PEL (UK) Ltd Orosi (UK) Ltd & Ors v Shaftesbury Plc

An application for pre-action disclosure requires a two-stage analysis. The court must first decide whether the jurisdictional conditions in Civil Procedure Rules 1998, rule 31.16, are satisfied. It must then decide whether disclosure is desirable and appropriate in the exercise of its discretion. An application for broad classes of electronic documents, particularly where it requires the respondent to identify documents falling within standard disclosure, may fail at the jurisdictional stage. Even where jurisdiction exists, disclosure should ordinarily be preceded by detailed discussions concerning custodians, keywords, sources, redactions, confidentiality and privilege. The court may refuse disclosure where the exercise would be burdensome and unlikely to resolve the dispute or save costs.

The applicants, substantial shareholders in the respondent, alleged that the respondent’s board had used a non-pre-emptive share placing for an improper purpose and sought pre-action disclosure under section 33(2) of the Senior Courts Act 1981 and rule 31.16 of the Civil Procedure Rules 1998. They sought five broad categories of documents, including board materials and extensive electronic communications identified by keywords.

The respondent accepted that the parties were likely to be parties to anticipated proceedings but disputed the remaining jurisdictional requirements. The central issues were whether the requested classes would fall within standard disclosure, whether disclosure was desirable for one of the purposes in rule 31.16(3)(d), and whether it should be ordered in the court’s discretion.

1. Application refused. The court declined to order pre-action disclosure, including in relation to Category 1.
2. A two-stage approach was required under rule 31.16 of the Civil Procedure Rules 1998: first, jurisdictional thresholds; secondly, the wider discretionary question whether disclosure was desirable and consistent with the overriding objective. This approach was taken from Black and others v Sumitomo Corpn and others [2002] 1 WLR 1562 (CA).
3. Under rule 31.16(3)(c), the applicants had to show that it was more probable than not that the requested documents or classes would fall within standard disclosure under rule 31.6. It was inappropriate to seek classes containing some disclosable documents while leaving the respondent to identify which documents fell within standard disclosure. Categories 2 to 5 were too broad and failed this threshold. They would generate excessive and falsely positive search results and impose a substantial burden.
4. The threshold under rule 31.16(3)(d) was low, requiring only a real prospect in principle that disclosure would fairly dispose of the anticipated proceedings, assist settlement or save costs. The applicants nevertheless failed to satisfy it. The proposed disclosure was broad, concerned a dispute likely to require oral evidence and cross-examination, and was unlikely to resolve the dispute or save costs.
5. Even assuming jurisdiction, the court would have refused disclosure in its discretion. The parties should first follow the electronic-disclosure discussions contemplated by Practice Direction 31B, including agreement or refinement of keywords, custodians, document types, redactions, confidentiality arrangements and privilege. The application’s breadth made it inconsistent with the overriding objective.