No early disclosure under Pilot Scheme

15/11/21

Mrs Justice Moulder has held that an application for early disclosure of a series of audit files fell outside of the disclosure which can be ordered accordance with the Disclosure Pilot Scheme (CPR 51UPD), and that to make an order under the Court’s residual discretion would cut across and undermine the Scheme’s purpose.

The application was made in the context of ongoing auditors’ negligence proceedings between companies (now in liquidation) in the Patisserie Valerie group and Grant Thornton.

The Claimants first relied upon paragraph 5.11 of the Disclosure Pilot Scheme. This provides that, in an appropriate case, the Court may require a party to disclose documents where that is necessary to enable the other party to understand the claim or defence they have to meet or to formulate a defence or a reply. However, in this case, the documents were not required to formulate a defence or reply but instead to address a lack of particularisation in the particulars of claim. Mrs Justice Moulder held that paragraph 5.11 must be interpreted narrowly in light of the Scheme’s overall purpose, which was to introduce a more proportionate approach to disclosure.

The Claimants also relied on paragraph 9.4 of Scheme, which is the power to order Extended Disclosure in stages. In circumstances where the parties had not yet finalised a Disclosure Review Document, the Court held that it would be premature for an application to be premised on paragraph 9.4.

The third jurisdictional basis relied upon for the application was the Court’s general power under CPR 3.1(2)(m) and/or the inherent jurisdiction of the Court. Despite noting (as Grant Thornton had conceded) that the court has an inherent jurisdiction to make an order to disclose documents, the Court held that that this power should not be exercised in a way that cuts across the Practice Direction both with regard to its literal terms and overall purpose. In the circumstances, the Court held it would inappropriate to order disclosure under its residual powers if disclosure was not otherwise available under the Disclosure Pilot Scheme itself.

Finally, as well as rejecting the application on jurisdictional grounds, the Court also concluded (obiter) that it would be wrong to make an order for early disclosure of the audit files as a matter of discretion. In reaching this conclusion, the Court rejected an argument that the audit files should be provided in order to assist the Claimants in particularising a case as to the existence of alleged misstatements in the relevant accounts. In reaching this conclusion, the Court placed reliance (among other things) on the large volume of information relating to the true financial position of the companies that was already within the Claimants’ control.

The Judgment is here.