In one of his first decisions after appointment to the Chancery Division Nugee J heard an appeal on a disclosure issue in the case of Ward Hadaway v DB UK Bank Limited (11.11.2013 unreported). The case raised a point of principle on the test to be applied where a document has already been technically disclosed by reference but the disclosing party claims that the primary disclosure duty is not engaged because the document is not adverse to their case or helpful to the other side’s case.
The claim was brought by the lender against the solicitor’s firm in relation to buy-to let mortgages. The bank said that the firm had failed to disclose that the sales involved back to back sub-sales in which the intermediate vendor was not the registered proprietor. W admitted the failure to report but defended on the issue of causation saying that the bank would still have made the loans if the reports had been made.
The bank disclosed its business underwriting guidelines (BUG) which they said contained their lending policy. The BUG referred to a credit process guide (CPG) which was described as a key credit policy document or blueprint which took priority over the guidelines in case of conflict. The bank refused to disclose the CPG because it was commercially sensitive and was not relevant to individual lending decisions in any event – it did not adversely affect its case or support the firm’s case and so was not within CPR 31.6. The firm applied for disclosure of the CPG arguing that a lending decision which fell outside the criteria might still be referred to the CPG. The Master refused the application for disclosure.
The firm appealed. On appeal Nugee J held that a failure to disclose under the standard disclosure duty was not a matter of pure judicial discretion in the way that normal case management decisions were. The test in this case was whether the CPG should have been disclosed because the CPR 31.6 criteria were met. This was not just a question of relevance but whether the document fell within the wording of the rule (Shah v HSBC Private Bank (UK) Ltd  EWCA Civ 1154 followed). If there was evidence that the document was not within the rule the party seeking disclosure had to show not that the evidence might be wrong but that it had to be wrong (GE Capital Corporate Finance Group v Bankers Trust Co  1 WLR 172 applied). The new evidence produced by the bank showed that the CPG would not have been engaged and therefore the Master had been right to dismiss the application.
It appeared, surprisingly, that the application for the court to determine whether the guide was within the obligation of standard disclosure was not specifically covered by the provisions of CPR 31. The application was not one for specific disclosure since the guide, having been referred to in the evidence, had already been disclosed, SmithKline Beecham Plc v Generics (UK) Ltd  EWCA Civ 1109,  1 W.L.R. 1479 considered. Nor was it an application for specific inspection within r.31.12. Nor was it a claim by D that it had a right or duty to withhold inspection within r.31.19.