Disputes in disclosure – commercial litigation

This articles outlines a brief introduction to disclosure in commercial litigation disputes. It outlines risks prevalent in the disclosure process, and how this is sometimes weaponised by the other side in business disputes. It outlines various Court applications that may assist to obtain documents against another party’s will. Disclosure can make or break a case and early legal advice is key.

What is disclosure?

“Disclosure” broadly refers to the exchange of material documents between parties to litigation.

Key documents are usually exchanged prior to the start of court proceedings, often via lawyers’ letters, called Letters of Claim, so that each side can understand the other party’s position, and assess the merits of fighting the claim.

If a court claim is then issued, a more detailed exchange of all material documents usually happens part way through litigation, after parties have summarised their case to the Court and each other, after exchanging the “Particulars of Claim” and “Defence”.

Disclosure can be time consuming and expensive

Disclosure can be one of the most expensive and time consuming aspects of commercial litigation, especially in complicated business or professional disputes which may have developed over several years.

If there are years of communications between large companies, or professional firms, then disclosure can amount to thousands of documents from each side, which need to be checked, catalogued and sorted. A lot of disclosure is dealt with electronically now, and the courts have tried to cut down on complexity and costs but it can still be a mammoth task. It might require outsourcing.

Some parties try to use disclosure as a weapon, both to flood the opposition with reams of irrelevant documents, whilst simultaneously failing to search for or hiding key documents which damage their case. Disclosure is used to cause unnecessary expense and time restraints on the other side.

What documents need to be disclosed?

People unaccustomed to court proceedings are often surprised to learn that in commercial litigation in the English and Welsh courts, there is a requirement to disclose all material documents, which are relevant to a dispute.

The requirement is not only to provide documents which support your case, but also those that are damaging to it.

There are some exceptions to this, if a document has protection known as “privilege”, which includes much of the correspondence between lawyers and clients provided for legal advice, or correspondence with a third party where litigation is reasonably in prospect. If a document is privileged then it can legitimately be withheld.

Documents that need to be disclosed can include not only letters and emails, but potentially any recordable information, such as video, voice recordings and even metadata from electronic databases.

There is a need to actively search for documents and take active steps to preserve them.

Why do disputes about disclosure arise?

Disputes about disclosure are common in commercial litigation for a number of reasons.

• They frequently arise before a claim is issued, where one party requires a copy of a key document from the other side to assess whether they have a claim, but the other side refuses to provide it or fails to respond.
• They commonly arise part way through litigation, after each party has exchanged a list of all material documents “List of documents”, but refuse to provide some or all of them, alleging they are privileged unjustly.
• Disclosure can become compulsory even by mistake. For example, disclosing an expert report, or barrister’s advice to the opposition, can lead to the confidential instructions to that expert also becoming discloseable, and which may betray weaknesses in the case.
• A party may say they have searched for all material documents when they haven’t and mislead the other side and the Court.
• A party may refuse to provide certain documents asserting that the time and costs of doing so are disproportionate to the issues in dispute, even when this is untrue.
• A party may accidentally reference a crucial document in oral cross examination in a hearing, which hasn’t been provided.
• A party may actively begin to destroy incriminating documents upon notification of a claim.
• Searches for documents may be artificially narrow or selective, so as to avoid disclosing a fatal document.
• Issues arise as to whether the information constitutes a trade secret or not, and whether it should be disclosed. Sometimes this can be artificial.
• If a party carelessly waives privilege to a protected documents, then privilege may be lost and it may become discloseable. The other party might try and object, saying it would ruin their case, but can be court ordered to do so.

There are sometimes signs which can be suggestive of partial disclosure, for example if there is a gap in the chronology of documents around a key event, or if a certain group of documents are missing; this could indicate dishonesty. Sometimes it is not obvious. A difficulty arises as the description of documents in the List does not have to be particularly detailed and so detailed assessment can be tricky.

What court applications might assist?

Fortunately there are various Court applications a party can make either before or during the course of commercial litigation, which may assist in getting disclosure of key documents (or preserving them):

1. It is possible to make a pre-action disclosure application under CPR 36.16.
2. It is possible to make a specific disclosure application under CPR 36.12.
3. You can apply for Bankers Trust Orders, Norwich Pharmacal relief, general injunctions for delivery up.
4. You can apply for disclosure against a non-party to litigation under CPR 36.17.
5. You can apply for a Witness Summons under CPR 34.2 compelling a party to bring documents with them to Court.
6. You can apply for Search Orders without notice to the opposition, which may grant right of access to opposition’s premises, to try and preserve documents at risk of destruction (previously known as Anton Piller orders).
7. There are “Doorstep Orders” which do not allow entry to premises, but require disclosure of documents (a less draconian version of Search Orders).
8. A CPR Part 18 request can force a party to provide further information and are common after statements of case are exchanged, such as Defences.
9. Data Subject Access Requests (DSARs) are increasingly being weaponised to obtain information pre-litigation to see if there is a possible claim.

It may be these Court applications can help to secure (or preserve) information which can win a case and lead to early offers of settlement. The approach needs to be carefully tailored to the circumstances of the dispute.

If you have a high value complex commercial or contractual dispute, contact our Dispute Resolution lawyers at Hodge Jones & Allen on 0808 271 9413 to see how we can help.