AAH Pharmaceuticals Ltd & Anor v Jhoots Healthcare Ltd & Anor

Factual and Procedural Background

This opinion concerns an application by the Defendants dated 25 August 2020 seeking to vary a disclosure order previously made in a dispute between the Claimants and Defendants. The Claimants, wholesalers of pharmaceutical products, have supplied pharmaceuticals to the Defendants since 2009. A dispute arose in May 2019, leading to claims by the Claimants for payment of approximately £1.66 million plus interest, and a counterclaim by the Defendants for about £1.3 million. The counterclaim alleges breach of an agreement relating to discounts and rebates under the "Market Watch" scheme.

The key issues include the proper contractual interpretation of rebate obligations—whether the Claimants were obliged to rebate based on a basket of products or on a price match for each individual product—and whether the Claimants' standard terms and conditions were incorporated into the parties’ course of dealing.

The case is subject to the Disclosure Pilot (PD51U). Following a Case Management Conference (CCMC) on 15 May 2020, detailed disclosure directions were made, including approval of a Single Joint Disclosure Review Document (DRD) with 27 disclosure issues and agreed custodians and keywords. The disclosure exercise involves potentially millions of documents.

Subsequent correspondence revealed significant disagreements between the parties regarding keyword searches and disclosure parameters. The Defendants applied for variation of the disclosure order to address these issues, supported by witness statements from solicitors of both parties. The court heard the application and requested supplemental submissions.

Legal Issues Presented

1. Whether the disclosure order should be varied to address disagreements over keyword searches and date ranges in the electronic disclosure exercise.
2. What is the proper approach to cooperation and agreement between parties under the Disclosure Pilot (PD51U) concerning electronic search parameters.
3. Whether a party may proceed unilaterally with keyword searches in the absence of agreement from the other party.
4. The court’s role in resolving disputes about disclosure parameters and the appropriate use of Disclosure Guidance hearings or applications to vary disclosure orders.

Arguments of the Parties

Defendants' Arguments

• The current keywords used in the disclosure exercise are too broad, resulting in an unmanageable volume of documents (approximately 1.5 million responsive hits from 3.8 million documents).
• The Defendants have requested detailed information on keyword hits from the Claimants to allow analysis and refinement, but the Claimants have adopted a unilateral approach and refused to provide this information.
• The Defendants argue that the Claimants’ approach to applying different keywords to different issues and linking keywords risks excluding relevant evidence and is illogical.
• The Defendants assert that electronic searches should not be conducted unilaterally but require cooperation and agreement, citing the Disclosure Pilot and relevant case law.

Claimants' Arguments

• The Claimants contend that they have complied with the order and have taken a model approach to disclosure, keeping the Defendants informed.
• They have refined their keyword searches to reduce the number of responsive documents from 240,000 to approximately 17,000–39,000, depending on the data source.
• The Claimants argue that disagreements over keyword searches do not alter the fundamental disclosure obligations and that they are entitled to proceed subject to their duties under the Pilot.
• They assert that the Defendants’ insistence on a single generic set of keywords for issues 7–27 is contrary to the court’s earlier directions and would result in an unworkably large number of documents.
• The Claimants maintain that further correspondence on the keyword issue is not productive and suggest that the Defendants apply to the court for specific disclosure if they believe documents are missing after extended disclosure.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Vannin Capital PCC v Rhos Shareholders Action Group Ltd and anor [2019] EWHC 1617 (Ch)	Requirement that applications to vary disclosure orders must show necessity for just disposal and reasonableness.	Accepted as guiding the need for necessity and proportionality in varying disclosure orders, though distinction was made from Tibbles v SIG.
McPartland and Partners v Whitehead [2020] EWHC 298 (Ch)	Emphasis on cooperation and liaison between parties under PD51U to ensure efficient and cost-effective disclosure.	Reinforced the court’s view that cooperation is imperative and failure to cooperate may lead to adverse costs consequences.
Agents' Mutual Limited v Gascoigne Halman Limited [2019] EWHC 3104 (Ch)	Electronic searches must be conducted with party engagement and agreement to avoid unilateral decisions that affect scope and cost of disclosure.	The court endorsed the principle that electronic search parameters require iterative, cooperative agreement before manual review proceeds.
UTB LLC v. Sheffield United Ltd [2019] EWHC 914 (Ch)	Legal representatives have continuing obligations under PD51U to liaise and cooperate to promote efficient disclosure and trial conduct.	Supported the court’s emphasis on the duty to cooperate under the Disclosure Pilot.

Court's Reasoning and Analysis

The court began by emphasizing the fundamental duty of cooperation under the Disclosure Pilot (PD51U), citing multiple provisions requiring parties and their legal representatives to liaise and cooperate to ensure efficient, cost-effective disclosure.

The court noted that the parties had reached agreement on many aspects of disclosure but remained divided on key issues such as the use of keyword searches and date ranges. The Defendants argued that the Claimants’ unilateral approach to refining keywords and proceeding without sharing detailed search data was inconsistent with the Pilot’s cooperative ethos.

The court referenced the judgment in Agents' Mutual, which underscored the necessity of agreement on electronic search parameters before manual review begins, emphasizing an iterative and collaborative process to avoid disproportionate costs and burdens.

While acknowledging the Claimants’ concern to meet disclosure deadlines, the court criticized their refusal to continue correspondence and dialogue with the Defendants on keyword refinement, which contributed to the dispute and ultimately the application before the court.

The court rejected the Defendants’ application to vary the disclosure order as proposed, finding the suggested steps unlikely to achieve the desired reduction in documents or resolution of the dispute.

Instead, the court endorsed the approach advocated by the Defendants’ counsel that the parties should be required to engage in further discussions, guided by practical proposals set out in the judgment. These include exploring subgroupings of issues, pairing keywords with relevant names or domains, sharing data on keyword hits, and conducting regular direct communications such as weekly telephone calls to foster cooperation.

The court stressed that unilateral action undermines the Pilot’s cooperative framework and that any failure to cooperate risks adverse costs consequences. The court also stated that if cooperation fails, the appropriate remedy is to seek court guidance through Disclosure Guidance hearings or applications to vary orders, rather than unilateral conduct.

Finally, the court scheduled a Disclosure Guidance Hearing to monitor progress and urged the parties to agree a revised trial timetable reflecting the realities of the disclosure process.

Holding and Implications

The court DENIED the Defendants’ application to vary the disclosure order as sought.

The court ordered the parties to engage in further collaborative discussions on disclosure, guided by the court’s recommendations, including exploring subgrouping of issues, keyword pairing, sharing information on search results, and holding regular direct communications.

The court scheduled a Disclosure Guidance Hearing for early October 2020 to review progress and directed the parties to identify trial dates and agree a revised timetable.

Costs of the application were to be costs in the case, reflecting the court’s view that the Defendants were justified in bringing the application due to the Claimants’ refusal to negotiate further, but the court did not vary the disclosure orders. No new precedent was established; the decision reinforces the importance of cooperation under the Disclosure Pilot and the court’s supervisory role in resolving disclosure disputes.