Black v Sumitomo Corpn

Pre-action disclosure under CPR 31.16 is not available merely because the jurisdictional conditions can be met. The court must separately decide, on the detailed facts, whether disclosure is desirable and should be ordered in its discretion.

The prospective parties need only be likely to be parties if

The intended claimants alleged that Sumitomo had conspired with Goldman Sachs to manipulate the copper market after the exposure of Mr Hamanaka's trading activities. They claimed at least US$126 million, principally for lost speculative trading profits, and sought extensive pre-action disclosure under CPR 31.16.

A deputy High Court judge in the Commercial Court held that litigation was likely and ordered disclosure in nine categories. The judge considered that evidence concerning the so-called China deal provided a reasonable basis for the proposed claim.

Sumitomo appealed. The central issues were the meaning of the jurisdictional conditions in section 33(2) of the Supreme Court Act 1981 and CPR 31.16, and whether the court should exercise its discretion to order pre-action disclosure.

Appeal allowed unanimously. Rix LJ gave the leading judgment, with which May and Ward LJJ agreed.

1. The requirements in section 33(2) of the Supreme Court Act 1981 and CPR 31.16(3)(a) and (b) mean that the applicant and respondent must be likely to be parties if proceedings are issued. They do not require a prediction that proceedings themselves are more likely than not to be commenced. In this pre-action context, “likely” may mean “may well”. The jurisdictional threshold is not intended to be high.

2. CPR 31.16(3)(d) requires a two-stage analysis. First, there must be a real prospect in principle that disclosure will fairly dispose of anticipated proceedings, avoid proceedings, or save costs. Secondly, the court must exercise a distinct and detailed discretion on all the facts. Passing the first stage does not make an order appropriate.

3. The judge below conflated those stages. Having found that the parties were likely to litigate and that disclosure was desirable, he did not stand back and decide whether disclosure should be ordered in the circumstances. The agreement to confine any disclosure to standard disclosure also did not remove the need to identify the prospective issues with sufficient clarity.

4. The discretion depends on all the circumstances. Material factors include the nature of the alleged loss, the clarity of the issues, the focus and scope of the documents sought, any applicable protocol or pre-action exchange, alternative means of obtaining information, and the burden on the respondent. Allegations of fraud or dishonesty require specificity and conviction; they do not justify wide disclosure designed to discover what allegations can be made.

5. Here the claim was speculative, asserted after four years by parties who were essentially strangers. Its factual and legal basis was diffuse, the requested categories were very wide, alternative information was available, and Sumitomo had established a real case of oppression. Subsequent material concerning the China deal showed prima facie that it was genuine and removed any basis for preserving even a narrowly confined order.

6. The order for pre-action disclosure was set aside. Sumitomo received its costs below and on appeal, including costs incurred in part compliance with the order, with detailed assessment and an interim payment of £60,000 within 14 days.

• Court of Appeal (Civil Division): Appeal allowed in [2001] EWCA Civ 1819 . The order for pre-action disclosure was set aside.
• Commercial Court: A deputy High Court judge ordered nine categories of pre-action disclosure under CPR 31.16. No citation for that decision is stated in the judgment.