Transport for Greater Manchester v Thales Transport & Security Ltd

[2012] EWHC 3717 (TCC)

The parties entered into a contract for the supply of a new tram operating system. Disputes arose and Thales submitted claims for increased costs and extensions of time. TGM made various requests to Thales for documentation. Thales refused to provide much of the material requested. TGM noted that the information was being sought in order to enable TGM to understand the basis upon which Thales had made its claims and to carry out a review of those claims. Clauses 27 and 28 of the contract provided that:

“27.1 The Supplier shall for a period of at least 12 years … maintain accurate, up-to-date and complete records relating to its obligations under this Agreement (“Records”) (in a form suitable for inspection under clause 28) relating to the performance of its obligations under this Agreement including: (a) the acquisition and properties of all materials, parts and items of equipment included in the manufacture and/or supply of the Deliverables; (b) the design and/or the supply and installation of the Deliverables …

28.1 In addition to the information otherwise to be submitted or provided to [TGM] under any other provision in this Agreement, the Supplier shall submit to [TGM] or to any Auditor, or ensure that there is submitted to [TGM] or such Auditor, within such period as [TGM] or such Auditor may reasonably require (having due regard to the time and costs involved in providing such information but disregarding any costs of less than £100 per request), such other information, records or documents in its possession or control or in the possession or control of any auditors, agents or Sub-contractors as [TGM] or such Auditor may reasonably request (including any information requested from [TGM] by the Department for Transport) and which relates to the Records.

TGM brought Part 8 proceedings seeking some 53 types of document to which it asserted that it was entitled to access. The reasons given for the right to inspect were either “to audit information supplied under the ... Contract” or “to verify that Thales has complied with its obligations under the... Contract”. Thales agreed to provide 33 of the 53 categories. Mr Justice Akenhead noted that TGM had a very real interest in determining the responsibility for the allegedly poor (or satisfactory) performance by Thales of its obligations under the Contract, as it may be established. This led the Judge to conclude that:

(i) The documentation which was disclosable, as required by the contract, by Thales included contemporaneous documents recording what Thales had done had or not done pursuant to the Contract.
(ii) This could include documents which recorded the cost of labour, materials, plant or suppliers. This was because it related to the performance of obligations. The fact that a cost had been incurred, say in respect of a team of engineers, demonstrated that there had been an attempt to perform the obligations.
(iii)The Judge dismissed the argument that as this was a fixed price contract, these records were immaterial.
(iv) It was not only the source or original contemporaneous records which have to be disclosed but also other related information and records. Documents, such as reports or internal audits, created after the events in question which had been recorded originally, which addressed previous events or matters otherwise recorded earlier, are linked to the supply of the Deliverables or the performance (or non-performance) by Thales of its obligations under the Contract.
(v) The request for documents or information must be reasonable and, if it is not, Thales did not have to comply with the request.
(vi) The request only had to be complied with if the purpose was either to enable TGM to vet information supplied under the Contract or to enable it to verify whether Thales had complied with its obligations.
(vii) The fact that documents which were otherwise discloseable under Clauses 27 and 28 were confidential was immaterial and could not be used as an excuse to withhold disclosure, although, once disclosed, TGM was required to comply with any confidentiality clause.
(viii) Purchase orders between Thales and subcontractors /suppliers, as well as records showing payments made to these groups, were disclosable, albeit that this category was not the subject of an Order;
(ix) Project specific board meeting minutes, including from the UK Board, were also disclosable - to the extent that they were in Thales’ possession;
(x) The Judge also disagreed that internal design review minutes formed an unreasonably broad category. The quality and completeness of the design were factors which might impact upon progress.

However, certain of the requests were unreasonable. Certain categories were considered to be too broad, for example “records that demonstrate to what standards the works for the Project have been installed.” Further, requests relating to the departure of project directors were described as a “fishing expedition”. The reasons why senior personnel move on may well be confidential, a factor to be taken into account where the request is for tangential information. It was common ground that advice given by lawyers would be privileged. However, subject to issues of privilege (which was not explored further in this case) project reviews which were carried out by consultants, on a regular basis, even though at a high level, were to be provided.

Of course, this case is entirely dependent on its facts and the specific wording of the audit clauses in question. However, it does serve as a useful reminder of the potentially wide scope of such clauses.

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