Applications for pre-action disclosure: specific, timely and fair

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11 May 2021

In this week’s Weekly Law Review, I have chosen to look at the case of Domestic and General Insurance Plc v HomeShield Direct Ltd [2021] 4 WLUK 278.

Fellow litigators will know just how tough it is to get a pre-action disclosure order, and this case reinforces that fact. It also serves as a useful reminder as to what the courts look for when considering applications and what expectations they may have around the treatment of disclosed materials.

Background

The applicant, Domestic and General Insurance Plc (Domestic and General), is a well-known provider of warranties, product protection and aftercare services for household appliances.

Domestic and General had set out to target ‘rogue callers’ allegedly contacting their customers and inducing them, by fraudulent misrepresentation, to purchase protection plans for appliances already covered by Domestic and General.  

The applicant alleged that agents working for the respondent, HomeShield Direct, had called Domestic and General customers, pretending to work for them, to encourage them to ‘reinstate’ policies that were about to expire.

Domestic and General arranged for an individual to work ‘undercover’ at HomeShield Direct between May and June 2019. The individual gathered evidence on their behalf and in November 2019 Domestic and General prepared a pre-action letter setting out allegations against HomeShield Direct.

Application

Domestic and General sought pre-action disclosure in relation to their claim for fraudulent misrepresentation.

They applied for disclosure of:

  1. recordings of sales calls made to specific, identified customers;
  2. recordings of sales calls made on three specific dates, and
  3. all written staff training materials.

Notably, the evidence gathered by the undercover employee was not referred to or relied upon in the application.

Decision

Judge Jason Coppel QC, sitting in the Queen’s Bench Division, refused the application for pre-action disclosure.

He ruled:

  • the court could not determine whether an order would materially advance the pleadings, as Domestic and General had not relied on all evidence available to them (namely the evidence gathered by the undercover employee);
  • it had not been proved that early disclosure was necessary to save costs or dispose of the case fairly; and
  • the categories of documents sought were too broad.

Reasoning

Part 31.16 of the Civil Procedure Rules applies where an application is made to the court for disclosure before the start of proceedings. Let us remind ourselves what its requirements are. In summary:

  1. The application must be supported by evidence.
  2. Both parties must be likely to be a party to subsequent proceedings. If proceedings have started, the respondent’s duty by way of standard disclosure would extend to the documents or classes of documents of which the applicant seeks disclosure.
  3. Disclosure before proceedings must be desirable to:

(a) dispose fairly of the anticipated proceedings;

(b) assist the dispute to be resolved without proceedings; or

(c) save costs.

  • Any order made must:

(a) specify the documents or the classes of documents which the respondent must disclose;

(b) require him, when making disclosure, to specify any of those documents which are no longer in his control or in respect of which he claims a right or duty to withhold inspection.

  • An order may require the respondent to indicate what has happened to any documents which are no longer in his control and specify the time and place for disclosure and inspection.

The court was required to consider the nature of the complaint and the documents requested, the clarity of the issues raised and the relevance of the requests, the applicant’s opportunity to make a case without the disclosure, their prospect of success and the fact the pre-action disclosure was unusual.

The applicant had redacted their pre-action correspondence so as not to disclose details of the evidence gathered by the undercover employee. The court considered that the respondent’s legal representative had been deprived of information relating to the evidence gathered and so could not be accused of withholding it.

The applicant argued it had not relied on the undercover evidence as there was likely to be a dispute over admissibility. The court was unimpressed with this reasoning. The judge found the evidence to be relevant to the test for pre-action disclosure. His view was that a potential admissibility dispute did not justify failing to deal with it in the application and since the evidence formed an important part of the applicant’s case, the failure to refer to it was an issue.

The applicant and respondent were likely to be party to subsequent proceedings, and so this requirement was fulfilled without issue.

Three categories of documents were sought. Two of these would be subject to standard disclosure in due course, but the one would not. The applicant had asked for all calls made on certain dates to be disclosed, and many of these calls would be irrelevant.

In accordance with the case of Hutchison 3G UK Ltd v O2 (UK) Ltd [2008] EWHC 55 (Comm), the application must be highly focused, confined to what is strictly necessary. The court was required to consider whether, overall, the pre-action disclosure would further the overriding objective (as per Total E&P Soudan SA v Edmonds [2007] EWCA Civ 50).

The court considered whether early disclosure would advance the applicant’s case and avoid delays and costs. It was acknowledged that the parties were competitors and the information being sought was sensitive.

The court found the applicant had failed to show pre-action disclosure was strictly necessary to dispose fairly of the anticipated proceedings, assist in resolution without proceedings or save costs.

Since the applicant had not relied on the evidence gathered undercover, the court was unable to determine whether an order for pre-action disclosure would materially advance their pleadings.

The court ruled that even if the threshold had been satisfied, it would not have exercised its discretion to make an order.

Interestingly, although it was acknowledged the applicant’s losses were potentially serious, there had been a delay since the pre-action letter had been issued, and the court interpreted this as being indicative that the respondent could not be causing too much damage to the applicant’s business - a reminder that timely action is preferable, rather than letting issues rumble on.

The court found the categories of documents requested had been drawn too broadly. Again, this is interesting, given the applicants had identified specific customers and dates they were interested in. However, the court clearly felt they need to go further.

The court was also unimpressed the applicant had not considered how they would protect the confidentiality of the commercially sensitive training materials they had requested. A reminder for litigators that the court will sometimes expect us to seek to protect even our opponents’ interests.  

(c) Melissa Worth 2021

The Dispute Adviser

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