London And Hertfordshire Ltd v Secretary of State for Communities And Local Government

In a terminal dilapidations claim, disclosure must be reasonable and proportionate to the issues requiring determination. The court should order only disclosure of documents likely to have probative value, having regard to the overriding objective and the ease and expense of the proposed searches.

Where expert valuation evidence addresses hypothetical repair costs and diminution in value, actual costs may be relevant insofar as they evidence comparable remedial works. That does not justify broad search-based disclosure where targeted disclosure will fairly resolve the issue. Disclosure may therefore be ordered by reference to different models for different issues.

The claimant brought a terminal dilapidations claim concerning an office building. Its damages claim was based on the alleged cost of remedial works, subject to the cap imposed by Landlord and Tenant Act 1927, section 18, and the parties disputed the diminution in value of the reversion.

At the first case management conference, the court determined whether disclosure model B, C or D should apply to disclosure issues 2 and 5. Issue 2 concerned the cost and scope of remedial works. Issue 5 concerned diminution in value and related valuation material.

1. Disclosure principles. Under the disclosure pilot, the parties must identify the issues for disclosure: issues requiring determination by reference to contemporaneous documents for a fair resolution of the proceedings. Disclosure must be reasonable and proportionate. The court must be satisfied that documents likely to have some probative value exist, and must consider the overriding objective, the fairness of the process, proportionality of cost, and the ease and expense of any searches.
2. Issue 2. The claimant’s pleaded case referred to the cost of works required to remedy the breaches, and the schedule was based on the landlord’s lowest tender. Actual costs were therefore a legitimate factor for the experts to consider where works had been carried out on a like-for-like basis with the remedial works identified in the schedule. The claimant’s alternative scheme included betterment, but some works were likely to overlap materially with the scheduled remedial works. Extended model D was unnecessary and disproportionate. Targeted extended model C disclosure was ordered for documents evidencing the costs of overlapping remedial works.
3. Issue 5. Model B disclosure was sufficient for diminution in value. The court declined to order the workings underlying the Investec valuation because the claimant did not possess them and discrepancies could be addressed through expert evidence and cross-examination. Further underlying surveyor documents were unnecessary in light of the targeted disclosure ordered for overlapping works. Share transaction documents were not shown likely to contain relevant or necessary information for determining the dispute.
4. The court made no immediate order for further information. Requests concerning professional fees were to be addressed by the model C disclosure. Further information or documents relating to diminution in value could be sought if the experts identified a genuine need for them.