WH Holding Ltd & Anor v E20 Stadium LLP [2018] EWHC 2578 (Ch)

Case No HC-2017-000498

[2018] EWHC 2578 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES

BUSINESS LIST (CHD)

Venue Royal Courts of Justice, 7 Rolls Building, Fetter Lane, London

EC4A 1NL

Date 5 October 2018

Before

MR JUSTICE SNOWDEN

Between

E20 STADIUM LLPDefendant

Between

WH HOLDING LIMITED

WEST HAM UNITED FOOTBALL CLUB LIMITED

Paul Downes QC and Luka Krsljanin (instructed by Gateley PLC) for Claimants

Thomas Plewman QC and Laura Newton (instructed by Gowling WLG) for Defendant

Hearing Hearing dates: 16-17 August, 11 and 13 September 2018

Judgment

[1]This is a judgment giving my reasons for deciding to exercise my power under CPR 31.19(5) to review the original versions of a sample selection of documents which had been disclosed in these proceedings by the Defendant (“E20”) with parts of the documents redacted.

[2]My review took place as part of my consideration of an application brought by the Claimants (together “West Ham”) which, among other things, sought information as to the basis for redaction, and ultimately specific disclosure of, a large number of documents which had been the subject of redaction by E20 on the grounds of(i) legal privilege and

(ii) irrelevance and commercial sensitivity. I dealt solely with West Ham’s challenge to the redactions for irrelevance and commercial sensitivity. It was agreed that the challenge to the redactions made on the ground of legal privilege should be adjourned to be heard by a judge who is not being considered as a possible trial judge.

Background

[3]E20 is the owner of the stadium built for the London Olympics and Paralympics in 2012 (“the Stadium”), which is operated on its behalf (as its agent) by a management company, London Stadium 185 Limited ("LS185"). E20 was originally owned by the London Legacy Development Committee (“LLDC”) and Newham Legacy Investments Ltd (“NLI”), but NLI is no longer a member.

[4]In order to facilitate the use of the Stadium after the 2012 Olympics and Paralympics, an Invitation to Tender was published in December 2011 inviting bids for the future use of the Stadium. West Ham eventually emerged as the preferred bidder and negotiations took place between West Ham and E20’s ultimate holding company, LLDC, over a long period.

[5]Following those negotiations, West Ham and E20 concluded a 99-year Concession Agreement on 22 March 2013 (“the Concession Agreement”), under which E20 granted certain concessionary rights to West Ham to use the Stadium during the football season.

[6]Regrettably, the relations between E20 and West Ham have broken down. In addition to the matters in issue in this case, a significant number of other disputes relating to the use of the Stadium have arisen between them.

The pleaded case

[7]The claims and counterclaims in this case relate to a dispute over the number of seats in the Stadium which West Ham is entitled to use under the Concession Agreement in return for payment of an agreed “Usage Fee”. West Ham asserts that in principle it is entitled to use all of the seats in the Stadium, subject only to obtaining the necessary permissions from appropriate bodies and authorities (“Grantor Consents”). E20 contends that West Ham is contractually entitled to use only 53,500 seats and that if it wishes to use more, it will have to agree to pay an increased Usage Fee.

[8]As part of its case, West Ham asserts, and E20 denies, that the Concession Agreement obliges E20 to take all reasonable steps to seek the necessary Grantor Consents to maximise the number of seats which West Ham can use, and to comply with West Ham’s reasonable requests in this respect. E20 has applied for and obtained Grantor Consents permitting a maximum of 57,000 seats to be used. However, West Ham contends that from 21 July 2016 it made reasonable requests that E20 should seek Grantor Consents for an increased capacity of 60,000, but that E20 has breached the Concession Agreement by failing or refusing to seek such Grantor Consents from about February 2017.

[9]The basis originally advanced for West Ham’s claim that the Concession Agreement requires E20 to make such applications for increased Grantor Consents was that there is an express or implied term of the agreement requiring it to do so in order to give commercial efficacy to the Concession Agreement or because a reasonable and prudent operator would do so. The latter contention is alleged to flow from a term of the Concession Agreement which requires E20 to carry out its duties at law and under the agreement in accordance with the “Standards of a Reasonable and Prudent Operator” (as that expression is defined in the agreement).

[10]In addition, and following an application to amend the Particulars of Claim which I heard in August, West Ham’s pleaded case for trial now also includes an allegation that, either because of the reference to good faith in the definition of the Standards of a Reasonable and Prudent Operator, or because of the nature of the relationship envisaged by the Concession Agreement, E20 was obliged generally to act in good faith under the Concession Agreement.

[11]In this latter respect, West Ham’s pleaded case of breach against E20 includes the following (the Concession Agreement being referred to as the “CA”), 56A. E20’s consideration of WHUFC’s requests for increased capacity and its refusal to apply for the necessary Grantor Consents on the grounds of cost and safety were in breach of the express and/or implied terms of the CA and in particular were not in good faith:a. E20 has failed to conduct any, or any adequately detailed, cost/benefit and/or safety analysis of the consequences of a successful application for Grantor Consents permitting 60,000 seats to be used for Events at the Stadium. In particular, E20 has failed in good faith, and to the Standards of a Reasonable and Prudent Operator, to assess whether or not the costs of an increased capacity of 60,000 would be greater than or lesser than the benefits outlined at paragraph 42a. above or whether there are any adverse safety implications of the said increase.

b. E20’s justification for its refusal at a meeting with WHUFC on 31st January 2017 was that it harboured concerns about safety issues. In making this assertion, without conducting the analysis referred to above, E20 wrongly advanced a justification for its breach of the CA without any genuine belief in its truth, or alternatively being reckless as to its truth. This was (and is) contrary to good faith and fell below the Standards of a Reasonable and Prudent Operator.

c. E20 has further justified its refusal by reference to increased operating costs in communications and negotiations over the Interim Seating Agreement … [in 2016] … In making these assertions without conducting the analysis referred to above, E20 wrongly advanced a justification for its breach of the CA without any genuine belief in its truth, or alternatively being reckless as to its truth. This was (and is) contrary to good faith and fell below the Standards of a Reasonable and Prudent Operator.

d. Further and alternatively, in the event that an increase to a capacity of 60,000 seats for Events at the Stadium would be commercially disadvantageous to E20, E20 has failed in good faith, and in accordance with the Standards of the Reasonable and Prudent Operator, to inform WHUFC of the quantum of the costs said to be associated with an increase in capacity to 60,000 or the revenue which E20 would derive from such an increase in capacity.

e. In the premises, E20’s statements to the effect that cost and/or safety are the reasons for its refusal to seek an increase in capacity are not truthful and/or are not made in good faith and/or are not reasonable statements in the light of E20’s failure to conduct any analysis of these issues. E20’s true reason for refusing to seek an increase in the capacity of the Stadium lay in a desire to extract an increased Usage Fee from the Claimants. a. E20 has failed to conduct any, or any adequately detailed, cost/benefit and/or safety analysis of the consequences of a successful application for Grantor Consents permitting 60,000 seats to be used for Events at the Stadium. In particular, E20 has failed in good faith, and to the Standards of a Reasonable and Prudent Operator, to assess whether or not the costs of an increased capacity of 60,000 would be greater than or lesser than the benefits outlined at paragraph 42a. above or whether there are any adverse safety implications of the said increase. b. E20’s justification for its refusal at a meeting with WHUFC on 31st January 2017 was that it harboured concerns about safety issues. In making this assertion, without conducting the analysis referred to above, E20 wrongly advanced a justification for its breach of the CA without any genuine belief in its truth, or alternatively being reckless as to its truth. This was (and is) contrary to good faith and fell below the Standards of a Reasonable and Prudent Operator. c. E20 has further justified its refusal by reference to increased operating costs in communications and negotiations over the Interim Seating Agreement … [in 2016] … In making these assertions without conducting the analysis referred to above, E20 wrongly advanced a justification for its breach of the CA without any genuine belief in its truth, or alternatively being reckless as to its truth. This was (and is) contrary to good faith and fell below the Standards of a Reasonable and Prudent Operator. d. Further and alternatively, in the event that an increase to a capacity of 60,000 seats for Events at the Stadium would be commercially disadvantageous to E20, E20 has failed in good faith, and in accordance with the Standards of the Reasonable and Prudent Operator, to inform WHUFC of the quantum of the costs said to be associated with an increase in capacity to 60,000 or the revenue which E20 would derive from such an increase in capacity. e. In the premises, E20’s statements to the effect that cost and/or safety are the reasons for its refusal to seek an increase in capacity are not truthful and/or are not made in good faith and/or are not reasonable statements in the light of E20’s failure to conduct any analysis of these issues. E20’s true reason for refusing to seek an increase in the capacity of the Stadium lay in a desire to extract an increased Usage Fee from the Claimants.

[12]The allegation of the existence of a separate duty of good faith is denied by E20, as are the allegations of breach of such alleged duty. In that latter respect, E20’s pleaded case includes the following, “As to paragraph 56A:(1) It is denied that E20’s consideration of West Ham’s requests for increased capacity and its refusal to apply for the necessary Grantor Consents on the grounds of cost and safety were in breach of any terms of the CA…

(2) …

(3) E20 believed (i) that it was not required by the CA to agree to an increase in the capacity of the Stadium or to seek the Grantor Consents necessary for that purpose: (ii) that it was entitled to negotiate a commercial agreement at arm’s length should West Ham wish for the available seating in the stadium to be increased: and (iii) at the time of West Ham’s requests referred to in paragraph 54, that (a) there were safety issues affecting any increase in capacity, and (b) the costs to E20 should the capacity be increased without any further Usage Fee would be greater than the benefits.

(4) E20 analysed at a high level the estimated operational costs and revenues of increased capacity prior to and at the time of negotiations in relation to the Interim Seating Agreement in the summer and autumn of 2016, by estimating match day operational costs and revenues per person and extrapolating from them on a rough and ready basis, and making some allowances for the fact that not all costs would be variable. These analyses informed its belief that the costs of increasing capacity would be greater than the benefits, but E20 does not allege that these analyses were a rigorous cost benefit analysis.

(5) In the course of the negotiations of the Interim Seating Agreement, E20 communicated to West Ham proposed estimates of the incremental net operational costs, but not the details of their calculations; and West Ham did not require detailed calculations to be provided at that stage (although it was recognised that for purposes of the ISA more detailed reconciliation might be required in the future).

(6) E20 did not and did not in the documents referred to in sub-paragraph (c) purport to justify its refusal by reference to increased operating costs. Rather, each of these documents reflects E20’s understanding that West Ham’s entitlement under the CA was for 53,500 seats and that any further capacity in excess of that would need to be subject of a separate commercial agreement with West Ham….

(7) In January 2017 (and before) litigation between West Ham and E20 in regard to seating capacity was in contemplation. E20 undertook work and made and received privileged communications in regard to the costs and benefits of increased seating capacity and the approach to the impending dispute, over which privilege is not waived. It is admitted that E20 did not then communicate any analysis of the costs and benefits to West Ham, and West Ham did not request that such an analysis be provided.

(8) It is admitted that at a meeting with West Ham on 31 January 2017 E20 said that it had concerns about safety issues associated with an increase in capacity. Those statements reflected E20’s belief and were advanced in good faith. Its concerns about safety arose from the experience of the operation of the stadium from 2016. Concerns about safety associates with egress were specifically raised at E20’s Board meeting on 31 January 2017, and a specialist consultant Mr Allison was instructed to report on them. In a report dated 28 February 2017 Mr Allison agreed that testing of a new egress plan was required in regard to safety.

(9) Objectively, the costs to E20 of applying for Grantor Consents for 60,000 seats and making those seats available to West Ham outweighed the attendant benefits.

(10) It is admitted that, save for the proposed estimates of net operation costs debated in the Interim Seating Agreement negotiations, and in the evidence filed in these proceedings, E20 has not informed West Ham of the quantum of costs and revenues to E20 associated with an increase in capacity; but it is denied that it was or is obliged to do so, whether under the Standards of a Reasonable and Prudent Operator or otherwise.

(11) It is admitted that E20 believes that it is entitled to negotiate a commercial agreement including an increased usage fee in return for an increase in the capacity of the Stadium. Its true reason for refusing to seek an increase in the capacity of the Stadium without concluding such a commercial agreement is that it does not believe it is obliged to do so.

(12) It is denied that the Standards of a Reasonable and Prudent Operator are engaged in this context; further or alternatively it is denied that E20 fell below such standards in this (or any other) respect.

(13) Paragraph 56A is otherwise denied.” (i) that it was not required by the CA to agree to an increase in the capacity of the Stadium or to seek the Grantor Consents necessary for that purpose: (ii) that it was entitled to negotiate a commercial agreement at arm’s length should West Ham wish for the available seating in the stadium to be increased: and (iii) at the time of West Ham’s requests referred to in paragraph 54, that (a) there were safety issues affecting any increase in capacity, and (b) the costs to E20 should the capacity be increased without any further Usage Fee would be greater than the benefits.

[13]A 20 day trial of the action has been fixed to begin in a 5 day window commencing on 19 November 2018.

The process of disclosure and redaction

[14]For purposes of its disclosure searches on the issues to which I have referred, the evidence is that in addition to its own documents, E20 gathered documents from LLDC and (insofar as it was entitled to) from LS185. The identity of 12 custodians whose email boxes would be searched was agreed, as well as date ranges and a list of key words for electronic searches. In addition, E20 performed a targeted search for 9 broad categories of document as requested by West Ham prior to disclosure.

[15]Documents were harvested by E20 in September 2017. The entire population of documents harvested amounted to some 1.5 million documents. Date ranges and over 70 key words were applied, in order to generate a population of documents for manual review. This review population totalled 114,006 documents.

[16]A first stage review of the 114,006 documents was conducted by a team of associates, trainee solicitors and paralegals at Gowling WLG (E20’s solicitors). Second and third stage reviews were then conducted by a core team of trainee solicitors, associates and directors (all of whom had day-to-day handling of the matter) to identify relevant documents and identify matters which were privileged and matters which were commercially sensitive and/or irrelevant.

[17]7,501 documents were found to be relevant and were disclosed in January this year. That number has increased subsequently to in excess of 7,700 by further disclosure in accordance with E20’s ongoing obligations. Of these documents, 413 were redacted for privilege and 3,720 contained redactions which were stated to be for irrelevance and/or commercial sensitivity. That number of documents redacted for irrelevance and/or commercial sensitivity is, by any standard, a large proportion of the disclosed documents. A reason for that appears from the evidence of Ms. Emma-Lee Carr, a director at Gowling, “ …. a first, second and third stage review of the Review Population was carried out by the reviewers. I can confirm (without waiver of privilege) that I briefed the Review Team ahead of their review of the Review Population to carry out redactions where a part of a document was both irrelevant and commercially sensitive. Accordingly, no documents should have been redacted solely on the grounds of irrelevance, and no relevant document for commercial sensitivity. I instructed the Review Team to take a broad approach to the concept of "commercially sensitive" given the litigious nature of the relationship between the parties, and the fact that almost every issue under the Concession Agreement has been in dispute, is in dispute or has the potential to be in dispute in the future. Such issues have in the past included apparently anodyne issues (wholly irrelevant to these proceedings) including (but without limitation) those relating to business rates, completion dates, 'fanstallation', Hawkeye and signage.”

[18]By its application, which was not issued until 3 July 2018, West Ham initially sought further information as to the basis of redaction of some 323 documents which it identified in a schedule. E20 had described these documents in its Disclosure List as having been redacted for privilege and/or commercial sensitivity.

[19]After the application was issued, the challenged documents were reviewed by Ms. Kate Robards, a senior lawyer at Gowling with 16 years post-qualification experience and day-to-day conduct of this matter on behalf of E20. This review resulted in a responsive schedule setting out the basis of each of the redactions. Ms. Robards also concluded as a result of her review that some of the redactions on 95 documents could be removed, and revised copies of those documents were provided to West Ham.

[20]It was apparent from E20’s responsive schedule that the stated basis for the making of redactions to a number of the documents had changed from the description given in the disclosure statement. However, putting aside documents for which privilege was claimed, Ms. Robards confirmed that no redactions had been made for commercial sensitivity unless the redacted passages were also irrelevant: in other words, there had been no redaction of any relevant material.

[21]At the first substantive hearing of this application (together with other disclosure and case management matters) in August, it was agreed that further steps would be taken by the parties in an endeavour to resolve the issue over the redactions. Among the steps taken, it was agreed that 33 documents which contained redactions both for privilege and for other reasons should be re-reviewed and marked so as to identify the reasons for different redactions separately. Ms. Carr also re-reviewed those documents to see if any of the redactions could be reduced or removed, and made a number of changes to the redactions accordingly.

[22]Secondly, it was agreed that West Ham would identify a sample of 20 documents which had been redacted for irrelevance, and that the parties would endeavour to agree a process for determining whether and to what extent the redactions in those sample documents had been properly made. By letter dated 20 August 2018, West Ham’s solicitors identified a sample of 21 documents for consideration. West Ham’s letter did not suggest any process for consideration of the accuracy of the redactions, but invited Gowling to do so if it maintained that the redactions were properly made after reviewing them.

[23]E20 thereupon arranged for the 21 sample documents to be reviewed for relevance by Mr. Clark Sargent, Of Counsel at Gowling, and one of the senior solicitors with overall oversight and conduct of this matter on behalf of E20. Mr. Sargent prepared a lengthy schedule setting out his conclusions as a result of his review. That schedule explained the reasons for each of the redactions for relevance on each of the documents. Mr. Sargent also suggested the removal of parts of some of the redactions which he viewed as having been erroneously made, and the removal of parts of some other redactions in the interests of transparency and to assist West Ham to understand the contents of the un-redacted material. To this latter end, Mr. Sargent’s schedule also disclosed the headings in the various documents.

[24]The approach which Mr. Sargent (and, it is said, Ms. Robards and Ms. Carr) took to the issue of relevance was said to be in accordance with certain non-binding guidance which I gave after hearing submissions at the first hearing concerning the relevance of E20’s financial information. The context of that guidance was that both in relation to the redactions and an application for specific disclosure, there was a marked difference between the parties as to the potential relevance of such financial information to the issues in the case. That guidance was incorporated as a recital to the August order which I made in the following terms, “E20’s relevant financial information is its financial information which, 1. goes to E20’s reasons for not applying for Grantor Consents permitting an increase in the capacity for football matches to be held at the London Stadium in response to [West Ham’s] requests … or any decision by E20 not to revise or change its earlier response(s) to those requests; or 2. goes to E20’s pleaded reliance on the anticipated interim seating agreement …; or 3. goes to the reasonableness of E20’s refusal to apply for Grantor Consents permitting an increase in the capacity for football matches to be held at the London Stadium in response to [West Ham’s] requests … in the sense that it is information relevant to an assessment of the material incremental operational and capital costs and benefits to E20 of increasing the number of seats provided to West Ham under the Concession Agreement and of obtaining the necessary Grantor Consents to permit that increase in capacity.”

[25]Copies of the 33 documents annotated and reviewed by Ms. Carr, and the 21 sample documents with adjusted redactions and Mr. Sargent’s schedule were provided to West Ham by E20 on 31 August 2018.

The rival contentions in outline

[26]Notwithstanding the extended review process which had been undertaken on behalf of E20, at the adjourned hearing in September, West Ham continued to challenge the basis upon which E20’s documents had been redacted for irrelevance. For West Ham, Mr. Downes QC made clear that he did not suggest any lack of good faith on the part of the lawyers conducting the review and redaction of documents at Gowling. However, he contended that from the outset they had approached the exercise of redaction for irrelevance too heavy-handedly, and with too narrow a view of what material might potentially be relevant to the issues in dispute. Mr. Downes submitted that Mr. Sargent’s review had not cured this problem. He also contended that in certain respects, the result of the redactions had been to make unintelligible those parts of the documents that had been disclosed.

[27]Mr. Downes contended that it was for E20 to justify its redactions, and that in light of the history of the matter, the only fair way in which the issue could be resolved was for the court to review the redactions made against the original unredacted documents. Importantly, Mr. Downes accepted that if I was to follow the course he advocated, and if I were to require any further submissions to be made in relation to them by E20, he would not be entitled to see the documents whilst those arguments took place.

[28]For E20, Mr. Plewman QC submitted that the burden lay upon West Ham to demonstrate that the redactions had not been properly made, and that the inspection of the unredacted documents by the court should be a matter of last resort. He contended that the view of relevance taken by Mr. Downes on behalf of West Ham was far too wide, and that the evidence of the process which had been conducted by Gowling (and in particular by Ms. Robards and Mr. Sargent) meant that there was now no reason to suppose that the remaining redactions had not been accurately made. He therefore submitted that I should not review the documents. As a fall-back, he submitted that if I decided to review the unredacted documents (and he provided a bundle containing them for that purpose) I would find that the redactions had been properly made.

The law on redactions for irrelevance

[29]In GE Capital Corporate Finance Group Ltd v Bankers Trust

[1995] 1 WLR 172

at 174, Hoffmann LJ said, “It has long been the practice that a party is entitled to seal up or cover up parts of a document which he claims to be irrelevant. Bray's Digest of the Law of Discovery, 2nd ed. (1910), pp. 55–56 puts the matter succinctly:

“Generally speaking, any part of a document may be sealed up or otherwise concealed under the same conditions as a whole document may be withheld from production; the party's oath for this purpose is as valid in the one case as in the other. The practice is either to schedule to the affidavit of documents those parts only which are relevant, or to schedule the whole document and to seal up those parts which are sworn to be irrelevant; …”” “Generally speaking, any part of a document may be sealed up or otherwise concealed under the same conditions as a whole document may be withheld from production; the party's oath for this purpose is as valid in the one case as in the other. The practice is either to schedule to the affidavit of documents those parts only which are relevant, or to schedule the whole document and to seal up those parts which are sworn to be irrelevant; …””

[30]At page 175 of the same case, Hoffmann LJ went on to observe, “In my view, the test for whether on discovery part of a document can be withheld on grounds of irrelevance is simply whether that part is irrelevant. The test for whether part can be withheld on grounds of privilege is simply whether that part is privileged. There is no additional requirement that the part must deal with an entirely different subject matter from the rest. The Peruvian Guano test must be applied to the information contained in the covered-up part of the document, regardless of its physical or grammatical relationship to the rest. Relevant and irrelevant information may, as in this case, be contained in the same sentence. Provided that the irrelevant part can be covered without destroying the sense of the rest or making it misleading, a party is permitted to do so.”

[31]The practical difficulties that may be caused by the making of redactions are graphically described by Charles Hollander QC in his work on Documentary Evidence (13th ed.) at para 10-16, “In substantial litigation, it is common for documents to be blanked out. However the trend is often to do so unthinkingly, without analysing properly the basis or justification for so doing. When the blanking out is challenged, and the redaction revealed, this can at the least make the lawyers look foolish for having sought to blank out without justification, and worse, can make the client look as though he is trying to hide something. Where material in the document is simply irrelevant, it is unlikely that there will be any point in blanking it out unless it is confidential. Blanking out part of a document always seems to excite interest in the document and the hidden contents for the other side. But lawyers are increasingly going beyond what is permissible. Large numbers of documents are disclosed with black lines through them in a way which makes it impossible to see what the basis of the redaction is or whether it is appropriate. On examination, too often these documents turn out to have been redacted based on an unjustifiably narrow definition of relevance. Passages redacted turn out to be material after all. Or the purported redaction on the ground of privilege is made because an expert or lawyer is referred to in the document even though there is no reference to legal advice. Sloppy and unjustified redactions seem to have become increasingly popular. Steps need to be taken to stop this. It will often be sensible to ask for the lawyers to ask to see the original unredacted document on terms that the contents are not communicated to the client. There can surely be no objection to this in any case where the redaction is not based on privilege. Where the redaction is based on privilege, then it will be inappropriate to have sight of the other side’s document referring to privileged legal advice. But there is no reason why the other side should not be asked to identify with precision the basis of the redaction - not merely whether it is on grounds of privilege, but explaining whether it is referring to legal advice or some other basis. In GE Capital the Court of Appeal said that it was incumbent on the legal adviser to examine the communications in question critically to see whether there are any non-privileged parts which should be disclosed to the other side. At present, however, the right to redact is being regularly abused, and the courts should be vigilant to stop this.”

[32]In the instant case, a solution along the lines of that suggested by Charles Hollander QC of allowing a limited number of lawyers for West Ham to have sight of the disputed documents on the basis of an undertaking that they would not disclose their contents to their client was mooted by West Ham in a letter of 4 September 2018. However, in the particular circumstances of this case as outlined by Ms. Carr in paragraph 17 above, both sides eventually accepted that this course would not be appropriate, because the same counsel and solicitors are acting for West Ham in other disputes with E20 and might be instructed by it in relation to future disputes with E20 arising out of the running of the Stadium. It would not, therefore, be practically possible for those lawyers to keep the contents of the unredacted documents out of their minds and confidential when advising their clients in relation to those other disputes.

[33]The approach of the court when requested to exercise its power to inspect redacted documents under CPR 31.19(5) was considered by Ramsey J in Atos Consulting v Avis plc

[2007] EWHC 323 (TCC)

. Ramsey J first referred to another passage from the 9th edition of Charles Hollander QC’s book which stated, “There is now express provision under the CPR for the court to require production to itself in order to determine whether to order disclosure or inspection, which suggests the procedure will be used more readily. Practically where the matter arises at trial, inspection by the court dispels any suggestion that there are sinister undisclosed documents lurking under some dubious claim for privilege or irrelevance. Skilful advocacy can sometimes give rise to a suspicion that there is more beneath the surface than is actually the case. So there are times when inspection by the court resolves all difficulties. However, there are inherent difficulties in inspection by the court which the cases do not in general grapple with. First, the disclosure exercise is always carried out under the supervision of the lawyers, and relies upon the lawyers fulfilling their duties to the court. Day-to-day decisions as to whether to disclose specific documents are taken by the lawyers. No one else is in a position to make those decisions, and there is in practice no supervision by the court as to whether, for example, the lawyers have taken a wrong view of privilege or relevance. Applications for specific disclosure only provide the most limited supervision because the other party simply will not be aware in most cases of the facts relied upon to justify a particular claim for privilege or irrelevance, and the basis for such decisions will not usually be transparent. Given that basic premise, it is illogical for the court to be asked to intervene other than in a case where there is reason to believe on evidence that the lawyers have either misunderstood their duty or are not to be trusted with the decision-making. These will be exceptional cases. …. Secondly, and more importantly, inspection by the court is usually effected in circumstances in which only one party has seen the documents in question. It would be possible for the documents to be disclosed to the other side for the purpose of facilitating inspection by the court, and disclosed to the lawyers only, but this is rarely done for this purpose and will sometimes be impractical, such as where a claim for privilege is under consideration. It is extremely unsatisfactory that the court should be asked to make a decision where the information available to the parties is different.… Unless both parties consent to inspection by the court, problems may therefore arise in the parties not having equal access to the court, which gives rise to Art. 6 problems as well as under r. 1.1(2)(a) of the CPR [ensuring that the parties are on an equal footing] and thus makes the exercise less attractive to the court.”

[34]Ramsey J then referred to a decision of Neuberger J in Bank Austria AG v Price Waterhouse [1997] CLY 464 in which he said that the remedy of requiring the disclosing party to make good its claim for privilege by an appropriate affidavit was the preferred course. Neuberger J described the remedy of looking at the documents as a solution of last resort.

[35]In Atos Consulting, Ramsey J concluded, at paragraph 37, “I accept and adopt the principle that looking at the documents should be a matter of last resort. In my judgment the appropriate course to be adopted in an application under CPR r 31.19(5) where the right being relied on is privilege or irrelevance, is for the court to proceed by way of stages as follows:(1) The Court has to consider the evidence produced on the application.

(2) If the Court is satisfied that the right to withhold inspection of a document is established by the evidence and there are no sufficient grounds for challenging the correctness of that asserted right, the Court will uphold the right.

(3) If the Court is not satisfied that the right to withhold inspection is established because, for instance, the evidence does not establish a legal right to withhold inspection, then the Court will order inspection of the documents.

(4) If sufficient grounds are shown for challenging the correctness of the asserted right then the Court may order further evidence to be produced on oath or, if there is no other appropriate method of properly deciding whether the right to withhold inspection should be upheld, it may decide to inspect the documents.

(5) If it decides to inspect then having inspected the documents it may invite representations.”

My decision to inspect

[36]In my judgment, the situation in the instant case fell into Ramsey J’s fourth category. There was force in Mr. Plewman’s submission that as each iterative review by Gowling took place I could have greater confidence that the resultant redactions were accurate, and I do not in any way criticise Ms. Carr, Ms. Robards or Mr. Sargent for the steps that they took in requiring modifications to be made to the redactions as a result of their successive reviews. However, for the following reasons it seemed to me that West Ham had established that there were sufficient grounds to challenge the correctness of the redactions, and that it was just in all the circumstances to exercise my discretion to inspect the documents.

[37]First, whilst I accept Mr. Plewman’s submission that the burden lies on the applicant to make out a case for inspection under CPR 31.19(5), and as is well known, the court will ordinarily be satisfied by a statement from a solicitor with responsibility for the disclosure process that the redactions in question have been properly made, I agree with Charles Hollander QC’s commentary that the heavy redaction of a very large number of documents justifies the court in adopting greater vigilance to ensure that the right to redact is not being abused or too liberally interpreted.

[38]In that regard, secondly, I had in mind the evidence that the lawyers at Gowling were originally asked to take a broad approach to what constituted commercial sensitivity, resulting in a very large number of redactions. Although (as Ms. Carr indicated) there is a difference between the concepts of relevance and commercial sensitivity, there is an obvious risk, especially in relation to disclosure of documents relating to E20’s financial information, that a reviewer who was motivated to exclude commercially sensitive information might, entirely honestly, take an excessively narrow view of the potential relevance of such information, or of the need to disclose it to make intelligible information that was required to be disclosed.

[39]Thirdly, the possibility that errors of approach or judgment might have crept into the process was borne out by the fact that on each subsequent review by Ms. Robards and Mr. Sargent, further modifications were made to the redactions.

[40]Fourthly, I thought that it was significant that the redactions were on the grounds of irrelevance and not privilege. The general reluctance of the court to inspect documents (to which Neuberger J referred in Bank Austria and which Ramsey J adopted in Atos Consulting) must be strongest where the claim relates to privilege. In such a case, as well as the potential intrusion into the litigant’s confidential communications, the unfortunate and inconvenient result of the inspecting judge seeing documents for which privilege has been properly claimed may well be that the judge is debarred from hearing any further applications or trying the case. It was for that reason that the parties in this case agreed to the challenge to the redactions on the grounds of privilege to be hived off to another judge. Such difficulties cannot, however, be present where the only dispute is whether the redacted matters are irrelevant or not.

[41]Fifthly, for the reasons that I have indicated, there really was no viable alternative mechanism for the unredacted documents to be seen on a confidential basis by the lawyers for West Ham who are or may be engaged in other disputes between the parties.

[42]Finally, Mr. Downes readily accepted that if I was to inspect the documents and were to require submissions to be made on them, he would not be able to see the documents. Mr. Downes instead made submissions on a general basis as to the factors that I should take into account on my review, and he outlined some of the lines of cross-examination and argument that he might wish to deploy at trial so as to alert me to the potential relevance of information in the redacted documents. Moreover, Mr. Downes also accepted (as in fact occurred) that any submissions to me by Mr. Plewman could be couched in terms designed to ensure that the contents of the documents in question were not revealed to West Ham and its advisers, and hence that such submissions might be largely unintelligible to Mr. Downes and anyone else who did not have sight of the documents. That consent, realistically given, overcame the procedural and fairness objections to inspection identified by Charles Hollander QC in the extract from his book to which Ramsey J referred in Atos Consulting.

My approach to inspection

[43]Having decided to inspect the unredacted documents for the reasons that I have given, I did so with a view to determining whether or not the redacted information was, or was not, relevant. As both sides agreed, I was not concerned to determine whether such information was, or was not, commercially sensitive.

[44]In deciding what was relevant and should be disclosed, I applied the test for standard disclosure in CPR 31.6, namely whether the information in the document adversely affected E20’s case or supported West Ham’s case. I also had regard in particular to the points made by Mr. Downes that the factors which might go to a cost/benefit or safety analysis of an increase of the capacity of the Stadium on West Ham match days could be various and inter-related; and that I should be alert to matters that might bear upon the issue of whether the relevant personnel at E20 approached the question of whether to apply for increased Grantor Consents in good faith or not.

[45]However, I should record that I did not accept the full extent of Mr. Downes’s submissions as to what might support West Ham’s case. At times it appeared to me that Mr. Downes was submitting that pretty much anything showing or discussing E20’s general financial performance and status, including, in particular, its lack of profitability or failure to meet its financial targets, would be relevant to the capacity issue. This seemed to be because Mr. Downes indicated that he might wish to put aspects of E20’s allegedly poor financial performance to E20’s witnesses in cross-examination and to suggest that such matters were the real reason why they wanted (in his words) to “extract” an increased Usage Fee from West Ham. Mr. Downes also seemed to suggest that documents showing that E20 was taking an unreasonable or intransigent stance to West Ham in other disputes between the parties could support his case as regards the capacity issue, because (he submitted) they might indicate that E20 personnel harboured an irrational antipathy towards West Ham.

[46]I consider that these submissions put the test for disclosure too widely. As is apparent from the extracts from the statements of case above, West Ham’s pleaded case revolves around the absence of any, or any reasonable cost/benefit or safety analysis by E20 relating to the effect of increasing the capacity of the Stadium on West Ham match days. To cast the net for disclosure of financial information as widely as Mr. Downes suggested would require, in effect, the disclosure of almost every piece of financial information or analysis concerning the business of E20 in areas unrelated to the use of the Stadium by West Ham. Such matters could not realistically be probative of any matters in relation to the current dispute with West Ham.

[47]As regards other matters, I note that there is in fact no pleaded case that E20’s relevant officers were motivated by any hostility towards West Ham. I accept that any direct expressions of view by E20 personnel as regards the behaviour and stance adopted by West Ham in relation to the Concession Agreement might (just) be relevant to provide some context to the deliberations of the E20 decision-makers in relation to the capacity issue. However, it cannot be the case that documents providing information, analysis or views on the underlying facts or merits of other actual or potential disputes between the parties would also be relevant. Mr. Downes’s hypothesis that investigation of such unrelated matters with E20’s witnesses might reveal some latent antipathy to West Ham in relation to the capacity issue is simply too speculative and would invite unwarranted satellite litigation.

[48]I should also record that in conducting my review I applied the approach identified by Hoffmann LJ in GE Capital (above) that redactions should not be made in such a way as to make what was disclosed unintelligible.

[49]Finally, although it is not a matter referred to in any of the reported cases, I should add that I also sought to ensure that redactions should be consistently applied to similar documents. So, to take the most obvious example, the position in relation to West Ham appeared as a repeated agenda item in E20’s monthly board minutes. The minutes for months 1 and 3 disclosed an identically worded comment as regards West Ham’s general attitude. However, precisely the same comment in the board minutes for month 2 was redacted. It is impossible to see how the information in two such documents could be regarded as relevant, but its inclusion in the intervening document be deemed irrelevant and justifying redaction. Since such inconsistency might create undesirable uncertainty or suspicion, I required disclosure of the same comment in the board minutes for month 2.

The result of my inspection

[50]Applying the principles outlined above, for the most part I found that the redactions in the sample documents, as ultimately verified by Mr. Sargent, had been properly made. After hearing submissions, I did, however, require a limited number of redactions to be modified or removed in the sample documents, principally on the basis of consistency and intelligibility. Having made the results of my inspection known to the parties, I then made an order that the redactions in the remaining 323 documents which were the subject of West Ham’s application (except for the 21 that I had reviewed or documents in respect of which privilege was claimed), together with a further 103 other documents which were disclosed by E20 towards the end of the hearing, be the subject of a final review for relevance and consistency of redaction by, or under the supervision of, Mr. Sargent, in light of the results of my inspection.

[51]Finally, I should record that I made a costs order that E20 should pay to West Ham 50% of its assessed costs in respect of the application concerning the redactions. That reflects the fact that although I was satisfied that, by the end, the redactions in respect of the sample documents were largely correct, and the suspicions voiced by West Ham of Mr. Sargent’s approach were not generally made out, this was the end of a substantial process of review of the redactions originally made, as a result of which there had been a material change in the overall level of redactions. I understand the commercial reasons why E20 took the approach to redaction outlined by Ms. Carr, but given the difficulties and suspicions to which extensive redaction inevitably gives rise, parties who decide to adopt such an approach in disclosure must take enhanced care to ensure that such redactions are accurately made, and must be prepared to suffer costs consequences if they are not.