Keeping up with the times – remember your electronic documents

Earles v Barclays Bank (Barclays)[1] involved a claim by Mr Earles against Barclays for damages for an alleged breach of mandate by the bank. It was alleged that Barclays made five unauthorised transfers, amounting to more than £¼ million between Mr Earles' personal account and an account held by a company of which Mr Earles was a director. When the company went into administration Mr Earles was left as an unsecured creditor and brought a claim against Barclays for consequential losses. Barclays defended the claim on the basis that Mr Earles had authorised the transfers by certain telephone calls and emails, and the key issue for the court to determine was whether or not those telephone calls and emails had in fact been made.

Although the High Court found in favour of Barclays in dismissing the claim, both Barclays' in-house legal team and its lawyers were heavily criticised in relation to the way in which they handled the disclosure of electronic documents, and this was a matter to be taken into account when awarding costs. The judge said that if key electronic documents, such as telephone and email records, had been properly preserved and disclosed earlier, there was a reasonable prospect that Mr Earles would not have commenced proceedings or that the matter would have been disposed of before trial. Therefore Barclays' costs were reduced by 50 per cent. In fact, Barclays recovered only 25 per cent of its costs following assessment.

Digicel v Cable & Wireless[2] marked the culmination of a long running dispute between the parties in relation to alleged anti-competitive practices by Cable & Wireless which Digicel alleged delayed its expansion into Caribbean markets. Following a seven-month High Court trial, the judge ruled in favour of Digicel on only one minor point, and ordered Cable & Wireless to pay just £2 in nominal damages to Digicel. Digicel was ordered to pay Cable & Wireless' costs. Costs have been estimated at £15.5 million.

In this case Digicel successfully applied to the Court for further disclosure of electronic documents, requiring Cable & Wireless to carry out further keyword searches even though it had already incurred costs of around £2 million on disclosure, having gathered over one million electronically stored documents, of which more than 5,000 were disclosed. Digicel argued that Cable & Wireless had failed to follow proper procedure in relation to the agreement of keyword searches before disclosure, and the court stressed the failure of the parties to discuss at an early stage the issues which might arise regarding searches for electronic documents.

Most recently, the court in Goodale v Ministry of Justice[3] outlined the practical difficulties created by the need to deal with the volume of electronically stored information which now exists. This case is also significant as it attached a draft of the disclosure questionnaire which is currently under discussion with a view to being rolled out more generally. With the increasing prevalence of electronic communication and storage of documents in all businesses, these cases together should be considered an important lesson on the importance of getting electronic disclosure right and the possible implications of getting it wrong, not only for a party's case but also on costs. It is therefore essential that disclosure is considered at the earliest possible opportunity in any dispute and that steps are taken to identify and preserve relevant documents, including electronic documents.

[1] [2009] EWHC 2500
[2] [2008] EWHC 2522
[3] [2009] EWHC 41 B41