Castle Water Ltd v Thames Water Utilities Ltd

Disclosure under PD51U must be directed to the issues in dispute and must remain reasonable and proportionate. There is no presumption in favour of Extended Disclosure. The party seeking it must justify the proposed Disclosure Model and ensure that Model C requests identify particular documents or narrow classes of documents.

A party must take reasonable and proportionate checks to identify known adverse documents and reasonable steps to locate them. The continuing obligation does not require repeated reviews where the litigation context remains unchanged, but it revives if the case materially changes or new adverse documents become known.

The judgment concerned disclosure disputes at the second case management conference in substantial contractual and tort proceedings arising from the transfer of a non-household water and sewerage retail business. The parties disputed the wording of Issues for Disclosure and the appropriate Disclosure Models under PD51U, including the scope of factual-matrix disclosure, the treatment of known adverse documents, and whether intended but unimplemented systems or processes were relevant.

The court determined the disputed formulations and the appropriate disclosure obligations for Issues 1, 2, 3, 4, 7, 17 and 36.

1. General principles. Extended Disclosure is not presumed. Disclosure must be directed to the issues in the proceedings and be reasonable and proportionate having regard to the overriding objective. The party requesting Extended Disclosure bears the burden of showing that it is justified. The factors in PD51U paragraph 6.4 include the nature and complexity of the issues, importance of the case, likelihood of probative documents, volume of documents, search costs, the parties’ financial position and the need for expeditious and proportionate resolution. In a complex and important case, the likelihood of probative documents, the number of documents and proportional cost are particularly important.
2. Factual matrix. The factual matrix is identified objectively by reference to background knowledge reasonably available to the parties in the situation in which they contracted. It is not confined to information actually shared between them or to published standards. Documents evidencing one party’s actual knowledge may nevertheless assist in determining what was reasonably available to both parties.
3. Model C. Model C may be appropriate where extensive documentation is likely to exist but most of it is irrelevant. Requests must be focused and concise. Broad formulations such as documents “regarding” a subject, or “any or all documents relating to” it, are inappropriate because they approximate to a Model D search. Model C disclosure was ordered for focused documents concerning industry standards, practices and benchmarks for data accuracy, including relevant material involving Ofwat, MOSL, consultants and industry bodies.
4. Known adverse documents. A party must take reasonable and proportionate checks to determine whether it has or has had known adverse documents, and reasonable and proportionate steps to locate documents of which it is aware. It is insufficient merely to state that an adverse document is known but has not been located. The obligation does not require an unlimited or repeated scrutiny of documents where nothing material in the litigation has changed.
5. Continuing obligation. Initial reasonable checks ordinarily discharge the obligation where the pleadings and litigation context remain unchanged. The duty arises again if the case materially shifts, if a document becomes known to be adverse, or if awareness arises during court-directed searches.
6. Application. The court required disclosure concerning standards and practices, retained wording referring to matters considered or intended but not implemented where those matters could bear on negligence or contractual breach, and required disclosure of known adverse documents relating to presently unidentified errors. The claimant’s formulation for Issue 17 was accepted because the pleaded examples were non-exhaustive and the issue concerned the reliability of Legacy Debt information. Similar focused disclosure was directed for meter-read skip rates.