APPLICATIONS FOR PRE-ACTION DISCLOSURE MUST BE MADE PRE-ACTION (NOT A GREAT SURPRISE THIS)

In Personal Management Solutions Ltd -v- Gee 7 Group Wealth Limited [2015] EWHC 3859(Ch) Mr Justice Morgan decided that applications for pre-action disclosure must be made pre-disclosure. The court did not have jurisdiction to make such an application once proceedings were issued.

“I consider that the deputy master was right to hold that he did not have power on 2 June 2015 to make an order under CPR 31.16 for “disclosure before proceedings have started” when proceedings had already started on 5 March 2015″

KEY POINT

• Once proceedings have been issued the Court does not have jurisdiction to make an order under CPR 31.16

PRACTICE POINTS

• The obvious point is to make an application for pre-action disclosure. Pre-action.
• If proceedings are subsequently issued it may be possible to amend the application. If this is done it should be done promptly with plenty of notice given to the respondent. The different criteria in the rules should also be addressed.

THE CASE

• The claimants issued an application for pre-action disclosure in March 2015.
• Also (at some time in March 2015) the claimants issued a claim form against the defendants.
• Minutes before the application for disclosure was due to be heard the defendants discovered that the claimants had,  in fact issued (but not served) proceedings.
• The Master held that he did not have power to make an order under CPR 31.16.
• It was entirely appropriate for the Master to decline to hear an application under CPR 31.12. The application was made orally during the hearing; the relevant tests were very different; it would be surprising if such an application was allowed.
• The Master also reserved costs. There was a cross-appeal against that decision by the defendants. Permission was not granted in relation to that.  The reserving of costs was within the range of reasonable discretion.

THE APPEAL

On appeal Mr Justice Morgan upheld the decision of the Master.

1. At an early point in the hearing on 2 June 2015, the respondents, not surprisingly, took a point as to the court’s jurisdiction to make an order for per-action disclosure. The respondents submitted that now that they had been told for the first time that a claim form relating to the relevant dispute had been issued on 5 March 2015, the dispute was no longer at the pre-action stage and, so, at the hearing of 2 June 2015, the court did not have jurisdiction to make an order for pre-action disclosure. The applicants submitted to the contrary. The deputy master accepted the respondents’ submission as to his jurisdiction. He said this:

“Although I am obviously loath to abandon this application for pre-action disclosure, the fundamental point is that I consider I no longer have jurisdiction. It seems to me that one therefore has to go through the normal process of disclosure and indeed specific disclosure under CPR 31.12. There is no application before me specifically to engage that process. In the circumstances, Mr Kulkarni [counsel for the respondents] submits that I cannot use the current proceedings to deal with the application when in fact I no longer have jurisdiction unless and until presumably a fresh application for specific disclosure is commenced in the new proceedings. It is obviously a highly unsatisfactory state of affairs. I am loath to be technical about this, but I agree with Mr Kulkarni that I do not have jurisdiction. However, I may be wrong in reaching the conclusion that I have no jurisdiction in this case, so, although I am not going to proceed with the hearing of the application today because I believe that I cannot, I do not have jurisdiction, I will give permission to appeal so that this can be possibly referred to the judge. Before him the parties by that stage may have found authority enabling some form of transitional provision to apply so that the existing application can be converted into an application for specific disclosure under CPR 32.12.” (quote unchecked)

1. I consider that the deputy master was right to hold that he did not have power on 2 June 2015 to make an order under CPR 31.16 for “disclosure before proceedings have started” when proceedings had already started on 5 March 2015. My reasons are as follows. I remind myself of the general rules as to disclosure in CPR 31 in a case where proceedings have been brought. I refer to CPR 31.5 which identifies the usual time for disclosure and to CPR 31.12 which allows the court to make an order for specific disclosure.

2. These general rules only apply in the context of proceedings which have been brought. It was obviously thought desirable to provide for the possibility of disclosure before proceedings were commenced. That is plainly the reason for the enactment of the present Section 33 (2).

3. Section 33 (2) is expressly limited to orders for disclosure being made before the commencement of the relevant proceedings. The reason for that is that the powers conferred by Section 33 (2) were simply not needed in relation to applications made after the commencement of proceedings. The intention appears to have been that Section 33 and CPR 31.16 would apply at the pre-action stage and the other provisions of CPR Part 31 would apply in the course of any action brought.

4. It was not necessary for CPR 31.16 to overlap with the remainder of Part 31. To avoid inconsistency between overlapping provisions, it was positively desirable that the two schemes did not overlap. There are clear jurisdictional limits on the operation of Section 33 and Rule 31.16. I refer to the discussion in Black v Sumitomo Corp [2002] 1 WLR 1562 as to the distinction which exists between issues which go to jurisdiction and issues which go to the discretionary powers of the court.

5. I consider that the question as to whether there are relevant proceedings in existence goes to the jurisdiction of the court to make an order which can only be made pre-action; that is before the relevant proceedings are commenced. On the facts of this case, the court did not have jurisdiction on 2 June 2015 to make an order for disclosure before proceedings under section 33, given that proceedings had already been brought.

6. In the course of argument, various possibilities were considered and I will now refer to some of those matters. What if the application is made under Rule 31.16 before the proceedings are commenced, but then the applicants commence proceedings before the hearing of the application? I consider that in such a case the court would have jurisdiction under section 33 and rule 31.16 at the time the application is made but does not have jurisdiction to make an order for disclosure under section 33 and rule 31.16 at the time of the hearing. The court would retain jurisdiction to deal with the costs of the application. The court would have power under other provisions in Rule 31 to make appropriate orders for disclosure at the times which the court considers to be appropriate.

7. What if there is an application under Rule 31.16 at a time when there are proceedings on foot and the applicants undertake to discontinue those proceedings and wishes to have disclosure in relation to a second set of proceedings, assuming they do not give rise to an abuse of process? In that case the court would have power to make an order under section 33 and rule 31.16 for disclosure in relation to the issues to be raised in the second set of the proceedings before the commencement of the second set of proceedings.

8. What if proceedings are brought but the claimant contemplates the bringing of a second set of proceedings without discontinuing the first set of proceedings and not involving any abuse of process? There again, an application can be made under section 33 and Rule 31.16 in relation to the issues to be raised by the prospective second set of proceedings.

9. Although all of the foregoing seems tolerably clear from the wording of Section 33 and Rule 31.16, the appellants submitted to me that the contrary had been held in a number of previous cases which I must therefore consider. The appellants rely in particular on Arsenal Football Club Plc & others v Elite Sports Distribution Ltd [2002] EWHC 3057(Ch) and Alstom Transport v Eurostar International Ltd [2010] EWHC B32(Ch).

10. In the Arsenal case the claimants sued the defendant for various alleged infringements and acts of wrongdoing. The defendant applied to strike out the claim. The claimants also sought an order that the defendant provide them with certain specified information. In his judgment, Mr Vos QC, sitting as a judge of the High Court, commented at paragraph 2 that the order sought for the provision of information could have been sought under Rule 31.12. The judge then decided that he would not strike out the statement of claim.

11. At paragraph 35 of his judgment, he added a further reason for his conclusion and he referred in that context to Rule 31.16. It is clear from his discussion in paragraph 35 that the judge was not considering an actual application which had been made to him to order disclosure under Rule 31.16, rather the judge was considering what the position would have been if there had been an application for pre-action disclosure.

12. He considered that the court’s reaction to that hypothetical application would be a factor to be taken into account in considering how to respond to the applications which were actually before him, namely to strike out the statement of claim and to make an order for the provision of information.

13. It was in that way that the judge considered the case of Black v Sumitomo Corp dealing with how one should approach an application under Rule 31.16. The judge made it clear in paragraph 37 that these matters were to be “taken into account when considering this strike-out application”. In other words, he was not dealing with an application under Rule 31.16, he was taking that matter into account when dealing with a strike-out application.

14. The matter is made yet more clear when the judge explains his conclusion at paragraph 40 of his judgment. He indicated that he would make an order for disclosure of the material sought by the claimant and he added, “but under part 31.12 within the action”. This makes it clear the judge’s order was not an order made under 31.16 at a time when there was a pending action between the parties. The judge explained that his order was being made under Rule 31.12 in three other places, in paragraphs 47, 48 and 49 of his judgment.

15. Accordingly, the decision in Arsenal does not provide any support to the appellants’ contention that the court has power to make an order under Rule 31.16 in relation to the issues raised in proceedings which have been commenced and are pending. Arsenal is referred to in a note to Section 33 in Volume 2 of the White Book at paragraph 9A-113. What is said in the note referring to the relevant sub-section is as follows, “powers referred to in sub-section 2 may be exercised by the High Court after proceedings have been commenced” and the note refers to the Arsenal case. I do not agree with that note. It seems to me it involves a misreading of the Arsenal decision.

16. Arsenal was considered by the same judge, by then Vos J, in the Alstom case. In Alstom the claimant had sued the defendant in respect of the defendant’s conduct of a tendering process in which the claimant was not awarded the contract. The claimant sought disclosure from the defendant of various documents. The judge referred to CPR Rules 3.6, 3.12 and also 3.16. He then cited certain paragraphs from his own decision in Arsenal, but as it happened he did not cite the passages to which I have earlier referred which made it clear that the order he had made in Arsenal was an order made under Rule 31.12 and not under Rule 31.16.

17. In Alstom at 32 the judge stated that he could order discloser under Rule 31.16 and he added, “as I did in the Arsenal Football Club case”. He repeated that comment at paragraph 37. However, with respect to the judge, he misdescribed his own decision in Arsenal when he said in Alstomthat the order had been made under Rule 31.16. If he had cited further paragraphs of his decision in Arsenal, then he would have reminded himself of the correct position which was that the order had been made under Rule 31.12.

18. As it happens, the decisions in Arsenal and Alstom have subsequently been correctly understood as cases where orders for disclosure were made at an early stage of proceedings under Rule 31.12. That appears from the decision of Coulson J in Roche Diagnostics Limited v The Mid Yorkshire Hospitals NHS Trust [2013] EWHC 933 (TCC) where it was said at paragraph 16, and I quote:

“An order for specific disclosure can be made in advance of the standard disclosure of documents, if the court is persuaded that the documents sought are important and should be provided early on in the proceedings. That is often necessary in procurement disputes. In Alstom Transport v Eurostar International Limited [2010] EWHC B32(Ch), Vos J made an order for specific disclosure in a procurement case because of the potential importance of the information relating to the tender evaluation, known only to the defendant. In reaching that conclusion, he relied on his earlier decision in Arsenal Football Club v Elite Sports Distribution Limited [2002] EWHC 3057 (Ch), in which he had set out the principles governing pre-action disclosure, and explained the overlap between that process and the ordering of specific disclosure at an early stage in the proceedings.”

1. If one reads the judgment in Roche Diagnostics Limited as a whole, it is clear that Coulson J was referring to a jurisdiction to order specific disclosure under Rule 31.12. There is nothing in Roche Diagnostics Limited which supports the idea that there is a concurrent power to order specific disclosure during the course of proceedings under Rule 31.16.

2. The decision in Roche Diagnostics Limited has been followed in a number of later cases in a similar context but it is not necessary to refer to them. I was also referred to Dellal v Dellal and Others [2015] EWHC 907 (Fam) at paragraphs 29 to 30 where Mostyn J referred to the Arsenal case in a way which is consistent with my reading of that decision. Accordingly, the authorities relied upon by the appellants do not make good their submission that the deputy master had, after all, jurisdiction on 2 June 2015 to make an order for pre-action disclosure under Rule 31.16.

3. The appellants next submit that the deputy master should have treated their application as if it had been an application for disclosure under 31.12. I have already quoted paragraphs 11 and 12 of the deputy master’s judgment where he referred twice to Rule 31.12. I noted in paragraph 11 of his judgment that the deputy master said, and I quote: “There is no application before me specifically to engage that process”. In the course of today’s hearing I was informed by counsel for the appellants and by counsel for the respondents, both of whom appeared before the deputy master, of what happened in this respect at the hearing on 2 June 2015.

4. Mr Kulkarni, counsel for the respondents, told me that he drew the deputy master’s attention to Rule 31.12. He drew the deputy master’s attention to that Rule to make good his submission that the only thing that the applicants could do, now that proceedings had been started, was to apply under Rule 31.12 and not under Rule 31.16. Mr Kulkarni pointed out that the applicants had not applied under Rule 31.12 and it would not be right to treat the application made under an entirely different rule, turning on different issues, as an application made under Rule 31.12. Mr Kulkarni said that the respondents had not addressed the possibility of an application under Rule 31.12.

5. Mr St Quinton, counsel for the appellants, told me that on 2 June 2015 he replied to this submission stating that the deputy master could and should proceed with the hearing as if the application had been made under Rule 31.12. From hearing both counsel describe what happened, it did not seem to me that Mr St Quinton had pressed the application of Rule 31.12, and for reasons I will give in a moment, I think it is entirely understandable why he did not press such an application.

6. Mr Kulkarni also reminded me that on 2 June 2015 the deputy master had taken a fairly strict line in preventing his clients relying on the witness statement of Miss Cooke on the grounds that the witness statement was late. It was submitted that the deputy master was only being consistent when he took a similar fairly strict line to an unheralded application by the applicants to transform the hearing from one dealing with Rule 31.16 to one concerned with Rule 31.12.

7. I accept that the deputy master could have proceeded on 2 June 2015 to treat the application before him as an application for disclosure under Rule 31.12. For myself, I would have been very surprised if he had allowed that to happen. The tests to be applied under Rule 31.16 and Rule 31.12 are different tests. The respondents had not been given any opportunity to address an application under Rule 31.12. Prima facie the respondents would have been able to make reasonable, possibly even powerful, submissions as to why disclosure should follow the ordinary course and not be the subject of an order under Rule 31.12 before the claim form had even been served and certainly before the parties had served their pleadings identifying the issues which would properly be the subject of subsequent disclosure.

8. It is true that the deputy master dealt very succinctly with the suggestion that he might proceed under Rule 31.12. He seems to have regarded that suggestion as a non-starter. That was a view he was entitled to take. He did not make any error of principle in relation to what was essentially a case management matter.

9. I have now dealt with the substantive points raised on the appeal. It follows from what I have said that I will dismiss the appeal.

RELATED POSTS

• Pre-action disclosure: the appropriate test considered by the Court of Appeal
• Pre-action disclosure was justified and reasonable: Court of Appeal decision.