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26 January 2016
In Claverton Holdings Ltd v Barclays Bank plc(1) the Commercial Court rejected an application by the claimant for specific disclosure against the defendant bank. The court found that the documents sought, which related to other mis-selling allegations against the bank employees featuring in the claimant's case, would have little probative value and adducing them would place a disproportionate burden on the defendant.
In July 2007 claimant Claverton Holdings Ltd, a property holding company based in the British Virgin Islands, purchased an interest rate swap from defendant Barclays. In June 2014 Claverton issued proceedings against Barclays, claiming that it had been mis-sold the swap on the basis of alleged negligent (oral) advice and recommendations from two of Barclay's employees. Barclays deny the allegations and a trial is set for June 2016.
The hearing concerned a specific disclosure application made by Claverton for documents relating to allegations of complaints of swaps mis-selling involving the relevant Barclays employees in other legal processes. This was to include complaints involving the Financial Conduct Authority (FCA) and the Financial Ombudsman Service, court proceedings and disciplinary processes.
Claverton cited the FCA review of swaps mis-selling which stated that (as of December 31 2014) Barclays had been obliged to offer redress to 2,896 customers. Claverton inferred that "a significant number" of complaints would have related to the conduct of the same Barclays employees who had provided it with advice. In support of this inference, Claverton submitted two particulars of claim from other mis-selling proceedings involving allegations against one of the employees. Although not of direct relevance, Claverton argued that they did establish collateral facts which might be admissible at trial as similar-fact evidence, which would support its claim.
Claverton relied on the two-stage test for determining whether evidence of collateral matters should be admitted as similar-fact evidence, as set out by Lord Bingham in O'Brien v Chief Constable of South Wales Police:(2)
In relation to the second stage of the test, the potential burden is broadly defined and can include time, cost, personnel resources, the lengthening of the trial, the potential prejudice to witnesses called on to recall matters long closed, the loss of documentation and the fading of recollections.
During the course of its submissions, Claverton – in the face of argument – was forced into a number of concessions:
The court concluded that Claverton failed on both stages of the O'Brien test.
In respect of the first stage, the court did not think that the documents sought in Claverton's application (now in a much reduced form following its concessions) would be relevant and therefore admissible as similar-fact evidence. It was highly unlikely that Barclays would have admitted liability in any of the claims that it had settled and any determinations made by the Financial Ombudsman Service would be based on its view of Barclays' responsibility to compensate the customer – not its view of Barclays' legal liability.
In respect of the second stage, even if that evidence were admissible, the court would not have exercised its discretion to admit it on the basis that to require Barclays to undertake the search and disclosure exercise proposed would be disproportionate and oppressive. Further, the court thought that adducing the requested evidence would risk giving rise to satellite issues that could derail the trial, as Barclays might wish to adduce its own evidence in respect of the admissions or findings – either to explain, contradict or distinguish them from the facts of the case.
In the court's view, the application had become a fishing expedition, with Claverton hoping to find an admission by Barclays or a finding of similar facts when there was no reason to suppose either existed.
The judgment makes reference to the inherent tension that existed in Claverton's desire to adduce something more than unsubstantiated allegations while also avoiding charges that it intended to engage in satellite litigation. While attempting to balance the two, Claverton ultimately failed on both counts.
While Claverton's application was perhaps speculative, future applicants can draw a number of points from the case that may guide future similar applications. Potential applicants should consider how likely it is that the requested documents actually exist and whether the documents identify facts, as opposed to allegations of facts (with the latter less likely to have probative value). Applicants should also consider how to deal with the proportionality arguments that will inevitably be levelled against them by the resisting party, narrowing their request and considering how the documents might be located and collated so as to minimise the burden on the respondent.
For further information on this topic please contact Simon Hart or Chris Whitehouse at RPC by telephone (+44 20 3060 6000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
(1)  EWHC 3603 (Comm).
(2)  2 AC 534.
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