In a recent decision the Technology and Construction Court has held that, in most cases, the Issues for Disclosure under Practice Direction 51U (the Disclosure Pilot) must be pleaded issues that have been crystallised in the statements of case. However, the court stressed that not all issues that appear in the statements of case will automatically become Issues for Disclosure: Curtiss v Zurich Insurance PLC  EWHC 1999 (TCC).
The Disclosure Pilot requires the parties to identify and seek to agree Issues for Disclosure, defined as the “key issues in dispute, which the parties consider will need to be determined by the court with some reference to contemporaneous documents in order for there to be a fair resolution of the proceedings”.
Guidance on this provision was given by the Chancellor of the High Court in McParland & Partners v Whitehead  EWHC 298 (Ch) (considered here) to the effect that Issues for Disclosure are not the same as issues to be determined at trial and should not be numerous, detailed or complicated. However, it has not been clear from the case law whether it is a prerequisite for an Issue for Disclosure to be identifiable on the face of the statements of case.
The present case suggests that, in most cases, there will be such a prerequisite, in particular where the question is what disclosure is necessary for a fair determination of the issues at trial. However, the decision leaves open the possibility of a different approach where the court is considering a request for disclosure in relation to an issue that arises at an interlocutory stage, such as an application to amend a statement of case. The judge made clear that he was not concerned with that situation, and said nothing about it.
The claimants are leasehold owners of apartments in a development in Swansea that was completed in 2010. The development suffered from significant defects.
The claimants issued proceedings in 2020 against the defendant insurers, who had issued New Home Warranty Insurance policies to the claimants in respect of potential structural defects relating to the development. Before issuing cover notes in respect of the policies, the defendant’s surveyors carried out inspections of the apartments.
The claimants alleged that: by issuing the cover notes, the defendant made certain representations as to (in essence) the fitness of the apartments; these representations were made fraudulently; and they had induced the claimants to purchase apartments that were considerably less valuable than the price they paid for them. The claimants sought exemplary damages on the basis that (it alleged) the defendant cynically carried on its business in a manner that was wilfully regardless of the claimants’ interests or of the risk that, because of its surveyors’ failure to carry out proper inspections, they would purchase apartments that suffered from serious defects.
In relation to their claim for exemplary damages, the claimants proposed 12 Issues for Disclosure, relating to matters such as the profitability of the defendant’s New Home Warranty business division and how that compared to other forms of insurance it offered, the role the costs of the division played in the defendant’s decisions about management and staffing, and whether the defendant prioritised inspections at particular developments. With the exception of two of the 12 proposed issues, the defendant did not agree that these were properly Issues for Disclosure.
The High Court (His Honour Judge Keyser QC sitting as a High Court judge) rejected all but the two issues agreed by the defendant.
The judge set out some of the key provisions of the Disclosure Pilot in relation to extended disclosure, including:
- Paragraph 2.4: The court will be concerned to ensure that disclosure is directed to the issues in the proceedings and that the scope of disclosure is not wider than is reasonable and proportionate… in order fairly to resolve those issues.
- Paragraph 7.3: “Issues for Disclosure” means for the purposes of disclosure only those key issues in dispute, which the parties consider will need to be determined by the court with some reference to contemporaneous documents in order for there to be a fair resolution of the proceedings. It does not extend to every issue which is disputed in the statements of case by denial or non-admission.
- Paragraph 7.4: The claimant should seek to ensure that the draft List of Issues for Disclosure provides a fair and balanced summary of the key areas of dispute identified by the parties’ statements of case and in respect of which it is likely that one or other of the parties will be seeking search-based Extended Disclosure.
He referred to the Chancellor’s guidance on the identification of Issues for Disclosure in McParland v Whitehead (referred to above) and specifically to his observation that: “It should not be a mechanical exercise of going through the pleadings to identify issues that will arise at trial for determination. Rather it is the relevance of the categories of documents in the parties’ possession to the contested issues before the court that should drive the identification of the issues for disclosure”.
The judge said that paragraph 7.3 of the PD, together with the Chancellor’s remarks in McParland, make clear that the mere fact that an issue is a matter of dispute in the statements of case – even if it is a central issue – does not suffice to make it a proper Issue for Disclosure (for example where there is an issue as to the legal effect of undisputed facts). However, he still had to decide whether it is a necessary precondition of being an Issue for Disclosure that an issue is a pleaded issue.
The judge noted that the court in Lonestar Communications v Kaye  EWHC 1890 (Comm) had concluded that “issues for disclosure must be crystallised in the statements of case” but this reasoning was not followed in a later High Court decision in Commissioners for HMRC v IGE  EWHC 1716 (Ch) (considered here) which held that the scope of issues for disclosure was not limited to those matters to be determined at trial and/or raised in the statements of case. (See also the decision of Master Clark in Eurasian Natural Resources Corporation Ltd v Ake-Jean Qajygeldin  EWHC 462, considered here – though that decision was not referred to in the present case.)
The judge in the present case stated that, for the purposes of this case and most case management conferences at which extended disclosure must be considered, the approach of the court in Lonestar was correct. Where the question was what disclosure was necessary for a fair determination of the issues at trial, such disclosure must be directed to the issues in dispute on the statements of case. That was reflected in the wording of paragraphs 2.4, 7.3 and 7.4 cited above. He distinguished the decision in Commissioners for HMRC on the grounds that that was an application for disclosure relating to an issue that would arise on a proposed amendment to a statement of case for the purpose of adding an allegation of fraud.
Applying these principles to the 12 issues identified by the claimant, the judge rejected all but the two issues agreed by the defendant. This was because the issues in question were not issues in the case at all or were not key issues, or were so vague as to be more in the nature of a “fishing expedition”.