To what extent does the duty of disclosure apply where an agency relationship exists? The award-winning commercial lawyers at ParrisWhittaker are specialists in representing businesses involved in disputes.

The UK’s High Court recently issued an important ruling1 on disclosure in the context of companies and their agents. The ruling has persuasive authority on the courts in The Bahamas and should be noted.

Disclosure is an important stage during the litigation process and requires the parties to disclose documents and information that are relevant to issues in dispute. The duty of disclosure is limited to the information within the party’s ‘control’.

It’s not uncommon for disputes to arise in relation to the disclosure duty, often where documents are held by a third party who is not a party to the dispute.

What happened in this case?

A disclosure application arose in the course of a lengthy dispute between a lender and a special purpose vehicle (SPV) that related to a mezzanine financing facility. The claimants sought disclosure, including against a third party which acted as advisor to the defendant on the basis that it held documents that should be treated as relevant and within the defendant’s control.

The defendant countered that the third party was not its agent and, therefore, the documents were not within its control. The High Court rejected the defendant’s argument.

The judges ruled that on the facts, even though the retainer included a ‘no retainer’ clause and that the third party could not sign contracts, it was acting as an agent. For example, the nature of the retainer was such that the agent could make representations and negotiate on the defendant’s behalf; and the defendant had a legal right to access documents held by the agent and created during the agency agreement.

The court therefore held that relevant documents created by the agent were in the defendant’s control and should be disclosed. The court made clear that ‘control’ covers the situation where a party’s documents are in the hands of a servant or agent – but this does not extend to the agent’s own “working papers”.

What does this mean?

Disclosure can be ordered in respect of documents held by third parties who are ostensibly acting as a party’s agent for the purposes of ‘control’ of documents and disclosure

The ruling clarifies that whether a third party is acting as an agent, in the context of the duty of disclosure, is a question of fact and considering the actual relationship between the agent and the relevant party.

Disclosure orders are not necessarily easy to obtain, but the specialist disclosure lawyers at ParrisWhittaker have a successful track record of securing disclosure orders on behalf of commercial clients.