Alfa Finance Holding AD v Quarzwerke GmbH

A contractual right to inspect and copy documents may be specifically enforced where damages are inadequate and the obligation can be expressed in an effective order. The fact that the contract uses the phrase reasonable access does not require the claimant to justify its reasons for seeking access. Reasonableness concerns the method and timing of access, including practical arrangements for collation, copying and redaction. The court may give specific content to an obligation capable of performance in several ways, and may include a liberty to apply so that implementation difficulties can be addressed. An injunction must be sufficiently certain, but the order may spell out the performance required in the circumstances.

The claimant had sold shares and related businesses to the defendant under an agreement requiring the defendant to retain pre-completion books, records and documents for ten years and to procure reasonable access for the claimant and its professional advisers. After the defendant failed to comply with a request for access, the claimant sought specific performance.

The defendant argued that the contractual obligation was unsuitable for specific performance because the proposed order was insufficiently precise, the requested access was not reasonable, and the claimant had not explained its reasons for seeking the documents. The dispute arose against the background of pending arbitration and stayed warranty proceedings. The central issues were whether the obligation could be enforced specifically and how reasonable access should be construed.

1. Relief granted. The court declared that clause 12.1.3 ought to be specifically performed and made peremptory orders for the immediate inspection sought. The proposed inspection dates and the requirement that access be provided in Bulgaria were reasonable. The claimant was to bear specified reasonable and necessary costs of compliance. The order included liberty to apply.
2. Certainty of the order. A specific performance order operates as a mandatory injunction and must not leave the defendant uncertain about what must be done. The principle recognised in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 did not prevent relief. The contractual obligation was capable of performance in several ways, and the court could specify the required performance in the particular circumstances.
3. Meaning of reasonable access. The reference to reasonable access concerned the method and timing of access. It did not require the claimant to explain or justify why it wished to exercise its contractual right. Requiring such an explanation would be uncommercial and would create potentially endless disputes. The claimant was entitled to inspect the documents within the relevant period, including for the purpose of identifying material potentially relevant to the arbitration.
4. Practical difficulties. The defendant’s best endeavours obligation covered difficulties concerning collation, copying, foreign locations and potential data protection concerns. Appropriate redaction could address genuine concerns. The court declined at that stage to order ten-year retention because there was no evidence of an intention to cease retaining the documents.
5. Remedy and procedure. Damages were plainly inadequate because the loss was difficult to quantify and the obligation concerned the provision of information. The application was suitable for summary judgment. Following judgment, any application for permission to appeal had to be made to the Court of Appeal under CPR 52.3 and PD52A 4.1; the judge declined to determine a stay application.

The judgment was a first-instance decision. After judgment, the defendant sought permission to appeal and a stay. The judge stated that any application for permission had to be made to the Court of Appeal under CPR 52.3 and PD52A 4.1, and declined to determine the stay application.