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Disclosure of documents pre-action

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Posted by Susan Hopcraft on 25 June 2020

Susan Hopcraft - Professional Negligence Lawyer
Susan Hopcraft Partner

How do you prove your professional negligence claim if the defendant keeps their ‘dirty laundry’ to themselves?

If you need to claim damages against a negligent professional you need to show that they were in breach of duty and how that negligence caused you loss.

You can do that by telling the court what happened using a witness statement and also putting in expert opinion, but you will need to have the relevant documents from the time to support your recollection and assertion of negligent work. You may well have your e-mail exchanges with the negligent advisers, which will show some of the picture, but what if the negligent act is best shown on the professional’s own file.  How do you get that evidence?

Court action includes a disclosure process so you will obtain the evidence if you issue a Claim Form and run through the process.  However, how can you have the confidence to take that action unless and until you have the evidence?  The defendant won’t just hand you their confession voluntarily.

Before anyone makes a claim at Court they need to follow the relevant pre-action protocol.  This is designed to enable parties in dispute to settle without Court action.  Each side typically needs to write a formal letter setting out their claim or defence (the Letter of Claim and Letter of Response).  They are also then obliged to exchange the key documents.  They are supposed to co-operate in attempting to avoid Court and an early exchange of key evidence is intended to assist early settlement. 

Yet the defendant might withhold vital incriminating evidence at this stage, or at best leave considerable doubt as to whether their full set of papers has been shared.  There often remains a suspicion that the most damaging bits of the file have been retained.  It is, after all, a voluntary process at this stage.

Application to Court for Pre-action disclosure

In this situation a potential claimant can ask the Court for an Order requiring a potential defendant to deliver up the evidence, before a formal claim is underway. 

We now explain the process and highlight a recent case that shows the limitations on this type of order. 

Any potential claimant should provide key documents with the protocol Letter of Claim and any other documents reasonably requested by the professional which are relevant to the issues in dispute.

The professional should provide key documents with the protocol Letter of Response and any other documents reasonably requested by the claimant which are relevant to the issues in dispute.  But the request cannot be a wide ranging ‘fishing expedition’ for anything on which to hang a case.

If there are gaps then either party can apply to Court.  The Court can order disclosure before proceedings have started if it is thought desirable (i) to dispose fairly of the anticipated proceedings, (ii) to assist the dispute to be resolved without proceedings, or (iii) to save costs.  The request must be "highly focussed" and confined to what is "strictly necessary".

Carillion v KPMG

In Carillion plc v KPMG (2020) the construction giant sought its former auditors’ working papers in order to launch a negligence action potentially claiming hundreds of millions.

The claim was said to be on the basis that KPMG did not detect that Carillion's financial statements failed to reflect their true position. Carillion applied for pre-action disclosure from KPMG in relation to certain aspects of the financial statements, where it alleged KPMG's audit work had been negligent. Carillion argued that it needed early disclosure in order to come to a properly informed view on these issues and to produce a more focused pleading, saving the cost of subsequent amendments.  The Court denied the application though.

In another previous similar case (Assetco plc v Grant Thornton UK LLP [2013] EWHC 1215) it was decided that, in the commercial context, a pre-action disclosure order is, if not exceptional, unusual. That case showed that pre-action disclosure of audit working papers is not viewed as the norm for audit negligence in the Commercial Court, notwithstanding that such documents will in due course likely be core documents for disclosure once the proceedings have started and pleadings have been exchanged.

The decision in Carillion appears to be based in part on a lack of clearly defined claims at the point the disclosure application was launched.  A series of claims had been put forward rather than one set of clear allegations.  Yet the claimant was trying to obtain evidence to help them knock out weaker claims and thereby save time and cost in the proceedings eventually brought.

The Court decided that Carillion probably had enough evidence and expert opinion to plead a case and it did not need KPMG’s full file at this stage.  Once the pleaded case was made out then the usual court process, including exchange of all documents that either side rely on or which harm their case, would continue.  KPMG were not required to make involved and detail searches of 8,500 documents at a stage when no litigation was underway; they were spared effectively having to do the job twice.

For claimants this was a rather unhelpful case in that a claimant seeking to refine its case before issuing a Claim Form was prevented from doing that.  This is a huge claim though and litigation between the two parties seems inevitable: they were pretty much asked just to get on and bring the claims rather than drag out the process pre-action.  Time will tell whether early disclosure would have made the litigation less arduous or more likely to settle.

For more run of the mill professional negligence claims, with fewer potential negligent acts to evidence, there remains the issue of how to extract the full file early on.  In that situation specific pre-action disclosure is more likely to succeed but a claimant still has to make an application.  Even if it fails, strong expert evidence can help bridge the gap to provide confidence to issue a claim at Court, so all is not lost.

About the author

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

Susan Hopcraft

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

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