The Disclosure Pilot Scheme – what have we learnt so far?

The Disclosure Pilot Scheme came into force on 1 January 2019 and runs for two years. Engendering a wholly new approach to disclosure, it was always going to contain matters open to interpretation by parties and the courts. With a report due out soon from the scheme’s official monitor, Professor Rachael Mulheron, what have we learnt so far from reported cases?

Transition provisions

In UTB LLC v Sheffield United Ltd, an order for standard disclosure was made under CPR 31 before 1 January 2019. An application for specific disclosure was then made in March 2019. Both parties assumed the Disclosure Pilot Scheme did not apply.

The notes in the 2019 White Book at 51.2.10 stated:

“The pilot does not apply to any proceedings where a disclosure order has been made before it came into force unless that order is set aside or varied”

In fact PD51U states that it applies from 1 January 2019 but “shall not disturb an order for disclosure made before the Commencement Date”

Vos J held that the parties’ assumption that the Pilot Scheme had no application was wrong, as was the note in the White Book. While an order for disclosure made before 1 January 2019 is unaffected by the introduction of the Pilot Scheme, any applications relating to disclosure made after that date will be subject to PD51U. This also means that the duties on the parties and their representatives set out in paragraph 3 of the Pilot Scheme apply.

Cultural change

In several cases judges have emphasised that the Pilot Scheme requires a new approach to disclosure and a move towards a co-operative approach to defining its scope. In UTB Vos J described the need for a cultural shift as “of the greatest importance”

In Canary Riverside Estate Management v Circus Apartments applications for specific disclosure were made by both parties following an order for standard disclosure that was made before 1 January 2019. The applications took two days to hear, with five lever arch bundles of documents and “a raft of witness statements”. Master Schuman commented that “This case provides a good example of why the Disclosure Pilot Scheme was necessary” … “There is a need for the parties to focus on what is required in a case, it requires both cooperation between the professionals and for the parties to assist the court.”

In Vannin Capital v RBOS Shareholders both parties made applications relating to disclosure. The judge described the lengthy skeletons and detailed submissions at the hearing as “both undesirable and contrary to the spirit of the Disclosure Pilot”.

It is perhaps unsurprising that this aspect of the Pilot Scheme has proved the most difficult. In an adversarial system, many practitioners struggle to reconcile their duties to their client and to the court. It may well be that a particularly uncooperative party will be hit with headline grabbing sanctions to try to bring about the necessary change of culture.

Issues for Disclosure

Many parties are taking too “granular” an approach to the List of Issues for Disclosure. Vos J, in McParland & Partners Limited v Whitehead, emphasised that the Issues for Disclosure should be driven by a consideration of what documents exist and what they might help resolve.

The judge did not seek to re-write the list of Issues for Disclosure as the parties had agreed it, but he commented that where they had agreed 16 issues, 3 would have been sufficient.

An example of an issue for disclosure agreed by the parties in this case that was unnecessary was the date on which someone’s employment ended: this was purely a matter of contractual interpretation and both parties had the contract and relevant correspondence. It was an issue in the case, but not an issue requiring disclosure.

Models for Disclosure

Vos J also commented on the use of Models for Disclosure in McParland & Partners Limited v Whitehead.

The parties do not have to use the same Model for each Issue for Disclosure – it may be clear that the documents on a particular issue will all or mainly be with one party, and so a more wide ranging search is appropriate for that party.

Using different Models for different Issues may be helpful, but only if it will reduce the scope of work. Realistically, if you are looking in one pool of documents, and some Issues require a search for relevant documents under Model D, it will increase rather than reduce the work required if another issue for Disclosure is to be conducted by way of requests under Model C.

Specific disclosure

The Pilot Scheme does not specifically allow applications for specific disclosure, but they are still possible.

In White Winston Select Asset Funds LLC v Mahon [2019] EWHC 1014 (Ch), the judge used general case management powers under CPR 3 to make an order for specific disclosure. However, this approach has probably been superseded by the decision of Vos J in UTB. An application for specific disclosure was dealt with under paragraph 18 of the Pilot Scheme, as an application to amend Extended Disclosure. It is worth noting that Vos J held that a list of Issues for Disclosure was necessary in order to deal with it, despite one not having been created for the original, pre-Pilot Scheme, disclosure order.

Extended Disclosure and proportionality

Any order for Extended Disclosure must “be reasonable and proportionate having regard to the overriding objective” including the factors set out at paragraph 6.4 of PD51U. Of these, the two that have repeatedly been emphasised in judgments so far are the third and seventh factors:

• 3- the likelihood of documents existing that will have probative value
  in supporting or undermining a party’s claim or defence;
• 7- the need to ensure the case is dealt with expeditiously, fairly and at a proportionate cost

In UTB, the judge dismissed most requests for Extended Disclosure because he doubted that the documents had sufficient probative value to justify the costs involved in disclosing and reviewing them. The same sub-paragraphs were emphasised by the judge in Maher v Maher.

Known Adverse Documents

In the only reported case dealing with Known Adverse Documents so far, it was said that the relevance of the documents must be “obvious” for them to be Known Adverse Documents: Obaid v Al-Hezaimi.

There appears to be some confusion as to when Known Adverse Documents need to be produced. Paragraphs 9.1 and 9.2 of PD51U seem clear:

• 9.1 If Extended disclosure is ordered, with that;
• 9.2 If no Extended Disclosure is ordered, 60 days after CMC

However, paragraph 3.1(2) can be interpreted as a duty to disclose Known Adverse Documents “once proceedings have commenced”. Clarification on this is awaited, but in our view paragraph 3.1(2) does not impose a duty to disclose Known Adverse Documents earlier than suggested in paragraph 9.

Amending an order for Extended Disclosure

In Brake v Lowes, an order was made for Model B Extended Disclosure (key documents relied upon plus Known Adverse Documents). The order foresaw other issues arising that might later require further Extended Disclosure.

The applicants later requested a wide range of documents over an 8 year period, the purpose of which was to determine whether a couple were ordinarily resident at an address. By the hearing they had narrowed this to 6 narrow categories of document. The judge noted that the earlier broad requests had reduced the chances of co-operation and were “unnecessarily burdensome and oppressive”.

Paragraph 18.3 of PD51U requires an application to amend an order for Extended Disclosure to be accompanied by a “witness statement explaining the circumstances in which the original order for extended disclosure was made and why it is considered that that order should be varied”. The witness statement filed by the applicant did not explain why the court had decided on Model B disclosure. It also failed to explain why the order should be varied: “It simply says, "We would like this disclosure. We think we ought to have it because this is an issue which has to be dealt with".” The application was refused.

Incomplete standard disclosure

Maher v Maher is another case where standard disclosure was given before the Pilot Scheme came into force, but the DPS applied from 1 January 2019. The claimant sought specific disclosure of bank statements, which had not been disclosed, relying on paragraph 5.4 of the old Practice Direction 31A:

“If the court concludes that a party from whom specific disclosure is sought has failed adequately to comply with the obligations imposed by an order for disclosure the court will usually make such order as is necessary to ensure those obligations are complied with.”

The judge felt that the defendant may not have complied with its obligations. However, he held that PD31A had been superseded by the Pilot Scheme with its “emphasis on culture change and reasonableness and proportionality”. Applying the factors in paragraph 6.4 of PD51U, he found that the bank statements were likely to be of limited probative value in supporting, or undermining, the parties’ cases. With the trial approaching, specific disclosure of the bank statements was disproportionate. The case did “not require every stone to be turned over, still less for a whole pile of more stones to be imported from a neighbouring quarry”

Pre-action disclosure

PD51U retains CPR 31.16 (pre-action disclosure) unchanged. In A v B [2019] WL 04919363 Knowles J decided an application for pre-action disclosure in a case that had seen 4 years of pre-action correspondence. He cited 5 reasons for refusing the application, including that some of the requests for documents were speculative and that the claimant had received other information already.

His main reason was that disclosure would be better dealt with once focused statements of case had been exchanged, allowing the real issues requiring disclosure to be identified. Pre-action disclosure as requested would be similar in scope to old “standard disclosure” and a more focused approach under PD51U would be preferable.

Disclosure Guidance Hearings

Disclosure Guidance Hearings are a new type of hearing introduced by the Pilot Scheme, enabling the parties to seek guidance from the court where, despite their best efforts, there are issues between them as to the correct scope of disclosure. They can be made before or after the CMC.

According to paragraph 11.2 of PD51U, Disclosure Guidance Hearings should be no longer than 30 minutes, with no more than 30 minutes pre-reading required. In reality courts are listing Disclosure Guidance Hearings for longer than this.

Parties are probably not using Disclosure Guidance Hearings as often as they should. In Vannin Capital v RBOS Shareholders both parties applied to the court for orders relating to disclosure. The judge pointed out that the issues were exactly the kind that should have been resolved via a Disclosure Guidance Hearing rather than extensive correspondence and then applications.

DRD and methodology

The Disclosure Review Document serves several purposes throughout the process. In general it has not been well received. Paragraph 10.2 of PD51U makes clear that in complex cases the form of the DRD can be amended to suit the case – particularly necessary in multi-party litigation. However, it is not clear whether in simpler cases it is acceptable to leave parts of the DRD uncompleted. This is likely to be an area of focus for the Disclosure Working Group in any amendments made to the pilot.

There has been little judicial guidance on use of the DRD, but in Agents’ Mutual Ltd v Gascoigne Halman Ltd it was emphasised that the methodology for searches should be agreed between parties before any manual review begins. The judge accepted that finding appropriate search terms and search parameters for an electronic search is often an iterative process and may require extensive liaison between the parties before these are finalised. However, as the greatest cost lies with the manual review, there should be no debate about the methodology once that has started.

The future

The pilot is a “living pilot” and changes may be made to it during the course of its existence. Professor Rachael Mulheron is monitoring the pilot for the Disclosure Working Group that created it. She published a questionnaire seeking feedback from practitioners in October 2019 and much feedback has been collated. There is unlikely to be consensus on many points, but there are likely to be areas where it is clear that improvement is needed and it is very possible we will see changes to the pilot before it concludes.

Some practitioners will doubtless call for the scrapping of the Pilot Scheme. However, a return to Part 31 seems unlikely, given the comments of senior judges at the launch of the Pilot Scheme that Part 31 was no longer fit for purpose. Our prediction would be several changes to the Pilot Scheme, ranging from clarifications up to some structural changes, particularly to the DRD, with an extension of the Pilot Scheme by at least a year to allow those changes to be tested.