SHERIFFDOM OF GRAMPIAN, HIGHLAND AND ISLANDS at INVERNESS

NOTE (No. 2)

by

SHERIFF DEREK C W PYLE

in causa

AARON HAMISH THOMSON, No1 Croft, Upper Lennie, Drumnadrochit, Inverness IV3 6XF

Pursuer

against

BANK OF SCOTLAND, The Mound, Edinburgh EH1 1YZ

Defenders

This is an incidental application by the pursuer for commission and diligence for the recovery of documents set out in a specification of documents which was in the following terms:

"1. All computer records, files, documents and financial accounts relating to the contract between the parties in order that excerpts may be taken therefrom at the sight of the commissioner showing or tending to show:

• the contractual terms under which the charges in the pursuer's schedule were payable.
• Showing when and on what basis the defender calculated or estimated the amount to be included in its contractual terms in respect of those charges.
• Showing what actions were taken by the defender in relation to each such charge.
• Showing what actual costs were incurred by the defender in carrying out those actions, and how they were calculated.
• How the charge is alleged to be a genuine pre-estimate of the defender's loss incurred by the pursuer's actions.
• If such charge is not alleged to be such a pre-estimate of the defender's loss incurred by the pursuer's actions, then the basis upon which the charge was calculated, and how that the (sic) charge was fair.

2. Failing principals, drafts, copies or duplicates of the above or any of them."

At the outset, Mr McCheyne, the solicitor for the pursuer, said that he was no longer insisting on calls (e) and (f).

As regards call (a), counsel for the defenders referred to the defenders' inventory of productions which was intended to answer that call. Mr McCheyne said that the pursuer's principal agents had previously received different terms of conditions directly from the defenders. Counsel agreed to discuss that with her instructing agents. There was therefore no reason not to grant the application quoad that call.

Attention therefore focused upon calls (b), (c) and (d). I refused the application in respect of these calls. I was advised that the pursuer's principal agents had placed on their web site a style specification of documents in exactly the same terms as the instant one for the use by other parties who were seeking recovery of bank charges. I therefore said that I would set out in writing my reasons for the part refusal of the application.

Counsel for the defenders attacked these calls on two grounds: first, that they were so lacking in relevancy and specification as to be regarded as a fishing diligence and, secondly, that the burden which would be placed on the defenders to trace the documents called for would be completely disproportionate to the value of the claim.

Counsel advised me that in connection with the investigation by the Office of Fair Trading and the action in the High Court in England the defenders had embarked upon an information gathering process. Whenever the OFT has requested information the defenders have provided it. The commercial judge in the High Court case has already ruled that disclosure by all the banks involved should be relatively small before the preliminary issues are considered and even at the stage after that the judge has said that the disclosure will be restricted to ensure that it is targeted and does not overburden the banks or the court. It appears from that approach that it is very unlikely that at any point will any of the banks be required to make the kind of disclosure which is envisaged in the calls in this specification of documents.

Counsel went on to describe in detail what the defenders envisage would be involved if they were required to answer the disputed calls. I find it unnecessary to repeat what the steps would be. Suffice to say that it could take up to ten weeks and would involve the spending of very considerable resources throughout every level of the defenders' organisation. Indeed, I gained the impression that because of the sheer amount of records which would require to be studied it might well be that the defenders would never know with certainty that every document which would theoretically be covered by the calls had been produced.

Turning to each call in turn, counsel submitted that call (b) was so wide that it was impossible to know what exactly the pursuer was seeking. If, for example, it was intended to discover what decisions were made at management level, then it would be necessary to trawl though a vast amount of records of management discussions and decisions, from board level down.

In similar vein, counsel criticised call (c), in that it was unclear what was meant by "actions". If it was intended to cover the production of the pursuer's bank statements, it would cause no difficulty. I also suggested that it might be intended to cover correspondence from the defenders to the pursuer. Counsel agreed that this would also cause no difficulty, but that anything beyond that would be impossible to identify without further specification.

Again, counsel criticised call (d) as being so inspecific as to be irrelevant. It might well encompass all the cost information stored within the defenders' system. That would include such matters as branch costs, ATM costs, call centre costs, staff and HR costs and so on. It would be a huge amount of information.

And, as counsel pointed out, call 2 would simply increase the number of documents which would have to be sisted and reviewed - for issues such as confidentiality and privilege - before they could safely be released.

In the course of her submissions, counsel cited Paterson v Paterson 1919 1 SLT 12; Earl of Morton v Fleming 1921 1 SLT 205; Burgh of Ayr v British Transport Commission 1956 SLT (Sh Ct) 3; Colquhoun Petr 1990 SLT 43; and Civil Service Building Society v MacDougall 1988 SC 58.

Mr McCheyne for the pursuer submitted that the calls were so wide only because the pursuer could not possibly know how and when the defenders made decisions relevant to the question of the pre-estimate of damage, nor indeed how such decisions were stored. He could not conceive of any other way to express what documents the pursuer was entitled to see. He referred to a press release from the Competition Commission from October 2006 and an excerpt from a report by the House of Commons Treasury Committee from January 2005. I find it unnecessary to discuss these here.

During the course of the debate I was not referred to the general law on penalties and in particular Lord Dunedin's famous dicta in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79 (at p86). Nevertheless, it seems to me that if one looks at those dicta they provide the necessary clues for the pursuer to frame calls which would have had a proper basis in the averments in the statement of claim. All that the pursuer is seeking is evidence that either the defenders, when fixing their charges which the pursuer now seeks to recover, did not calculate them as a genuine pre-estimate of loss (bearing in mind that the question of construction of the contract must be decided upon the terms and inherent circumstances at the time the contract was made, not at the time of the breach) or, if they did so calculate, what that calculation was. Of course, if it be the former, it is not necessarily fatal to the defenders' case bearing in mind Lord Dunedin's fourth possible test that a sum may still be a genuine pre-estimate of damage where the consequences of the breach are such as to make precise pre-estimation almost an impossibility.

But even if the pursuer framed his calls in the above way they might still fall foul of the rule about fishing diligence if they would involve too wide a search among all the documents of the defenders. That is, in my opinion, clear from the opinion of the Second Division in Civil Service Building Society v MacDougall (at p62):

"A fishing diligence is one for which there is no basis in the averments or [my emphasis] one which involves too wide a search among all the papers of the haver."

It seems to me that the second of those alternatives would cover a circumstance such as the instant case where it can readily be envisaged that even more precise calls would result in a wholly disproportionate amount of work for the defenders bearing in mind the value of the claim and that it is under the small claim procedure.

In any event, I wondered allowed to parties where the burden of proof lay in determining whether any of the charges was a penalty. It seemed to me that it would be upon the pursuer. The burden, however, might be discharged merely by showing, for example, that the pursuer went into overdraft on his current account by only a few pence and yet incurred a charge of £20 or more. It would then be for the defenders to adduce evidence that the charge was a genuine pre-estimate of damage or that a precise determination was impossible. Doubtless, that is an argument for another day. For present purposes, I am quite satisfied that the disputed calls were an attempt at fishing diligence.