A recent judgment of the Commercial Court demonstrates the difficulty of obtaining a broad order for enhanced or "train of enquiry" disclosure, even where the case involves very large sums and there are allegations of dishonesty: Berezovsky v Abramovich [2010] EWHC 2010.

Key points:

  • If the approach in this case is adopted by other judges, an application for enhanced disclosure will have more chance or success if it is aimed at identifiable categories of documents and linked to specific issues in the case.
  • Such an application should be supported by evidence identifying the nature of the searches it is envisaged would have to be carried out depending on whether standard or enhanced disclosure was ordered, and what difficulties such searches might impose on the parties.  
  • It may be easier to obtain an order for enhanced disclosure after disclosure has been given on the standard basis, although it is hoped that the courts will take into account the potential costs implications of such an approach in each case.

Background

The claimant sought an order that both parties should search for and disclose any documents which it was reasonable to suppose might advance or damage either party's case "or lead to a train of enquiry which has either of those consequences". In effect, therefore, the claimant was seeking an order that disclosure be conducted according to the broad test established in the Peruvian Guano case, which applied before the Civil Procedure Rules 1998 (CPR) introduced the more limited test of standard disclosure.

Judgment

The judge, Gloster J, recognised that this was the type of case in which it might well be appropriate to order enhanced disclosure in due course, given the huge amount at stake (USD3.5 billion), the reputational issues on both sides, and the allegations of dishonesty being made. However, she refused to make such an order at the present stage of the case, before standard disclosure had taken place.

She noted that no evidence had been filed in support of the application, and consequently the court had no information as to what searches would have to be made, of what categories or classes of document, to enable documents to be disclosed which might lead to a train of enquiry. She stated that an application for enhanced disclosure should be directed at identifiable categories of document and linked to specific issues, with some explanation as to the nature of the enquiry envisaged.

The judge highlighted the onerous nature of an enhanced disclosure order, which would impose not just increased costs burdens but also difficulties in identifying the categories of document that might come within the ambit of such an order and reviewing each one to apply the relevant test. She also noted that a failure to search for or disclose a document might have serious consequences, as the party might be accused of deliberately withholding it. This made it all the more important for both the court and the parties to have a clear idea as to what documents were likely to fall within the scope of the order, the issues to which they would relate, and what the relevant "trains of enquiry" might be.

The judge felt it would be more appropriate for any enhanced disclosure application to be made once standard disclosure had taken place. At that stage, the parties would have a much better idea what remaining categories of documents (if any) they contended should be searched and disclosed on the enhanced basis. While this might give rise to some duplication of effort in that the same documents would have to be revisited, she said the more likely consequence was that further categories of documents would have to be searched.

Comment

It is interesting to see how views regarding disclosure have changed since the introduction of the CPR. The court in this case was being asked to order disclosure according to the pre-CPR test that would have applied just over 10 years ago, and clearly considered it an unworkable basis on which to conduct disclosure - at least if applied to the entirety of the case, as opposed to clearly focused issues within it.

The judgment is of particular interest in suggesting that the question of whether to make an order for enhanced or "train of enquiry" disclosure should be considered after standard disclosure has already taken place. Given that an order for enhanced disclosure affects not only what categories of document are reviewed, but the test that is applied in considering whether or not each one is discloseable, additional time and costs will necessarily be spent in reviewing documents a second time. In this case, however, the judge dismissed the applicant's argument that adopting a two stage approach would entail a huge, and wasted, duplication of effort.

The judgment refers to the proposed new rule that Lord Justice Jackson has recommended should apply for disclosure in a "substantial" case (meaning cases in the Commercial Court or other cases where the sums in dispute exceed £1 million). Under this proposal, standard disclosure would no longer be the starting point. The court would instead select the order which is most appropriate to the case out of a "menu" of options. Lord Justice Jackson's report specifically notes his view that it is important that the train of enquiry test be included as one of the menu options, as this level of disclosure is sometimes appropriate in fraud cases.

If the new rule is introduced, it will be interesting to see how often, and in what circumstances, the train of enquiry option is chosen. Of course, as the judge noted, such an order is by no means "off the menu" even in the present case, but if made it is likely to be on a more focused basis, limited to specific categories of documents and/or specific issues.