Mornington 2000 LLP (t/a Sterilab Services) & Anor v The Secretary of State for Health And Social Care

[2024] EWHC 1708 (TCC)

The dispute here arose out of a contract for the supply of COVID-19 lateral flow test kits. In order to perform the contract, the second claimant (“Santé”) had a subcontract with a German supplier (“Bio”) and Bio, in turn, had a subcontract with the manufacturer of the test kits in China (“Boson”).

The application before Jason Coppel KC concerned 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. The TCC had 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).

The judge noted that it was well-established that an arrangement or understanding which gave a party practical or de facto control of a third party’s documents was sufficient to constitute control for disclosure purposes. It was submitted that Santé was to be treated as having practical control over the documents held by Bio and Boson, which were responsive to the categories of disclosure ordered. For example, undertakings had been made where Bio and Boson had committed to providing Santé with assistance in terms which were applicable to the claim. Clause 6.14(a) of the contract between Santé and Bio stated:

“The Supplier shall, at Santé’s request, promptly provide (and procure that the Manufacturer provides) Santé with all reasonable assistance requested by Santé in connection with:

(a) any dispute between [Santé] and the [SoS] in relation to a claim that Goods supplied to the [SoS] are defective or not in accordance with the Client Contract …”

The judge decided that the balance of the evidence demonstrated that Santé enjoyed practical control over documents held by Bio and, in particular, Boson, which may contain information that was required for the determination of the claims. Applying the factors found in the case of Berkeley Square Holdings Ltd v Lancer Property Asset Management Ltd [2021] EWHC 849 (Ch):

1. Practical control did not depend upon there being control over the holder of the documents in some looser sense, such as a parent and subsidiary relationship. There was no reason, in principle, why a contractor could not enjoy practical control over certain documents held by a subcontractor or a sub-subcontractor. Here, the relationship between Santé, Bio and Boson was a close one in the sense that they participated in what was, in substance, a joint venture, in seeking to be awarded contracts for the supply of lateral flow tests. That relationship during the litigation had continued to have: “a strong flavour of being a joint enterprise”. That relationship had “gone beyond” a standard, arm’s length contractor/subcontractor/sub-sub-contractor relationship.
2. The balance of the evidence showed that there was an arrangement or understanding that Boson would search for relevant documents or make documents available to be searched. Boson had an ongoing commitment to do this in the contractual assistance clause in its contract with Bio, and Bio had an ongoing commitment to secure that Boson did so, insofar as this constituted assistance (Boson clause) or reasonable assistance (Bio clause) with the claim. The contractual assistance clauses were, however, broader in their effect and would extend to searches for documents, favourable or unfavourable, which are necessary to the fair disposal of the claims. The judge rejected the idea that assistance or reasonable assistance was confined to making available or searching for documents which were helpful to Santé’s claims.
3. The Defendant did not suggest that all documents held by Bio and Boson were within Santé’s control but only the documents responsive to the disclosure categories ordered by the court.  
4. The contractual assistance clauses were the starting point for inferring the arrangement or understanding, but there were significant other factors which gave rise to that inference. This included the evidence of past access to documents being provided by Boson. These matters taken together were “more specific and compelling” than there merely being a close commercial relationship between Santé, Bio and Boson.
5. It was not necessary for the Defendant to establish that Santé, or Bio, had free and unfettered access to Boson’s documents. Here, the judge was satisfied that there was an understanding that access would be permitted and that Boson would cooperate in providing the relevant documents or direct access to them. That documents may have been provided previously on request, rather than by Boson permitting direct third-party access to its documents, did not establish that searching of Boson’s documents would not be permitted. Any refusal to cooperate by Boson would be a matter which could be taken into account by the court in assessing the credibility of the evidence given on behalf of the claimants, in particular by Boson’s employees.

The evidence also supported there being a similar arrangement or understanding with Bio as with Boson, albeit that Bio might be expected to have many fewer documents which were relevant to the proceedings than Boson. If documents were then provided by Boson to Bio, rather than to Santé, there must be no doubt that they remain within the scope of the claimants’ disclosure obligations.

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