McParland & Partners Ltd & Anor v Whitehead

Extended Disclosure under Practice Direction 51U: Disclosure Pilot for the Business and Property Courts must be fair, reasonable and proportionate. Issues for Disclosure are not a list of all issues for trial. They are confined to key disputed issues for which further contemporaneous documents are likely to be needed for a fair resolution.

The parties should begin with the documents likely to exist and identify the issues to which they are relevant. They should avoid granular lists and unnecessarily complex combinations of disclosure models. Model C is suitable for focused requests within a large body of mostly irrelevant material. Model D may be suitable for central issues where search-based disclosure is necessary. The Pilot requires genuine cooperation and cannot be used for tactical advantage.

The claimants alleged that their former financial adviser had breached contractual confidentiality and post-termination restrictive covenants, including by transferring client information and soliciting or servicing clients after leaving their business. The defendant disputed the enforceability and breach of the covenants and denied that the claimants had suffered loss.

Following initial disclosure, the parties agreed 16 proposed Issues for Disclosure but disagreed about the appropriate Extended Disclosure models for several issues. At a Disclosure Guidance Hearing, the court was asked to give guidance before a case management conference. The central question was how the parties should identify genuine Issues for Disclosure and select proportionate models under the Disclosure Pilot.

1. Disclosure guidance was given and the agreed order was approved. Model B disclosure was approved for the issues generally covered by initial disclosure. Model C was approved for the issue concerning the commercial relationship between the claimants and the succession of the trading business. Model D was approved for the central breach and loss issues. Model D disclosure was not to include Narrative Documents.

2. Extended Disclosure is not presumed, especially under Models D and E. Any order must be fair, reasonable and proportionate under Practice Direction 51U: Disclosure Pilot for the Business and Property Courts. The parties must therefore select a process that supplies the documents genuinely needed for a fair resolution without creating disproportionate cost.

3. Issues for Disclosure are fundamentally different from Issues for Trial. They must be driven by the categories of documents likely to be held and their relevance to disputed issues. They should not include legal or construction issues, or factual issues which can already be fairly resolved from documents disclosed initially. In this case, the 16 issues could in substance be reduced to the commercial relationship and succession issue, the alleged breaches, and loss.

4. Model C was appropriate where a complex transaction had generated extensive material but only narrowly defined documents could bear on the dispute. Model D was appropriate for the central breach and loss issues, where the parties distrusted the completeness of the other’s disclosure. Different models for each party were possible but were not required. Narrative Documents were unnecessary because the parties’ actions, rather than their motives, were material.

5. Cooperation is an operative obligation under the Disclosure Pilot. Legal representatives must not deploy it as a tactical device or obstruct agreement of the Disclosure Review Document. A party failing to cooperate can expect serious, immediately payable adverse costs consequences.

6. The court encouraged mediation after disclosure. It noted Lomax v. Lomax [2019] EWCA Civ 1467, but did not decide whether mediation could be compelled. The parties instead agreed to mediate after disclosure.

This was a first-instance decision. The claim had been transferred between the Preston Combined Court Centre and the Business and Property Courts in Manchester. Earlier case management hearings led to the joinder of the second claimant, amended pleadings, initial disclosure, and the listing of this Disclosure Guidance Hearing.