CLAIMANT HAD NOT BREACHED THEIR DUTY OF DISCLOSURE: A PARTY DOES NOT HAVE “CONTROL” OF THEIR PARTNER’S FINANCIAL DOCUMENTS

The judgment of Mr Justice Julian Knowles in Morgan-Rowe v Woodgate [2023] EWHC 2375 (KB) makes some important points about the duty of disclosure.  A party giving disclosure doesn’t have to disclose details of their spouses’/partners accounts.

“A married couple who have separate bank accounts or credit cards do not have control of their spouse’s bank statements or credit card statements simply by virtue of being married to them.”

THE CASE

The defendant appealed a judgment on damages. The claimant had claimed for car hire and was allowed a higher rate on the grounds that she was impecunious.   One of the defendant’s arguments on appeal was that the claimant had failed to give full disclosure and, pursuant to an earlier court order, should not have been allowed to argue impecuniosity.

THE JUDGMENT ON THIS ISSUE

The defendant’s argument was rejected on appeal.  The claimant had given disclosure of her personal financial information.  The duty to disclose did not include a duty to disclose her husband’s finances. The defendant could have made an application for non-party disclosure against the husband but elected not to do so.

1. 1. I accept (per Diriye, [4]) that the burden lay on the Claimant to demonstrate her impecuniosity. I also accept DJ Coonan made a specific order placing disclosure obligations on the Claimant, and that a failure to comply with them would have led to her being debarred. I also accept that had she been debarred she could not have recovered the credit hire rate, but only the lesser spot rate. I further accept there are sanctions under the CPR for non-disclosure: see CPR r 31.21.

1. 1. All that said, in my judgment the Recorder was right to reject the argument that the Claimant should be debarred, and thus that she should only have been entitled to recover the spot rate rather than the credit hire rate.

1. 1. The way the argument was put in the Defendant’s trial Skeleton Argument at [17] was as follows:

“17. The Claimant contends to be impecunious, and has provided bank statements and wage slips in support (p277 – 355). However, the Defendant avers that the Claimant has failed to provide complete disclosure of all her bank accounts and/or credit cards, and thus remains debarred from relying on the fact impecuniosity pursuant to the Order of District Judge Coonan (p296(d)). The following accounts have not been provided: (a) account number ****2754 (eg transfer on 14 Sep 2019 (p277)); (b) Gold credit card ****4192 (eg transfer on 14 Sep 2019 (p277)).”

1. 1. I begin with CPR r 31.8, which deals with a party’s general duty of disclosure:

“(1) A party’s duty to disclose documents is limited to documents which are or have been in his control.

(2) For this purpose a party has or has had a document in his control if –

(a) it is or was in his physical possession;

(b) he has or has had a right to possession of it; or

(c) he has or has had a right to inspect or take copies of it.”

1. 1. The Recorder accepted the Claimant’s evidence that the accounts referenced in the 14 September 2019 transaction were in her husband’s sole name. I cannot go behind that finding of fact. There is accordingly no basis for concluding the associated statements fell within CPR r 31.8 so that they should have formed part of standard disclosure. There is no evidence that any of the three limbs of CPR r 31.8(2) was satisfied.

1. 1. Earlier I set in full the relevant part of DJ Coonan’s order, indicating what disclosure the Claimant was required to give. In my judgment, she complied with that order. It was expressly limited to documents which were ‘in his [sic] control’. Absent any evidence, I reject the suggestion that the associated statements were in the Claimant’s control for these purposes. They were not. A married couple who have separate bank accounts or credit cards do not have control of their spouse’s bank statements or credit card statements simply by virtue of being married to them. The statements were in the control of the Claimant’s husband, but DJ Coonan’s order did not apply to him. Nor, it seems to me, could it have done so. The district judge could not properly have ordered the Claimant’s husband to make disclosure as part of standard disclosure directions, or made an order of his own motion against him. That is on the simple basis that the husband was not a party to the proceedings.

1. 1. The Defendant’s legal team were plainly alive to the point before the trial, because it was put to the Claimant in cross-examination. Hence, once she had made disclosure of her financial records, it seems to me that the way forward for the Defendant should have been for her to make an application for third party disclosure against the Claimant’s husband, seeking the relevant statements, pursuant to CPR r 31.17 (Orders for disclosure against a person not a party):

“(1) This rule applies where an application is made to the court under any Act for disclosure by a person who is not a party to the proceedings.

(2) The application must be supported by evidence.

(3) The court may make an order under this rule only where –

(a) the documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and

(b) disclosure is necessary in order to dispose fairly of the claim or to 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 the respondent, 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.

(5) Such an order may –

(a) require the respondent to indicate what has happened to any documents which are no longer in his control; and

(b) specify the time and place for disclosure and inspection.”

1. 1. The Defendant did not make such an application. I cannot speculate why not, and make no finding about it. However, one possibility that occurs to me is that this was a tactical choice by her legal team. They may have reasoned that there was too great a possibility that disclosure would not help her case, eg, if the credit limit or available balance on the husband’s credit card had been low, or if his bank account had had insufficient funds to have paid spot rate of about £9000. They may have reasoned the Defendant. would be in a better position to deal with the matter by way of cross-examination (as it was), and then to make the argument they made at trial, and have repeated on this appeal.

1. 1. Be that as it may, the Defendant’s argument rightly failed before the Recorder and it fails before me. That is simply because there was no non-compliance by the Claimant with DJ Coonan’s order and she was under no duty to disclose her husband’s financial records, which were not hers to disclose.

1. For completeness, the Defendant’s other complaint about non-disclosure, namely of the earmarking of the ISA for mortgage payments and bills, has now fallen away. It was asserted by the Claimant during the pleading stage, and did not emerge for the first time at trial as the Defendant initially claimed. Similarly with the fact that the Claimant did not have a credit card until March 2020, which was also referred to in the pleadings before trial.