A recent High Court decision provides a useful reminder of the circumstances in which a party to proceedings may successfully apply for disclosure of documents held by a non-party.

(1) Caroline Adams (2) Mark Milgate Bright Adams (3) Caroline Louise Swallow (Claimants/Applicant) v (1) Allen & Overy LLP (2) Howkins & Harrison (Defendants) & Gallagher Broughton Ltd (Respondent) [2014] EWHC 53 (Ch)

Background

The applicants were involved in proceedings having brought a professional negligence claim against their former solicitors and surveyors regarding the provisions of an agreement for the sale of farming land which was later to be developed. The agreement provided for the making of a top-up payment at a later date to be calculated by reference to the open market value of the land. They alleged that the open market value calculation provisions in the agreement were defective, and that this had led to a loss of opportunity to obtain a higher value.  The applicants sought disclosure of the overall payments made after the land had been sold on again by the purchaser in separate parcels as evidence of the true overall market value of the land in order to establish the level of loss sustained and whether the previous expert valuations were too low.

The Test

Applications for disclosure against a non-party are made pursuant to Civil Procedure Rules Part 31.17. In view of the competing interests between the party seeking disclosure and the party against whom the order is sought (who may wish to protect the confidentiality of the documents and/or may be concerned about being brought into the proceedings), the Court will only grant an order for disclosure if satisfied that the following "jurisdiction" conditions of CPR 31.17(3) are met:

  • The documents of which disclosure are sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings and
  • Disclosure is necessary in order to dispose fairly of the claim or to save costs.

As to the first limb of the test, the threshold for what is "likely" is fairly low and the Court may be satisfied if the requested documents "may well" support the case. However, this is a narrower test than the ordinary disclosure requirement under CPR 34(2) which requires disclosure of all documents relevant to an issue. In addition, the applicant will need to demonstrate that each class of documents of which disclosure is sought will satisfy the test.

In respect of whether it is in fact "necessary" to order disclosure of documents, the Court has a wide discretion. It will not grant such an order unless it has sufficient information to evaluate the necessity of disclosure to the fairness of the proceedings or potential costs savings. It may also be reluctant to order their release in the event that the documents could be located from another source. An applicant will therefore need to demonstrate that the disclosure sought goes to a key issue in the proceedings and that better evidence may be difficult to come by.

If the Court is satisfied that the jurisdiction conditions have been met, it will still have a discretion to take into account any other relevant factors and will, for example, consider the extent to which the interests of the disclosing party may be prejudiced (resulting from a breach of privacy or confidentiality) if disclosure is ordered and weigh this up against the likely prejudice to the applicant in the proceedings if the order were refused

Decision

The Court agreed that determining the true open market value of the land was one of the key issues in the negligence proceedings and may well support the applicants' case. Further, disclosure of the requested documents was necessary to dispose fairly of the claim as they would provide compelling valuation evidence (better than any comparables which were hotly contested by the experts).

Although the respondent made a number of arguments as to why disclosure was not necessary, the Court dismissed each point on account of the fact that the documents would provide most persuasive evidence in the professional negligence proceedings. The respondent also argued that it was in a competitive business in which confidence and trust played a major role. However, the Court considered that the respondent's relationship of trust and confidence ought not to be damaged if disclosure was required pursuant to an order of the Court. Further, given that the deals were done some 7 years ago, no satisfactory explanation had been provided as to why that information may still be commercially sensitive today. Finally, the respondent had, as an alternative to disclosure, proposed that its solicitor provide a witness statement detailing the total amounts paid by the developers. However, the Court was not attracted by this proposal. Although no further explanation was provided on this point, it may be that the Court considered that the witness statement may not have provided sufficient information to enable the expert valuers to properly assess the open market value of the land.

Comment

Where the right circumstances exist, this can be a useful tool to obtain key evidence in support of a case. In particular, there may be a clear benefit of bringing such an application in a loss of opportunity claim where the potential outcome may otherwise be highly speculative.  However, the granting of such orders against a non-party will tend to be the exception rather than the rule and this case remains very much in line with established authority which was recently summarised in the helpful judgment of Mr Justice Vos in Constantin Medien Ag v Ecclestone and others [2013] EWHC 2674 (Ch).

The extent of the disclosure sought will need to be carefully thought through as the respondent may continue to assert privilege over certain categories of documents. A cost is also likely to attach to making such an application as the respondent will ordinarily be awarded its costs, although the Court has the power to make a different order if the respondent has acted unreasonably and if the application could otherwise have been avoided.

The Court will have regard to the fact that such orders are intrusive and may breach rights to privacy (including ECHR Article 8) and confidentiality of the non-party. In practice, if an order is made, the impact can be reduced by imposing confidentiality undertakings limiting the disclosure to the parties' representatives and experts.