The importance of understanding disclosure obligations


24 March 2021

Disclosure can often be a complex and costly milestone in any dispute, irrespective of the relative value and complexity of the dispute itself.

Differing disclosure obligations arise at different points in time, whether by virtue of the CPR, court order or pursuant to a clause in a particular contract. The notion of “putting your cards on the table, face up”, as envisaged by the Disclosure Pilot, is in general terms commendable, and goes a long way to reducing the need for interim applications.

However, and rightly or wrongly, it does front load litigation costs. The recent case of Equipe Regeneration Limited v Higgins Construction Limited & Others [2020] is a prime example of a party’s failure to understand when disclosure obligations arise. It concerns an interim application for specific performance for disclosure and acts as a useful reminder to litigants as to when and how disclosure obligations can arise.

Background

Equipe Regeneration Limited (Equipe) issued protective proceedings against Higgins Construction Limited (Higgins) on 29 November 2019 relating to a PFI contract for the refurbishment and maintenance of residential properties (the Contract). The claim was eventually served on Higgins on 29 March 2020 but no particulars of claim were served, nor had Equipe issued a pre-action letter. Upon service of the claim form Equipe requested a six-month extension of time for service of the particulars of claim, stating this was necessary to “complete its investigations”. An extension of time was agreed to 18 September 2020. So far so good.

However, in or around August 2020, and despite having performed its obligations under the Contract for almost 12 years prior to the litigation, Equipe began requesting numerous documents from Higgins. The breadth of this request for disclosure spanned several hundreds of thousands of documents. Equipe claimed Higgins was contractually obliged to provide these documents and that the documents were required “for the proper performance of its [contractual] obligations”. In reality, it was a request for all the project documentation principally aimed at assisting Equipe in making its case against Higgins. It was the very definition of a fishing expedition!

Higgins refused to comply with Equipe’s request, and so Equipe made an application to the court for an order for specific performance for disclosure and a further extension of time for service of the particulars of claim. This was premised on Equipe’s belief that Higgins was contractually obliged to disclose the documentation, and that by virtue of Higgins’ refusal to yield, further time was required to serve the particulars of claim.

And that, in brief, brings the discerning reader, broadly up to speed.

Judgment

In his judgment, handed down on 3 December 2020, Ter Haar LJ reinforced the fact that whilst the time for pre-action disclosure had long since passed – with Equipe’s claim issued almost 12 months earlier – the usual time for disclosure had not yet arrived as the pleading phase of litigation must be sufficiently complete beforehand. Similarly, any argument that the Disclosure Pilot applied was swiftly dismissed. Ter Haar LJ confirmed that the disclosure obligation pursuant to the Disclosure Pilot must rightly arise only once the defendant in the proceedings understands the claim against it – that is, once Equipe had served its statement of case. Because Equipe had failed to adequately take this step, or any pre-action steps whatsoever, Higgins’ obligation under Disclosure Pilot was not yet engaged.

In the alternative, Ter Haar LJ acknowledged that the contract may obligate disclosure where it has some form of operational requirement. However, he found that there was no such contractual obligation to disclose anything here, as the request was not for “operational reasons”; Equipe had already carried out its contractual obligation without the documentation (if it was in fact the case they didn’t have the documentation already – which they did) for 12 years before making the application!

The rest of the application was simply smoke and mirrors, made in a bid to gain any assistance Equipe could in making its claim – which it had struggled to plead up to that point. As such, the application for specific performance was denied.

Analysis

Whilst early disclosure is a valuable and important process in litigation, so too is the need for both sides to cooperate (as much as is practicable in a dispute). However, the disclosure process does not serve as an obligation for one party to make the other’s case against it.

There is no obligation to assist a claimant in making its case, particularly in circumstances where the claimant cannot set this out of its own accord.

In addition, a disclosure obligation can only arise once the claimant has sufficiently set out its case. If the disclosure obligation were to arise beforehand, how would a defendant know what it should disclose or what is relevant to a dispute that it has no discernible knowledge of? The position taken by Higgins is therefore a logical one to take.

Notwithstanding this is only an interim application that forms part of a wider, more complete dispute involving substantial PFI refurbishment and maintenance contracts, it is a prime example of a party’s failure to understand when disclosure obligations arise and its importance to claimants and defendants alike therefore remains stark!

Applications of this nature are becoming more common; often used as leverage by one party against the other, forcing them to comply with unfounded disclosure requests through fear of being deemed unreasonable by the courts and consequently being subject to an adverse cost order. It is therefore essential for parties to litigation (as well as their legal representation) to know how disclosure obligations operate so that they are not subject to vast, meritless disclosure requests in the future.

This article is from the March 2021 issue of Cornerstone, our regular newsletter for those working in the construction industry. To download the latest issue, please visit the newsletter section of our website. For further information please contact Tyler Fitzpatrick or another member of Birketts' Construction Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2021.

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