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Disclosure pilot scheme: a comprehensive reshuffle

Posted: 26/10/2018

Let’s call a spade a spade: disclosure in the UK litigation process has got increasingly out of hand. The exponential growth in electronic documents in recent decades has resulted in spiralling scale, complexity and costs in this key evidential stage. Disclosure these days bears little resemblance to the paper-based exercises of yore. And, despite attempts to up the ante, the disclosure process remains one card short of the deck.

Traditionally, the English ‘cards on the table’ approach to disclosure, whereby all parties disclosed documents both helpful and harmful to their case, drew international litigants to our justice system. Today however, the benefits of this wide approach are ever more eclipsed by the associated costs; so much so that those costs can now deter international parties from bringing claims here. This jeopardises our position as a dispute resolution jurisdiction of choice – something we can ill afford in the current climate.

All change: a new deck of cards

Sir Rupert Jackson’s introduction of a disclosure ‘menu’ in CPR Part 31 back in 2013 was an admirable attempt to overhaul disclosure. The disclosure menu enabled (in theory) the court and parties to tailor disclosure to the needs of the particular case, with options ranging from standard disclosure to dispensing with disclosure entirely, and several others in between.  However, the judiciary and the profession largely did not engage with or adopt the changes, and standard disclosure (which can lead to many irrelevant documents being disclosed) still remains the default option and by far the most likely choice. 

Against a background of increasing concerns expressed by court users and the profession, the Disclosure Working Group (DWG), formed in 2016 and chaired by Dame Elizabeth Gloster, was tasked with identifying the problems and proposing a practical solution. 

On 31 July 2018 it was announced that the Civil Procedure Rule Committee (CPRC) has given its final approval to a two-year disclosure pilot scheme for cases in the Business and Property Courts. The pilot arises out of proposals made by the DWG in November 2017, and follows extensive public consultation. It will commence (subject to ministerial consent) on 1 January 2019. 

Who deals: in which cases will the pilot apply?

With some limited exceptions, the pilot will apply to existing and new proceedings across the Business and Property Courts in the Rolls Building and in the centres of Bristol, Birmingham, Cardiff, Leeds, Liverpool, Manchester and Newcastle. However, it will not disturb an order for disclosure made before the commencement date or before transfer into the Business and Property Courts, unless that order is varied or set aside. (The limited exceptions where the pilot will not apply are competition claims as defined in Practice Direction 31C, public procurement claims, claims within the Intellectual Property and Enterprise Court, claims within the Admiralty Court, claims within the Shorter and Flexible Trials Schemes and claims within a fixed costs regime or capped costs regime.) 

The pilot is not currently intended to apply in the County Court, although this may be revised during the course of it. 

If it is deemed a success, consideration will be given to whether it should also apply to other proceedings outside of the Business and Property Courts.

Playing by which rules?

To enable court users, the profession and the judiciary time to prepare for the pilot’s commencement, the CPRC has authorised the release of the draft disclosure pilot Practice Direction. As drafts, these documents may yet be subject to minor changes.

The provisions under which the pilot will operate are set out in the new draft Practice Direction, and where that Practice Direction conflicts with the provisions of the rules or other Practice Directions in the CPR, the new Practice Direction takes precedence.  

Except for certain specified provisions of Part 31 and the related provisions in Practice Directions 31A and 31B, Part 31 and Practice Directions 31A and 31B shall not apply to any proceedings falling within the pilot. Those specified existing provisions will be applied and will operate as normal, and Part 31 as a whole should still be used to interpret those provisions.

If the pilot succeeds and is fully adopted, then we can expect the existing CPR Part 31 to be amended to reflect the substantially revised version of the Practice Direction on which the pilot is based.

Cards on the table: what principles underpin the pilot?

Section I of the new Practice Direction sets out the pilot’s underlying principles, some of which, such as a requirement of cooperation between parties and their representatives, will be familiar. Although the principles warrant reading in full, the following are of particular note:

  • The court will be concerned to ensure that disclosure is directed to the issues in the proceedings, and that its scope is not wider than is reasonably proportionate in order to fairly resolve them, and specifically the ‘issues for disclosure’. The issues for disclosure are the key issues in dispute which the parties consider will need to be determined by reference to contemporaneous documents for a fair resolution. 
  • Disclosure extends to ‘adverse’ documents, a document being ‘adverse’ 'if it or any information in it contains contradicts or materially damages the disclosing party’s contention or version of events on an issue in dispute, or supports the contention or version of events of an opposing party on an issue in dispute.’ 
  • ‘Known adverse documents’ are documents (other than privileged documents) that a party is aware (without undertaking any additional further searches) both
      • are or were previously in its control, and
      • are adverse.  

The duty to disclose known adverse documents has been strengthened and is now wider. It should become harder for parties to keep that ace up their sleeve. 

  • A company or organisation is ‘aware’ if any person within it with accountability or responsibility for the events or circumstances the subject of the case, or for the conduct of the proceedings, is aware. Reasonable steps must also be taken to check the position with any such people who have since left the company or organisation. This is useful clarification but will likely prove fertile ground for case law on its interpretation, initially at least.

Playing your hand: how will disclosure work under the pilot?

The very first (and often pre-action) step of the disclosure process (as is the case now) is the early preservation of documents. The draft Practice Direction prescribes specific actions that a party must take, including suspending relevant document deletion or destruction processes for the duration of the proceedings, sending written notification to relevant employees requiring them to preserve documents, and taking reasonable steps so that agents or third parties do not delete or destroy documents that may be relevant.

Legal representatives must notify their clients of the need to preserve documents and of their obligations, and must obtain written confirmation that their client has taken the steps required. In this way, the requirements around preservation of documents go beyond the existing rules, with the purpose of achieving more effective compliance with the duty of preservation, and preventing parties from stacking the deck.

The procedure for disclosure under the pilot is fundamentally different from present rules in that after this stage, disclosure is divided into two main stages: initial disclosure and extended disclosure.

Showing your hand: initial disclosure
Under initial disclosure, the key documents relied on by a party and which are necessary for their opponent to understand the case they have to meet are provided, along with an initial disclosure list of documents, at the same time as serving the statement of case. 

At the initial disclosure stage, a party is under no obligation to undertake a search for documents beyond any already taken. Copies of the documents should be served electronically and need not be filed (although the initial disclosure list of documents must be). Moreover, documents that it is known are or have been in the other party’s possession, or have already been provided to the other party, need not be provided, although they should still be listed in the initial disclosure list of documents. 

The emphasis is clearly on early ‘common sense’ disclosure with minimal additional cost, allowing each party to make a more accurate early evaluation of their position, and which should even, in some cases, obviate the need for further disclosure completely.  Because the parties ought to be better able to assess their strengths and weaknesses, it is hoped that this may also increase early settlements before the proceedings get further underway. 

Dealing fairly: extended disclosure
Any further disclosure in addition to (or occasionally as an alternative to) initial disclosure is called extended disclosure. Entitlement to extended disclosure is not automatic and a party must request it. The request is made not by application notice, but in the disclosure review document (DRD), a joint document that the parties must complete together, after statements of case have been filed, but before the first case management conference (CMC). The DRD will list the issues for disclosure in the case (which the parties must seek to agree), exchange proposals for extended disclosure – with estimates of likely costs - and share information about how documents are stored and how they might be searched and reviewed. It replaces the current disclosure report and electronic documents questionnaire. 

The parties will make their proposals in the DRD, and the court will order extended disclosure, by reference to five extended disclosure models (Models A to E). These range from no order for disclosure, to an order for disclosure of known adverse documents on the identified issues for disclosure only, through to wide search-based disclosure as may be appropriate in a fraud case, which may lead to a train of inquiry which then results in the identification of further documents. Different disclosure models may be sought and ordered for different issues for disclosure within the same case. Notwithstanding this, in all cases, parties must disclose known adverse documents as the minimum.

Where extended disclosure is ordered, the court is expected to be more proactive in directing which form of disclosure is appropriate than we are perhaps used to. Practitioners can anticipate more questioning of disclosure proposals and must be ready to justify them, particularly where the broader Model D (the equivalent to standard disclosure) or Model E is sought. 

Extended disclosure will be complied with by:

  • serving a disclosure certificate in which each party certifies, with a statement of truth, that (among other things) they have taken reasonable steps to preserve documents and have disclosed all known adverse documents unless privileged;
  • serving an extended disclosure list of documents (unless dispensed with by agreement or order); and
  • producing the disclosed documents (unless a claim is made to withhold production or a particular document cannot be produced). 

Playing your cards right

The emphasis of the new rules is on reasonable and proportionate disclosure having regard to the overriding objective, brought about through increased flexibility (enabling disclosure to be tailored more precisely to each case), tighter management and containment of the process, and underpinned by stronger commitments from the parties and their lawyers.

Greater collaboration is expected between the parties themselves, and between the parties and the court, and likely greater pro-active intervention by the court too. New provisions such as the ability for parties to apply for a disclosure guidance hearing (to seek guidance from the court on the scope or implementation of extended disclosure) support this.

The new certificate of compliance and disclosure certificate require both the parties and their legal representatives to positively confirm that they have understood and met their duties - be that cooperating and engaging with opponents, preserving documents, disclosing all known adverse documents, or something else. Moreover, if these duties are not strictly adhered to, then they are backed up by a range of orders and sanctions for non-compliance. 

Calling our bluff?

Few litigators or indeed litigants would disagree that disclosure has been ripe, if not crying out, for an overhaul. Couple this with the current political backdrop, and the arguments for reform are stronger than ever. The English justice system already faces unprecedented change due to Brexit (the joker in the pack), and it is imperative that our jurisdiction takes positive steps to maintain its strong suit as an attractive jurisdiction in which to resolve commercial disputes. Controlling and modernising disclosure, and consequently its costs, is a significant step towards this.

These new rules have enormous potential and, with the combined efforts of all those involved in the pilot, should, it is hoped, herald a new, more efficient and effective age in disclosure – both in the Business and Property Courts and beyond. For that to happen however requires the profession and the judiciary to embrace the pilot, in a way that they did not engage with Jackson’s disclosure reforms. We have been dealt in to this game changing, mandatory, pilot; we now need to play our hand better than we did in the last round, so that we can help shape the future of the game in a meaningful way. The stakes are too high not to come up trumps this time.

This article was published in the Commercial Litigation Journal in September 2018.

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