The Courts are approaching the new Disclosure Pilot Scheme with Pragmatism: A Review of Recent Case Law

By Yvanna Miller

07-2019

Recent case law demonstrates applications relating to disclosure made after 1 January 2019 will be dealt with in accordance with the new Disclosure Pilot Scheme ("DPS"). Although the court is prepared to take a pragmatic approach under the DPS, parties should seek to comply fully with their disclosure obligations, regardless of whether those obligations have arisen by virtue of Part 31 of the Civil Procedure Rules ("CPR Part 31") or pursuant to the DPS.

The DPS came into force in January 2019 without any transitional provisions. Parties making applications to the court regarding disclosure orders made prior to 1 January 2019 have, until recently, been uncertain as to whether CPR Part 31 still applied to their application or whether the courts would seek to apply the DPS.

Following the decision in UTB LLC v Sheffield United Ltd and others [2019] EWHC 914 (Ch), it is now clear that applications made after 1 January 2019 will be dealt with in accordance with the DPS and that parties and their legal advisors must comply with the principles behind the new approach.

What is the Disclosure Pilot Scheme?

The DPS provides a new scheme for disclosure in the Business and Property Courts ("B&PC"). It is intended to replace the previous disclosure regime (governed by CPR Part 31) and aims to promote proportionality and responsibility during the disclosure phase.

The key changes introduced by the DPS include early exchange of key or adverse documents with statements of case (by way of Initial Disclosure), an increased focus on the issues which require documentary evidence (with a List of Issues for Disclosure) and emphasis on a collaborative approach between parties to complete a Disclosure Review Document. A party may also apply to the court for a Disclosure Guidance Hearing in the event that an impasse arises between the parties during disclosure discussions.

The DPS came into force on 1 January 2019 and will run for two years. The DPS applies to both new and existing proceedings in the B&PC (subject to certain exceptions).[1] However, Paragraph 1.3 of Practice Direction 51U states that if an order for disclosure has been made in existing proceedings before 1 January 2019, the DPS will not apply unless that order is varied or set aside. This has led to a number of applications before the courts seeking to understand how the provisions of CPR Part 31 apply to existing orders for disclosure.[2]

The Court's Approach

White Winston Select Asset Funds LLC v Mahon [2019] EWHC 1014 (Ch)

Directions for standard disclosure had been made pursuant to CPR Part 31.6 before 1 January 2019. The defendant had failed to provide specific categories of documents that were considered highly relevant to the case. The claimants therefore applied to the court for specific disclosure from the first defendant.

The key question for the court was whether or not it had jurisdiction to make an order for specific disclosure under CPR Part 31.12. The court acknowledged that this provision had been replaced by the DPS, but it was not obvious which particular part of the DPS would give the court jurisdiction to make the equivalent order for specific disclosure as the concept was now part of the rules relating to Extended Disclosure (under paragraph 18 of the Practice Direction 51U).

The court held that as a matter of general case management powers, it had "the ability to make at least the equivalent of an order which could previously have been made under CPR Part 31.12 in order to ensure that [the defendant] does comply with its standard disclosure obligations." As the court did not consider that disclosure had been adequately provided by the first defendant, an order was made for disclosure of specific categories of documents requested by the claimants.

Kazakhstan Kagazy plc and others v Zhunus and others [2019] EWHC 878 (Comm)

In the context of wider proceedings, standard disclosure should have been given in September 2018, but the defendants had failed to comply.

The claimants applied to the court for specific disclosure under CPR Part 31 but as the application post-dated 1 January 2019, the DPS, rather than CPR Part 31, applied. Nevertheless, the claimants argued that by using its case management powers, the court could make a proper and targeted order for specific disclosure (as might have been made under CPR Part 31), 'if justified'.

The court acknowledged that a proper, reasonable search for documents had not been carried out, nor had there been an adequate review of the documents that were available. However, Andrew Baker J declined to grant specific disclosure and instead directed the defendants to explain the basis of their document selection within two working days.

UTB LLC v Sheffield United Ltd and others [2019] EWHC 914 (Ch)

A few days after the judgment in Kazakhstan Kagazy plc v Zhunus, the court heard an application for disclosure of further documents in a dispute over shares in a company which ran Sheffield United Football Club.

An order for standard disclosure had been made prior to the commencement of the DPS, but in March 2019, the defendant applied for disclosure of further documents.

Sir Geoffrey Vos (Chancellor of the High Court in England and Wales) considered: (i) whether the DPS applies to proceedings in which an existing order for disclosure had been made before 1 January 2019; and (ii) whether the White Book was correct to state that: "[t]he pilot does not apply to any proceedings where a disclosure order had been made before it came into force unless that order is set aside or varied." Vos J said that the White Book was wrong in this context. He clarified that although a pre-existing order will not be disturbed by the DPS, it is incorrect to say that the DPS does not apply to any proceedings where a disclosure order has already been made.

He highlighted paragraph 18.1 of Practice Direction 51U, which provides that the court may at any stage make an order that varies an order for Extended Disclosure, including making an additional order for disclosure of specific documents or narrow classes of documents relating to a particular issue for disclosure. Vos J said that the court will interpret Practice Direction 51U to make sure that it works in harmony with any orders made before the DPS came into force.

This important judgment confirms that the DPS was intended to (and does apply) to all relevant proceedings in the B&PCs, whether started before or after 1 January 2019, even in a case where a disclosure order was made before 1 January 2019 under CPR Part 31.

Key Points for Clients

The court in UTB LLC v Sheffield United has signalled very clearly that all parties must embrace the key principles and ethos behind the new DPS.

Paragraph 1.3 of Practice Direction 51U makes clear that the pilot will not disturb an order for disclosure made before 1 January 2019 – but, in cases where a new application is made, this will then fall within the DPS and will be dealt with under that regime.

In the absence of transitional provisions, parties should carefully consider the effect of the DPS on any applications for disclosure made after 1 January 2019. While the court may exercise its case management powers to facilitate compliance with disclosure orders, parties should not rely on CPR Part 31 when applying to the court. The court has indicated that the DPS is not a "rewrite of CPR 31" but is a new code and ethos to follow.

 

For further disputes related know-how, Login or Register to Disputes+ Bird & Bird's dedicated DR know-how portal.



[1] The exceptions include: competition claims; public procurement claims; claims within the Intellectual Property and Enterprise Court; proceedings within the Admiralty Court; proceedings in the Shorter and Flexible Trial Schemes; or fixed or capped costs regime cases.

[2] Although the DPS has no transitional provisions, certain parts of CPR Part 31 will remain in force, including: disclosure before proceedings start (CPR Part 31.16); orders for disclosure against a person that is not a party (CPR Part 31.17); rules not limiting the court's other powers to order disclosure (CPR Part 31.18); provisions relating to public interest immunity (CPR Part 31.19); and rules relating to subsequent use of disclosed documents and completed Electronic Documents Questionnaires (CPR Part 31.22).

 

Authors