Hipgnosis Music Limited v Merck Mercuriadis & Ors

Issues for disclosure should be concise and focused on the key disputed issues, viewed in light of the documents likely to be relevant. They should not become a mechanical transcription of the pleadings or an unduly granular list of sub-issues. General formulations followed by numerous examples may hinder agreement and document review. A party’s limited access to documents does not justify disclosure extending beyond the issues required for a fair trial, and disclosure must not be used as a fishing expedition.

For security for costs, the court must consider both whether a prescribed ground is established and whether making an order is just. Prematurity may justify a reduction in recoverable costs, but does not necessarily justify disallowing them altogether.

The claimant, a company in liquidation, brought claims concerning the conduct of the defendants in relation to a proposed IPO and related matters. At a case management conference, the court reserved two issues for determination on paper.

The first issue concerned whether the claimant’s broad formulation of Disclosure Issue 22 complied with the disclosure regime, or whether the narrower formulation proposed by the first defendant should be approved. The second concerned the costs of the first defendant’s security-for-costs application, which had been compromised by consent with costs reserved.

1. Disclosure Issue 22. The court approved the first defendant’s narrower formulation. Paragraphs 7.6, 7.7 and 7.10 of Practice Direction 57AD require concise issues for disclosure and require the parties to engage with the functions of such issues. The guidance in McParland & Partners v Whitehead [2020] EWHC 298 (Ch) remained important.
2. The identification of disclosure issues should be driven by the relevance of categories of documents likely to be in the parties’ possession to the contested issues. It should not be a mechanical exercise based on the pleadings. Unduly granular or complex formulations should be avoided. A general issue followed by several sub-issues may make agreement and document review more difficult.
3. The claimant’s liquidation and limited access to contemporaneous documents did not justify wider disclosure. The claimant had pleaded its case fully and was not entitled to disclosure more generous than that available to another party. Issue 22 concerned largely undisputed or peripheral matters and was not necessary for a fair trial.
4. Security-for-costs costs. Under rule 25.13(2) of the Civil Procedure Rules 1998, establishing a ground for security is not sufficient; the court must also be satisfied that an order is just. The first defendant’s application was premature because an adequate breakdown of incurred and estimated costs had not been provided. The claimant had also delayed in unequivocally agreeing the form of security.
5. The application could reasonably have been issued between 16 November and 11 December 2023. The first defendant succeeded overall, but the prematurity had a modest effect. The court therefore applied a 10% discount rather than disallowing the costs entirely. Costs were summarily assessed at £12,000 plus VAT and the £216 court fee, reduced to £13,154.40 after the discount.