Zaki & Ors v Credit Suisse (UK) Ltd

Disclosure before an appeal is discretionary and must bear on the existing grounds of appeal or the respondent’s notice. The court should approach with caution an application seeking broad disclosure to discover whether new grounds might emerge. Such a speculative fishing expedition is not justified. Systemic failures in recording and monitoring may evidence a failure to take reasonable steps to ensure suitable advice, but they do not establish that advice was actually unsuitable. Suitability and causation through reliance remain distinct questions. Where the regulatory investigation did not examine the individual sales in issue, its material is unlikely to affect those questions.

The claimants appealed against Teare J’s dismissal of their claim concerning the alleged mis-selling of leveraged structured capital-at-risk products by Credit Suisse. The underlying claim relied principally on alleged breaches of the Conduct of Business Rules and Conduct of Business Sourcebook Rules. The appeal grounds were limited, including an issue concerning COB 7.9.

Before the appeal hearing, the claimants sought wide disclosure under CPR 31.12 of documents generated by an FSA investigation, including a skilled person’s report under section 166 of the Financial Services and Markets Act 2000. The central issue was whether the documents were relevant to the existing appeal or instead constituted a speculative attempt to develop new grounds.

Application refused. Toulson LJ gave the lead judgment. Davis LJ agreed, and Arden LJ agreed with both judgments. The application concerned disclosure before the hearing of the pending appeal, rather than the merits of that appeal.

1. Under CPR 31.12 of the Civil Procedure Rules 1998, the court had jurisdiction to consider the merits of an application for disclosure in aid of an appeal. The jurisdiction involved a discretion, which should be exercised cautiously where the documents were not germane to the issues already raised.
2. The documents sought did not bear on the existing grounds of appeal or the Respondent’s Notice. The claimants were effectively seeking to discover whether further arguable grounds might exist. That was speculative and amounted to a fishing expedition. The requirement in CPR Rule 31.6 was therefore not satisfied.
3. The judge’s distinction between regulatory systems and the suitability of advice was logically correct. Failures in record-keeping and monitoring might evidence a failure to take reasonable steps to ensure that recommendations were suitable. They did not determine whether the recommendations were in fact suitable. Suitability was a discrete issue, separate from systemic regulatory deficiencies.
4. The FSA investigation had examined systemic failures and had not examined whether individual advised sales were unsuitable. Its material therefore had no realistic bearing on the findings that notes 1 to 7 were suitable, or that Mr Zeid had not relied on advice concerning notes 8 to 10. Arguments concerning the adviser’s product knowledge, honesty and the use of leverage did not establish a logical connection with the requested documents.
5. The potentially substantial burden of reviewing a very large body of documents, combined with the speculative nature of their possible relevance, reinforced the refusal of relief. Application refused.

• Court of Appeal (Civil Division): Refused the application for disclosure before the pending appeal; [2012] EWCA Civ 583.
• Queen’s Bench Division, Commercial Court: Teare J dismissed the underlying mis-selling claim on 4 October 2011.