Disclosure Pilot Scheme to take effect as permanent new Practice Direction from 1 October 2022, with no substantial changes

The Disclosure Pilot Scheme, which has been operating in the Business and Property Courts since January 2019, is to be incorporated into the Civil Procedure Rules permanently, with only minimal changes. From 1 October 2022, it will take the form of a new Practice Direction (PD) 57AD “Disclosure in the Business and Property Courts”, which is substantially in the form of (and replaces) the current PD 51U. The Chancellor of the High Court and Master of the Rolls have welcomed the move, as announced here.

The adoption of the Disclosure Pilot on a permanent basis follows a process earlier this year in which the Disclosure Working Group sought views on the scheme’s operation to date, including whether it has achieved the key aim of reducing the time and costs involved in the disclosure process. The results of that process have not been published but, anecdotally, there is a great deal of scepticism among practitioners as to whether the Disclosure Pilot has led to any costs savings, particularly in complex disputes, given the high costs of negotiating the list of issues for disclosure and agreeing appropriate disclosure models for each, not to mention reviewing documents to assess whether they correspond to the particular issues in question.

The Chancellor has recognised that the Disclosure Pilot has resulted in a front-loading of costs, but stated that it has also led to a dramatic decline in specific disclosure applications and a “far more focused and efficient approach to the disclosure process generally”. The Master of the Rolls has described the new PD as reducing the need for disclosure where it is unnecessary, and increasing the parties’ focus on the real issues in the case.

The minor changes that will be included in the new PD57AD can be viewed in a redline comparison to the current PD51U here. They include:

  • Part 8 Claims: Confirmation that PD57AD does not apply to Part 8 claims unless specifically ordered (in which case the court can adapt the procedure as appropriate to the proceedings)
  • Known Adverse Documents:
    • Confirmation that Known Adverse Documents must be disclosed even if the issue to which they are relevant is not one of the issues in the List of Issues for Disclosure
    • Clarification of the timing for disclosure of Known Adverse Documents, by removing wording that arguably suggested this is required as soon as proceedings are commenced
  • Model C requests (ie for particular documents or narrow categories of documents): Confirmation that a party may not only address Model C requests to other parties but also propose the use of Model C for its own disclosure
  • Certificate of Compliance: Confirmation that this is not required in cases where a Disclosure Review Document does not need to be prepared
  • Disclosure Certificate:
    • Amendment to the wording regarding the duty to contact any relevant former employees for the purpose of identifying Known Adverse Documents, which now accurately reflects the scope of the duty (in PD57AD) – ie to “take reasonable steps to check the position” with such employees, rather than to receive positive confirmation from all of them
    • Confirmation that a party’s legal representative may sign the Disclosure Certificate provided that they have explained to the party its significance and have written authority to sign on the party’s behalf
  • Less Complex Claims: The default threshold below which a simplified procedure will apply (subject to party agreement or court order) has been increased from £500,000 to £1 million claim value
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High Court orders broad “train of inquiry” (or Model E) disclosure on key issue in dispute

In a recent decision, the High Court has made a rare order for disclosure to be given under Model E of the Disclosure Pilot at PD51U – ie old-fashioned “train of inquiry” disclosure, of the sort that applied before 1999 when the Civil Procedure Rules introduced a more limited concept of “standard disclosure”: Ras Al Khaimah Investment Authority v Azima [2022] EWHC 1295 (Ch).

The debate in this case was between Model D and Model E disclosure. Model D essentially replicates standard disclosure, ie those documents which are likely to support or adversely affect any party’s case. The difference between the two models is that Model E also includes “train of inquiry” documents, or those which “may lead to a train of inquiry which may then result in the identification of other documents for disclosure” (because those other documents are likely to support or adversely affect any party’s case).

Even before the introduction of the Disclosure Pilot in 2019, with its focus on restricting disclosure to what is really needed to determine the issues in dispute between the parties, orders for train of inquiry disclosure were already rare. This is illustrated for example by Berezovsky v Abramovich [2010] EWHC 2010 (considered here) in which such an order was refused despite the case involving huge sums and involving allegations of fraud.

It is important to note that, although train of inquiry disclosure was ordered in the present case, it was ordered only in relation to a particular issue, which the court described as a “core critical issue” in the case. It was also significant that there were allegations of a cover-up, and that there had clearly been a substantial loss of documentation, whether or not that was the result of a deliberate policy by the respondent (which the judge could not assess in the context of the application). The decision does not indicate that a more expansive approach will be taken to ordering train of inquiry disclosure, but is of interest in illustrating the circumstances in which such an order may be considered appropriate.

The decision also considers an application for security for costs, which is addressed in our separate blog post here. Continue reading

High Court considers whether “Issues for Disclosure” under the Disclosure Pilot must be issues pleaded in the parties’ statements of case

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 [2021] 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 [2020] 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. Continue reading

High Court finds accountants’ investigation report not protected by litigation privilege and considers requirements for obtaining disclosure under the Disclosure Pilot

The High Court has granted an application by a claimant state for orders that the defendant bank disclose an accounting firm’s investigation report (and associated documents) originally withheld from disclosure on the grounds of litigation privilege, as well as to disclose certain categories of documents on a Model E or “train of enquiry” basis and make further enquiries for “known adverse documents”: State of Qatar v Banque Havilland SA and others [2021] EWHC 2172 (Comm).

The decision does not establish new principles relating to litigation privilege, but is noteworthy as it underlines the difficulties caused by the dominant purpose test in establishing a claim for litigation privilege where documents were arguably produced for a number of purposes, including to deal with enquiries from regulators, rather than solely for the purpose of anticipated litigation.

For more information see this post on our Banking Litigation Notes blog.

Disclosure Pilot to be extended for a further year and the procedures streamlined

The Disclosure Working Group has today published an Update on the operation of the Disclosure Pilot Scheme, which has been running in the Business and Property Courts since the beginning of 2019 under Practice Direction (PD) 51U.

The update notes that the Disclosure Pilot has been extended to the end of 2022, as approved by the Civil Procedure Rule Committee (CPRC) at a recent meeting, and outlines a number of proposed revisions to PD 51U in response to a request for feedback from court users. These have been approved in principle by the CPRC but remain subject to final approval by both the CPRC and the Justice Minister. The timing is not entirely clear from the update, but we expect the aim is to implement the revisions this autumn. The key changes are outlined below.

Agreeing issues for disclosure and disclosure models: There is a streamlined approach to proposing and agreeing lists of issues for disclosure and associated disclosure models, which should greatly increase the efficiency of the process. This means that the claimant identifies its proposed disclosure models for each of the issues for disclosure it proposes, including how any Model C disclosure should be defined, at the same time as putting forward its draft list of issues. The other parties then comment on all of the proposals. This contrasts with the current approach which envisages the parties agreeing the list of issues and then starting to discuss the appropriate disclosure model for each issue.

Model C disclosure: There are amendments to “discourage excess” where Model C disclosure is used, making it clear for instance that Model C proposals should be “limited in number, focused in scope and concise” and that broad and wide-ranging formulations such as “any or all documents relating to…” should not be used. It also appears that it is now open to parties to propose how Model C disclosure should be defined for their own documents as well as an opponent’s documents, whereas the previous wording tended to suggest that it was for a party to put forward “requests” for specific documents or categories from its opponent. So for example Model C disclosure has been renamed as “Disclosure of particular documents or narrow classes of documents” rather than “Request-led search-based disclosure”.

Multi-party cases: Although the pilot continues to apply to multi-party cases, there is now express recognition that disclosure in such claims is likely to need a bespoke approach from the court. The new draft PD 51U provides that “the court may order that the timetable and procedure is to be varied so as to provide a bespoke timetable and procedure to meet the needs of the individual multi-party case”. Parties are encouraged to apply for such an order at an early stage. The new draft also states that parties to multi-party cases should discuss and seek to agree whether it is appropriate for all of the disclosing party’s documents to be given to all of the other parties or to some only.

Less complex claims: There is a new separate regime within the pilot for “Less Complex Claims”, ie those which by virtue of their nature, value, complexity and the likely volume of disclosure may not benefit from the full pilot procedure. There is a presumption that a claim valued at less than £500,000 should be treated as a Less Complex Claim, unless another factor indicates to the contrary.

Disclosure guidance: There is now less emphasis on the use of hearings in order for the court to give guidance on disclosure issues. Disclosure Guidance Hearings are an innovation of the pilot but have not been widely used. The new draft PD makes it clear that the court can also control the disclosure process in the traditional way, by a party issuing an application notice to raise an issue for determination by the court.

Anna Pertoldi
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Maura McIntosh
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High Court confirms jurisdiction to order disclosure under Disclosure Pilot Scheme not confined to issues identifiable from statements of case

The High Court has confirmed that it has jurisdiction to order disclosure of specific documents under the Disclosure Pilot Scheme, even where the disclosure relates to issues which are not identifiable on the face of the statements of case and no List of Issues for Disclosure has been agreed by the parties: The Commissioners for Her Majesty’s Revenue and Customs v IGE USA Investments Ltd [2020] EWHC 1716.

The court noted that the Disclosure Pilot Scheme (at Practice Direction (PD) 51U) does not contain a direct equivalent to the general power to order “specific disclosure” in cases falling outside the pilot. Instead there are two new powers: paragraph 17, which applies where there has been a failure to comply with an existing order for extended disclosure, and paragraph 18, which allows the court to vary such an order, including by ordering further disclosure of documents “relating to a particular Issue for Disclosure”.

However, the court did not accept that “Issues for Disclosure” are limited to issues that can be identified on the face of the statements of case at the date that the List of Issues for Disclosure is finalised. The concept comprises the key issues that will need to be determined by reference to contemporaneous documents for there to be a fair resolution of the proceedings, which is broader than just the issues to be determined at trial, or those raised in the statements of case. Nor is the existence of a List of Issues for Disclosure a pre-requisite to making an order: the List of Issues for Disclosure is merely a tool for identifying the Issues for Disclosure.

On the facts of this case, that meant that the court could grant an application for disclosure of documents that were relevant only to allegations of fraud which the claimant was seeking to introduce by an amendment to its particulars of claim. Continue reading

Commercial litigation podcast series – Episode 4: General update

In this fourth episode of our series of commercial litigation update podcasts, we look at a variety of cases and developments, including an update on the disclosure pilot and proposals in relation to witness statements. We also look at recent cases on privilege, witness evidence, access to court documents, claim notices and freezing injunctions. This episode is hosted by Anna Pertoldi, a partner in our litigation team, who is joined by Maura McIntosh, a professional support consultant, and Kevin Kilgour, a senior associate.

Our podcast is available on iTunes, Spotify and SoundCloud and can be accessed on all devices. A new episode will be released every couple of months. You can subscribe and be notified of all future episodes.

Below you can find links to our blog posts on the developments and cases covered in this podcast:

Anna Pertoldi
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Maura McIntosh
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Article published – Disclosure Pilot Scheme: a potential way forward?

A judicial update on the operation of the Disclosure Pilot Scheme has recently been published, together with the Third Interim Report on the pilot which sets out feedback received. The report suggests that, in the view of court users, the pilot has not succeeded in making disclosure simpler and cheaper. The update sets out a number of proposed amendments to the scheme, which are to be considered by the Civil Procedure Rules Committee, but they are relatively light touch and seem unlikely to result in fundamental changes.

Maura McIntosh has published a post on Practical Law’s Dispute Resolution blog which considers the report and the proposed amendments and suggests a potential compromise solution, which would seek to achieve the aims of the scheme while avoiding much of its complexity. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

 

Judicial Update on operation of the Disclosure Pilot Scheme

The judiciary has today published an Update on the operation of the Disclosure Pilot Scheme which has been operating in the Business and Property Courts since 1 January 2019 and is set to continue until the end of 2021 following a recent extension.

The update includes publication of the Third Interim Report on the pilot by Professor Rachael Mulheron of QMUL, who has been monitoring the pilot since the outset. The report is dated 25 February 2020 but has only now been released. It analyses the 71 responses received to a questionnaire that practitioners were asked to complete in October/November 2019. The report presents a mix of positive and negative feedback regarding the detailed operation of the pilot, but respondents’ views on the overall outcomes under the pilot, as set out in the report, are overwhelmingly negative:

  • 85% say the pilot has not saved costs overall (4% say it has, 10% can’t say/too early)
  • 42% say it has made disclosure less accurate (16% say more accurate, 42% can’t say/too early)
  • 71% say it has increased burdens on the courts (2% say decreased burdens, 27% can’t say/too early)
  • 78% say it has not brought about a culture change (6% say it has, 16% can’t say/too early)

Professor Mulheron’s note accompanying publication of the report, dated 17 September 2020, states that there will be a further opportunity to give feedback on the pilot as it enters its third year of operation in 2021. In the interim, there will be a survey of the judiciary to ascertain their views and experiences of the pilot, which will take place shortly after the new judicial term begins.

The judiciary’s update includes a proposed revised version of the pilot rules at Practice Direction (PD) 51U, together with a revised version of the Disclosure Review Document, which are expected to be considered by the Civil Procedure Rules Committee (CPRC) in October. Some of the main proposals are as follows:

  • Clarifying that the obligation to disclose “known adverse documents” does not bite until the stage at which the parties provide any Extended Disclosure.
  • Providing that document preservation notices only need to be sent to employees or former employees where there are reasonable grounds to believe that the relevant person has disclosable documents that are not already in the possession of the party to the litigation.
  • Providing that there is no need to disclose adverse documents at the Initial Disclosure stage, and that the parties can agree to dispense with the requirement for an Initial Disclosure List of Documents.
  • Confining the obligation to complete the Disclosure Review Document (DRD) to cases where the parties propose one or more search-based Extended Disclosure models, and providing that some sections of the DRD may not have to be completed in some circumstances.
  • Clarifying the scope of “Model C” request-based disclosure, and in particular that this is intended to relate to narrow categories of specific requests – ie not the wide-ranging requests that you might find in a “Redfern Schedule” in international arbitration.
  • Simplifying section 2 of the DRD, which provides the court with information about the data held by each party, and allowing parties to tailor it more easily to their cases.

A number of these proposals were mentioned during the Commercial Court 125 virtual seminar on 7 September as outlined here.

The judiciary’s update emphasises that, unless and until the proposed amendments are approved by the CPRC, they have no formal status. We will provide a further update once the position is clear regarding the amendments.

In any event, given the relatively limited nature of the proposed amendments, it is not obvious that they will be sufficient to alleviate court users’ concerns regarding overall outcomes under the pilot.

Julian Copeman
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Anna Pertoldi
Anna Pertoldi
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Maura McIntosh
Maura McIntosh
Professional support consultant
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Commercial Court 125 virtual seminar: insights on virtual hearings, the disclosure pilot and witness evidence reform

On Monday 7 September, the Commercial Court presented its first virtual seminar as part of the celebration of the Court’s 125th anniversary, entitled: “Year 126 and onwards: planning for the future of London’s Commercial Court“. Chaired by Lord Justice Flaux, the Supervising Lord Justice for the Commercial Court, the event comprised panel sessions on virtual and hybrid hearings, the disclosure pilot and the future of witness statements. Some points of interest from the discussions are highlighted below.

Virtual and hybrid hearings

The move to virtual hearings in the Commercial Court has been remarkably successful, with the court able to conduct the vast majority of scheduled hearings during lockdown. Now that restrictions have eased, some cases are being heard through a hybrid of physical and remote attendance.

A panel chaired by Mrs Justice Cockerill, the Judge in charge of the Commercial Court, considered the advantages and disadvantages of virtual hearings for different hearing types. The key advantage is seen as the potential for cost saving, particularly where parties or witnesses would need to travel long distances to attend court. Virtual hearings can also give scope for more client representatives to be involved than would be able to attend court in person. There are however a number of disadvantages, including greater difficulty in taking instructions, the loss of visual clues regarding the parties’ reactions to particular points, and less free-flowing discussions and judicial intervention. Concerns were expressed in particular at the potential disadvantages for more junior barristers and solicitors, who may lose much of the benefit of attending court in terms of their legal and practical education and experience.

The potential to have at least some hearings, or elements of hearings, continue to operate remotely does however seem to have been popular among attendees of the seminar, based on the results of a poll conducted during the session. The results were as follows:

  • 81% said procedural hearings (up to half a day) should be remote by default.
  • 60% said the parties should be able to agree that a CMC will not be virtual, whatever the court’s view.
  • 58% said hearings of substantial interlocutory applications should remain virtual in some form.
  • 80% said only main witnesses should attend court physically, with a presumption that minor witnesses will give evidence remotely.
  • 72% said they would favour other portions of trial (eg submissions) also being held remotely.

Disclosure pilot

A disclosure pilot scheme has been underway since the beginning of 2019 in the Business and Property Courts, including the Commercial Court. Governed by rules set out in CPR Practice Direction (PD) 51U, the pilot was originally intended to run for two years but it has been extended to the end of 2021 to give a greater opportunity to see how the pilot is working and whether it achieves its aims – including, crucially, to save costs.

A panel chaired by Ed Crosse, who is a member of the disclosure working group, considered the pilot rules and the feedback received to date, as well as setting out some proposals for amendments to the pilot rules which are to be put before the Civil Procedure Rule Committee (CPRC) this autumn.

Prof Rachael Mulheron of QMUL, who has been monitoring the pilot, outlined some positive and negative aspects that stood out from the feedback received to date. The key positives are: the introduction of the initial disclosure stage; the need to look at technology-assisted review at an early stage; and the introduction of a duty of cooperation in the disclosure process. On the negative side, there are concerns regarding: the list of issues for disclosure and the potential for this to lead to disputes; the front-loading of costs including in preparing the Disclosure Review Document (DRD); the increased burdens in relation to document preservation including the need to contact ex-employees; and the need to select disclosure models per issue which is requiring a lot of work.

As regards the proposed amendments to the pilot rules, points mentioned during the session include changes to:

  • Clarify the timing of the obligation to disclose “known adverse documents” – at the moment the PD could be interpreted to suggest that these need to be provided with initial disclosure, which is not what is intended.
  • Clarify that document preservation notices will only need to be sent to former employees where there are reasonable grounds to believe that the relevant person has potentially disclosable documents that are not already in the possession of the party to the litigation.
  • Clarify the scope of “Model C” request-based disclosure, and in particular that this is intended to relate to narrow categories of specific requests – ie it should not typically involve wide-ranging “any and all documents relating to x issue” type requests that you might find in a “Redfern Schedule” in international arbitration.
  • Simplify section 2 of the DRD, which provides the court with information about the data held by each party, and allow parties to tailor it more easily to their cases.

Witness statements

A witness evidence working group was set up in 2018 to consider potential reforms in light of concerns that witness statements often contain irrelevant or inadmissible material and do not always achieve best evidence. The group’s report was published in December 2019 and made various recommendations, including that an authoritative statement of best practice should be prepared. A draft of that statement has now been prepared by the working group, in the form of a draft PD 57AC and Appendix, and was available for review by attendees of the seminar. The draft will in due course be considered by the Business and Property Courts Board and the CPRC.

A panel chaired by Mr Justice Andrew Baker, and which included our own Chris Bushell, both of whom are members of the working group, considered the aims of the draft PD and Appendix and the extent to which they are likely to achieve these. In broad terms, the aims include improving witness evidence by reducing the potential for a witness’s recollections to be influenced or overwritten by the process of taking the statement itself, as well as refocusing witness evidence on the areas where it is actually needed – rather than the detailed recitation of and commentary on the documents which is often found in witness statements at the moment. It is also hoped that, as well as improving witness evidence, this will increase cost efficiency and reduce the burdens on witnesses.

As well as the best practice statement itself, the draft includes a new enhanced statement of truth from the witness and a new certificate of compliance from the legal representative, both of which should help focus minds on the necessary change of practice. Two other aspects are new: (i) a new requirement that for important disputed matters of fact the statement should, if practicable, state how well the witness recalls the matter in question and indicate the extent to which that recollection has been affected by considering documents; and (ii) a new requirement to identify what documents, if any, the witness has referred to or been referred to for the purpose of providing the statement.

The one area on which the working group is divided is the requirement referred to at (ii) above. Some members of the working group believe this strikes the appropriate balance between transparency regarding the interactions with the witness, on the one hand, and party autonomy in presenting the evidence, on the other, and gives the judge important information to help him or her assess the weight to be attached to the witness’s evidence. However, some members believe the requirement goes too far, particularly when considering large, complex commercial cases where the relevant events may have taken place some years before and it may be necessary to take the witness through the contemporaneous documents to put them back in the relevant context and see what evidence they can give. The concerns include: the possibility of judges drawing adverse inferences from a long list as to the quality of the witness’s evidence, where that may not be justified; obvious difficulties regarding the witness who is also the client, and will therefore have to review documents in the course of giving instructions; and potential difficulties regarding the need to list privileged documents.

Chris Bushell
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Anna Pertoldi
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Maura McIntosh
Maura McIntosh
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