The Dekagram: 29th July 2024

Now that the summer seems to be under way at last, the team has dispersed to go crabbing in Skegness, paddling in Bridlington, and of course sampling the amuses on Clacton pier. But before we packed our branded Dekachairs and parasols, we found time for one last Dekagram before the summer break. And in topical news we discovered that the Maritime and Coastguard Agency has issued its first warning to a jet skier under the new water safety law we told you about back in January 2023. It seems that the man in question turned directly across the path of the Isle of Wight ferry at the entrance to Cowes Harbour, causing the Captain to take evasive action in order to avoid colliding with him – a collision which we venture to suggest would have been likely to cause him more damage than the ferry. The jet skier admitted breaching Rule 9 of the International Regulations for the Prevention of Collision at Sea (IRPCS), contrary to s.4 of The Merchant Shipping (Distress Signals and Prevention of Collisions) Regulations 1996. This law has applied to jet skiers since 31^st March last year pursuant to the provisions of the Merchant Shipping (Watercraft) Order 2023, which enables the prosecution of those who endanger others by using powered watercraft of any size in a dangerous manner. About time too, we think.

In other news, the Spanish government has approved Directive (EU) 2021/2118, which (as readers will recall) gave member states until 23^rd December 2023 to implement increases in insurance coverage, including agricultural and industrial vehicles and ‘light personal vehicles’, and in particular electric scooters and personal mobility vehicles, within the scope of compulsory insurance for the first time. The Spanish have also taken the opportunity to improve the claims process in road traffic accident claims. Interestingly the Spanish government will publish a register of electric scooters, which will have to be insured to a minimum of €6,450,000 per claim for damage to persons, regardless of the number of victims, and €1,300,00 per claim for damage to property.

Our thanks to Jose Maria Pimental and Irene Moreno of DAC Beachcroft Madrid for bringing these changes to our attention via their illuminating Alert newsletter.

(1) Mornington 2000, (2) Sante Global v Secretary of State for Health and Social Care [2024] EWHC 1708 (TCC): Disclosure and Subcontractors

How the rules on disclosure apply to parties alleging that relevant documents are not within their control but within that of a subcontractor has been a thorny issue amongst travel lawyers for as long as this author has been doing this work. A recent decision by Jason Coppel KC, sitting as a Deputy High Court Judge in the Technology and Construction Court, may shed some further light on the question.

The facts

The claim itself was a squabble arising out of a contract between the Claimants and the Defendant for the provision of Covid-19 lateral flow tests. In order to perform the contract the Second Claimant had subcontracted with a supplier based in Germany called MP Biomedicals Germany GmbH (“Bio”), and Bio in turn had subcontracted with the manufacturer of the test kits in China, Xiamen Boson Biotech Co Ltd (“Boson”). The Defendant terminated the contract, however, on account of alleged violations of labour law, health and safety and worker payment obligations in Boson’s factory in China, following an audit conducted on behalf (ultimately) of the Defendant by a firm known as “QIMA”. These violations were alleged to constitute breaches of contract, giving rise to a right to terminate the contract. The Claimants dispute that there was any breach of contract on their part and, as a result, claim damages and interest in excess of £100m for wrongful termination of the contract, as well as further substantial damages in respect of further opportunities to bid for lucrative procurement contracts they say were wrongfully withheld from them.

The application

Waxman J ordered extended disclosure primarily on the basis of Model D (narrow, search-based disclosure), with certain categories on the basis of Model C (disclosure of particular documents or narrow classes of documents). With the date for standard disclosure imminent, the Defendant applied for a determination of whether as a result of the arrangements between Santé, Bio and Boson, documents in possession of Bio and Boson were to be regarded as within the control of Santé for the purposes of discharging its disclosure obligations. In particular, the Defendant sought disclosure of documents detailing:

1. The extent to which the responses relevant to [Boson] in the Standard Selection Questionnaire were accurate including all documents supporting the statements made in those responses.
2. The contractual relationship between the Claimants, MP Bio and Boson (including informal contracts or any agreed orally or by conduct).
3. The basis on which the QIMA Audit was carried out and compiled, including:
   • The documents and information requested by QIMA before and during the course of the audit;
   • The documents and information made available by Boson during the course of the audit.
4. Whether Boson’s Licence from the Jimei District Human Resources and Social Security Bureau, on which the Claimants relied to rebut many of the allegations of breach of contract, was authentic, how and when it was procured, whether Boson had the benefit of the Licence and the scope/extent of the Licence.

All of which seem highly relevant, but some at least of which would or might be within the possession of the Claimants’ subcontractors and not the Claimants.

In brief, the Defendant sought:

“A declaration that documents within the possession of: (i) [Bio]; (ii) [Boson] which respond to the issues identified in the DRD are within the control of the Claimants for the purposes of their extended disclosure obligations under Practice Direction 57AD”

The very issue that has vexed travel lawyers for many years when considering whether tour operators must disclose documents within the control of their suppliers, whether domestic or foreign.

The law

At paragraphs 6 to 10 of the judgment Jason Coppel KC sets out the legal principles relevant to the application, and this part of the judgment is a helpful primer for cases of this nature.

Pursuant to the definition in Appendix 1 of CPR PD57AD, at paragraph 1.4, a party gives disclosure by stating “that a document that is or was in its control has been identified or forms part of an identified class of documents and either producing a copy, or stating why a copy will not be produced”.

The concept of ‘control’ is therefore crucial.

The definition of ‘control’ for the purposes of disclosure in PD57AD (see Appendix 1,para.1.1) includes (but is not limited to) documents:

1. in a party’s possession;
2. in respect of which a party has or has had a right to possession; or
3. in respect of which a party has or has had a right to inspect or take copies.

The same definition applies under CPR 31.8(2), so the authorities dealing with the question of control in the context of CPR 31.8(2) are equally relevant to the question of control for the purposes of PD57AD, and vice versa.

• An arrangement or understanding which gives a party practical or de facto control of a third party’s documents is sufficient to constitute control for disclosure purposes (cf Berkeley Square Holdings Limited v Lancer Property Asset Management Limited [2021] EWHC 849 (Ch) and Public Institution for Social Security v Al Wazzan [2024] EWHC 480 (Comm) in this regard). The following factors are significant:

1. The relationship between the parties is not determinative. 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.

The submissions

The Defendant relied on a ‘reasonable assistance’ clause in the contract between Santé and Bio and Boson as evidence of de facto control over the latters’ documents. Moreover, Bio and Boson had already provided documents to Santé, and their employees were to give evidence on their behalf, suggesting a high degree of cooperation between them.

On the other hand, Santé pointed out that the authorities suggest that there must be a close commercial relationship between parties for one to owe disclosure obligations in relation to documents held by another. Just because Boson had responded to a limited number of disclosure requests did not mean that Santé owed disclosure obligations in respect of documents held by them.

The decision

The court came down on the side of the Defendant [para.20]:

In my judgment, the balance of the evidence in this case demonstrates that Santé enjoys practical control over documents held by Bio and in particular Boson which may contain information which is required for the determination of the claims.

In so holding the judge held that the relationship between the parties on the Claimants’ side had gone beyond a standard, arm’s length contractor/sub-contractor/sub-sub-contractor relationship – it was effectively a joint enterprise, in which Bio and Boson were assisting the Claimants in bringing their claim, by providing documents and witnesses.

At paragraph 21(4) the judge observed:

The contractual assistance clauses are the starting point for inferring the arrangement or understanding which I find to be present in this case, but there are significant other factors which give rise to that inference, including in particular the evidence of past access to documents being provided by Boson. This may, as the Claimants submitted, have occurred only during a small number of discrete periods but the Claimants do not rely upon any instances where Boson has refused to provide access to documents and it seems to me very likely that if more requests had been made by Santé they would have been satisfied by Boson. This is a highly relevant factor, and there are others, including the initial and ongoing cooperation between the Claimants and Boson for the purposes of pursuing the claims.

He therefore granted the declaration sought by the Defendant.

Comment

With respect to both counsel for the Defendant and to the judge, the former’s submission that to deprive the Defendant of the declaration sought would be unfair was clearly correct in this case. If the court had not granted the Defendant’s application, it would have been left in the position of defending a claim in which Santé had all the benefit of documentary and witness support from their subcontractors, but no obligation to disclose documents relevant but unhelpful to their case. It is suggested that this cannot possibly be right – where a subcontractor provides information supportive to one party’s case, it cannot be just to allow it to withhold information which might well cast those documents in a completely different light.

The case should be a useful weapon in parties’ armouries, and of particular assistance to claimants in package travel cases whose claims are dependent on the disclosure of documents by tour operators’ subcontractors.

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. Together with her colleagues at Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.