Summary

Transcripts of interviews by DTI Inspectors should be disclosed to all parties in complex proceedings relating to the collapse of two companies on an application of the test in RSC O.24 r.13. ** Final judgment on issues reserved after preliminary hearing.

Facts

A number of summonses were before the court in a pre-trial review in different sets of complex proceedings. The trial was scheduled for May 2000. The proceedings all related to the acquisition of the share capital of Atlantic Computers plc ('ACP') by British & Commonwealth Holdings plc ('B&C') in September 1988. Both companies went into administration in 1990. The following issues had, inter alia, already been agreed between the parties or determined by the judge in the course of the hearing. (A) ACP had applied to strike out the defences of Barclays de Zoete Wedd Ltd ('BZW'), ACP and Spicer & Oppenheim ('Spicers') insofar as they sought to plead events or make allegations in relation to the post-acquisition events, as B&C had amended its statement of claim so as to limit its damages to the difference between the price paid for the ACP shares in September 1988 and the value of those shares in September 1988. The judge held that the defences could refer to post-acquisition events provided that this was limited to relying on facts and was solely linked to the question of the valuation of the ACP shares as at September 1988. Leave to amend the defences granted, such defences to be served by 15 January 1999 (ACP and BZW) and 22 January 1999 (Spicers). (B) There should be simultaneous exchange of a summary of the valuation case of each party (directions given as to content) seeking to call valuation evidence as to the value of the ACP shares as at September 1988 by 31 March 1999. The date for exchange of full reasoned expert reports in October 1999 would remain. (C) The number of expert witnesses had been agreed, as had the adjournment applied for by APC to have all its claims against its directors and its directors' claims against it and against each other adjourned to be heard until after the main trial. Adjournment granted. (D) Leave was given to ACP pursuant to RSC O.20 r.5(5) to add a new cause of action to its pleadings as against Spicers, although that amendment involved adding a new cause of action outside the limitation period. The issues between the parties which were not agreed were as follows. (i) Two Inspectors were appointed in respect of Atlantic under s.432 Companies Act 1985 and produced a report in 1994. In so doing transcripts of the evidence of 112 witnesses were prepared. With the possible exception of ACP and Mr McCormick, a former director of ACP and a defendant to claims by various parties in these proceedings, all the parties had only some of the transcripts. During discovery each party listed the transcripts in its possession. NM Rothschild & Sons Ltd ('Rothschilds') applied for inspection of the transcripts in the possession of the other parties to the proceedings, but not of documents which included provisional criticism of witnesses and their replies to the criticisms ('the PC material'). All the parties accepted that no order for discovery should be made in respect of the PC material because it was properly the subject of a public interest immunity ('PII') certificate. The effect of a successful application would be mutual disclosure by all parties of the transcripts, excluding irrelevant and legally privileged material. There had been earlier proceedings in which the transcripts had been disclosed and used. There were two questions before the judge: firstly, whether Rothschilds had satisfied him that an order for inspection of the transcripts was necessary either for disposing fairly of the cause or for saving costs (RSC O.24 r.13); and secondly, whether it was right in his discretion to order discovery, given that RSC O.24 r.11(1) said he "may" do so. (ii) The date by which Civil Evidence Act notices should be exchanged. (iii) Whether there should be a further hearing this term on post-acquisition events.

Held

(1) Even though not the subject of PII, the transcripts in issue contained material which was obtained by witnesses in confidential circumstances, pursuant to compulsion. (2) The court was bound by the CA decision in Wallace Smith Trust Co Ltd v Deloitte Haskins & Sells & Anor (1997) 1 WLR 257. The fact that the evidence in the transcripts was subject to the compulsion principle did not assist the argument that no disclosure of the transcripts should be ordered if the judge was satisfied that the test laid down in RSC O.24 r.13 was satisfied: (a) unless he decided it was appropriate to inspect the transcripts and concluded that it would not be of significant assistance; or (b) unless he concluded that the probative value of the transcripts was unlikely to be anything more than slight; or (c) save to the extent that it was appropriate to restrict inspection to legal advisers or some other limited group. (3) Unless all parties had all the transcripts, or at least unless all parties had the same transcripts, there was a real risk of unfairness so far as the conduct of the litigation was concerned. (4) It would be helpful to have the oral evidence given closer to the time of relevant events where witnesses were trying to remember those events at a trial 12 years after their occurrence. (5) Although the extra material would extend to 11,000 pages of evidence, given the volume of material in the trial, the totality of documents would be increased by no more than 5 per cent. The extra work would be time well spent in preventing some facts being in issue between the parties, giving a more realistic assessment of the oral evidence and the claims put forward and hence tending to a reduction of the live issues between the parties at trial. However, if disclosure was to be ordered, cross-examination on the transcripts based on minor discrepancies would be treated very severely by the court. (6) The fact that the transcripts did not include the PC material and were therefore incomplete was not a reason for not disclosing them, although some risk of unfairness existed. (7) The judge was satisfied that disclosure was "necessary for disposing fairly of the cause or matter", although not necessarily for the saving of costs, and disclosure should be ordered. (8) It would not have been an appropriate use of judicial time for the judge to inspect the transcripts before that decision was reached. (9) Each party's solicitors should perform the normal task in relation to discovery and produce the transcripts with deletions (erring on the side of full disclosure) in relation to material they judged to be irrelevant or privileged (whether in respect of legal privilege or banking confidentiality), and then sent to the DTI so that it could make appropriate representations to the parties as to whether it objected to any of the undeleted material in the transcripts being disclosed (eg because of PII considerations). The material should also be sent to each of the witnesses concerned, who, if given prior notification of this course of action now, could then make application in connection with production within a short period of receipt. (10) Insofar as the transcripts in the possession of the other parties, the solicitors to one or more parties should be responsible for production, rather than Mr McCormick. In respect of other transcripts, if, by disclosing them Mr McCormick would be in breach of Criminal Procedure and Investigations Act 1996 he should not be required to produce them. Insofar as Mr McCormick was prevented from disclosing transcripts by virtue of his undertaking to Lloyd J, he was discharged from that undertaking as necessary. (11) The ACP administrators were released from similar undertakings given to Robert Walker J so far as transcripts they obtained pursuant to the order in Soden v Burns (1996) 1 WLR 1512. (12) Although the judge did not make any order to this effect, he made it clear that unless the DTI had good reason for doing otherwise it would be desirable for PC material on B&C's former employees should be released to B&C, in order to ensure a level playing field for all the parties. (13) The judge made an order under RSC O.24 r.14A extending the implied undertaking not to use a document disclosed for the purpose of proceedings to documents read to or by the court or referred to in open court. (14) The Civil Evidence Act notices should be exchanged by 17 December 1999. (15) It would be inappropriate to order any party to produce its valuation case before 31 March 1999. However, ACP and BZW must have considered the question of valuation and consulted their experts before attempting to justify their pleading on that basis and therefore ACP and BZW had until 12 November 1998 to come up with their evidence as to why their method of valuation was appropriate and B&C had seven days thereafter to reply. (16) Leave to appeal not granted to Mr McCormick. (17) Limited questions of costs discussed. Other questions relating to costs stood over until 27 November 1998, if all the parties concerned were before the court on that date.

Order accordingly.Following a Alternative Dispute Resolution hearing on 14, 15 and 16 December 1998, the creditor committees settled these proceedings according to recommendations.