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Going fishing: can you use pre-action disclosure in adjudication?

Akenhead J’s judgment in PHD Modular Access Services Ltd v Seele GmbH provides a useful analysis of when a party can apply for pre-action disclosure under CPR Part 31.16 and the breadth of the order sought by the applicant, particularly where there are ongoing adjudication proceedings.

It is a common consideration where disputes arise between parties in the construction industry. One may seek useful documents from the other prior to any formal proceedings. The practice is often described (though sometimes unfairly) as “fishing”. The party may be looking to see if it can get a “nibble” when it dangles its metaphorical hook to gather more evidence for a claim.

A real prospect of proceedings

In PHD v Seele, the parties had already gone through seven adjudications and PHD’s application for pre-action disclosure related to categories of documents concerned with extensions of time.

Akenhead J considered the circumstances in which the application was made and found that CPR Part 31.16(3)(d) could not be used as there was merely a “faint possibility that proceedings could happen” and not a real prospect, if not a certainty or likelihood.

This is a helpful reading of Part 31.16. Where a dispute exists between parties, there will always be a possibility of court proceedings following, but this should not, of itself, be sufficient to allow for pre-action disclosure in all cases.

Does it fit with the TCC’s approach to adjudications generally?

The decision is interesting in light of the TCC’s usual accommodation of adjudication applications, Part 8 for example. When you look at the facts, this case does seem to have been one where the TCC might have been prepared to grant pre-action disclosure due to the number of adjudications that had already taken place.

However, as is rightly pointed out in the judgment, the impact of adjudication has been to encourage final resolution of disputes rather than increase recourse to the courts. It must therefore follow that, as was the case here, the fact that the parties had been through successive adjudications and the unsuccessful party had shown absolutely no intention of challenging those decisions, the prospect of litigation must be regarded as minimal.

In stark contrast to the support that the TCC has offered to those adjudicating through Part 8 applications, Akenhead J was strongly of the view that parties who are adjudicating or thinking about adjudicating must not see CPR Part 31.16 as some sort of procedural support or tactical weapon for the purposes of the adjudication.

Does it fit with the Jackson LJ view?

One could say that the case is difficult to reconcile with Jackson LJ’s costs review, where recommendations were put forward for greater pre-action applications with a view to saving costs. Interestingly, the final report noted that the courts would need to closely control the process, otherwise there could be the potential to generate further costs when frivolous applications were allowed to be made. This may well have been one of the reasons behind the decision in PHD v Seele.

Akenhead J also commented on the width of the draft disclosure order. This was said to be far too wide and involved categories of documents unrelated to the dispute in question. The court’s view was that the request was disproportionate and unnecessarily expensive. The question of whether a narrower and more clearly defined application may have been accepted in different circumstances was left open. Costs were certainly part of the court’s decision making.

A line in the sand

Akenhead J has clearly taken a fairly hard line and placed a lot of emphasis on the need for a real prospect of proceedings. This may have been in an effort to step away from interfering in the adjudication process (as this appears to have worked fairly efficiently between the two parties to date). It does draw a useful “line in the sand” to show that there is clearly a stage when it is too early to apply for pre-action disclosure.

The key messages to take away are:

  • Court proceedings must be a real prospect.
  • The importance of drafting a specific and focussed order for disclosure that the court can enforce.

As this case demonstrated, failure on both these counts will result in a dismissed application, which could end up being quite costly for the applicant.

One thought on “Going fishing: can you use pre-action disclosure in adjudication?

  1. In additon to Tom’s points, it is interesting that Akenhead J suggested that Rix LJ (in Black and others v Sumitomo Corporation and others [2001] EWCA Civ 1819), did not consider the likelihood of proceedings, even though Rix LJ expressly stated:

    “The application has to be made by ‘a person… likely to be a party to subsequent proceedings’ against ‘a person… likely to be a party to the proceedings’ (section 33(2), Supreme Court Act 1981) and those requirements are reflected (in reverse order) in CPR 31.16(3)(a) and (b). There is no longer any statutory requirement that ‘a claim…is likely to be made…’ in my judgment the amended statute means no more than that the persons concerned are likely to be parties in proceedings if those proceedings are issued… The omission of any language which expressly requires that the initiation of proceedings itself be likely, which could have been included in the amended section, appears to me to reflect the difficulties which the earlier authorities had explored in the sort of circumstances found in Dunning. What the current language of the section appears to me to emphasise, as does the rule of court, is that the parties concerned in an application are parties who would be likely to be involved if proceedings ensued.”

    Of course, Akenhead J could have adopted the same approach as Rix LJ, but then exercised his judicial discretion to refuse to grant an order for pre-action disclosure, based on the need to have in mind the overriding objective. Instead, he adopted a different interpretation of the requirements set out in CPR 36.16(3)(a) and (b). It will be interesting to see how these two decisions are reconciled in future cases (particularly as Black v Sumitomo is a Court of Appeal decision).

    For some other recent consideration of the hurdles to be satisfied for an order for pre-action disclosure, see Kneale v Barclays Bank plc and Pineway Ltd v London Mining Company Ltd.

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