Case Alert - [2017] EWHC 1748 (QB)

Presumption where documents are no longer in a party's possession

Clyde & Co's Andrew Preston and James Addison acted for the claimant in this case.

The underlying issue in this case was whether an individual who contracted mesothelioma was the employee of a company which had transferred its business to the claimant. The claimant wished to claim an indemnity from a company which had acquired the business later on (the defendant). The defendant argued that the employee was employed by the claimant's subsidiary rather than the claimant. The case therefore turns on its particular facts, but of more general interest was the application here of a principle that, where a party has disposed of documents or information relevant to a particular issue, the court should presume against that party when resolving the issue (see Malhotra v Dhawan [1978]).

Here, the defendant had passed documentation to Converteam, which had acquired the defendant's business. The defendant therefore chose not to retain control of the relevant documentation in relation to historical liabilities for which it was going to continue to bear responsibility. Accordingly, even though neither side had approached Converteam for the missing documents, the court was entitled to apply the presumption. The same presumption was also applied in earlier separate cases involving the same parties (where, for example, it was held that the defendant must have been aware of the possibility of claims by the claimant and should have retained copies of all relevant documents).

COMMENT: Parties need to preserve disclosable documents "as soon as litigation is contemplated" but this case highlights that an adverse presumption may be drawn if a party is responsible for the unavailability of documents because of its actions even before litigation was in contemplation if that presumption is consistent with other available evidence (and there was a possibility of a claim at the time).