In Ennis Property Finance Ltd v Thompson the English High Court considered the correct approach to the redaction of documents in civil proceedings. The court held that the right to redact irrelevant material applies both to standard disclosure (discovery) and the right to inspect documents referred to in statements of case.
Underlying action
Ennis Property Finance Ltd issued proceedings to recover debts assigned to it by the Bank of Scotland Plc. The proceedings were based on certain loan agreements and guarantees made between the Thompsons and the Bank of Scotland (Ireland) Ltd, to which Ennis was not a party. Ennis relied on a series of documents as evidence of its right to bring the claim to recover the debts, the most important of which was a purchase deed between the Bank of Scotland Plc and Ennis, which referred to six other documents. These documents were referred to in Ennis's particulars of claim and evidence as to why it had the right to bring the claim, and were disclosed in a redacted form as they contained irrelevant and commercially sensitive information.
As the documents were referred to in the particulars of claim and evidence, the Thompsons had the right to inspect them in accordance with Civil Procedure Rule (CPR) 31.14(1), which provides that:
"(1) A party may inspect a document mentioned in –
(a) a statement of case; (b) a witness statement; (c) a witness summary; or (d) an affidavit."
Thompsons' application
The Thompsons applied to the court for the disclosure of these documents in their unredacted form, save for personal details regarding other debtors, on the basis that the redacted text included conditions relating to the validity of the assignment of debts, including those assigned to Ennis. The Thompsons argued that the redacted text would enable them to show that the conditions for assignment had not been met, thus rendering the assignment – and therefore Ennis's claim – invalid.
The Thompsons' argument comprised the following:
- The right to inspect documents (CPR 31.14) is a right to inspect unredacted documents unless redaction is required on the grounds of privilege or public interest immunity – neither of which applied in this case.
- The duty to disclose documents (CPR 31.6(c)), which requires that a party disclose documents if required to do so by a practice direction, requires unredacted copies of the documents to be disclosed unless those documents are subject to privilege or public interest immunity. The Thompsons relied on Paragraph 7.3 of Practice Direction 16, which states that where a claim is based on the written agreement, a copy of the contract or documents constituting the agreement should be attached to or served with the particulars of claim.
- The redacted sections of the documents, although commercially sensitive, fell within the requirements of standard disclosure contained in CPR 31.6, and in particular CPR 31.6(b)(i) and (iii), which provides that a party must disclose "the documents which adversely affect his own case… or support another party's case".
The judge refused the Thompsons' application.
In response to the first and second arguments above, the judge noted that she had not been directed to any authority which stated that the pre-CPR ability to redact a document had been removed following the introduction of the CPR, nor had she been directed to any authority which stated that the CPR expressly provided for redaction. Instead, the judge held that a party's ability to redact disclosed documents "is taken for granted in the case law" and it was implausible that the longstanding practice of redacting irrelevant material had disappeared under the CPR. Accordingly, the judge held that the right to redact irrelevant material applies equally to the right to inspect documents (CPR 31.14) and to the requirements for standard disclosure (CPR 31.6).
The judge held that the correct test to apply when considering whether parts of a document can be redacted is the test for standard disclosure (CPR 31.6) as applied to the material within the document – that is, that a party must disclose documents on which it relies, as well as documents which adversely affect its own or another party's case, or support another party's case.
However, the judge appeared to accept that the court retained the right to order the inspection of the redacted material, which depended on "striking a just balance between the competing interests" of the parties. Confidentiality is one factor which should be considered when looking at a parties' interests. In this case, the amount claimed was significant to the Thompsons, but the assignment of the debt to Ennis was only a small part of a complex transaction. Therefore, it would have been "disproportionate and commercially dangerous" for Ennis to provide unredacted material containing commercially sensitive information, even with the safeguards contained in CPR 31.22 (which provides that disclosed documents can be used only for the purpose of the proceedings in which they were disclosed).
In response to the third argument, the judge held that there was no sufficient reason to look beyond Ennis's evidence that the redacted material did not fall into any of the categories contained in CPR 31.6. The Thompsons argued that the redacted material might show that the conditions for the transfer of business and debts from the Bank of Scotland Plc to Ennis had not been met and so the transfer was not valid. However, the judge noted that, as the Bank of Scotland Plc had accepted the validity of the assignment, it was hard to see that it had not waived any breaches of conditions (if there were any). As a result, searching for such material would be futile and the redacted material was "unlikely to be of any assistance". Further, the judge noted that it was for the trial judge to determine whether Ennis had title to sue on the basis of the evidence given at trial. If the Thompsons could show that there were potential flaws in the assignment, Ennis might not be able to prove its title to sue using the documents as disclosed in their redacted form.
By agreeing that the parts of the documents containing personal information could retain their redactions on account of confidence, the Thompsons appeared to undermine their argument that other parts of the documents could not be redacted for the same reason. However, in the short term, this case confirms a party's ability to redact documents in order to protect commercially sensitive information. A party seeking the disclosure of unredacted documents will not be able to rely solely on the safeguards contained in CPR 31.22 to justify the disclosure of unredacted documents containing commercially sensitive information.
Nevertheless, parties must not abuse the right to redact documents; courts have become increasingly willing to criticise parties for perceived disclosure failings, as evidenced by Justice Hildyard's comments in The RBS Rights Issue Litigation, where he criticised "an unfocused disclosure process, which has fanned out exponentially and extravagantly without sufficient control and direction".
In the long term, the practice of redacting commercially sensitive information is likely to be confirmed by way of an express rule. The two-year disclosure pilot scheme proposed for the Business and Property Courts, which is going through an informal consultation process, includes specific provisions at Paragraphs 14.5 and 14.6 of the draft practice direction in relation to the redaction of documents. Paragraph 14.5 states that:
"A party may redact a part or parts of a document on the ground that the redacted data comprises data that is –
(1) irrelevant to any issue in the claim, and confidential; or (2) privileged."
Paragraph 14.6 states that:
"Any redaction must be accompanied by an explanation of the basis on which it has been undertaken and confirmation, where a legal representative has conduct of the litigation for the redacting party, that the redaction has been reviewed by the legal representative with control of the disclosure process. A party wishing to challenge the redaction of data must apply to the court by application notice supported where necessary by a witness statement."
The fact that, for the first time, the proposed disclosure pilot scheme expressly provides for a party's right to redact documents which contain irrelevant and confidential information highlights the consistent line that the courts wish to adopt and will undoubtedly make any applications for the disclosure of unredacted documents harder in future.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
For further information on this topic please contact Victoria Rogers or Davina Given at RPC by telephone (+44 20 3060 6000) or email ([email protected] or [email protected]). The RPC website can be accessed at www.rpc.co.uk.
