The Court of Appeal on the scope of disclosure

Nichia Corporation v Argos may have been a patent case, but the sum involved was not very big and the principles as to proportionate disclosure and judicial case management are applicable everywhere

The ideal in legal commentary is that you know what the Court of Appeal said yesterday and report it. It is no less satisfying, however, to have been asserting publicly what you think the CA would say in certain circumstances – and then discover that it actually did so nearly a year ago in more or less the same terms.

No Court of Appeal judgment is needed to support my primary assertion that the scope of standard disclosure under Part 31.6 and Part 31.7 CPR is narrower, and may be very much narrower, than that of discovery under the old O24. RSC – see Relevant is irrelevant for standard disclosure where I quote from Lord Woolf’s 1995 Access to Justice Report as the best source for understanding the difference (as opposed to merely knowing that there is a difference) between the old regime and the new one.

Where I have been going more out onto a limb is in asserting that a broad-brush approach to disclosure may result in a slightly rough justice, but that rough justice is better than no justice. No justice is what you get when the cost of handling documents is disproportionate to the value of the claim. I make it very clear in saying this firstly that this approach (although not, of course, the express use of the words “rough justice”) is firmly rooted in the rules, and secondly that I am not urging a casual or cavalier attitude to disclosure.

This line got a good outing in Nichia Corporation v Argos Ltd [2007] EWCA Civ 741 in which Jacob LJ described what “perfect justice” would be in this context. A tribunal, he said, would examine “every conceivable aspect of a dispute….and all relevant documents would have to be considered [and] no stone, however small, should remain unturned”.

He went on (at paragraph 51 and 52):

But a system which sought such “perfect justice” in every case would actually defeat justice. The cost and time involved would make it impossible to decide all but the most vastly funded cases. The cost of nearly every case would be greater than what it is about. Life is too short to investigate everything in that way. So a compromise is made: one makes do with a lesser procedure even though it may result in the justice being rougher. Putting it another way, better justice is achieved by risking a little bit of injustice.

The “standard disclosure” and associated “reasonable search” rules provide examples of this. It is possible for a highly material document to exist which would be outside “standard disclosure” but within the Peruvian Guano test. Or such a document might be one which would not be found by a reasonable search. No doubt such cases are rare. But the rules now sacrifice the “perfect justice” solution for the more pragmatic “standard disclosure” and “reasonable search” rules, even though in the rare instance the “right” result may not be achieved. In the vast majority of instances it will be, and more cheaply so.

The case has not received the exposure it deserves partly because it was a patent case, and patent cases have to some extent their own sub-variants on the rules relating to disclosure, and partly because Jacob LJ was the only member of the Court of Appeal who would have upheld the order of Pumfrey J. which was the subject of the appeal. Nevertheless, what he said about disclosure generally (as opposed to his view on the particular facts) was expressly supported by Rix LJ, and although Pill LJ saw no merit in the distinction between “justice”, “perfect justice” and “rough justice” he endorsed Jacob LJ’s proposition that ‘The pragmatic good sense of the patent judges at case management conferences will be able to tailor orders appropriate to the individual case’. Pill LJ’s disagreement with the judge was that he had done the opposite, appearing to dispense with disclosure in patent cases as a matter of principle, and “did not attempt to consider the needs of the case”. It did not help that Pumfrey J. had said “I have waited nine years actually to do this”.

What can we draw from this case which applies generally, and not just in the specialist arena of the Patents Court? Perhaps the first point to make (as Jacob LJ did) is that this was not a high-value claim. The costs of disclosure were, he felt, likely to match the amount at stake. That, his brethren said, was not a reason for dispensing with disclosure, still less for appearing to do so as a matter of principle in patent cases, but was an argument for the tailored orders appropriate to the case which Pill LJ referred to.

The points of general application, which add on to what Woolf said in his report as to the old test of relevance, come in paragraphs 46 and 47 of the CA judgment. Jacob LJ’s words are worth setting out in full:

It is manifest that this [the Peruvian Guano test] is a much wider test than that for “standard disclosure.” I have a feeling that the legal profession has been slow to appreciate this. What is now required is that, following only a “reasonable search” (CPR 31.7(1)), the disclosing party should, before making disclosure, consider each document to see whether it adversely affects his own or another party’s case or supports another party’s case. It is wrong just to disclose a mass of background documents which do not really take the case one way or another. And there is a real vice in doing so: it compels the mass reading by the lawyers on the other side, and is followed usually by the importation of the documents into the whole case thereafter – hence trial bundles most of which are never looked at.

Now it might be suggested that it is cheaper to make this sort of mass disclosure than to consider the documents with some care to decide whether they should be disclosed. And at that stage it might be cheaper – just run it all through the photocopier or CD maker – especially since doing so is an allowable cost. But that is not the point. For it is the downstream costs caused by overdisclosure which so often are so substantial and so pointless. It can even be said, in cases of massive overdisclosure, that there is a real risk that the really important documents will get overlooked – where does a wise man hide a leaf?

I assume that the words “consider each document” in this passage take account of the express authority in Paragraph 2A.5 of the Practice Direction to Part 31 CPR to use electronic means to reduce the mass of background documents – the exact words are:

It may be reasonable to search some or all of the parties’ electronic storage systems. In some circumstances, it may be reasonable to search for electronic documents by means of keyword searches (agreed as far as possible between the parties) even where a full review of each and every document would be unreasonable. There may be other forms of electronic search that may be appropriate in particular circumstances.

The main thing here is the reference to “downstream costs” – the point that whatever saving may be made by “mass disclosure” at the outset may be dwarfed by the “substantial and so pointless” costs of handling them for the rest of the case.

Two points are worth making here. One is in answer to those who say that close attention to the minutiae of disclosure at an early stage incurs up-front costs which may themselves be disproportionate in cases which may settle or be narrowed in scope before the burden of the “downstream” costs appears. That, however, is exactly the point of the idea that disclosure orders are to be tailored to the circumstances – the only overriding point of principle is that there is no overriding point of principle except the overriding objective to pursue justice. If that is best achieved by deferring disclosure then you can argue as much at the case management conference.

The other is that the difference between the views of their Lordships as to the use of the term “rough justice” is very much secondary to what the rules say about the scope of disclosure and, indeed, the lawyers’ own presumed need to know what their clients have by way of potentially disclosable documents. I will leave you with Rix LJ’s observations on this:

I am concerned above all to emphasise that the switch from Peruvian Guano discovery to CPR standard disclosure should be properly taken on board by litigants and their advisers. Once attention is focussed on the rationale of standard disclosure in the context of any relevant issue, it is possible to appreciate that it is those parties and their advisers who are in the best position to adopt procedures which are both commensurate and proportionate. Indeed, it is hard to think that even before launching proceedings such as these, a claimant has not carried out, in its own interests, such a review of its own documents as will in all probability have already met, or all but met, the requirements of a reasonable search for the purposes of standard disclosure. I would therefore hope and expect that the present issue of this disclosure could be dealt with, timeously and with only limited expense, without the need for a return to the court below.

About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
This entry was posted in Case Management, Court Rules, Courts, CPR, Discovery, Part 31 CPR. Bookmark the permalink.

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