Carillion Plc v KPMG LLP & Anor

Pre-action disclosure under CPR 31.16 is unusual in commercial litigation and requires a tightly focused request for documents likely to fall within standard disclosure and strictly necessary for identified purposes. The low jurisdictional threshold may be met where disclosure would sharpen initial pleadings, but that does not determine the discretionary outcome. A claimant able to plead a viable professional-negligence case from existing material is not ordinarily entitled to disclosure merely to give its expert a fully informed or concluded view. The court should assess protocol compliance, burden, duplication, the likely development of the litigation and the overall case-management picture. A partial Letter of Claim and an excessive document request may fail the spirit of a professional-negligence protocol.

Carillion plc, in liquidation, applied under CPR 31.16 against its former auditors, KPMG LLP and KPMG Audit plc, for pre-action disclosure of electronic audit files. The narrowed application concerned audits for 2014 to 2016, nine construction contracts and goodwill. Carillion said the documents were needed to assess and plead an intended negligence claim. KPMG disputed the jurisdictional requirements and opposed disclosure on discretionary and pre-action-protocol grounds. The central issues were whether the focused request fell within standard disclosure, whether disclosure was desirable for the purposes specified in rule 31.16, and whether the discretion should be exercised.

1. Outcome. Carillion’s application for pre-action disclosure was dismissed. The court had jurisdiction to consider the application, but the discretionary balance did not favour making an order.
2. Applicable principles. Under CPR 31.16, the parties must be likely parties to subsequent proceedings, the documents must probably fall within standard disclosure, and pre-action disclosure must have a real prospect of helping to dispose fairly of the proceedings, assist resolution without proceedings or save costs. The claim must also have a real prospect of success. The request must be highly focused and confined to what is strictly necessary. The court must take a broad case-management view. The judge followed the approach in Black v Sumitomo Corp [2002] 1 WLR 1562, Hutchinson 3G UK Ltd v O2 (UK) Ltd [2008] EWHC 55 (Comm), Snowstar Shipping v Graig Shipping [2003] EWHC 367 (Comm), Total E&P Soudan SA v Edmonds [2007] EWCA Civ 50 and Hands v Morrison Construction Services Ltd [2006] EWHC 2018 (Ch).
3. Jurisdiction. The narrowed request for documents specifically contained on KPMG’s eAudIT files and relating to the nine contracts and goodwill was sufficiently focused and probably fell within standard disclosure. The general catch-all category did not satisfy the balance-of-probabilities test and would have been deleted. The low threshold for desirability was crossed because disclosure could sharpen the initial pleadings, although amendment remained inevitable. There was no realistic prospect of resolving the dispute without proceedings.
4. Protocol. The professional-negligence protocol was to be applied in substance and spirit. It contemplated one full Letter of Claim setting out all intended allegations and identifying key documents. A reasonable request for key documents could be made before a Letter of Claim, but only where the claimant needed to make it and the request was reasonable. Carillion’s first letter was partial and sought an excessive range of documents. Its second letter was narrower and addressed the protocol requirements, but still did not set out the full intended claim and sought more than key documents. KPMG had not breached the protocol.
5. Discretion. Carillion already had substantial material and expert evidence enabling it to plead a viable negligence case. Disclosure was not justified merely to convert a prima facie expert view into a fully informed or concluded view. The burden of reviewing approximately 6,000 to 8,500 documents, the likelihood of duplication after the issues were pleaded, the prospect of a wider claim and serial applications, and the substantial litigation expected to follow all favoured the ordinary disclosure process after proceedings commenced. The reasoning in Assetco plc v Grant Thornton UK LLP [2013] EWHC 1215 was applied, while Pantelli Associates Ltd v Corporate City Developments Number Two Ltd [2011] PNLR 12 was distinguished.
6. Further procedure. Carillion should either confirm the scope of its intended claim or send a full Letter of Claim. KPMG should respond in accordance with the protocol and provide key documents. The court indicated that the usual course was then to plead and proceed to ordinary disclosure, rather than engage in further expensive pre-action applications.