Introduction

Disclosure of documents in a court action can be fraught with arguments. It is an important step, as the purpose of disclosure is to make available evidence, which either supports or undermines the respective parties' cases.

A recent decision in the case of Gray Construction Limited v Harley Haddow LLP considered the issue of confidential documents, in the context of an arbitration settlement.

Facts

Gray Construction Limited (“Gray”) was suing Harley Haddow LLP (“Harley Haddow”) for damages, for alleged breach of contract and negligence - quantified on the basis of sums which Gray spent in an arbitration with the NHBC, about defective house foundations at a development in Dunfermline. The arbitration between Gray and the NHBC was settled by Gray's payment to NHBC of £110,000. Gray sought recovery of that sum plus one half of the arbiter's charges and other fees and expenses.

Harley Haddow applied for recovery of the documents relating to the arbitration, in order to understand the legal and factual basis of NHBC's claim against Gray, the circumstances surrounding settlement, and the reasonableness of the settlement.

Gray argued that these documents were confidential and were not needed by Harley Haddow in order to defend the court action. Gray had offered to produce an affidavit from the solicitor who acted for it in the arbitration with the NHBC to provide all information which Harley Haddow would reasonably require, in order to understand NHBC's claim and the circumstances surrounding settlement.

It was conceded that the documents sought by Harley Haddow did not contain sensitive commercial data. Nonetheless, it was accepted, given that arbitrations are private, that the documents were confidential. The question to be decided was whether the Court could, and should, override the obligation of confidentiality to require disclosure of the documents.

Decision

Examining the law in this area, the Court considered that a balance required to be struck between respecting parties' rights to privacy in arbitration proceedings and the public interest in the fair administration of justice. In this case, the Court considered that the documents in question were necessary to allow Harley Haddow properly

to prepare its defence to the action, and the affidavit which Gray offered would not be sufficient to allow a full and proper examination of matters in advance of the trial.

Whilst the rules of disclosure are different in Scotland and England, the underlying principle that a court may, in certain circumstances, allow disclosure in the public interest applies in both jurisdictions. This is something which should always be borne in mind by parties, when seeking to protect their commercial interests.

A copy of the decision can be found here.