Following the implementation of the costs budgeting and management regime a few years ago and in a further step by the English courts to try to ensure that the scope (and therefore the cost) of litigation is ‘reasonable and proportionate’, new disclosure rules are being trialled in certain cases in the High Court.
The pilot scheme will run for two years from 1 January 2019 in the Business and Property Courts of England & Wales, and so will apply to most commercial disputes. It has been described as a ‘wholesale cultural change’, and aims to address the costs and other burdens of disclosure (i.e. ‘discovery’ in US proceedings). Whether or not it will achieve this aim remains to be seen.
The rules are complex and require disclosure to start much earlier in proceedings than previously, with ‘initial disclosure’ (albeit limited to the key documents on which the respective party relies and which are necessary to enable the other parties to understand the claim or defence they have to meet) being given at the outset of the claim, with statements of case. ‘Extended disclosure’ may be granted later, based on one of five disclosure models, which range from very simple (non-search based) to more complex.
Litigants will need to consider disclosure at the very beginning. Furthermore, although parties (and their legal representatives) have always owed certain duties to the court and the other side in respect of disclosure, under the pilot these duties are now set out expressly, and are more extensive, than under the previous rules. Their performance will need to be carefully documented, particularly regarding the preservation of relevant materials at the onset of litigation.
There is now an even greater focus on parties co-operating in order to agree to a proportionate approach to disclosure, with an emphasis on a targeted, issue-based approach. Of course, it may be that parties try to simply opt for the disclosure model which is most akin to the existing ‘default’ option of ‘standard disclosure’, although the new rules for the pilot make it clear that they will need to justify any decisions that they make in this regard and that the court will be tasked with taking a more proactive approach to determine the appropriate model.
One thing that has not changed (and may have been enhanced), and which the English courts were keen to preserve in order to retain the ‘cards on the table’ approach which makes England such an attractive forum to litigate in, is the obligation on parties to disclose ‘adverse’ documents. A document is ‘adverse’ if it, or any information which it contains, contradicts or materially damages the disclosing party’s contention or version of events concerning an issue in dispute, or supports the contention or version of events of an opposing party on an issue of dispute. Under the pilot, a party must disclose ‘known adverse documents’, whichever of the five disclosure models are ordered, and this is a continuing duty, throughout the course of the proceedings. A document is ‘known’ where a party is actually ‘aware’ it was ‘adverse’ and it is or was previously in its control. A person or company is ‘aware’ if any person with accountability or responsibility within the company or organisation for the events or the circumstances which are the subject of the case, or for the conduct of the proceedings, is aware. No guidance has been given on the meanings of ‘accountability’ and ‘responsibility’, so there is some room for uncertainty here, although it is probably intended to cover anyone with accountability or responsibility for the conduct of the proceedings and may include taking reasonable steps to check the knowledge of those who have left the company but formerly had the relevant accountability or responsibility.
Some commentators believe that the duty to disclose adverse documents is now wider. However, unless a search-based disclosure model is ordered, a party is not required to carry out any further search for documents than it has already undertaken. There is, therefore, an important tactical decision to be made at the outset of the litigation: in cases where search-based disclosure may not be ordered, to what extent should clients (and their legal advisors) search for relevant materials, if not already ‘known’? Although litigators always want to see ‘the full picture’ in order to properly assess the merits of the case, running further searches could unearth ‘adverse documents’ which the client will then be obliged to disclose. Whether or not a party can simply turn a ‘blind eye’ in respect of such ‘adverse’ documents will, however, doubtless be tested. Doing so could be a high risk strategy in view of the declaration that the parties have to sign on completing disclosure, as well as the possibility that one of the models which includes search-based disclosure may be subsequently ordered and/or that ‘adverse’ documents are already in the possession or control of the opposing party.
Although the pilot has potential to make litigation less cumbersome and expensive but without losing the prospect of the right result being reached, we suspect that it may not deliver on this objective until the new procedures have been tested in practice. It introduces concepts which are new, and which therefore risk being the subject of argument, unless the Court takes a firm grip and embraces the new rules. Extensive training is being carried out to prepare the judiciary for this task.
It remains to be seen how effective the new rules will be, and whether the two year trial period will be extended or made permanent. It may well, however, result in the earlier settlement of claims, as well as providing opportunities for tactical advantages to be achieved by a careful application of the new tools to the particular facts of any dispute.