PRE-ACTION DISCLOSURE CANNOT BE A FISHING EXPEDITION: A JUDGE WILL NOT DO THE PRUNING FOR AN APPLICANT

The judgment of Deputy Master Brightwell in Willow Sports Ltd v Sportslocker24.com Ltd & Anor [2021] EWHC 2524 (Ch) is a reminder of how difficult it can be to obtain pre-action disclosure, particularly in commercial cases. It is also a reminder that any such application should be focussed and confined to documents that are “strictly necessary”. The court will not undertake the process of pruning itself.

 

 

“Applicants for disclosure before proceedings start, especially in commercial cases, are warned by the authorities to limit their requests to those which are strictly necessary. The Applicant in the present application has not complied with this exhortation. I do not consider that I am in a position to undertake the task of attempting to prune it myself.”

THE CASE

The claimant proposed to bring a case based on breach of contract and damages based on the use of broadcasting rights.  He applied for pre-action disclosure.

 

THE RELEVANT PRINCIPLES

The Deputy Master considered the principles relating to pre-action disclosure.
    1. CPR Part 31.16(3) provides that an order for disclosure before proceedings start may be made when the following jurisdictional requirements are satisfied:
i) the respondent is likely to be a party to subsequent proceedings;
ii) the applicant is also likely to be a party to those proceedings;
iii) 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
iv) disclosure before proceedings have started is desirable in order to –
a) dispose fairly of the anticipated proceedings;
b) assist the dispute to be resolved without proceedings; or
c) save costs.
    1. Mr Duggan relies on the following summary of the principles derived from the leading case of Black v Sumitomo Corp [2002] 1 WLR 1562, in the judgment of HHJ Waksman QC (as he then was), in ECU Group plc v HSBC Bank Plc & Ors [2017] EWHC 3011 (Comm) at [17] to [19]:
’17. The leading case is Black v Sumitomo. The following propositions may be derived from the judgment of Rix LJ:
(1) The requirements in sub-paragraph (3) (a) and (b) are simply about the likely parties to any claim, not its underlying merits and “likely” in this context means “may well”; see paragraphs 71 and 72;
(2) Requirement (c) will raise the question of the clarity of the issues which would arise once the litigation has started, without which such clarity it will be difficult to say if the documents now sought would fall within standard disclosure; see paragraph 76;
(3) Requirement (d) with its three possible variants constitutes both a jurisdictional threshold and also a set of factors which are required to be considered in more detail when the question of discretion is dealt with; see paragraphs 81 and 82;
(4) The jurisdictional threshold is not intended to be a high one and the real question is likely to be the exercise of discretion which will not be much assisted by the simple fact that the jurisdictional threshold is met; see paragraph 73; if it were otherwise, that would tend to suggest that orders would be made much more frequently under this provision than they are; see paragraph 85;
(5) The discretion itself is not confined and will depend on all the facts of the case; important considerations will include the nature of the injury or loss complained; 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 enquiries and the opportunity which the complainant has to make his case without PAD; see paragraph 88;
(6) In addition, if there is considerable doubt as to whether the usual disclosure staged would ever be reached, the court can take this into account as affecting discretion; see paragraph 77. This must be a reference to practical or legal obstacles which the putative claim may face;
(7) At paragraph 92 Rix LJ stated “unless there is some real evidence of dishonesty or abuse which only early disclosure can properly reveal and which may, in the absence of such disclosure, escape the probing eye of the litigation process and thus possibly all detection, I think that the court should be slow to allow a merely 6 prospective litigant to conduct a review of the documents of another party, replacing focused allegation by a roving inquisition”. This observation was made in the context of Rix LJ having found that the complaint in that case was factually and legally “speculative in the extreme” see paragraph 91. Context is important because it is otherwise hard to see why it must be shown that in the absence of early disclosure the evidence would (later) escape the eye of the legal process;
(8) 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 PAD, even where the complaint might seem somewhat speculative or the request argued to be mere fishing. The court might be entitled to take the view that transparency was what the interest of justice and proportionality most required. But the more diffuse the allegations and the wider the disclosure sought more sceptical the court is entitled to be about the merit of the exercise; see paragraph 95.
18. There was a certain amount of debate before me, and in the cases, as to whether it was also necessary for the applicant to show (a) that without the disclosure it could not properly plead a case at all and/or (b) that even without the disclosure, the case had at least a real prospect of success, or had reached some other merits threshold. In fact, of course, there is a degree of tension or inconsistency between those requirements if both had to be made out, as noted in paragraph 28 of the judgment of Underhill LJ in Smith v Energy Secretary [2014] 1 WLR 2283. Since the view of Rix LJ at paragraph 68 of his judgment was that the provision was addressed to situations where disclosure (a) would help the applicant who could plead a cause of action to improve it or (b) was necessary as a vital step in deciding whether to litigate at all or (c) necessary to provide a vital ingredient in the pleading, it seems to me that questions of underlying merit of the claim should be dealt with in the context of discretion. As Underhill LJ put it in Smith “If there were a jurisdictional requirement of a minimum level of arguability the question would necessarily arise of how the height of the threshold is to be described…It is inherently better that questions about the likelihood of the applicant being able in due course to establish a viable claim are considered as part of a flexible exercise of the court’s discretion in the context of the particular case.”; see paragraph 24.
19. The potential width and focus of the classes of documents sought is a further matter for discretion. See paragraph 72 of the judgment of Rix LJ. I can see that in an extreme case, where the documents sought were hopelessly wide, that might even militate against the jurisdictional thresholds being achieved. In any event, as Morison J put it in Snowstar v Graig [2003] EWHC 1367 “… Every action for pre-action disclosure should be crafted with great care, so that it is properly limited to what is strictly necessary.”. In the case before him where the disclosure sought was “wide and woolly” he did not regard it as a satisfactory suggestion that any flaws in the application notice could be dealt with after judgment. I accept that where the categories of disclosure sought are extremely wide or unclear, the Court is unlikely to be prepared to rescue the application by, in effect, redrafting them. However, in my judgment that does not mean that the Court has no power to adjust the categories of disclosure sought so as to deal with any particular problems, whether in terms of scope or availability, which may become apparent in the course of the application. The extent to which the Court would, as part of its discretion, consider it appropriate to vary the disclosure sought obviously depends on the facts and circumstances of each particular application. See the observations of Marcus Smith J at paragraph 34 of his judgment in Attheraces v Ladbrokes [2017] EWHC 431.’
    1. Mr Duggan also draws my attention to judicial statements to the effect that, in commercial disputes, an order for disclosure before proceedings is outside the normal run: see First Gulf Bank v Wachovia Bank [2005] EWHC 287 at [24] (Christopher Clarke J). I note, though, that HHJ Waksman QC in the HSBC case considered that, whilst such applications are by their nature unusual, each case should be determined on its own facts, with regard to the overriding objective and in particular proportionality: see at [20].
    1. I was addressed on the effect of the Disclosure Pilot on applications made under CPR Part 31.16 in the Business and Property Courts. This was considered by Knowles J in A v B [2019] 10 WLUK 65, at [10] to [11]. In exercising his discretion to refuse to grant an application for disclosure before proceedings started on the facts before him, he compared the position as it would be if no order was made and disclosure was then to be given in accordance with the Pilot, and the position if an order was made on the application. The judge did, however, hold that he would have jurisdiction to make an order, holding that the particular application turned on the question of discretion.
    1. The preliminary question of jurisdiction itself refers to the respondent’s duty by way of standard disclosure set out in rule 31.6, and that is so as the rule is reproduced in section II of the Disclosure Pilot itself. I consider accordingly that when considering whether there is jurisdiction to make an order, the court should ask whether the documents sought would be available in subsequent proceedings on the assumption that standard disclosure applied, i.e. without regard to the Disclosure Pilot.
    1. The range of documents in relation to which an order under rule 31.16 may be made necessarily extends to all those to which standard disclosure would apply. This must be so not only because of the express wording of rule 31.16(3)(c), but also because the court cannot before proceedings have begun pre-empt the Initial Disclosure which will be provided by the parties, or the scope of any orders for Extended Disclosure. When moving on to consider the discretion whether to make an order and, if so, what order, however, the court should take into account the fact that if subsequent proceedings are brought they will be subject to the provisions of the Pilot.
    1. In A v B Knowles J also confirmed that, in the Commercial Court, where an order for disclosure is made the applicant will generally pay for it (which is the general rule, see CPR Part 46.1(2)(b)). The Applicant accepted during the hearing that if an order is made on the application, then it must pay for any disclosure granted, the costs of the application itself to be determined after judgment in the usual way.

 

THE EXERCISE OF DISCRETION IN THE CURRENT CASE

The Deputy Master found that the court had jurisdiction to make an order, but declined to do so.  The request for disclosure was too widely drawn.

    1. … I have come to the conclusion that it would not be desirable to make an order for disclosure under rule 31.16. I take into account the following factors:
i) The Applicant explicitly asserts that Mr Tatlock’s evidence appears to be dishonest. The level of distrust is apparent as the Applicant seeks additional orders micro-managing the disclosure process in advance. No authority in support of such wide orders has been cited. There must be a very real likelihood that the Applicant will be dissatisfied with whatever results from an order (as it is with the disclosure already provided) and that the Respondents’ compliance with it will not further assist the Applicant in articulating its claims, or will generate satellite litigation about compliance with any court order.
ii) The breadth of the allegations pursued by the Applicant suggests to me that there is no serious risk that any dishonesty might escape the probing eye of the litigation process and thus possibly all detection in the absence of an order. The Applicant did not submit that there was any such risk.
iii) The disclosure sought is very wide and, despite the Applicant being given an opportunity to focus it more narrowly, the application remains framed in extremely wide terms. This makes me sceptical of its merits, and concerned that the Applicant in fact seeks to replace focused allegation with a roving inquisition (see Black v Sumitomo at [91] and [95]). Paragraph 30 of Mr Spyrou’s second witness statement, to which my attention was specifically drawn on behalf of the Applicant, reads more like a cross-examination script rather than a simple request for documents.
iv) Where an allegation of fraud is made with specificity, and the request for disclosure is appropriately focused, it may support an application (Black v Sumitomo at [18]). In this application, however, the allegation of dishonesty is wide ranging and to allow the application may well allow dishonesty “to spread its cloak over the means by which it can be detected and revealed” (see Black v Sumitomo at [54]).
v) This is a case where the Applicant says expressly that it does not know which cause of action it is able to pursue, and seeks disclosure in order to make that decision. Even though concerns with Mr Tatlock’s evidence have been lucidly expressed, I am left with the sense that to an extent the Applicant is fishing for material in order to work out how to put its case.
vi) Applicants for disclosure before proceedings start, especially in commercial cases, are warned by the authorities to limit their requests to those which are strictly necessary. The Applicant in the present application has not complied with this exhortation. I do not consider that I am in a position to undertake the task of attempting to prune it myself.
vii) Even if pre-action disclosure enabled the Applicant to plead a claim against the Respondents omitting one or more causes of action, about which I am sceptical, any costs saving could well be marginal. A clear outline of the particulars of claim has already been prepared. Given the allegations made, and the responses already provided in a witness statement, the likelihood of disclosure satisfying the Applicant that no claims alleging dishonesty should be brought seems to me to be minimal.
viii) The potential future application of the Disclosure Pilot does not weigh heavily in my decision. I do however bear in mind that an order for Extended Disclosure will not generally require disclosure in relation to all pleaded issues, and the process will not mirror standard disclosure. The factors mentioned above, however, are the factors I consider to be relevant in the circumstances of the present case.
Conclusion
  1. For the reasons I have given above, I will dismiss the application.