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Pre-action disclosure applications

The claimant issued a letter of claim alleging he had suffered from hearing loss whilst working for the defendant in two coal mines between 1979 and…

Henry Alan Smith v Secretary of State for Energy & Climate Change [2013]EWCA Civ 1585

The facts

The claimant issued a formal letter of claim alleging he had suffered from hearing loss whilst working for the defendant in two coal mines between 1979 and 1984, during which time he had never been provided with any hearing protection. The letter of claim included a request for various documents, including those relating to noise levels.

The Secretary of State for Energy & Climate Change (the statutory successor to the National Coal Board) refused the disclosure request. At the application hearing they argued that the claim should be regarded as wholly speculative as the claimant had failed to provide an audiogram or any other substantive evidence to show he was indeed suffering from hearing loss. 

The decision

The claimant’s pre-action disclosure application was successful at first instance. On appeal, the court reversed the decision and refused to order disclosure on the grounds that the claimant had failed to provide any evidence in support of his application that was ‘more than merely speculative’.

The Court of Appeal, led by LJ Underhill, then overturned the decision and held that there was no requirement for a claimant to establish a ‘prima facie’ case or an ‘arguable’ case in order for a court to consider a pre-action disclosure application. Instead, the question to be determined by the court should be whether a claimant can demonstrate a belief that they had suffered a compensatable injury and, if so, with what degree of likelihood.

LJ Underhill clarified the two stage approach of the courts when considering pre-action disclosure applications. Firstly, the ‘jurisdictional stage’ i.e. whether the threshold prescribed by the four heads set out in CPR 36.16 (3) (a)-(d) are satisfied:

 The court may make an order under this rule only where: 

(a)    the respondent is likely to be a party to subsequent proceedings;

(b)   the applicant is also likely to be a party to those proceedings;

(c)    if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d)   disclosure before proceedings have started is desirable in order to:

(i)    dispose fairly of the anticipated proceedings;

(ii)   assist the dispute to be resolved without proceedings; or

(iii) save costs. 

Secondly, the ‘discretionary stage’, where the court considers each class of documents requested and whether or not an order for disclosure should be made (taking into account the usual factors such as the relevance of the documents, whether any documents are privileged, and the proportionality of the request). 

LJ Underhill confirmed that when considering whether an application satisfies the ‘jurisdictional stage’, the only requirement is for it to be shown that the applicant and respondent are likely to be a party to the proceedings, if proceedings were subsequently issued. In this regard, LJ Underhill did not accept that the meaning the word ‘likely’ implies that there is any ‘arguability threshold’ to be satisfied. 

The appeal was therefore allowed on this basis.  Therefore, despite the fact that the claimant had failed to provide an audiogram, a note from his GP, or any other evidence to suggest he had hearing loss, an order for disclosure was made.

Analysis

The decision effectively overturn the previous case authority of Kneale v Barclays Bank plc[2010] EWHC 1900 (Comm)in which the court had held that there was no requirement for an applicant to demonstrate a ‘real prospect of success’ (as with applications for setting aside judgment and for summary judgment) but there was a requirement for an applicant to show ‘some sort of prima facie case which is more than a merely speculative punt’.

The decision is founded on a rather technical point however.  Whilst LJ Underhill confirmed there is no ‘arguability threshold’ at the jurisdictional stage, he went on to state that the court is entitled to consider such a threshold as part of the courts general discretion at the ‘discretionary stage’.

It remains to be seen therefore to what extent the potential prospect of success of a claim will be taken into account when considering whether to make an application, and what effect the decision is likely to have on ‘PAD’ cases in general. 

The decision does however provide a useful insight into the approach the court takes when faced with pre-action disclosure applications for what defendants and their insurers may view as spurious or fanciful claims. Whilst the Court in this instance acknowledged that claimant had provided very little evidence in support of his claim, they still took the view that the request for disclosure was justified and not too onerous to comply with.

Perhaps the most pertinent comment from the judgment is from LJ Longmore: “Applications for pre-action disclosure are not meant to be a mini-trial of the action and should be disposed of swiftly and economically. Elaborate arguments are to be discouraged”.  

Defendants and their insurers should therefore give careful consideration before refusing to comply with a disclosure request or application for pre-action disclosure, even if a lack of evidence has been provided in support of the claim. Any demands for medical evidence such as an audiogram or GP records prior to considering any request for disclosure is also likely to be criticised by the court.  However it is hoped that the court will still use its general discretionary power to stop the flow of PAD applications, which are often seen as cost-building and unnecessary. In particular it is submitted that there is nothing in the judgment to suggest encouragement to claimants to proceed with such applications prematurely or where they are still involved in dialogue with insurers or defendants as to the availability of such documentation.  Should they do so, defendants should still maintain robust arguments on costs.

Bhatti v Primark (2013) (unreported)

The question of who should meet the costs of pre-action disclosure applications continues to be an issue that the courts are faced with on a regular basis. 

Weightmans LLP have had recent successes in this regard including the case of Bhatti v Primark (2013) when the claimant’s appeal against an order of ‘No order as to costs’ was rejected by HHJ Butler. 

The facts

The claimant’s solicitors sent a letter two days before the expiry of the protocol period stating that they intended to issue a PAD application if the documentation requested was not provided. The expiry of the protocol period subsequently passed.   A matter of days after the expiry of the protocol the claimant proceeded to issue a PAD application. Full documentation was then disclosed and only the issue of costs remained ahead of the application hearing. 

The claimant argued that the defendant had breached the pre-action protocol and therefore a departure from the general rule in CPR 46.1 (that a defendant will be awarded their costs of complying with a PAD request) was justified.

As there had been no unreasonable opposition to the application by the defendant, which had by then been complied with in full, the district judge refused to award the claimant’s solicitors their costs as requested. As an offer of ‘no order as to costs’ had been rejected by the claimant prior to the PAD hearing, the judge also ordered the claimant to pay the costs of the hearing itself. 

The claimant appealed the decision on the ground that the district judge improperly took into account the timing of the PAD application being issued i.e. immediately following the expiry of the protocol which the claimant argued they were entitled to do. 

The decision

HHJ Butler accepted the submission made on behalf of the defendant that the current rules do not support a costs order in favour of the claimant unless there has been unreasonable opposition to the PAD application, or a significant breach of the pre-action protocol. He accepted the defendant’s breach was minor and that the district judge at first instance had correctly exercised their discretion and taken all relevant factors into account when making the order of ‘no order as to costs’. 

Analysis

Whilst the decision in Bhatti v Primark can be viewed as a success for defendants and a reinforcement of the principles set out in SES Contracting Ltd v UK Coal plc[2007] EWCA Civ 791, the court made it clear that each PAD application will be decided on their own facts.

The message therefore appears to be that defendants and their insurers cannot be complacent about compliance with the pre-action protocols and the costs implications of PAD applications. If it is not possible to provide disclosure in accordance with the protocols, defendants’ representatives should not ignore deadlines for disclosure but should maintain an ongoing dialogue with a claimant’s representatives as to their ongoing investigations, and disclosure of such relevant disclosure obtained to date. Extensions should be sought for any relevant disclosure still to be located and again such extensions should not lapse without further dialogue.  Such behaviour is likely to be persuasive evidence of the unreasonableness of any PAD application should it subsequently be issued, and is likely to encourage courts not to award claimants their costs.  

For further information about the issues raised in this article please contact Lewis Hough on 0151 242 9448 or at lewis.hough@weightmans.com