In its recent judgment in Invest Bank v El-Husseini [2024] EWHC 996 (Comm), the Commercial Court has considered a number of important questions of law concerning the disclosure regime in PD57AD.
The Bank, the claimant, advances claims under s 423 of the Insolvency Act 1986. It issued a wide-ranging disclosure application seeking (among other things) findings that documents held by various third parties were within the control of the defendants, orders for the ‘production’ of certain classes of documents irrespective of whether they individually satisfy the Model D test and a ‘privilege schedule’ identifying all non-privileged information (such as the date of a document) contained in documents in which privilege is asserted. The application, which was described by the Judge as ‘overblown and unfocussed’, was advanced under both para 17 and para 18 of PD57AD. Following a 1-day hearing before Mr Adrian Beltrami KC, sitting as a Judge of the High Court, the application was substantially dismissed.
Much of the argument concerned the legal basis of the application and the interaction between the para 17/18 powers and other procedural rules. The Judge’s conclusions about these points are of general interest. They include the following:
- The onus of establishing that documents held by a third party are in the ‘control’ of the litigating party is on the applicant seeking disclosure: [52].
- The control relationship must be established individually and not generically, i.e. by reference to each individual third party: [51], [56].
- An applicant cannot access the para 17 power by establishing a failure to comply with the existing order for Extended Disclosure in one respect, if what the applicant is seeking to revisit under para 17 is a different aspect of that order: [20(b)].
- The Chanel principle (abuse of process) is not a hard precondition to the applicant’s ability to access the para 18 power, but it ‘will no doubt often be relevant, and perhaps in any given case determinative’ to explore whether the variation now sought under para 18 could and should have been sought earlier: [25].
- The requirement in para 18.3 that an application for a variation ‘must’ be supported by a witness statement is a mandatory requirement and, if it is not complied with, ‘the court has no power to make any order at all’: [26], [29]. On this point, the Judge endorsed Brakes v Lowes [2020] EWHC 538 (Ch) in preference to Cocoa v Maersk [2023] EWHC 2168 (Comm).
- Para 18 provides that the order made must not only be reasonable and proportionate but also ‘necessary for the just disposal of the proceedings’. Although para 17 does not contain such a requirement in terms, this requirement applies if the order sought (even under para 17) would increase the burden on the parties in the lead up to trial: [21].
- There is no rule that a party may not use search parameters (e.g. keywords or date ranges) to limit its searches without the agreement of the other party or the approval of the court: [33].
The significance of point (5) above was that the Bank’s application for a ‘privilege schedule’ failed in limine because the request had been made in a second application notice, which was not accompanied by a witness statement. The significance of point (2) was none of the orders sought the Bank for collection of third party documents could be made because the Bank had sought to establish the control relationship generically (e.g. all companies in which D has an ownership or financial interest) rather than by reference to each individual third party entity.
The judgment is available below
Niranjan Venkatesan and Constantine Fraser appeared for the successful defendants, instructed by Debenhams Ottaway LLP.
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