Genevieve Cripps looks at challenges within the disclosure pilot scheme (DPS) and considers recent court decisions to help you interpret and apply the rules.
On 1 January 2019, the mandatory DPS was introduced in the Business and Property Courts in England and Wales. The scheme will be in effect until 31 December 2021 and is set out in Practice Direction 51U (PD51U). Its purpose is to replace Part 31 of the Civil Procedure Rules (CPR).
Paragraphs 3.1 and 3.2 of the DPS set out three main duties for parties and representatives, to:
- preserve documents within the parties’ control
- disclose known adverse documents, and
- cooperate with the opposite party.
New concepts and court guidance
The DPS introduces new concepts which have led to confusion among practitioners. The Business and Property Courts have issued guidance on how to interpret and apply the DPS. Some of the key decisions are considered below, together with the new concepts.
Duty to preserve relevant documents
Paragraph 4.2 (1) of the PD51U specifies that both parties and their legal representatives must ensure that deletion and destruction of relevant documents is suspended as soon as they are (or may become) party to proceedings. To achieve this, representatives must send written notification within a reasonable period of being instructed.
As soon as a dispute arises, it is advisable to notify your client of the requirement to:
- put on hold all document deletion and destruction, and
- ensure that all employees comply with the company’s document retention policy.
A preservation notice letter should follow with further detail. This should be addressed to all relevant employees (and former employees), instructing them to take reasonable steps to inform their agent / third parties of the obligation to preserve relevant documents for the purpose of litigation. You should outline all the relevant categories of documents clearly, and ask the recipients and any in-house legal teams to confirm in writing that they have read, understood and taken steps to comply.
Duty to disclose known adverse documents
The judgment in Castle Water Ltd v Thames Water Utilities Ltd  EWHC 1374 (TCC) outlines the steps that parties should follow when identifying known adverse documents.
The party must take reasonable and proportionate:
- checks to see if it has, or has had known adverse documents
- steps to locate those documents.
Upon locating the documents, questions should be directed to everyone involved and not just the leader of an organisation. (For more detail, see my case commentary.)
McParland & Partners Ltd v Whitehead  EWHC 298 (Ch) confirmed that adverse documents should not be treated as narrative documents (that is, as only relevant to the background or context of material facts or events, and not directly related to the issues of disclosure) (see paragraph 41).
Duty to cooperate
The new disclosure process involves a two-step approach: initial and extended disclosure.
Under paragraph 5 of the PD51U, parties must exchange an initial disclosure list of documents (IDLD) with their statement of case,. This must be accompanied by copies of around 200 documents or 1,000 pages of key documents:
- that the parties relied on to formulate their case, and
- that are necessary for the other party to understand the nature of the case against them.
Key documents must be served electronically. Parties are not obliged to undertake a further search for documents beyond the search already undertaken. The IDLD must be served with a disclosure certificate.
For initial disclosure, parties should disclose:
- only really necessary documents (The State of Qatar v Banque Havilland SA and others  EWHC 1248 (Comm)), and
- documents that are considered necessary to understand certain aspects of the claim (Peter Breitenbach and Others v Canaccord Genuity Financial Planning Limited  EWHC 1355 (CH)).
Parties can apply for an extended disclosure order within 28 days after the initial disclosure.
- Model A – disclosure of known adverse documents only
- Model B – limited disclosure of key documents, parties are not under obligation to undertake any further search
- Model C – request-led search-based disclosure of particular classes of documents relating to a particular issue
- Model D – narrow search-based disclosure of documents that are relevant only to the background or context of material facts or events (see appendix 1, paragraph 1.11)
- Model E – wide search-based disclosure of documents that may lead to a train of inquiry which may result in the identification of further documents for disclosure.
All five models incorporate an ongoing duty to disclose known adverse documents.
In determining which model is appropriate for your claim, chancellor of the High Court, Sir Geoffrey Vos, said in McParland that the court will consider certain factors together with the overriding objective:
- the nature and complexity of the issues
- the importance of the case, including non-monetary relief sought
- probative value documents in supporting or undermining a party’s claim or defence
- the number of documents involved
- the ease and expense of searching for and retrieval of any particular documents, by considering any limitations on the information available and costs estimates
- the financial position of each party, and
- ensuring that the case is dealt with expeditiously, fairly and at proportionate costs.
The determining factor when deciding the type of extended disclosure is to be fair, proportionate and reasonable. You should decide which model(s) is (or are) appropriate as early as possible. It is critical for the parties to cooperate when deciding which documents need to be produced. Failure to cooperate may result in adverse costs orders (see McParland, paragraph 54). Proportionality is key.
- Granular and complex solutions should be avoided, particularly when choosing which model to follow (McParland).
- Acquire a robust and pragmatic approach regarding the disclosure process (see Maher v Maher & Anor  EWHC 3613 (Ch) and AAH Pharmaceuticals Limited v Jhoots Healthcare Limited  EWHC 2524 (Comm)).
Issues of disclosure
A distinction is drawn between issues of disclosure and issues for trial.
Issues of disclosure are rarely legal issues and they do not include factual issues that can be resolved from the documents available for the initial disclosure (McParland, paragraph 47). When preparing the issues of disclosure, start by considering which documents are likely to be in the parties’ possession that are relevant to the contested issues before the court.
Disclosure guidance hearings
In Vannin Capital PCC v RBOS Shareholders Action Group Ltd  EWHC 1617 (Ch), the deputy judge encouraged parties to make use of the disclosure guidance hearing to obtain the court’s assistance to resolve issues relating to the scope of disclosure or implementation of a disclosure order.
The court can also order parties to attend a disclosure guide hearing if it would be of assistance. In AAH Pharmaceuticals, the parties were advised to return to the court for a disclosure guide hearing within two to three weeks if they could not reach an agreement. The court favoured face-to-face discussion as it is more cost and time effective than correspondence (paragraph 27).
Under paragraph 16, a party can redact a document containing information that is irrelevant to the proceedings, and confidential or privileged. An explanation for the basis of redactions is set out in the disclosure certificate.
In Musst Holdings Ltd v Astra Asset Management UK Ltd & Anor  EWHC 1871 (Ch), Chief Master Marsh directed a sensible and pragmatic approach to document redaction. It is not necessary to provide a separate explanation for each redaction if it would:
- be repetitive, or
- risk identifying data that is irrelevant and confidential.
A highly generated formula will not suffice either, unless it provides a complete and accurate explanation as to why data is redacted (paragraph 20).
Proceedings started before January 2019
The DPS applies to new and existing cases alike. This means that the DPS will not affect an order for disclosure made before:
- the DPS commencement date (1 January 2019), or
- the transfer of proceedings into a business and property court.
However, the DPS will apply if the said order is varied or set aside (paragraph 1.3).
Sir Geoffrey Vos made it clear in UTB LLC v Sheffield United  EWHC 914 (Ch) (9 April 2019) that the DPS applies to any new application for disclosure: “Transactional provisions were put into place so that the DPS would apply to all existing proceedings, that have not specifically excluded, even when an initial disclosure order had been made.”
Technology Assisted Review
The Disclosure Review Document (DRD) specifies that when the review data exceeds 50,000 documents, the parties should cooperate to use Technology Assisted Review (TAR) (otherwise known as predictive coding) to conduct a proportionate review of the data.
TAR systems apply complex algorithms to identify relevant documents using a set of key documents. Eventually, a set of documents is produced that is subject to human review.
Although predictive coding was encouraged under Part 31 of the CPR (Pyrrho Investments Ltd V MWB Property Ltd  EWHC 256 (Ch)), there were not sufficient directions on how to approach TAR. The DPS requires parties to consider using TAR and cooperate in agreeing to a protocol.
For this reason, practitioners should understand the limitations and capabilities of TAR. For a TAR exercise to be successful, you should be familiar with the relevant criteria and consistently apply those across the review process. After the senior associate and the legal project manager train an algorithm, they should train the review team and enable them to familiarise themselves with the relevant documents. This allows your team to provide disclosure advice to clients in a cost-effective manner.
Part 8 claims
On 27 March 2019, Chief Master Marsh, published a note confirming that the DPS does not directly apply to Part 8 claims. Part 8 has its own regime for the disclosure of documents.
Under the DPS, the court has the power to make an order for extended disclosure for proceedings under Part 8. Only appropriate elements of the extended disclosure will be adopted. The parties must identify the disclosure issues and any models that apply.
Changes to the scheme
Some of the main proposals are:
- clarify use of disclosure guidance hearings
- confine the obligation to complete the DRD to models C, D or E
- if both parties agree to seek models A or B, remove the obligation to produce the DRD and a list of issues for disclosure
- send document preservation notices to employees and former employees believed to possess documents that the company does not have
- clarify that there is no obligation to disclose known adverse documents at the initial disclosure stage
- provide guidance on when and how best to use the Model C disclosure request.
The CPR Committee approved the proposed revisions on 10 November 2020 (see CPR Committee minutes, item 3). The amendments will be included in the next available Practice Direction update. Practitioners should familiarise themselves with the proposals, to be ready when the proposals are incorporated into the PD51U.