Hadaway v DB (UK) Bank

An appeal concerning disclosure of a commercially sensitive lending-policy document was dismissed. Standard disclosure under CPR 31.6 is confined to the categories specified in the rule. The question is not simply whether a document is relevant in a broad sense. The court must decide whether the evidence establishes that the document adversely affects one party’s case or supports another party’s case. Material that might assist cross-examination, or reveal a bank’s general appetite for risk, does not necessarily satisfy that test. An appellate court must determine the issue for itself where the appeal involves new evidence and the question is whether the document falls within the rule, although a discretionary decision on specific disclosure attracts appropriate deference. A document may technically have been disclosed where its existence is stated in a witness statement, even if it is not included in a disclosure list.

Ward Hadaway appealed against a decision of Deputy Master Lloyd dated 28 May 2013. The Deputy Master had refused DB (UK) Bank’s application for disclosure or production of the Credit Process Guide, a commercially sensitive document referred to in the bank’s Business Underwriting Guidelines.

The underlying claim concerned alleged breaches by solicitors acting on three buy-to-let loans. Liability had been admitted in part, but causation remained in issue. The bank argued that the Credit Process Guide might show whether it would have made the loans even if the relevant facts had been reported. On appeal, further evidence was admitted under CPR 52.11(2). The central questions were whether the document fell within standard disclosure under CPR 31.6 and, if not, whether specific disclosure should nevertheless be ordered.

1. The appeal was dismissed. The Credit Process Guide did not fall within the bank’s obligation of standard disclosure.

2. A disclosure decision under CPR 31.6 is not, in substance, a purely discretionary case-management decision. The court must decide whether the document falls within the categories specified by the rule, namely documents relied on and documents which adversely affect one party’s case or support another party’s case. The word relevant is not a substitute for the wording of the rule. The court must assess the evidence before it.

3. The evidence established that the Credit Process Guide dealt with procedures for obtaining authority where technical lending criteria were exceeded. It did not address whether a transaction involving undisclosed sub-sales and a substantial price uplift would nevertheless be regarded as good business. It therefore did not materially assist the causation issue and was not shown to support the bank’s case or adversely affect the claimant’s case. General evidence of lending appetite would be too broad and disproportionate, since it could make every lending decision disclosable.

4. The court distinguished the appellate approach to discretionary case-management decisions described in Walbrook Trustee (Jersey) Ltd v Fattal & Ors [2008] EWCA Civ 427. That guidance was not directly applicable to the question whether the document fell within standard disclosure. Because new evidence had been admitted, the judge had to reach his own conclusion, while giving the Deputy Master’s decision such weight as was appropriate.

5. The application for specific disclosure under CPR 31.12 was a discretionary matter. The judge deferred to the Deputy Master’s refusal because there was no good reason to depart from it. The application could be renewed if banking experts considered the document necessary for proper expert work.

6. The court further held that stating in correspondence and witness statements that the Credit Process Guide existed amounted technically to disclosure under CPR 31.2, following SmithKline Beecham v Generics (UK) Ltd [2003] EWCA Civ 1109. The court retained an inherent power to control inspection and the ambit of disclosure where the rules did not provide an apt procedural route.

1. High Court (Chancery Division): appeal from Deputy Master Lloyd’s decision of 28 May 2013 refusing disclosure of the Credit Process Guide; appeal dismissed.