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Pre-action disclosure orders

AWARE30/04/2014
Property Insurance Aware 3

Pre-action disclosure applications are regularly viewed, in the face of a non-cooperative party, as a comprehensive way of exploring liability based issues without formally issuing court proceedings.

This article is written from the point of view of the claimant seeking an order for disclosure, although it must be noted that there are circumstances when, seeking to press home its point on non-liability, the defendant will seek key documentation from the claimant too.

The mechanics of an application

The courts are genuinely sympathetic to a claimant’s request for pre-action disclosure application as long as justified reasons are aired as to why the documentation is required.

In addition, the court will ordinarily grant costs in favour of the party seeking disclosure if it can be shown that the opponent has disregarded disclosure requests in the past.

Costs, however, will be assessed by the judge and invariably reduced resulting in some shortfall between costs claimed and costs incurred.

Whilst far from ideal for the claimant, this may be viewed as a short term loss for a long term gain if the documentation requested can be procured from the defendant and assists in obtaining an admission of liability.

What happens if an order is ignored?

The question arises as to what happens in instances where a pre-action disclosure order is disregarded entirely by the defendant.

Whilst this does not happen regularly, there are instances where the defendant insurer and the defendant insured “are not on the same page” for whatever reason and time passes without disclosure of the requisite documentation.

In such instances, the applicant has limited scope if they wish to maintain matters on a pre-action footing.

It ought, ordinarily, to seek to raise matters with the court and request an unless order that the sought after documents are delivered up within, say, 14 days with consequences for non-compliance.

However the powers available to the applicant if the defendant still fails to provide documentation sought are very weak. 81.4 of the Civil Procedure Rules states:

(1) If a person –

(a) required by a judgment or order to do an act does not do it within the time fixed by the judgment or order; or

(b) disobeys a judgment or order not to do an act,

then … the judgment or order may be enforced by an order for committal.

(3) If the person referred to in paragraph (1) is a company or other corporation, the committal order may be made against any director or other officer of that company or corporation.

Whilst insurance backed matters are ordinarily handled by insurers, the ultimate failure to comply with any court order rests with the defendant insured, whose representatives are susceptible to being held in contempt of court.

When making an application for committal it will be necessary to prove that the offending party has repeatedly failed to provide the requisite documentation and acted in breach of court orders demanding delivery up of the documents.

It would then be a matter for the court to decide whether the offending party is to be held in contempt and potentially imprisoned.

However, this power is very rarely adopted – the courts are understandably reticent to enforce against insureds and, regardless of their decision, the act doesn’t actually help with the requisite disclosure and the advancement of the civil case in hand.

Another alternative is to ask to debar the defendant from serving a defence (if indeed it is the claimant seeking to obtain the documentation). However, courts also view this step as too harsh where proceedings have not yet been issued and counter-productive to the overriding objective for justice to be done.

What is an aggrieved party to do?

Having exhausted all realistic routes towards obtaining the necessary documentation on a pre-action basis, it appears that the aggrieved has no option but to formally issue court proceedings. This can be costly.

However, if documents sought pre-action are subsequently relied upon by the party during their disclosure obligations, there is an extremely strong argument to contend that an application debarring that party from relying upon those documents during the course of its defence will succeed.

However, by that stage the aggrieved party would have incurred substantial costs (having issued court proceedings and moved towards either the drafting of proceedings or even as far as disclosure).

The awarding by the court of their costs at this point may well serve to soften the blow, but ultimately will still have resulted in the aggrieved party suffering substantive costs.

The purpose of this article is to provide a summary of steps that can be taken to resolve matters on a pre-action footing.

It should be noted that the vast majority of parties satisfy pre-action disclosure orders. It is highly unusual for a party to act in breach of a court order as it is aware of the consequences from a costs perspective if it fails to do so.

In addition, it is highly likely that contempt of court proceedings will focus the minds of parties and, if they have not disclosed the necessary documentation, they certainly will do so if their liberty is placed into doubt.

However, against a head strong defendant willing to chance its arm in respect of matters, then it appears that there is little scope other than to issue court proceedings.

If the defendant then seeks to rely upon those documents contained within the pre-action disclosure order, there is scope to claim costs from it and to be debarred from relying upon those documents.