Teething Problems: The Disclosure Pilot three months in

Published: 27/3/2019

This blog article is the first in a series examining the new disclosure pilot in practice. Below we consider some of the issues surrounding the pilot’s roll-out, the effect of the enhanced requirements surrounding document preservation, and the obligations on parties to provide initial disclosure along with their statements of case.

Background

On 1 January 2019 (the “Commencement Date”), a two year disclosure pilot began in the Business and Property Courts of England and Wales (the “Disclosure Pilot”). The Disclosure Pilot replaced old Part 31 of the Civil Procedure Rules (“CPR”) with new Practice Direction 51U (the “Disclosure Practice Direction”). 

Roll-out of the Disclosure Pilot

The Disclosure Pilot applies to “existing and new proceedings in the Business and Property Courts of England and Wales” (1.2). It does not disturb an order for disclosure made before 1 January 2019 or before the transfer of proceedings into a Business and Property Court, unless that order is varied or set aside (1.3). There is no explicit guidance as to the situations in which a variation or set aside would be appropriate, or whether the mere existence of the Disclosure Pilot would be reason enough.

The application of the new rules to “existing” proceedings has thrown up a number of practical considerations. For example,  the Disclosure Practice Direction is silent on what happens to applications brought before the Commencement Date under provisions available under the CPR 31 (for example, requests for specific disclosure under old Part 31.12 or requests for documents mentioned in pleadings or witness statements under Part 31.14), but listed to be heard after. It is assumed that the court will take a practical approach to applications which fall under this category and that rights and obligations which accrued under the old Part 31 will remain in place. This approach was adopted in the case of Kevin Taylor v Van Dutch Marine Holding Ltd [2019] EWHC 324 (Ch), where the court considered an application for disclosure concerning obligations under the old Part CPR 31 but heard after the commencement of the Disclosure Pilot.

Where specific relief was mentioned in old Part 31 but is not expressly mentioned in the Disclosure Practice Direction, it remains to be seen whether the court will simply transpose these rights under its general case management powers. This was the approach taken in one of the first cases in which the Disclosure Pilot applied: White Winston Select Asset Funds v Mahon [2019] 1 WLUK 202. In White Winston, the court had to consider whether it had jurisdiction to make an order for specific disclosure under old Part 31.12, as that provision had been replaced by the Disclosure Pilot. The court held that whilst it was not clear which part of the Disclosure Practice Direction gave the court jurisdiction to make an order for specific disclosure under what would have been Part 31.12, as a matter of general case management powers, it had the ability to make an equivalent order.

Another potential oddity of the Disclosure Pilot being applicable to “existing” proceedings may arise out of cases where particulars of claim were submitted before the Disclosure Pilot began and a defence is filed after the Commencement Date. In such circumstances, there would be more onerous obligations on the defendants when filing a defence than had applied to the claimants. We have seen a similar question arise in the context of an amended pleading filed after the Commencement Date, where the original pleadings were submitted prior to the Commencement Date. It seems unlikely that a court would be overly critical of a party for not submitting Initial Disclosure with an amended pleading but the risk remains.

Document Preservation Obligations

A key change ushered in by the Disclosure Pilot is the expansion of the obligations on both the parties and their legal representatives in relation to document preservation.

The obligations on parties under the New Disclosure Rules (“the Disclosure Duties”) start early. A person who knows that it is or may become a party to proceedings that have been commenced or who knows that it may become a party to proceedings that may be commenced is under the Disclosure Duties (3.1).

Given the need for early engagement, best practice is likely to be for legal representatives to include standard wording regarding the duties on parties in firm engagement letters and to provide an overview of parties’ disclosure obligations simultaneously.

In relation to document preservation, parties’ key duties include taking reasonable steps to preserve documents in their control that may be relevant to any issue in the proceedings (3.1(2)). The Disclosure Practice Direction further prescribes that the duty to preserve documents includes:

  • an obligation to suspend relevant document deletion or destruction processes for the duration of the proceedings (4.2(1))

  • an obligation to send a written notification in any form to all relevant employees and former employees in accordance that (i) identifies the documents or classes of documents to be preserved; and (ii) notifies the recipient that they should delete or destroy those documents and should take reasonable steps to preserve them (4.2(2) and 4.3(1)(2)); and

  • an obligation to take reasonable steps so that agents or third parties who may hold documents on the party’s behalf do not delete or destroy documents that may be relevant to an issue in the proceedings (4.2(3)).

Under the Disclosure Practice Direction, parties are now required to provide written confirmation that they have complied with the above steps when they serve their particulars of claim or defence (as appropriate) (4.5).

In practice, the enhanced requirements that parties notify employees, former employees, third parties and agents of the need to preserve documents before the statements of case is a time consuming exercise. Consideration must be given to whom the relevant individuals are, and what specific categories of documents they may hold. This is not always a straightforward exercise in cases with complex issues or involving clients with a large number of employees. Standard form wording is not likely to be effective in such circumstances because specific guidance must be given as to what categories of documents must be stored. This naturally varies from case to case and leads to additional cost. In addition, where parties are running up against the expiration of a limitation period or otherwise are under time pressure, it may be difficult for them to carry out their obligations effectively.

Another consequence of the Disclosure Practice Direction’s document preservation requirements is that more detailed conversations with the client about disclosure which previously may in some cases have been held later in proceedings are necessarily brought forward. It remains to be seen whether there are any positive consequences of the front loading of disclosure obligations. In theory it should enable both parties to understand the case they have to meet or the case that is against them earlier in proceedings.

Initial Disclosure

Another change initiated by the Disclosure Practice Direction is the introduction of a new concept of “Initial Disclosure”. Parties are now required to provide to all other parties at the same time as its statement of case an “Initial Disclosure List of Documents” that lists and is accompanied by copies of:

  • the key documents on which it has relied (expressly or otherwise) in support of the claims or defences advanced in its statement of case (and including the documents referred to in that statement of case); and

  • the key documents that are necessary to enable the other parties to understand the claim or defence they have to meet (5.1(1) and (2)).

Initial Disclosure is not intended to be onerous. The circumstances where Initial Disclosure will not be required include where the parties agree to dispense with it, the court has ordered that it is not required, or a party concludes and states in writing, approaching the matter in good faith, that giving Initial Disclosure would involve it or any other party providing whichever is the larger of 1,000 pages or 200 documents.

Aside from the provision of an index of the documents provided, in practice we have so far not found that Initial Disclosure differs vastly from the provision of documents under the old disclosure rules. One notable change does arise, however, out of the requirement for parties to describe “briefly” any searches they have undertaken or caused to be undertaken for the purposes of the proceedings (5.4(2)). There is no prescribed wording to explain what searches have been undertaken and it remains to be seen what searches the court will consider sufficient. For example, it may be that in many cases parties simply include generic wording confirming that they have undertaken searches as necessary to enable them to prepare their pleading. If so, the change will be no more than a tick box exercise.

Conclusion

Understandably, court users are experiencing teething problems as the Disclosure Practice Direction starts to take effect and cases begin to test its provisions. Some of the challenges, such as lack of clarity over the court’s powers in relation to provisions which existed under the old disclosure rules but have no equivalent provision under the Disclosure Practice Direction, will hopefully prove easy for the court to clarify.

However, some problems seem more consequential. For example, the document preservation obligations required prior to the submission of particulars of claim or a defence have had the effect of frontloading time spent on disclosure and adding additional costs upfront. The same goes for the new requirement for “Initial Disclosure”. It remains to be seen whether such frontloading will have any positive impact on the ability to resolve disputes earlier in proceedings.

The New Disclosure Pilot can be accessed here

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