Transactions and Summaries




Introduction

In business, and in other fields of activity, there may be documents which provide a high level financial or statistical summary (perhaps yearly or quarterly) based on a large number of individual transactions or other events or items. Examples include annual accounts which may be produced each year and provide a summary of the individual financial transactions such as purchase orders, payments, invoices and receipts.

Other examples might include a summary of the number of days particular rooms or suites in a hotel are booked (in a case involving a claim for loss of business due to poor workmanship in fitting out rooms), or a summary of the number of days production lost due to failures in manufacturing plant.

These summaries may help to prove your case. For example, if the case is about loss of business to one party allegedly caused by a legal wrong by the other party, there will usually be some direct evidence connecting the wrong with the loss. For example if a hotel has lost business because some of its rooms were unavailable for periods due to poor workmanship/delay by a builder, there may be direct evidence of telephone calls from customers trying to book rooms and being turned away because of lack of rooms. Such evidence may not cover the entirety of the loss because it does not cover customers who viewed room availability online and did not book because of lack of availability (it being impossible to distinguish such customers from people casually browsing online).

The hotel's accounts provide further evidence. If the unavailability of rooms made a significant difference to revenue and, hence, profits, the annual accounts may bear this out by showing that the year in question produced strikingly lower profits than other years. But even if the accounts are not useful for this purpose (e.g. because the loss does not affect the accounts to a degree which can be clearly distinguished from variations from year to year due to other factors) the accounts will still provide some background or statistical material which may assist with approximate calculations of loss. For example they may show, or give figures from which can be calculated, the average profit per night per room or per type of room.

The problem/issue

Where particular transactions happen to be relevant then of course PDF copies of those transaction documents need to be made but if the overall position for the year or quarter - as shown in the summary documents - is relevant (whether or not a few individual transactions also have particular relevance) then two questions arise: 

A. Do you need to provide me with copies of all the individual transaction documents when asking me to advise on the case (given that that will greatly increase me fees for advice and given the logistical difficulties for you of scanning in all the transaction documents if they are in paper form)?

B. If you need to disclose the individual transaction documents to the other side (e.g. because you might potentially want to rely on some of them them at trial, or because they come within the scope of a disclosure order order the court/tribunal has made) should you simply disclose them as a group and wait to be asked by the other side for copies of any individual transaction documents or should you supply copies of all the transaction documents without being asked?

An example

For example, the business accounts and supporting documents may consist of:

1. Annual accounts prepared by you or your accountant

2. A record of every transaction for the year entered on a spreadsheet, or accounting package.

3. Electronic documents for some individual transactions – e.g. PDF copies of invoices and credit notes, sent and received

4. Paper documents for some individual transactions – e.g. cheque stubs, invoices and credit notes sent and received, bank statements and credit card statements, etc – often in bundles by time period.

If 1 and 2 are probative of disputed issues in a case, then the individual financial transactions - 3 and 4 - from which the accounts were compiled, will also be probative because they can prove (or disprove) the accuracy of the accounts. But, in practice, it is unlikely that either side will be asking the court/tribunal to count up the individual items at trial (and unlikely that the court/tribunal would agree to do so). Instead what would typically happen would be that the other party would either choose to accept the summary documents (e.g. annual accounts) produced by a party as accurate, or else they would carry out random sampling to check their accuracy, or they might, in some cases, engage a forensic accountant to go through the transactions.


What to provide to me when asking me to advise

If you are as sure as you can be that everything in 3 and 4 is fully reflected in 1 and 2 – for example if a professional accountant has prepared 1, and you have personally kept the record in 2 and are sure it is right and that there is nothing unusual or controversial in 3 and 4, then normally you only need to provide me - when asking me to advise - with 1 and 2.

How to manage disclosure of documents

Normally when you disclose documents to the other side - at the disclosure of documents stage - you would automatically send the other side PDF copies of all the documents disclosed even if the rules or order of the particular court/tribunal only require you to send a list of documents and only provide copies on request. (The reason why you would normally do this is that if the documents are relevant - as they will be if they are being disclosed - you will want to show them to me when asking for advice and so will need to make PDF copies anyway and, given that you therefore will have PDF copies, sending them automatically is easy and helps to protect you against the consequences if you should happen to accidentally miss-describe any of them on the disclosure list.) However generally you should not do this for 3 and 4. This is because you want to see which particular individual transaction documents (if any) the other side is interested in by waiting to see what they ask for copies of - you can then try to guess why they are interested and investigate those particular transactions further and/or ask me to advise further. So, in your disclosure list, you would simply list the individual transaction documents by group like this:

2009 Cheque stubs (can be inspected by arrangement)
2010 Cheque stubs (can be inspected by arrangement)
2011 Cheque stubs (can be inspected by arrangement)

2009 Invoices sent (can be inspected by arrangement)
2010 Invoices sent (can be inspected by arrangement)
2011 Invoices sent (can be inspected by arrangement)

In the case of 4 - documents in paper form - the other side might ask, as they are normally entitled to, whether they can inspect them and, if so, a time will need to be arranged for them to come and inspect them in person in your presence. It is good practice to offer to scan in and provide PDF copies of any particular documents the other side are particularly interested in - it makes it easier for them and also means that you can investigate further to try to guess why the other side might regard that particular transaction document as significant. 

Disclaimer


This information page is designed to be used only by clients of John Antell who have entered into an agreement for the provision of legal services. The information in it is necessarily of a general nature and is intended to be used only in conjunction with specific advice to the individual client about the individual case. This information page should not be used by, or relied on, by anyone else.

This page was lasted updated in October 2017 Disclaimer