Court rejects request for “train of enquiry” disclosure and orders new list of issues

United KingdomScotland

In what is believed to be the first reported decision on a request for “Model E” disclosure under the ongoing Disclosure Pilot Scheme (the “Pilot”) in the Business and Property Courts of England and Wales, the Chancery Division has refused the request and ordered the parties to repeat the exercise of seeking to agree a list of issues for disclosure, with a view to producing a more focused list and giving further consideration to whether a less restrictive Model could be used instead. The court reached this decision despite the parties having agreed the Model to be used for over 90% of the issues for disclosure. The judgment emphasizes that the pilot aims to narrow the scope of disclosure, which must be reasonable and proportionate to the sums in dispute, even where very serious allegations of impropriety are raised.

Background

In Kings Security Systems Ltd v King [2019] EWHC 3620 (Ch), the claimant was a family-run security and surveillance company. The first defendant, Mr King, was the company’s former MD and CEO. The company claimed that Mr King accepted bribes from a fleet hire firm. Mr King counterclaimed for abuse of process on the basis that the proceedings had been brought for the improper purpose of obtaining his shares at an undervalue. These proceedings were part of a wider context of disputes between the parties, some of which had given rise to separate litigation.

List of issues for disclosure

The Pilot introduced a new requirement for the parties to agree a list of issues for disclosure, by reference to which the court must then consider which disclosure model is appropriate for each issue. In this case, the parties’ list ran to 54 issues. Master Kaye criticised the list as being “broad, amorphous and certainly not focused in the way required” and highlighted that creating a list of issues for disclosure was not intended to identify every single issue on which the parties disagreed. Rather, it should include “only those key issues in dispute which… will need to be determined by the court with reference to the contemporaneous documents in order for there to be a fair resolution”. He gave denials and non-admissions as examples of areas of disagreement that might not need to be included on the list.

Request for Model E disclosure

Both parties were agreed that Model D should be used for most of the issues. This model is broadly equivalent to standard disclosure in cases outside the Pilot. However, at the Costs and Case Management Conference (CCMC), there were six issues for which Mr King requested the broader Model E, which includes documents that may lead to a train of enquiry giving rise to additional documents for disclosure. This resembles the so-called “Peruvian Guano disclosure” in cases outside the Pilot, although the train of enquiry under that line of cases must give rise to additional issues rather than additional documents.

Master Kaye noted that under the Pilot, any request for Models D or E had to be specifically justified to the court. He observed that, since the case involved serious allegations of bribery and abuse of process, Model D might be appropriate for certain key issues. However, Model E was only to be used in “exceptional cases” and only when it was reasonable and proportionate to do so. Master Kaye stressed that the purpose of the Pilot was to achieve “a cultural shift in approach to disclosure… intended to focus and narrow disclosure”. He also emphasised that, under the scheme, adverse documents of which a party was aware would have to be disclosed in any event, regardless of which Model was ordered.

His preliminary view, therefore, was that Model E was not appropriate in the current matter. He suggested that, while Model D would be appropriate for most of the issues, in relation to some, Model C (a request-based model similar to that used in arbitration) or even Model B (disclosure only of documents a party intends to rely on) would be sufficient. In reaching this conclusion, he took into account a number of factors, including:

  1. the fact that the claimant had already incurred costs of £579,000 and the defendant of £226,000 in relation to a claim for only £120,000;
  2. the extensive list of issues for disclosure;
  3. the breadth of the issues for which Model E was proposed;
  4. the lack of proper detail as to the likely cost of Model E disclosure;
  5. a concern, based on the procedural history, that the parties would not conduct disclosure in a reasonable and proportionate matter; and
  6. the fact that the burden of disclosure was likely to fall primarily on the claimant.

In the event, in the light of the difficulties he identified with the list of issues for disclosure, Master Kaye declined to make any order for disclosure at all at the CCMC. Instead, he required the parties to seek to agree a revised list of issues for disclosure and provide their assessment of the likely costs of the revised proposal. He would then make a decision on disclosure at a disclosure guidance hearing, which he ordered to be listed for two hours (despite the practice direction indicating a limit of 30 minutes for such a hearing.)

Comment

This case provides an interesting illustration of the courts’ willingness to adopt a more pro-active approach to managing disclosure under the Pilot, including requiring parties to repeat the exercise of agreeing the list of issues for disclosure. The direction that a disclosure guidance hearing should be listed for two hours is also an indication that the courts are willing to be more flexible in implementing the Pilot than a strict construction of the Pilot practice direction might suggest.

Although no actual order for disclosure was made, it is noteworthy that the Master was willing to contemplate disclosure under Model C or Model B even in a case involving what were effectively allegations of dishonesty and bad faith, rather than defaulting to a “train of enquiry” model.

Given that the Master ultimately decided to defer the decision on disclosure to a later hearing, he was not required to address any issues arising out of the difference in wording between Model E’s “further documents for disclosure” and Peruvian Guano’s “further issues for disclosure”. This therefore remains an area of uncertainty that will have to be considered in a future case.

Takeaways for litigants in the meantime include:

  • Lists of issues for disclosure should be narrowly focused, omitting any that will be decided primarily by witness evidence rather than documents or that are unlikely to be key to the court’s final decision. The courts will not necessarily tolerate lengthy lists, even if that means requiring parties to do further work, with the additional costs that entails, before making an order.
  • Parties should not assume that the courts will rubber-stamp a request for Models D or E, but should be prepared to justify why a narrower Model will not be adequate.
  • It will be difficult to justify model E, in particular, unless it can be shown that the proposed costs will be proportionate to the sum in dispute. Parties may therefore find it useful to take advantage of early case analysis software to assist in pricing different disclosure options.