Avalon Capital Markets Limited v Jonathan Rose & Anor

On an application for specific disclosure, the court should first identify whether the documents fall within standard disclosure and then decide whether further disclosure is necessary to deal with the case justly and at proportionate cost. Relevance is assessed by reference to the pleadings and factual issues. Documents may be ordered where they materially assist assessment of loss, support one party’s case, or adversely affect another’s case. A litigation indemnity is not irrelevant merely because it may have an insurance-like effect if its existence is an issue and it may illuminate the dispute.

The claimant sought damages for alleged breaches of contracts under which two experienced brokers were to leave Cantor Fitzgerald and join the claimant. The defendants instead remained with Cantor Fitzgerald. The claim included substantial alleged losses based on revenue and profit which the defendants would have generated.

The claimant applied for specific disclosure of documents concerning remuneration, improved terms offered by Cantor Fitzgerald, any litigation indemnity, and the defendants’ revenue-generation track records. The defendants resisted. The central issue was whether the documents fell within standard disclosure and, if not, whether specific disclosure was necessary to deal with the claim justly.

Application granted.

1. The court applied the disclosure principles in Commissioners of Inland Revenue v Exeter City AFC Ltd and Harrods Ltd v Times Newspaper Ltd. It considered all the circumstances and the overriding objective. Relevance was assessed by reference to the pleadings and factual issues in dispute.

2. The court first identified whether each category fell within standard disclosure, then considered whether specific disclosure was necessary to deal with the case justly and at proportionate cost.

3. Remuneration and historical revenue documents were relevant to the likely revenue generated by the defendants and materially assisted assessment of loss. The court relied on the significance of brokers’ personal relationships with traders, as described in Tullett Prebon PLC v BGC Brokers LP.

4. Documents concerning improved remuneration and negotiations could show the value placed on retaining the defendants and the likelihood that traders would follow them. The indemnity was a pleaded issue and could provide similar evidence. West London Pipeline and Storage v Total UK was distinguished because the insurance policy there had no relevance to the issues.

5. Track-record documents were within standard disclosure and necessary to show what information may have been provided before the contracts were made. Each category was ordered to be disclosed. The parties were to agree an order if possible, and time for exchanging witness statements was extended until disclosure had been dealt with.