A recent High Court decision underlines the strict approach the courts have tended to adopt in considering applications for specific disclosure under the two-year disclosure pilot which has been underway in the Business and Property Courts since the beginning of 2019 and is governed by CPR Practice Direction (PD) 51U: Maher v Maher  EWHC 3613 (Ch).
The judge considered that the defendants’ failure to disclose the documents in question may have represented a failure adequately to comply with the disclosure order which had been made in this case. However, he emphasised that the court’s approach under the pilot is different from the previous practice. In particular, the claimant in the present case relied on paragraph 5.4 of PD31A, which applies in non-pilot cases. This states: “If the court concludes that a party from whom specific disclosure is sought has failed adequately to comply with the obligations imposed by an order for disclosure the court will usually make such order as is necessary to ensure that those obligations are properly complied with.”
The judge found, however, that this statement had been overtaken by the specific provisions of the disclosure pilot. The onus was therefore on the claimant to satisfy the court that the order sought was reasonable and proportionate. In all the circumstances, including the claimant’s delay in making the application and the potential for an order for disclosure distracting the parties in the run-up to trial, the judge concluded that the application should be dismissed.
The claimant and the two defendants were brothers, and were trustees of a family discretionary settlement. The claimant sought an order for the removal of the defendants as trustees, as well as for the sale of a company which the defendants controlled and which the claimant alleged was a substantial asset of the trust.
On 3 June 2019, the claimant issued an application for specific disclosure of the defendants’ personal bank statements. These were said to be relevant to the claimant’s pleaded concern that the defendants had used company funds to meet the costs of the proceedings.
The application was not heard until 26 November 2019, seven weeks before trial which was due to begin on 13 January 2020.
The High Court (HHJ Hodge QC sitting as a High Court Judge) dismissed the application.
The judge noted a number of principles based on the authorities under the disclosure pilot to date, including the decision of Sir Geoffrey Vos, Chancellor, in UTB LLC v Sheffield United Ltd  EWHC 914 (Ch) (considered here). The judge said he derived particular assistance from a number of statements in that case, including the following:
- The introduction of the disclosure pilot was intended to effect a culture change and was not simply a re-write of CPR Part 31. It operates along different lines, driven by reasonableness and proportionality, with disclosure being directed specifically to defined issues arising in the proceedings.
- In deciding whether to allow extended disclosure, the court has to consider whether the application is reasonable and proportionate having regard to the overriding objective. Each of the factors set out at paragraph 6.4 of Practice Direction 51U is to be given weight. (These include, among other things: the nature and complexity of the issues; the importance of the case; the likely probative value of the documents; the financial position of each party; and the need to ensure the case is dealt with expeditiously, fairly and at a proportionate cost.)
- The issues for disclosure are “only those key issues in dispute” and do not extend to “every issue which is disputed in the statements of case by denial or non-admission”. Extended disclosure is not “something that should be used as a tactic, let alone a weapon, in hard fought litigation. It is all about the just and proportionate resolution of the real issues in dispute.”
The claimant in the present case relied in support of its application on paragraph 5.4 of PD31A (Disclosure and Inspection), quoted above. The judge found, however, that this statement had now been overtaken by the specific provisions of the disclosure pilot, with their emphasis on culture change and reasonableness and proportionality.
The present application was governed by paragraph 17 of PD51U, which applies where a party has failed adequately to comply with an order for extended disclosure. The court may make further orders to ensure compliance, but it must be satisfied that such an order is reasonable and proportionate. The onus is on the applicant to satisfy the court that this requirement is met, having regard to the overriding objective and the factors at paragraph 6.4 of PD51U.
The judge was satisfied that the defendants may have failed adequately to comply with the order for standard disclosure by not disclosing their personal bank statements. However, he held that it would not be reasonable and proportionate to require disclosure at this late stage, with trial due to start imminently. He noted that it was made clear in a letter from the defendants’ solicitors, on 30 January 2019, that the bank statements would not be disclosed. Despite that, the claimant waited until 3 June before issuing his disclosure application. Although the claimant was not responsible for the delay in the application being heard, once it was issued, it would have come before the court much sooner if he had acted promptly following the January 2019 letter. The judge commented:
“I acknowledge the importance of the case to the parties, but that does not require every stone to be turned over, still less for a whole pile of more stones to be imported from a neighbouring quarry. The parties should not be diverted down side tracks to see what use may have been made of company monies.”
In the judge’s view, the bank statements were likely to be of limited probative value in supporting, or undermining, the respective cases of the parties. It would be necessary to subject the bank statements to detailed analysis, potentially including obtaining and reviewing the company’s bank statements to attempt to match up any payments, and all of that would have to be done in the immediate run-up to trial, interrupted by the Christmas and New Year holiday period.
It was relevant that the parties were private individuals, that the defendants said they had been squeezed financially by the claimant’s actions, and that they had expressed concern about the claimant’s ability to pay any legal costs.
It was also relevant to have regard to the fact that, in the case of the second defendant, his bank account was held in joint names with his wife and therefore respect for her private life also had to be borne in mind.