SUMMARY

The introduction of the Disclosure Pilot scheme in the Business and Property Courts in January 2019 was intended to address the spiralling scale and costs of disclosure and introduce a system driven instead by reasonableness and proportionality. The Pilot incorporates many of the duties and elements of best practice under the existing Rules, but also introduces a number of new concepts.

There has been some confusion over the operation of certain aspects of the Pilot as it goes through a "teething phase". A number of recent decisions help with some of these points and are therefore welcome. We look at decisions dealing with: identifying Issues for Disclosure, selection of the appropriate Disclosure Model and the approach to disclosing "known adverse documents".

The Pilot, which was originally due to be incorporated into the rules at the end of 2020, has been extended for another year to allow for more feedback. Meanwhile a slightly amended version has recently been proposed, but not yet adopted by the Rules Committee. 

ISSUES FOR DISCLOSURE

Under the Pilot, disclosure is split into two stages: Initial Disclosure (when the parties serve their Statements of Case); and Extended Disclosure (in the form of one of five Disclosure Models). Issues for Disclosure are identified by the parties as the starting point for an Extended Disclosure exercise. The rules say that these should be the "key issues in dispute, which the parties consider will need to be determined by the court with some reference to contemporaneous documents in order for there to be a fair resolution of the proceedings".

In Lonestar Communications Corporation LLC v Kaye and others [2020] EWHC 1890 (Comm), the Commercial Court gave some guidance on the court's approach to the identification of Issues for Disclosure in a case where D objected to one of C's requested Issues - on the basis that it related to an allegation that had not been pleaded.

The Court agreed with another recent decision (McParland & Partners Ltd v Whitehead [2020] EWHC 298 (Ch)), that Issues for Disclosure are issues to which undisclosed documentation in the hands of one or more of the parties is likely to be relevant and important for the fair resolution of the claim. However, it made clear that these must be issues that are crystallised and pleaded in the Statements of Case.  

The Court also warned that the list of Issues should not become "tangled in a complex distillation of issues, both great and small, thrown up by the statements of case".

key points

• Issues for Disclosure must be formulated from the key issues pleaded in the Statements of Case. The Courts will not be receptive to attempts to go beyond them in an effort to provide further articulation of a party's case.
• The parties should keep in mind the objectives of the Pilot (i.e. ensuring that disclosure is reasonable and proportionate) when putting together the list of Issues.

APPROPRIATE DISCLOSURE MODEL

Parties must identify which of the five Disclosure Models they wish to apply to each Issue for Disclosure. All the Models include an ongoing duty to disclose "known adverse documents". Model D is the closest to the pre-existing standard disclosure regime, with parties undertaking a reasonable and proportionate search for documents in relation to the each Issue for Disclosure.

In Energy Works (Hull) Ltd v MW High Tech Projects UK Ltd and another [2020] EWHC 1699 (TCC), C had made Model C requests (intended to be for disclosure of particular or narrow classes of documents), which D complained were extensive enough to essentially amount to Model D. The requests did capture specific documents (such as minutes of meetings and monthly status reports), but also sought very broad categories including emails, memoranda and correspondence.

O'Farrell J considered that Model C could work well for cases where the issues were reasonably well defined by the pleadings, however she agreed that the extent of C's requests in this case meant that Model D would be more appropriate.  She explains that the starting point for most disclosure issues should be Model D, subject to the parties identifying any particular Issues that do not require full Model D disclosure. These could include preliminary issues, where Model A (disclosure of "known adverse documents" only) could be most appropriate, or Part 20 issues where the Part 20 defendant is not an active party, where Model C should apply.

In Lonestar, the Court made it clear that it should be possible to relate requests under Model C to a particular Issue or Issues for Disclosure. This should not result in "an unduly expansive or ill-defined category of documents requiring disclosure". Those requested must be capable of precise description (individually or by class) so the disclosing party understands what must be disclosed, and disclosable documents can be recognised without too much difficulty.

The proposed amendments to the Pilot, published by Lord Justice Flaux (Chair of the Disclosure Working Group) in September 2020, include guidance on when and how best to use Model C disclosure requests.

Key Points

• It is important to select the correct Model from the outset. If Model C is agreed by the parties then the Court may refuse requests that are "disproportionately wide", "broadly formulated", or would involve disclosure of a "very substantial" number of documents.
• Model D should be the starting point for most Issues for Disclosure, subject to consideration of whether another Model would be more appropriate.

KNOWN ADVERSE DOCUMENTS

Castle Water Ltd v Thames Water Utilities Ltd [2020] EWHC 1374 (TCC) is the first decision to specifically consider the steps that must be taken in relation to adverse documents under the Pilot. This case involved potentially very large numbers of documents.

Under the Pilot, an "adverse document" is one that could materially contradict or damage a party's case, or support the case of an opposing party. An adverse document will be "known" if a party is actually aware of it without undertaking any further search. However, Stuart-Smith J's judgement in Castle Water makes clear that this does not translate to "no obligation at all to look for adverse documents of which the party was aware".

The judgment explains that a party must first undertake reasonable and proportionate checks to see if it has, or has had, known adverse documents. If this is the case, it must undertake reasonable and proportionate steps to locate them. What this will involve will depend on the facts of the case, however it is very likely that more than a "generalised question" directed only to senior members of an organisation will be required.

Key Points

• The Court identified a distinction between "checks" and "searches", although the difference between these two concepts will need to be further clarified by the rules and/or courts. This may indicate that the objective of "checks" under the Pilot is to flush out adverse documents in a reasonable and proportionate way. However given the lack of clarity in practice, it would be a good idea to carefully document the "checks" that have been undertaken.
• There is an obligation to look for adverse documents of which a party is aware following its reasonable checks. A party does not, however, need to renew its checks on a regular basis in order to satisfy its continuing obligations.

OTHER RECENT CLARIFICATIONS

Two other recent cases have also provided some useful comments on the Pilot:

• In Astra Asset Management UK Ltd and another v MUSST Investments LLB and others [2020] EWHC 1871 (Ch), Chief Master Marsh (a member of the Disclosure Working Group) acknowledged that although it might not be practical for parties to agree every minor adjustment in a disclosure process, some effort should be made to agree changes. At the least, parties should be made aware of any adjustments, including if a party intends to use Technology Assisted Review.
  
  The Master also made clear that an application to vary an order for Extended Disclosure must satisfy the Court both that the making of the order is reasonable and proportionate and that it is necessary for the just disposal of the proceedings. There must be a "good reason" for a party to invite the court to revisit an order for disclosure and requests to do so should not be commonplace.
• In The State of Qatar v Banque Havilland SA and others [2020] EWHC 1248 (Comm), Cockerill J reminded the parties that Initial Disclosure is intended to be "very tightly focused" and has in mind key documents on which reliance is placed. An example would be a note of a meeting potentially evidencing that a particular representation has been made.

The decision also made clear that Model E disclosure (wide search-based disclosure based on a "train of enquiry" consideration) is intended to be used in exceptional cases only.