Court of Appeal considers relevance of merits to application for pre-action disclosure

The Court of Appeal has confirmed that the court's jurisdiction to order pre-action disclosure is not subject to an "arguability threshold". The strength of the applicant's case on the merits, and in particular whether the applicant is able to show that it has "some sort of prima facie case which is more than a merely speculative punt", may however be an important factor when the court considers its discretion to make such an order: Jet Airways (India) Limited and Others v Barloworld Handling Limited [2014] EWCA Civ 1311.

In this case the Court of Appeal upheld an order for pre-action disclosure of documents relating to the maintenance of certain forklift trucks, where it was accepted that the fire which destroyed the applicant's warehouse had started in those trucks. Whilst the decision does not alter the law, it provides a useful guide to the circumstances in which the court may order pre-action disclosure. Rachel Lidgate and James Leadill consider the decision further below.

	Rachel Lidgate Senior Associate +44 20 7466 2418
	James Leadill Trainee solicitor +44 20 7466 2103

Background

The court may order pre-action disclosure under CPR 31.16 only where: (i) the applicant and respondent are likely to be party to subsequent proceedings; (ii) the documents in question would fall within the respondent's duty of standard disclosure; and (iii) disclosure before proceedings have started is desirable in order to dispose fairly of the proceedings, assist the dispute to be resolved without proceedings, or save costs.

Even where this jurisdictional test is satisfied, the court will only exercise its discretion to order pre-action disclosure if it considers that it is justified in all the circumstances.

In this case, the owner of a warehouse (Jet Airways) applied for pre-action disclosure of documents relating to the maintenance of forklift trucks used in the warehouse by the party that had been responsible for their maintenance (Barloworld). The warehouse had been destroyed by fire. It was common ground that the fire had started in one of the forklift trucks and there was evidence that the investigators instructed by Jet Airways had formed the provisional view that poor maintenance had played a part.

Barloworld opposed the application, principally on the basis that the suggestion that it was responsible for the fire was no more than speculation.

The first instance judge in the Commercial Court, Burton J, granted the application. He applied the High Court's decision in Kneale v Barclays Bank [2010] EWHC 1900 (Comm), which held that before the court has jurisdiction to order pre-action disclosure, an applicant must show that he has "some sort of prima facie case which is more than a merely speculative punt" (see post).

On the facts of the present case, Burton J held that Jet Airways had satisfied this test. He was also satisfied that pre-action disclosure would help to eliminate or support the case that the fire had been caused by faulty design or maintenance of the forklift truck, and would thus promote a resolution of the dispute or save costs. He therefore exercised his discretion to make the order. Barloworld appealed.

Court of Appeal Decision

The Court of Appeal (Moore-Bick LJ, Ryder LJ and David Richards J) dismissed the appeal.

On the jurisdiction aspect, in his leading judgment, Moore-Bick LJ referred to the Court of Appeal's judgment in Smith v Secretary of State for Energy and Climate Change [2013] EWCA Civ 1585, which had been decided after Burton J's decision was handed down. In Smith the Court of Appeal disapproved Kneale for having proceeded on the basis that CPR 31.16 prescribed any kind of jurisdictional "arguability threshold". Instead, the Court of Appeal made clear that judges should consider the viability of the applicant's potential claim when exercising their discretion as to whether to order pre-action disclosure.

The decision in Smith was, the Court of Appeal said, a "body blow" to Barloworld's appeal based on lack of jurisdiction, but left it unscathed insofar as it involved a challenge to the judge's exercise of discretion.

On that point, whilst the evidence pointing to failures in the maintenance of the forklift trucks was far from conclusive, the Court of Appeal considered that there was sufficient evidence before the judge at first instance to justify his conclusion that the case was not merely speculative, and that the Court of Appeal should be slow to interfere with the judge's assessment as to whether the strength of the case, the nature of the particular issues to which a claim would give rise, the contribution likely to be made by disclosure at this stage or the burden such an order for disclosure would impose on the appellant justified making the order sought. Barloworld's submission that the order was too broad and should not have extended to documents created up to two years preceding the fire was also very much a matter for the judge.

On the facts there were no grounds on which the Court of Appeal could properly interfere with Burton J's exercise of his discretion.