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 but the question arises about how to handle the large number of individual transactions from which the summaries were compiled. 

An Example - and how disclosure of documents can be dealt with 

If a 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 you owned a hotel which had 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 although such evidence may not cover the entirety of the loss because it would not cover, for example, 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 may 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 may 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.     

If the accounts are evidence supporting your contentions, then the individual financial transactions, from which the accounts were compiled, such as purchase orders, cheques/paying-in slips or other evidence of payments in and out, invoices and receipts, will also be relevant evidence 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 all the individual items at trial (and very unlikely that the court/tribunal would agree to do so). Instead what would typically happen would be that the other party would choose to accept at least most of annual accounts as accurate. They might carry out random sampling to check their accuracy, or they might, in some cases, engage a forensic accountant to go through the transactions. In such situations usually the parties will agree, in order to save costs for both sides, that the individual financial transaction documents need not be listed individually but can be included (on the disclosure list, at the Disclosure of Documents stage) as groups by year, and instead of PDF copies of every transaction being provided, it may be agreed that a supervised physical inspection of the original documents can take place at an agreed time and place. Depending what remains in dispute it might eventually be necessary for some transaction documents to be scanned in so that they can eventually be included in the Trial Bundle but for the purposes of saving costs they would not be scanned in wholesale at the Disclosure of Documents stage. 

In such situations, you would make PDF copies of the accounts or other summary documents, and disclose these in the usual way, and make placeholder PDFs containing the text “this category of documents may be inspected on request” for each category/date range of transaction documents, 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)

So that when a disclosure list is created from the PDF file names the groups of transaction documents are included on the list. 

If the other side does ask to inspect the transaction documents then if they are in paper form 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 even if the court/tribunal rules do not actually require you to do this - 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. If the transaction documents the other side wish to inspect are electronic documents - documents on computer/tablet/phone etc. - then they can be sent to the other side by email.


What to provide to me when asking me to advise

It goes without saying that if you ask me to write an Opinion I can only advise you based on the information and documents you provide me with, and pay for me to look at. But you do not want to scan in a huge number of paper transaction documents which may never be used at trial, nor, for that matter, do you want to pay the kind of fees I would charge if you asked me to read them all.   

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. Word or 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 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.

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 November 2017 Disclaimer