The Court of Appeal decision in R v Stubbs highlights the importance of a company having an adequate document retention system in place. The failure to retain or image a system and underlying data may make it difficult for a company to provide evidence regarding the functionality of a previous computer system, should a dispute litigate.

The Court of Appeal in Stubbs were asked to consider the safety of the defendant’s conviction for conspiracy to defraud. The trial judge had allowed evidence given by an employee of the defendant’s former employers on the operation of an online banking system through which it was alleged the defendant had committed unauthorised activity.

At trial, the defendant had objected to the admissibility of the bank employee’s evidence as he lacked expertise on the technical aspects of the functioning of computers to appear as an expert witness and was not independent.

An acknowledged computer expert had given evidence at trial. However, he had said that he was unable to report fully due to the lack of information regarding the old system. No hardware existed which could run the superceded version of the system in question to allow the independent expert to comment. Further, no information was supplied in relation to how the system operated previously, nor was the defendant’s workstation imaged. The court expert did not, therefore, have sufficient data upon which he could safely base any conclusion.

In assessing whether to admit the evidence of the bank employee, the trial judge had applied the test in R v Bonython. The test required the judge to decide: (1) whether the subject matter of the opinion [the bank’s computer system] fell within the class of subjects upon which expert testimony is permissible; and (2) whether the witness had acquired, by study or experience, sufficient knowledge of the subject to render his opinion of value in resolving the issues before the court. The trial judge gave affirmative answers to both questions, holding that the employee had acquired sufficient knowledge of the operation of the bank’s system to render his opinion of value in resolving the issues before the court.

His lack of independence as an employee of the company defrauded, went only to the weight of his evidence, not to its admissibility.

On the facts of this case, the Court of Appeal agreed with the trial judge that the bank employee did have sufficient expertise to assist the court, albeit on only limited issues. In different circumstances, however, failure by a company to retain or image an old system and/or retain old data, could be damaging, if the company wished to make assertions regarding the operation of a previous system in litigation and was not able to adduce reliable evidence from employees.

Document retention policy

To minimise the evidential problems that arise in disputes relating to an old system or old data, it is good practice for businesses to adopt an adequate document retention policy. Insurers may also want to raise enquiries on the proposal form and, where necessary, impose conditions on the adoption of document retention policies for prospective policyholders, particularly where an insured processes a large amount of electronic data. A document retention policy may also be a requirement imposed by regulators or standards of professional conduct.

A comprehensive document retention policy will also assist a company in complying with their litigation disclosure obligations. The issue of electronic documents for use in litigation is now the subject of Part 31 of the CPR.

Under the Practice Direction to Part 31, the definition of ‘document’ now expressly includes electronic documents, which include documents stored on servers and back-up systems and metadata (embedded information stored on the system related to accessible information).

In line with new disclosure requirements, companies will need to be in a position to provide to their lawyers details of their IT systems and document retention policies at an early stage in any litigation. This will assist in complying with the detailed requirements of the new disclosure rules. As any dispute may have a long gestation period, routine data culling procedures should be suspended while appropriate searches can be made and an assessment of the required evidence and disclosable documents carried out.

In a situation where a dispute relates to alleged software or hardware faults over a number of years, the relevant system for the purpose of the dispute, may over that time have been upgraded. Unless a party has imaged an old system or retained old data, efforts by a party to preserve evidence for litigation may be too late. Companies should therefore assess whether their document retention system is adequate, to minimise their exposure should they become involved in subsequent litigation.