High Court Decision Provides Guidance on Extended Disclosure in Complex Construction Litigation

Citation: [2023] EWHC 2864 (TCC)
Judgment on

Introduction

The High Court of Justice’s decision in Irwell Riverside Developments Limited v Arcadis Consulting (UK) Limited [2023] EWHC 2864 (TCC) brings into focus the operative mechanisms of Extended Disclosure under Practice Direction 57AD in the Business and Property Courts. The case illustrates the court’s approach to contested applications for further disclosure, particularly when one party asserts that relevant documents “simply must exist.” This article analyzes the judgment’s handling of issues around disclosure, compliance with court orders, and the practical operation of the legal principles underpinning disclosure in complex construction litigation.

Key Facts

The conflict arises from alleged defects in the design of a podium slab in a modular construction project, entailing claims upwards of £21 million. Arcadis, the structural engineers, made an application for disclosure orders under paragraphs 17 and 18 of Practice Direction 57AD, asserting that the disclosure provided by the claimant, Irwell Riverside Developments Limited (IRDL), was insufficient. Arcadis emphasized that certain expected documents were missing and, consequently, requested the court to mandate further searches and the production of additional documents.

Case management directions, including issues for disclosure and the method of searching, had been previously agreed upon by both parties. During the disclosure process, IRDL revealed 2,079 documents from an initial yield of over 20,000 after de-duplication and review. Arcadis was given access to the 23,000 documents, a move they described as a “data dump,” however, after sampling these documents, they maintained that “evidently missing” documents remained undisclosed.

The court’s analysis hinged on interpreting PD57AD, distinguishing between paragraph 17, addressing potential non-compliance with existing orders, and paragraph 18, concerning varying the original order to include specific documents. A significant focal point of the analysis was the responsibility to demonstrate compliance with the order of Extended Disclosure within the scope of reasonableness and proportionality.

Acknowledging the expected co-operative nature of the disclosure process under PD57AD, the court scrutinized the application in light of the overriding objective. This took into account factors such as the nature and complexity of the issues, the importance of the case, the likelihood of probative documents existing, the extent of documents involved, the ease and expense of retrieving any particular document, each party’s financial position, and the need for expeditious and fair case management at a proportionate cost.

The judgment stressed that applications under PD57AD 17.1 should identify alleged disclosure failures with precision and suggest how further searches should be conducted, typically involving terms, date ranges, or custodians.

Outcomes

The court ruled there was no clear basis for some categories of the documents requested by Arcadis, upholding that IRDL’s previous disclosure process was compliant and proportional. Orders were made for further searches relating to select categories involving loan documents, progress reports, site meeting minutes, and documentation pertaining to construction programs. Specifically, the court ordered IRDL to:

  1. Carry out further searches for substantiating documentation for the interest charged for internal lending.
  2. Perform additional searches for cash flow forecasts.
  3. Undertake further searches for all progress reports, site meeting minutes, and documents relating to Ideal Modular’s insolvency and damage to the modules.
  4. Locate all construction programs predating a certain revision and any as-built programs.

The court did not grant orders for documents for which Arcadis had not adequately argued their relevance or necessity for disclosure, underscoring that parties could not shift the burden of document review onto each other. Significantly, the absence of cooperation between parties played a role in the court’s determination.

Conclusion

The High Court’s decision elucidates the intricacies of managing Extended Disclosure under PD57AD. Crucially, it underscores the need for specificity and justification in applications for further disclosure, adherence to the principles of reasonableness, proportionality, and practical cooperation between parties. The judgment serves as a reminder that courts expect a disciplined and rational approach to disclosures, with parties onus-bound to engage constructively. It also reflects judicial reluctance to sanction ‘fishing expeditions’ in the absence of clear substantive reasoning, highlighting the court’s role as a referee ensuring fairness, expediency, and cost-effective resolution in complex legal disputes.

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