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Control of Documents and Disclosure Obligations

Author: Syedur Rahman  29 April 2021
2 min read

Posted in: Commercial Litigation.

Syedur Rahman of Rahman Ravelli details a case that examined what can be considered to be in a party’s control in relation to the disclosure exercise

In the case of Berkeley Square Holdings Ltd and Others v Lancer Property Asset Management Ltd and Others [2021], a High Court judge found that documents in the claimant’s parent company’s possession, or in the possession of related individuals, were within the claimant’s control for the purposes of their disclosure obligations under PD 51U. 

Background

While the material facts of the case are not important in this matter, disclosure occurred in September 2020. Both parties made applications for further disclosure. The defendants then alleged that the claimants had failed to comply with the disclosure order. The claimants contended that documents held by the parent companies or related individuals were not under the control of the claimants, “being neither employees nor agents of the claimants”. 

The starting point with disclosure is that unless a party has a legal right to access documents held by a third party, that party will not normally have control over those documents. This was confirmed in Lonrho v Shell [1980], where the House of Lords made it clear that a parent company does not automatically have control of the documents held by a subsidiary. 

Proceedings

The court summarised that the following can determine whether documents held by one party are under the control of another, where there is no legally enforceable right to access the documents:

  1. The relationship between the parties is irrelevant. It does not depend on there being control over the holder of the documents in some looser sense, such as a parent and subsidiary relationship.
  2. There must be an arrangement or understanding that the holder of the documents will search for relevant documents or make documents available to be searched.
  3. The arrangement may be general in that it applies to all documents held by the third party or it could be limited to a particular class or category of documents. A limitation, such as an ability to withhold confidential or commercially sensitive documents, will not prevent the existence of such an arrangement.
  4. The existence of the arrangement or understanding may be inferred from the surrounding circumstances. Evidence of past access to documents in the same proceedings is a highly relevant factor.
  5. It is not necessary that there should be an understanding as to how the documents will be accessed. It is enough that there is an understanding that access will be permitted and that the third party will co-operate in providing the relevant documents or copies of them or access to them.
  6. The arrangement or understanding must not be limited to a specific request but should be more general in its nature.

Other parties had been previously involved within the disclosure process and, therefore, the court understood that there was an ongoing arrangement or understanding that the claimants would be able to access documents held by the related parties.

The judge concluded that this was not a surprising conclusion, given that the claimant had been managed and controlled by the parent companies via their agents. As such, it would be expected that the claimants would be able to access the documents held by those parties, whether or not they have a strictly legally enforceable right to do so. 

Conclusion

As shown above, in relation to Lonrho, this judgment is one of a few where there is an expansion of what is considered to be in a party’s control in relation to the disclosure exercise. If there is an arrangement or understanding between two parties whereby the documents are under the practical control of the disclosing party, this could be sufficient for the documents to be disclosed. The understanding or arrangement can also be inferred from previous actions or the circumstances of the case.

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Syedur Rahman

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.

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