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21 May 2019
The disclosure pilot scheme applies to all relevant proceedings subsisting in the Business and Property Courts, whether started before or after 1 January 2019, even in cases where a disclosure order was made before 1 January 2019 under Civil Procedure Rule (CPR) Part 31.
The chancellor of the High Court has cleared up some confusion on which cases the pilot applies to in his judgment in UTB LLC v Sheffield United Limited.(1) He also provided some useful guidance on the extent to which the court should exercise its discretion to inspect allegedly privileged documents under the new regime. Further, he took the opportunity to emphasise the change in behaviour and culture envisaged under the pilot.
A dispute arose between Sheffield United Limited and Prince Abdullah Bin Mosaad Bin Abdulaziz Al Saud, who together co-owned the company which itself owned Sheffield United Football Club.
Proceedings began in the Business and Property Court between Abdullah's company, UTB LLC, and Sheffield United. An order for standard disclosure was made in 2018 (before the disclosure pilot came into force on 1 January 2019).
Sheffield United applied for further disclosure on 14 March 2019. Both parties expected that CPR Part 31 would apply to that application because the order for standard disclosure had been made before 1 January 2019. The relevant sections of the CPR are as follows:
The first question was whether the pilot applied to these proceedings.
The chancellor explored the apparent conflict between those two paragraphs, together with the effect of CPR Part 51.2.10; "[t]he pilot does not apply to any proceedings where a disclosure order had been made before it came into force unless that order is set aside or varied". He believed that this sentence was wrong and was a misunderstanding of Paragraph 1.3 of the pilot. He stated that:
[p]lainly, it is one thing to say that a pre-existing order will not be disturbed by the commencement of the Pilot, and quite another to say that the Pilot is not applicable to any proceedings where a disclosure order has already been made. Only the first is correct.
Accordingly, he held that the pilot was clearly intended to apply – and does apply – to all relevant proceedings subsisting in the Business and Property Courts, whether started before or after 1 January 2019, even in cases where a disclosure order was made before 1 January 2019 under CPR Part 31.
The chancellor then considered how Practice Direction 51U should be applied in the current situation.
He found that there is still an obligation on parties whose cases existed before 1 January 2019 (even where a disclosure order was already made) to consider concepts like extended disclosure and issues for disclosure:
The court will interpret the new [Practice Direction] 51U in a way that makes it work as effectively in relation to applications for disclosure in proceedings issued after 1st January 2019 as it will in relation to further applications for disclosure made in cases where disclosure was already ordered under CPR Part 31 before that date.
The chancellor also warned that the pilot was intended to effect a 'culture change' and was not simply a re-write of the existing CPR rules. The keys, he said, were proportionality and reasonableness.
A partner in Jones Day's Riyadh office, Mr Giansiracusa, had been instructed by Abdullah in early 2017 in relation to the Sheffield transaction. Giansiracusa was a lawyer (albeit not licensed by the Ministry of Justice), although UTB acknowledged that Giansiracusa had also acted as Abdullah's 'man of business'. UTB withheld from inspection some 500 documents which it argued were privileged insofar as they contained legal advice given by Giansiracusa to UTB. UTB accepted that many of Giansiracusa's other communications were not privileged, and those were disclosed.
Sheffield United submitted that once UTB had acknowledged that Giansiracusa had acted as Abdullah's 'man of business', UTB could not claim legal advice privilege over any of his communications.
The chancellor was "initially very reluctant" to inspect any documents because he was concerned that reviewing a small subset of the documents would not provide the necessary context. He noted that Practice Direction 51U expressly deals with judicial inspection at Paragraph 14.3, which sets out that judicial inspection is allowed where necessary. This, the chancellor commented, was a high threshold. However, he decided that to inspect two unredacted documents (but no more) was appropriate in this case – largely in order to avoid delaying the expedited trial, but also because the two redacted documents constituted Sheffield United's best case as to privilege.
The chancellor, having inspected the two unredacted documents and heard evidence from a partner in Jones Day's London office as to how his team had approached the privilege review, accepted that although Giansiracusa had been acting both as Abdullah's lawyer and his 'man of business', many of his communications did meet the relevant test in Three Rivers District Council v Governor and Company of the Bank of England(2) (ie, that the advice relates to the "rights, liabilities, obligations or remedies of the client either under private law or under public law"). The chancellor commented that it was not unusual for lawyers to draft letters or "evaluate legal options" for their clients "as part of the continuum of their advice".
The case leaves no uncertainty over whether Practice Direction 51U will apply to cases which have commenced before 1 January 2019, even where a disclosure order has already been made by the court (although there may still be room to argue about what 'disturbed' will actually mean in practice). It will be interesting to see how the court's interpretation of different existing disclosure orders develops, particularly in light of the chancellor's comments that the court will interpret the pilot in a way that "makes it work" and that the culture change ushered in by the pilot is relevant.
The case also suggests that the pilot lends support to the established rule that the court should be cautious about inspecting privileged documents and should be alive to the dangers of looking at documents out of context.
For further information on this topic please contact Gillian O'Regan or Parham Kouchikali by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
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