Company ordered to disclose documents in the control of its controllers

The Commercial Court has ordered a company to disclose documents in the hands of third parties (an individual and another company in the same group) on the basis that those parties exercised control over the company for the purpose of all matters relating to the litigation: Suez Fortune Investments Ltd v Talbot Underwriting Ltd [2014] EWHC 2848.

The decision arguably continues the recent judicial trend towards a broad interpretation of control for disclosure purposes, in appropriate circumstances, as for example in North Shore Ventures Ltd v Anstead Holdings Inc & Ors [2012] EWCA Civ 11 (considered here). Although the Suez judgment dates from August last year, the transcript has only recently become available. Gareth Keillor considers the case below.

Background

Suez brought a claim against Talbot for an indemnity under a marine insurance policy. Talbot sought an order that Suez disclose documents held by (a) Worldwide Green Tankers (WGT), a company in the same corporate group as Suez, and (b) an individual (Mr Iliopoulos) who was said to be the ultimate beneficial owner of Suez. Talbot argued that documents held by these third parties came within Suez's control and therefore needed to be disclosed by Suez.

Decision

The judge (Mr Justice Males) granted the application.  In doing so he referred to North Shore, where the Court of Appeal stated that in determining whether documents held by a third party are in a litigant's control, the court must have regard to the true nature of the relationship between the third party and the litigant. The Court of Appeal went on to say in that case that "even if there were on a strict legal view no 'right to possession' … it would be open to the English court in such circumstances to find that as a matter of fact the documents were nevertheless within the control of that party".

North Shore was a case in which the litigating party was said to have control over the documents of a third party because it had control over that third party. In contrast, the argument in Suez was that the third party had control over Suez (i.e. the reverse of the North Shore position). However, Males J said that, in principle, that should not make any difference, at least in circumstances where Mr Iliopoulos must have been dealing with the matter in his capacity as an agent of Suez.

Males J held that, regardless of whether Mr Iliopoulos was the beneficial owner of Suez, he had significant control over Suez, and authority to act on behalf of Suez, at least for the purpose of all matters concerning the litigation. Accordingly, there was no injustice in making an order which spelt out that relevant documents within his or WGT's control were to be regarded as under the control of Suez for the purpose of disclosure.

Comment

Although the judge referred to the Court of Appeal's comments in North Shore that documents may, as a matter of fact, be within a party's control even if there is no strict legal right to possession, it is not clear that he reached his decision on that broader basis in this case. In fact he rejected the submission that there was no evidence that Suez had a legal right to documents held by Mr Iliopoulos or WGT. Mr Iliopoulos and WGT were acting on behalf of Suez and, the judge said, there was no reason to suppose that Suez did not have a right to those documents. Further, the decision appears to leave open the possibility of Mr Iliopoulos or WGT adducing evidence at a later stage that they were not, in fact, obliged to provide the documents to Suez.

As always with cases of this nature, this was a highly fact specific decision. It is however of interest in showing that, in appropriate circumstances, documents held by those who control a litigating party may be held to fall within the litigant's control for the purposes of its disclosure obligations, particularly if they can be said to be acting as agent.

The judge in this case appeared to be troubled by the fact that if he had not granted the order, it would have been open to Mr Iliopoulos and WGT simply to choose which documents they provided to Suez, presumably with the result that only helpful documents would be disclosed, an outcome the judge described as "not acceptable". This may suggest that a court may be more inclined to find that documents held by a third party fall within a litigant's control where there is a perception that, otherwise, there will be a high degree of self-selection in the disclosure process.

It is important when considering the scope of a party's disclosure obligations to investigate carefully the relationships between litigants and third parties and remember that the court may adopt a broad interpretation of control for disclosure purposes where the facts allow.