SES Contracting Ltd. & Anor v UK Coal Plc& Ors

Pre-action disclosure may be ordered where the statutory conditions are met and disclosure is desirable to resolve or fairly dispose of anticipated proceedings or save costs. The jurisdictional conditions and the discretionary decision are distinct, although they may overlap.

In cases involving alleged fraud, dishonesty or unlawful conduct, the court should exercise caution and avoid a roving inquiry. The claim and requested disclosure should be clearly defined and tightly focused. However, uncertainty about the precise cause of action is not necessarily fatal where disclosure may enable the applicant to decide whether to litigate. The court may order disclosure of focused categories that would fall within standard disclosure if proceedings were issued.

The applicants, specialist mining contractors and their holding company, sought pre-action disclosure from four respondents under Part 31.16 of the Civil Procedure Rules 1998. They alleged that a former chief executive had breached fiduciary and contractual duties and confidence, and had colluded with companies in the respondent group in developing a competing contracting business and securing a tender.

The applicants also pursued an alternative Norwich Pharmacal application against two respondents. The principal issue was whether the requirements for pre-action disclosure were met and, if so, whether disclosure should be ordered in the requested categories. A further issue concerned the proportionality of requiring the fourth respondent to disclose documents falling within all the proposed categories.

1. Application granted. The applicants satisfied all four requirements in CPR Part 31.16(3). The first two requirements were accepted: the applicants and respondents were likely to be parties to subsequent proceedings.
2. The documents sought fell within the scope of standard disclosure under CPR 31.16(3)(c). The applicants were not seeking full standard disclosure in advance. Categories (1) to (7) concerned potential claims against the fourth respondent for breach of fiduciary obligations, collusion and breach of confidence. Other categories concerned the competing tender and related matters.
3. Following Black v Sumitomo Corporation [2002] 1 WLR 1562, “desirable” in CPR 31.16(3)(d) involves both a jurisdictional threshold and a subsequent exercise of discretion. For jurisdictional purposes, there must be a real prospect that disclosure will fairly dispose of anticipated proceedings, assist resolution without proceedings or save costs. The applicant need not satisfy all three alternatives.
4. “Likely” in CPR 31.16(3)(a) and (b) means that the parties may well be parties if proceedings are issued. A high test based on proof on the balance of probabilities would be inappropriate at the pre-action stage.
5. Allegations of fraud, dishonesty or unlawful conduct require caution. The court should avoid granting a roving inquiry through another party’s documents. Nevertheless, the absence of a fully particularised claim is not necessarily fatal where disclosure is narrowly focused and may enable the applicant to decide whether to litigate. The applicants’ proposed disclosure was sufficiently connected to their identified suspicions and potential claims.
6. The court’s discretion was exercised in favour of disclosure. The applicants could perhaps plead a vulnerable case without disclosure, but the documents might either resolve the dispute or permit more particularised pleading and avoid substantial costs. Disclosure was ordered against the first three respondents in all categories. Against the fourth respondent it was ordered only for categories (1) to (7) and (12), to avoid disproportionate disclosure.
7. The applicants had solid grounds to investigate possible breaches of fiduciary obligations, collusion and irregularities in the tender process. The court also indicated that the authorities concerning implied obligations in tendering processes were not confined to cases involving local authorities, although it did not analyse that issue finally.
8. The respondents were ordered to pay the applicants’ costs of the applications and were entitled to their costs of complying with the disclosure order.

First-instance decision. The judgment does not state any earlier appellate history.