is it free and unfettered access or responding to specific requests.  It is the third element that is relevant to “control” for disclosure purposes.

In finding that a “control arrangement” did exist, the Court analysed the practical evidence for the existence of an arrangement and found that it was not sufficient for a parent or its subsidiary to assert that no arrangement exists or existed.  This is a further demonstration of the Court's wide discretion and its approach to require extensive disclosure of documents.

This judgment serves as a stark reminder to managers and lawyers in a group structure to be alive to the potential wide-ranging obligations that can arise in disclosure and highlights that Courts will undertake a careful analysis of the arrangements between parent and subsidiary companies in order to ascertain whether documents held by the subsidiary are within the control of the parent.  At the earliest signs of a dispute, parent companies should be aware that documents may fall to be disclosed to other parties, including documents held by subsidiary companies even if they are not party to the claim. Further, while this present decision related to a parent company obtaining documents from a subsidiary, it could equally apply to a situation where the control arrangement is, for example, between inter-group companies.

If you would like to discuss anything mentioned in the article above, please contact Michael Hoskins an Associate and Louise Wilson a Partner in our Commercial Dispute Resolution Team.