APPLICATION FOR PRE-ACTION DISCLOSURE: COURT’S DISCRETION EXERCISED AGAINST THE APPLICANT

In Hussain v Medical Defence Union & Anor [2020] EWHC 157 (QB) Clive Sheldon QC (sitting as a High Court judge) refused an application for pre-action disclosure.  This judgment makes it clear that pre-action disclosure is, ultimately, a matter of discretion.   It is also important to note that the fact that the applicant could make a subject access request under the GDPR played a significant part in the way the judge decided to exercise their discretion.

“Weighing up these various factors, and standing back and looking at the matter in the round, I consider that the circumstances of the present case are not sufficiently unusual to justify departure from the normal rule that disclosure should be provided at the normal time.”

THE CASE

The applicant is a surgeon who had arranged insurance from the medical defence union “MDU”.  The MDU refused to provide indemnity in relation to a claim being brought against the applicant.   The grounds for refusal were that the applicant had not properly disclosed his income when making his MDU subscription application. The applicant applied for pre-action disclosure of documents from the MDU on the grounds that he was likely to bring an action against it.

THE DOCUMENTS SOUGHT

The judgment sets out the documents sought.
    1. In the letter before action, Mr. Hussain’s solicitors made a request for documents:
“(a) Notes/documents/correspondence clarifying what prompted the MDU Underwriting Department’s accounting queries in late 2017;
(b) Board minutes/notes/documents (in accordance with Section 76 of the Articles) relating to declinature decision of late 2017, including:

(i) Details of quorum and majority formed in accordance with Sections 65 & 66 of the Articles; and

(ii) Details of the recommendation(s) of the Standing Committee given to the Board.

(c) Notes/documents/correspondence relating to the under-declaration, including:

(i) the years in which the income was believed to be under-declared;

(ii) the amount of the under-declaration in each year believed to be under-declared; and

(iii) the shortfall in membership subscription for each year believed to be under-declared.

(d) Transcript and/or audio file(s) of July 2017 phone call with Mr Hussain …
(e) Details of all indemnity assistance decisions in the last decade following a member’s under-declaration of income, clarifying the circumstances in:

(i) Those that resulted in assistance for the Member being denied entirely;

(ii) Those that resulted in conditions being placed on assistance for the Member; and

(iii) Those that resulted in no conditions being placed, and indemnity assistance continuing as normal;

(f) Copies of the Guide(s) and Articles in force in 2012-2014;
(g) Details as requested at paragraph 4.31 above [presumably a reference to paragraph 4.30 which asked for details of (i) how the declinature decision was reached; and (ii) how the same was a fair process and satisfied the common law requirements for contractual discretion and relational contracts].”
  1. Mr. Hussain’s solicitors also noted that ‘Should the above documents not be provided, we will submit a formal Subject Access Request under the GDPR [General Data Protection Regulation] which imposes strict guidelines. We trust this will not be necessary and look forward to receiving the requested documents.’
  2. A detailed response was provided by solicitors acting for the Respondents on July 16th 2019. This addressed the various potential grounds of claim that had been referred to in the letter before action. With respect to the request for documents, this was rejected. It was stated that “Your request is not a request to review material which is necessary for you to understand our client’s position.”

THE JUDGE’S DECISION:  A REVIEW OF THE PRINCIPLES

The judge first reviewed the rules and principles relating to pre-action disclosure.

    1. CPR Rule 31.16 provides that:
“(3) The court may make an order under this rule only where–
(a) the respondent is likely to be a party to subsequent proceedings;
(b) the applicant is also likely to be a party to those proceedings;
(c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and
(d) disclosure before proceedings have started is desirable in order to –
(i) dispose fairly of the anticipated proceedings;
(ii) assist the dispute to be resolved without proceedings; or
(iii) save costs.
(4) An order under this rule must –
(a) specify the documents or the classes of documents which the respondent must disclose; and
(b) require him, when making disclosure, to specify any of those documents –
(i) which are no longer in his control; or
(ii) in respect of which he claims a right or duty to withhold inspection.”
    1. I am satisfied that the conditions set out at CPR Rule 31.16 (3)(a) to (c) for making an order for pre-action disclosure are satisfied as against both Respondents. I consider that
a) both Respondents are likely to be a party to subsequent proceedings. I consider that there is a serious prospect that there will be proceedings against the Respondents given what has already been said by Mr. Hussain’s legal representatives in the past and at the hearing before me, and given that legal proceedings will (unless a compromise is reached) be Mr. Hussain’s only prospect of restoring the assistance of the Respondents in the proceedings brought by WM or to compensate him if he is required to make payments to WM. If proceedings are to be issued, in addition to MDU, I consider that MDU Services Limited “may well” (in the words of Rix LJ in Black v. Sumitomo Corp [2002] 1 WLR 1562 at [72]) be a party, as I consider that Mr. Hussain will want to ensure that all potentially liable parties are involved in the proceedings;
b) Mr. Hussain will obviously be a party to those proceedings; and
c) the documents that are sought fall within the documents, or classes of documents, which would be covered by standard disclosure.
    1. As for whether 31.16(3)(d) is satisfied, I consider that it is. I consider that, at the very least, there is (in the language of Rix LJ in Black at [81]) a “real prospect” that disclosure of all the documents sought by Mr. Hussain will enable his legal representatives to focus on the essential points, narrowing or refining the grounds of claim that will be put forward. This will, in my judgment, inevitably save some costs in the proceedings, as irrelevant or extraneous matters will not need to be litigated. There is also a possibility that the Respondents will reconsider their decision in light of the materials that they discover as a result of their searches for disclosure, or conversely that Mr. Hussain will form the view that a claim against the Respondents will be pointless and not worth expending his resources on.
    2. The key issue for me, therefore, is whether I should exercise my discretion to grant pre-action disclosure. In this regard, I am reminded that “by and large the concept of disclosure being ordered at other than the normal time is presented as something differing from the normal, at any rate where the parties at the pre-action stage have been acting reasonably“: per Rix LJ in Black at [85]. In other words, the circumstances have to be something outside of “the usual run” even once the jurisdictional threshold is met, given that the jurisdictional threshold is likely to be met in many cases: see Matthews and Malek, Disclosure (5th ed, 2017) at 3.40.
    3. The discretion to order pre-action disclosure is not confined and will depend on the facts of the case. There are a number of important considerations for the Court to take into account:
the nature of the injury or loss complained of; the clarity and identification of the issues raised by the complaint; the nature of the documents requested; the relevance of any protocol or pre-action inquiries; and the opportunity which the complainant has to make his case without pre-action disclosure.
(see Rix LJ in Black at [88]).
    1. In Black, Rix LJ also pointed out at [95] that:
“the more focused the complaint and the more limited the disclosure sought in that connection, the easier it is for the court to exercise its discretion in favour of pre-action disclosure, even where the complaint might seem somewhat speculative or the request might be argued to constitute a mere fishing exercise. In appropriate circumstances, where the jurisdictional thresholds have been crossed, the court might be entitled to take the view that transparency was what the interests of justice and proportionality most required. The more diffuse the allegations, however, and the wider the disclosure sought, the more sceptical the court is entitled to be about the merit of the exercise.”

THE EXERCISE OF THE DISCRETION IN THE CURRENT CASE: DISCRETION EXERCISED AGAINST THE APPLICANT

The judge exercised his discretion against the applicant

  1. In my judgment, there are a number of factors that support an exercise of discretion in Mr. Hussain’s favour.
  2. First, the nature of the injury or loss complained of by Mr. Hussain is straightforward: it is the loss that results from the withdrawal of assistance in defending the claim brought by WM.
  3. Second, even though the letter before action sets out the basis of Mr. Hussain’s claim in a variety of different ways, the nub of the complaint is that the exercise of discretion to withdraw assistance is so unfair that something must have gone wrong in the process and/or some extraneous factor must have been taken into account: see Braganza v. BP Shipping Ltd. [2015] UKSC 17.
  4. Third, the documents that are sought are narrowly confined, and ought to be obtainable relatively easily by the Respondents.
  5. Fourth, the decision to withdraw assistance has plainly caused Mr. Hussain serious difficulties, as he is having to defend a clinical negligence claim without the support of an insurer or other indemnifier.
  6. Fifth, if disclosure leads to the Respondents changing their position and agreeing to support Mr. Hussain, this will remove the risk that the third party, WM, will go uncompensated if he is successful with his clinical negligence claim.
  7. On the other hand, I consider that there are a number of factors which militate against making the order.
  8. First, I consider that the Respondents have acted reasonably in the pre-action stage, and have provided Mr. Hussain with sufficient information and disclosure for him to plead his case. They have provided him with what are, at least ostensibly, the key documents in the case: the Case Summary followed by the Chairman’s email. These documents suggest, on their face, that the reason for the withdrawal of assistance was related to Mr. Hussain’s under-declaration of his income for the relevant period (and thereafter) by some considerable amount, and his failure to correct his under-declaration on a number of occasions when asked to confirm his income.
  9. Second, the suggestion made on behalf of Mr. Hussain that the withdrawal of assistance was caused by the transfer to the different provider is wholly speculative. The documents that have already been disclosed demonstrate that the investigation into the under-declaration preceded the notification to the Respondents of Mr. Hussain’s intention to transfer to a different indemnifier. This suggests that the withdrawal of assistance was not connected to the transfer decision. Mr. Hussain is perhaps hoping that there will be a document that tells a different story and makes that connection, but he has no factual basis for expecting to find such a document.
  10. Third, Mr. Hussain has at all times had other lawful means of obtaining most, if not all, of the documents that he now seeks: he could have made a subject access request under the GDPR, something which his solicitors intimated he was entitled to do in June 2019. It is unlikely that the Respondents could have charged a fee for this request, and there is no obvious reason why the request could not have been dealt with within a relatively short time frame. Although I have not heard argument on the point, I cannot think of any obvious exemptions that could have been relied upon by the Respondents to justify non-disclosure. This avenue for obtaining the documents will still be available to Mr. Hussain if the pre-action disclosure request is refused by the Court, and could provide him with access to the documents in the relatively near future.
  11. Weighing up these various factors, and standing back and looking at the matter in the round, I consider that the circumstances of the present case are not sufficiently unusual to justify departure from the normal rule that disclosure should be provided at the normal time.
  12. I consider that Mr. Hussain has ample material available to him either to assess the merits of his case, or to issue proceedings, and if Mr. Hussain wishes to have further information about the decision before taking the step of issuing proceedings against the Respondents, he can make a subject access request under the GDPR. This can be done quickly, and Mr. Hussain can expect to receive a response with the relevant documents well before trial of the case brought against him by WM.
  13. Accordingly, I refuse this application for pre-action disclosure.