Disclosure And Practical Control In Contract Disputes: A Key Court Application

(1) Mornington 2000 LLP (t/a Sterilab Services), (2) Santé Global LLP -v- The Secretary of State for Health and Social Care

Background of the case

The Defendant applied in two related claims arising from a contract dated 6^th September 2021, for supplying Covid-19 lateral flow test kits between the Claimants and the Defendant. To fulfil this contract, the Second Claimant ("Santé") subcontracted with a German supplier, MP Biomedicals Germany GmbH ("Bio"), which further subcontracted with the Chinese manufacturer Xiamen Bosten Biotech Co Ltd ("Boson"). The Defendant terminated the contract due to alleged violations of labour laws, health, safety, and worker payment obligations in Boson's factory, based on an audit by QIMA. The Claimants denied any breach, seeking damages exceeding £100 million for wrongful termination and alleging procurement violations by the Defendant.

Disclosure Obligations and Control of Documents

The application considered if documents held by Bio and Boson were within Sante's control for purposes of its extended disclosure obligations under PD57AD.

Extended disclosure had been ordered based on Model D (narrow, search-based disclosure), with some categories under Model C (disclosure of particular documents). The Defendant requested relevant materials from Boson to justify its contract termination.

The court reviewed the issue of control over documents held by third parties, applying the principles from Berkeley Square Holdings Ltd v Lancer Property Asset Management Ltd [2021] and Public Institution for Social Security – AI Wazzan [2024]. Control is defined broadly, as possession, the right to possession, or the right to inspect or copy documents.

Key Legal Principles and Application

The principles for determining control over third-party documents are:

1. The relationship between the parties.
2. There must be an arrangement or understanding for the third party to search for and provide documents.
3. The arrangement can be general or specific to certain categories of documents.
4. The existence of the arrangement can be inferred from past conduct.
5. It is not necessary that there should be an understanding as to how the documents will be accessed.
6. It should be more than a specific request; a general understanding is necessary

In this case, the court found practical control based on the following factors

1. Contractual assistance clauses: Boson has previously provided crucial documents to Santé and Bio, and Bio and Bonson, included clauses providing an obligation on Bio and Boson to assist in disputed related to the contract. While these clauses did not specifically mention documents, they implied broad assistance, including providing necessary documents.
2. Past provision of documents: Boson had previously provided crucial documents to Santé, suggesting a pattern of compliance and cooperation.
3. Boson's commitment to assistance: Boson continued to assist Santé by providing documents and making employees available for testimony, suggesting an ongoing cooperative relationship.
4. Direct contact and influence: Despite the fact that there was no formal contract between Santé and Boson, the evidence showed that Santé had direct dealings and influence over Boson, including commissioning audits and monitoring production compliance.
5. Equitable disclosure: The court considered that it would be unjust for the Claimants to present beneficial documents from Boson while withholding potentially adverse ones, a concept which is in breach of CPR 31.6

Decision

The court decided that Santé has practical control over documents held by Bio and Boson necessary for fair litigation. This control stems from their contractual relationships, past compliance, and the cooperative nature of their interactions, extending to the relevant document categories ordered for disclosure. The court granted the Defendant's application, reinforcing the broad interpretation of control in disclosure obligations, ensuring fairness and transparency in the litigation processes.

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