Hinchcliffe v HSBC Plc & Anor

Permission to appeal against a case-management decision refusing disclosure should be granted only where the proposed appeal has a real prospect of showing legal error or misdirection. A judge managing litigation has a wide discretion over whether documents are necessary for the proceedings.

Document relevance must be assessed against the issues as pleaded. Where the only issue is the value of shares at the date of disposal, earlier bank statements are not ordinarily relevant unless the case is framed to raise matters such as tracing funds or improper payments affecting value.

The applicant sought permission to appeal from an order made by His Honour Judge McGonigal in the Leeds District Registry. The judge had dismissed applications for disclosure of Nortile Distributors Limited’s bank statements for the period 1991 to February 1994 and made costs orders.

The underlying proceedings concerned the applicant’s sale of shares in Nortile after borrowing secured by charges and a personal guarantee. He alleged that the bank and a management consultant had forced the sale at an undervalue. The immediate issue was whether the requested documents were necessary for forensic accounting and relevant to the pleaded claim.

1. Application refused. The Court of Appeal declined permission because there was no real prospect that a full appeal would establish legal error or misdirection in the judge’s refusal to order disclosure.
2. A judge managing litigation has a wide discretion to decide whether disclosure is necessary for the purposes of the proceedings. The appellate court will be slow to interfere with that exercise absent a properly arguable error in principle.
3. The claim, as presently framed, concerned the valuation of the shares. The applicant could succeed only by proving that the shares were worth more than £279,000 when they were sold in February 1994. The relevant valuation date was the date of disposal, not 1991, 1992 or 1993.
4. The requested bank statements might have been relevant in a differently framed claim involving the tracing of money, improper payments from the company’s accounts, or payments into those accounts which increased the company’s value. The court could not, however, see their relevance to the pleaded valuation issue.
5. The court left open the possibility that the disclosure question might be reconsidered after proper legal advice identified an issue to which the documents were relevant. The decision concerned only this permission application and did not determine whether the applicant might have other arguable claims.

• Court of Appeal (Civil Division) — On 5 July 2002, Lord Justice Mummery refused permission to appeal and dismissed the application: [2002] EWCA Civ 1165.
• Leeds District Registry — His Honour Judge McGonigal dismissed the disclosure applications on 24 January 2002 and made costs orders against the applicant.