In McParland & Partners Limited and Fairstone Financial Management Limited v Stuart William Whitehead,1 Sir Geoffrey Vos, Chancellor of the High Court, provided clarification of how some aspects of the Disclosure Pilot for the Business and Property Courts are intended to work, along with guidance for users of the Business and Property Courts who are required to follow the Disclosure Pilot.
The Disclosure Pilot
Starting in January 2019, the Business and Property Courts in England & Wales (including the Business List of the Chancery Division and the Commercial Court) adopted a new Disclosure Pilot Scheme (“DPS”)2, with the aim of reducing the burden on parties associated with giving disclosure of documents. The working group charged with creating the DPS noted that the previous standard disclosure system (under CPR 31) “often produces large amount of wholly irrelevant documents, leading to a considerable waste of time and costs."3
The goal of the DPS was to encourage a more flexible approach to disclosure, involving proactive direction from the Court (including “increased and more focused case management”) and engagement of the parties in advance of the first Case Management Conference “with a view to agreeing a proportionate and efficient approach to disclosure.”
On approval of DPS, Sir Terence Etherton, Master of the Rolls said “It is imperative that our disclosure system is, and is seen to be, highly efficient and flexible, reflecting developments in technology. Having effective and proportionate rules for disclosure is a key attraction of English law and English dispute resolution in international markets.”
The underlying dispute between the parties related to alleged breaches by Mr Whitehead of a service agreement for his employment by McParland & Partners Limited (McParland), and of an enterprise firm agreement he entered into with Fairstone Financial Management Limited. In substance, the dispute related to the confidentiality, notice and non-compete provisions contained in those agreements.
Proceedings were commenced by McParland on 15 November 2018, with a defence filed by Mr Whitehead on 11 January 2019. Various other procedural steps took place throughout 2019, with the case management conference being adjourned on 31 October 2019 due to the parties being unable to agree key matters of disclosure. A disclosure guidance hearing was accordingly listed to address the outstanding disclosure issues.
The parties appeared before the Chancellor at the disclosure guidance hearing on 7 February 2020, seeking guidance from the Court on the appropriate scope of extended disclosure.
The High Court decision
The Chancellor did not disturb the parties’ agreement as to the List of Issues for Disclosure, and made orders as to the disclosure models to be adopted. As well as dealing with the issues in this particular case, the Chancellor gave clear guidance in relation to three “misunderstandings” between the parties as to the operation of the DPS.
More generally, the Chancellor reminded court users that “[t]he Disclosure Pilot is intended to operate proportionately for all kinds of case in the Business and Property Courts from the smallest to the largest. Compliance with it need not be costly or time-consuming.”4 The tenor of the Chancellor’s judgment made clear that he believes that it is incumbent on the parties to ensure that is the case.
The identification of Issues for Disclosure
The Chancellor advised parties that the starting point for the identification of the Issues for Disclosure should be the documentation that is or is likely to be in each party’s possession. The Issues for Disclosure should be framed by reference to potentially relevant documentation, rather than simply by identifying issues arising on the pleadings. The Chancellor was at pains to stress that there is no need for issues of law or construction to be included in parties’ lists of Issues for Disclosure at all.5 The Chancellor added that the Issues for Disclosure “will almost never be legal issues, and they will not include factual issues that are already capable of being fairly resolved from the documents available on initial disclosure.”6
The Chancellor also noted the importance of the Issues for Disclosure to the ongoing process of reviewing documents, enabling that review “to be conducted in an orderly and principled manner.” The Chancellor concluded that “[u]nder the Disclosure Pilot the [document] reviewer has defined issues against which documents can be considered”, as opposed to the generic reference to a party’s “case” under the previous standard disclosure regime, with the resulting review being “a far more clinical exercise”. 7
The approach to choosing between disclosure models
The Chancellor encouraged parties to consider what documents they are likely to hold and to what issues those documents are relevant. He noted that an issue where specific documents could be requested was “a classic one for model C”. The Chancellor also noted that while parties are able to agree different models for different parties in relation to the same issues, there is no requirement that they do so and, on occasion, fairness may in fact dictate that the same model should be used.
Cooperation between the parties
The Chancellor emphasised, in the strongest terms, the importance of cooperation between the parties. He not only noted that there is a “need for a high level of cooperation between the parties and their representatives in agreeing the Issues for Disclosure and completing the [Disclosure Review Document]” but emphasised how cooperation is at the heart of the new regime, adding that “[t]he Disclosure Pilot is built on cooperation as its terms make clear”. 8
The Chancellor indicated that “some parties to litigation in all areas of the Business and Property Courts have sought to use the Disclosure Pilot as a stick with which to beat their opponents”, and commented that this is “entirely unacceptable”. Parties should “expect to be met with immediately payable adverse costs orders if that is what has happened.” He added that “[n]o advantage can be gained by being difficult about the agreement of Issues for Disclosure or of a [Disclosure Review Document]”. 9
Significance of the Decision
As the DPS enters its second year, judges in the Business and Property Courts have had increasing experience of how parties are approaching it. With fresh guidance now having been provided by the Chancellor as to aspects of the DPS and the expected approach of parties to it, it can be expected that this will be at the forefront of those judges’ minds when Disclosure Guidance Hearings are before them.
The Chancellor noted that “the provisions of the Disclosure Pilot are intended to apply across a wide range of cases stretching from the highest value business cases to the lowest value ones, and from the most complex, lengthy and document intensive to the least complex cases with few relevant documents.” Naturally this means that the DPS has to be adapted to a wide range of cases, and a one size fits all approach will not be effective. The regime contemplated by the DPS will only be effective if the parties work together to set the parameters of the disclosure exercises involved. The Chancellor has made this point forcefully and repeatedly – and parties should be prepared to have adverse costs orders made against them if they do not act in the spirit of the DPS.
At a more granular level, the Chancellor also provided some guidance in relation to “Narrative Documents” (i.e. “those that are relevant only to the background or context of material facts or events, and not directly to the Issues for Disclosure”), indicating that they are likely only to be required to be disclosed where the parties’ “specific motives” matter rather than their actions.
The judgment also contained an important message for parties’ representatives, as the Chancellor noted that “[c]ooperation between legal advisers is imperative.” Accordingly, the decision in McParland is of interest to all users of the Business and Property Courts – judges, clients and counsel alike.