Moresfield Ltd. & Ors v Banners (a firm) & Ors

Pre-action disclosure may be ordered where the parties may well become parties to proceedings, the documents would fall within standard disclosure, and disclosure is desirable to dispose fairly of the dispute, assist settlement or save costs. The court must identify the likely issues and exercise its discretion on all the circumstances. A limited class of documents may satisfy the test when considered individually and in context. The same “may well” threshold applies to non-party disclosure, including documents that may illuminate the scope of another party’s professional duties.

Banners sought disclosure of KPMG’s two working files concerning a share sale. The claimants had sued Banners for negligence in drafting the sale agreement and calculating a purchase-price shortfall. Banners anticipated seeking an indemnity or contribution from KPMG, alleging that KPMG advised on the agreement and assured the claimants that no shortfall would arise.

KPMG had previously offered mutual disclosure but withdrew the offer after proceedings against Banners advanced without a Part 20 claim. Banners applied under CPR r. 31.16, alternatively r. 31.17. The issues were whether the disclosure conditions were satisfied and whether disclosure should be ordered in the court’s discretion.

1. Application granted. Disclosure of KPMG’s two files was ordered under CPR r. 31.16. The alternative application under CPR r. 31.17 would also have succeeded.
2. Under CPR r. 31.16, “likely” means that the respondent may well become a party. The court must identify the likely issues because the documents must fall within standard disclosure. There must also be a real prospect that disclosure will fairly dispose of the anticipated proceedings, assist resolution without proceedings or save costs. The principles were drawn from Black v Sumitomo Corpn [2002] 1 WLR 1562 and Bermuda International Securities Ltd v KPMG [2001] Lloyd's Rep PN 392.
3. Pre-action disclosure is not routine. Relevant discretionary factors include the clarity of the complaint, the nature and focus of the documents, the applicant’s ability to formulate its case without disclosure, delay, prejudice, any prior offer to disclose and the need to determine promptly whether overlapping issues should be tried together.
4. For CPR r. 31.17, documents need only may well support the applicant’s case or adversely affect another party’s case. Each document must be considered in context. A sufficiently defined class may be ordered where all documents in the class meet the threshold, even though some may ultimately prove neutral. The approach in Three Rivers District Council v Bank of England (No 4) [2003] 1 WLR 210 at 228 was applied.
5. KPMG’s files could illuminate the scope of KPMG’s retainer, the respective roles of KPMG and Banners and any assurances given to the claimants. KPMG’s denials and limited disclosure did not establish irrelevance. The court would also have allowed amendment for post-trial proceedings if necessary.