The recent case of Winchester Park Ltd v 1 Palace Gate Freehold Ltd [2024] EWHC 661 (Ch) is a stark reminder of the importance of fulfilling disclosure obligations.
In summary, Winchester Park’s defence was struck out due to their failure to comply with disclosure obligations.
Background
The parties’ original dispute relates to the ownership of a freehold interest and the management of a building. The Claimant, 1 Palace Gate Freehold, sought to exercise the tenants’ right of collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993.
A key question was whether, as at the date of the notice, the flat was being used for residential or commercial purposes. The Defendant argued that the flat in question was being used as an office and that there was no right of collective enfranchisement. However, the Claimant sought to prove that it was being used for residential purposes. This key question needed to be answered by disclosure.
The claim fell within the standard disclosure obligations under CPR, Part 31. Winchester Park provided inadequate disclosure in the first instance because several documents were the pleadings, or other documents were in the public domain such as Land Registry entries.
Winchester Park provided a secondary disclosure list with six further documents, which failed to fully disclose all relevant communications and formal deficiencies with the Disclosure Statement remained.
The Claimant therefore proceeded to issue an application for specific disclosure and an unless order was granted, this meant the defence of Winchester Park would be automatically struck out 5 minutes after non-compliance.
A third disclosure list was provided, but the judgment states the “same formal deficiencies” remained. The Claimant applied for a declaration in their favour, whilst Winchester Park sought relief from sanctions.
Standard disclosure
CPR 31.6 outlines what documents need to be disclosed in a standard disclosure exercise. These being:
(a) the documents on which he relies; and
(b) the documents which:
(i) adversely affect his own case;
(ii) adversely affect another party’s case; or
(iii) support another party’s case; and
(c) the documents which he is required to disclose by a relevant practice direction.
The Court’s decision
The matter was heard before HHJ Parfitt who held that relevant documentation had not been disclosed in the first to third lists and raised particular concerns regarding the electronic disclosure.
HHJ Parfitt found no good reason for the default and that Winchester Park had been given various chances to “get its house in order” [para 34]. HHJ Parfitt therefore did not grant relief from sanctions and Winchester Park’s defence was struck out.
The appeal
In March 2024, the appeal was heard before Mr Justice Adam Johnson. It was held that HHJ Parfitt was entitled to come to his decision and that it was not “so disproportionate or unfair that it can be described as plainly wrong or unprincipled”.
Implications
The case acts as a stark reminder that parties need to take disclosure obligations seriously and not to take a minimalist approach.
A breach of disclosure obligations can result in severe consequences, such as cost penalties, adverse inferences and as in this case, the striking out of a defence. For this reason, at Morr & Co we take disclosure obligations very seriously.
Often at the outset of instructions we will discuss what documents you hold which may be relevant to the dispute and advise you of the importance of both document preservation and disclosure.
The Pre-Action Protocol encourages the early disclosure of relevant evidence to try and settle a claim before proceedings as issued. Once proceedings are issued, disclosure becomes compulsory, save for privileged documents.
The Dispute Resolution team have a vast experience of disclosure exercises, including large commercial disputes whereby the volume of documents within the review universe exceeds a million documents.
How can Morr & Co help?
If you have any similar disputes or disclosure queries, please do not hesitate to reach out by calling our Dispute Resolution team on 01737 854500 or email [email protected]