Bilta (UK) Ltd v Nazir & Ors (2010)
The court refused to strike out a party's defence to the trial of a preliminary issue on the basis that it had destroyed or failed to preserve material evidence. The responsible party had not deliberately destroyed that evidence.
The applicant (B) applied to strike out an application issued by the respondent company (J) for a stay of proceedings or, alternatively, applied for summary judgment on its claim against J. B had been wound up on a petition by the office of Her Majesty's Revenue and Customs. It was the Revenue's case that B had been involved in VAT fraud. Through it's liquidator, B sought to sue the alleged participants in that fraud, including J. It was J's case that B and J had traded together on J's standard terms and conditions which included an arbitration clause precluding the court's jurisdiction to determine the claim. G applied for an order under the Arbitration Act 1996 s.9 for a stay of proceedings. B opposed that application on the basis that it had never had sight of such an agreement. One of J's employees (C) gave evidence that he had sent B two electronic copies of the agreement and that his assistant had sent B a hard-copy. C stated that in the absence of B's express agreement, B had to be taken as having accepted those terms through conduct of engaging in trade with J. The judge determined that C had, at least, raised a triable issue as to whether the agreement had become binding and referred that dispute for determination as a preliminary issue. However J later updated its technology systems resulting in the loss of electronic data and metadata from the relevant period, including C's alleged emails to B. B submitted that (1) J had destroyed material documents or failed to preserve them such that the fairness of the impending trial had been impaired; (2) alternatively, it was entitled to summary judgment on its claim on the basis that C was not a credible witness despite a contrary ruling in earlier proceedings: more evidence was available to the instant court; (3) it was entitled to further specific disclosure.
(1) The object of the RSC Ord.24 r.16 was not to punish an offender for his conduct but to secure the fair trial of the case in accordance with the due process of the court, Logicrose Ltd v Southend United Football Club Ltd (No1) Times, March 5, 1988 Ch D, Landauer Ltd v Comins & Co Times, August 7, 1991 CA (Civ Div) and Arrow Nominees Inc v Blackledge (2000) CP Rep 59 CA (Civ Div) applied. The court should be satisfied on the ordinary civil standard of proof that the material documents had been destroyed or deliberately falsified before striking out a case, Douglas v Hello! Ltd (No3) (2003) EWHC 55 (Ch), (2003) 1 All ER 1087 (Note) applied. It was simply impossible to strike out the instant case at the present stage where significant witnesses had not been called to give oral evidence. People who were the subject of standard disclosure orders would not, in the ordinary course of events, be required to submit the hard-drives from their computers to extensive forensic examination. C's emails would, if produced, support J's case. B had not, itself, disclosed any relevant electronic documents and the alleged lack of evidence was not down to G alone. (2) The issue as to whether or not C was a credible witness was not res judicata as a result of the court's previous ruling on the issue. The failure to deploy material that was available at the hearing of a first application to strike was not fatal to a second application. That failure could be recompensed through orders as to costs, Woodhouse v Consignia Plc (2002) EWCA Civ 275, (2002) 1 WLR 2558 applied. The material before the instant court was not so different to the material that had been before the court previously and to otherwise justify it reaching a contrary conclusion. (3) B was not entitled to disclosure that went to the underlying merits of its claim against J but rather to the limited issue as to whether an arbitration clause existed.