The Chancellor provides fresh guidance on the Disclosure Pilot

In January 2019, the Business and Property Courts in England & Wales adopted new disclosure rules under a two-year Disclosure Pilot scheme (the "Pilot")¹. The aim of the Pilot, governed by CPR Practice Direction 51U, is to encourage parties to agree a proportionate and efficient approach to disclosing documents in litigation. The Pilot's launch followed criticisms that the old disclosure rules were costly and complex².

Now into its second year, the Chancellor of the High Court – Sir Geoffrey Vos  – has provided important practical guidance on certain aspects of the Pilot in a recent Disclosure Guidance Hearing³ (the "DGH"). At the start of the DGH, the Chancellor explained to the parties that he intended, "unusually" for that type of hearing, to deliver a reserved judgment in order to clarify certain aspects of the Pilot. Although the Court did not intend to criticise the parties to the DGH, it clarified three "misunderstandings" in the hope this would "help parties in other cases". 

Background - McParland and Fairstone v Whitehead

The underlying dispute between the parties concerned Mr Whitehead's alleged breach of non-compete and confidentiality clauses in various agreements with his former employer, McParland & Partners Limited, and a wealth management house with whom Mr Whitehead had entered into an adviser agreement, Fairstone Financial Management Limited.

Proceedings were commenced in November 2018 (prior to inception of the Pilot, although the Pilot applies to "existing and new proceedings in the Business and Property Courts"⁴) and a case management conference ("CMC") took place on 31 October 2019. The parties were unable to agree key matters of disclosure (and experts) at the CMC and subsequently appeared before the Chancellor at a DGH.⁵ In his judgment, the Chancellor clarified certain aspects of the way in which the Pilot is intended to work, in three broad categories:

1. The identification of Issues for Disclosure;
2. The approach to choosing between Models of Extended Disclosure; and
3. Cooperation between the parties.

1. The identification of Issues for Disclosure

Under the Pilot, parties must identify (and try to agree) the issues on which Disclosure will be required in a draft List of Issues for Disclosure, which includes identifying what Model of Extended Disclosure⁶ the parties believe to be appropriate for each issue at hand. The objective of creating a List of Issues for Disclosure is to limit the searches required and the volume of documents to be disclosed.

The identification of Issues for Disclosure is a different exercise from the creation of a list of issues for determination at trial. Issues for Disclosure are those which require Extended Disclosure of documents (i.e. further disclosure beyond what has been provided on initial disclosure) to enable them to be fairly and proportionately tried. The List of Issues for Disclosure does not extend to every issue which is disputed in the statements of case by denial or non-admission.⁷ Accordingly, the Court emphasised that the Issues for Disclosure will almost never include legal issues, and will not include factual issues that are already capable of being fairly resolved from the documents available on initial disclosure.

2.  The approach to choosing between Models of Extended Disclosure

The Models of Extended Disclosure provided for in the Pilot should “simplify the process [of disclosure] rather than complicate it”. In the present case, Model C⁸ was appropriate for an issue where vast documentation was likely to exist, most of which was irrelevant to the underlying dispute, whereas Model D⁹ was appropriate in the context of the two central issues in dispute, namely breach of the various relevant provisions and loss, in which there was “significant mistrust between the parties.” The Court also emphasised that during the Pilot process, parties should consider what documents they are likely to hold and to what issues those documents are relevant.

3.  Cooperation between the parties

Perhaps of paramount significance is the Court's recognition of the “need for a high level of cooperation between the parties and their representatives” throughout the Pilot process, and the fact that, for those parties which have “sought to use the Disclosure Pilot as a stick with which to beat their opponents", such conduct was "entirely unacceptable, and parties can expect to be met with immediately payable costs orders if that is what has happened”. Whilst not intending to criticise the parties to McParland v Whitehead,  the Court urged judges at all levels to "be astute to call out" any parties that do not cooperate. It emphasised that no advantage can be gained by "being difficult" about the Pilot requirements.

Significance of the Chancellor's decision

Just over a year after the Pilot was launched, the Chancellor's judgment provides important and timely clarification of how parties should approach the new regime: in future DGHs, the Court will no doubt be mindful of the Chancellor's guidance and emphasis on the above points. In particular, litigants should consider carefully the Issues for Disclosure (which is a different exercise from identifying issues for trial) and the appropriate disclosure Model for each Issue – and should cooperate with other parties whilst doing so, or face adverse costs orders.