Steamship Mutual Underwriting ASSN Trustees (Bermuda Ltd) & Anor v Baring Asset Management Ltd

Pre-action disclosure is exceptional. The applicant must first cross each jurisdictional threshold in Black v Sumitomo Corporation, including showing that the requested documents would fall within standard disclosure and that disclosure has a real prospect of helping to dispose fairly of anticipated proceedings. The court then exercises a broad discretion on all the facts.

General suspicion of professional negligence, or a desire to investigate whether a claim exists, is insufficient where the issues are already sufficiently clear, relevant information has been supplied, and the request is wide or likely to generate costly satellite litigation. Compliance with an applicable pre-action protocol is a significant discretionary consideration.

The applicants, the corporate trustee and investment manager of a fund, sought pre-action disclosure from its former asset manager under section 33(2) of the Supreme Court Act 1981 and CPR Part 31.16. The application concerned documents about risk controls, tracking error, portfolio reviews, internal policies, strategy and performance attribution.

The applicants alleged that the former manager’s substantial underperformance might reflect negligent management, but had not served a detailed Letter of Claim under the Professional Negligence Pre-Action Protocol. The central questions were whether the jurisdictional thresholds in CPR Part 31.16(3)(c) and (d) were met and, if so, whether disclosure should be ordered.

1. Application refused. The applicants and respondent were each likely to be parties to anticipated proceedings, satisfying CPR Part 31.16(3)(a) and (b).

2. Following Black v Sumitomo Corporation, each requirement in CPR Part 31.16(3)(a)–(d) was a jurisdictional threshold. Only after those thresholds were crossed could the court exercise its discretion.

3. The issues were sufficiently clear for CPR Part 31.16(3)(c). The likely litigation would concern whether the respondent had exercised reasonable professional care and skill in managing the portfolio. The requested classes would, if they existed, fall within standard disclosure under CPR 31.6.

4. The threshold in CPR Part 31.16(3)(d) was satisfied only in relation to the prospect that disclosure might help dispose fairly of later proceedings. There was no real prospect that it would assist settlement or save costs.

5. In exercising the discretion, the court considered the nature of the loss, the clarity of the issues, the documents sought, the applicable pre-action protocol and the applicants’ ability to advance their case without further disclosure. The requests were, in material respects, already answered by documents and explanations supplied, incapable of production, or too wide to assist formulation of a claim. Some requests amounted to a roving inquiry.

6. The applicants had grounds to formulate a claim, even though its strength was unresolved. Their failure to serve a detailed Letter of Claim, despite having sufficient information to do so, weighed significantly against the application. The extensive cost of the satellite disclosure dispute and the respondent’s reasonable conduct also favoured refusal.

It was not just or proportionate to order disclosure before proceedings. The application was refused.