A Lack of List of Issues for Disclosure is not a bar to specific disclosure under the Disclosure Pilot Scheme
The court can order specific disclosure under the Disclosure Pilot Scheme, even where there is no agreed or approved List of Issues for Disclosure HMRC v IGE USA Investments Ltd and Ors(1).
Background
Briefly, the appellants are a number of companies within the GE Group (GE). The respondents are HM Revenue and Customs (HMRC). In 2005, the parties entered into a series of settlement agreements in relation to GE's tax liability. On 16 October 2018, HMRC sent a letter to GE rescinding the settlement agreements based on misrepresentation and/or material non-disclosure and issued a claim for around £650 million.
A year later, HMRC issued an application to amend their Particulars of Claim (Amendment Application) to, amongst other things, allege fraud. GE denied the allegation of fraud and resisted the application. At the Case Management Conference, the court made a direction for extended disclosure under paragraph 6 of the Practice Direction 51U (PD 51U) in the form of Model D and while the parties liaised with a view to agreeing a draft List of Issues for Disclosure, not all the proposed issues were agreed.
In its Amendment Application, HMRC filed evidence that the team dealing with the GE matter had on two occasions referred the case to HMRC's Fraud Investigation Service (FIS), the specialist body responsible for investigating taxpayer fraud at HMRC. Following this, GE's solicitors asked HMRC for copies of the documents relating to the FIS to support their application. HMRC declined to produce the documents, so GE issued a specific disclosure application under paragraph 18.1 of PD 51U requiring HMRC to provide specific disclosure of the FIS Documents(2).
The Disclosure Pilot Scheme does not include the rule for specific disclosure contained in CPR 31.12, but Paragraph 18.1 of PD 51U provides:
"The court may at any stage make an order that varies an order for Extended Disclosure. This includes making an additional order for disclosure of specific documents or narrow classes of documents relating to a particular Issue for Disclosure."
Paragraph 18.1 is similar to the power under CPR 31.12; however, an important difference is that any such additional order for disclosure of specific documents must relate "to a particular Issue for Disclosure."
Deputy Master Nurse dismissed the application, on the basis that there could be no order for disclosure within an Order for Extended Disclosure unless and until there exists a List of Issues for Disclosure. That List cannot include "Issues" not identified within the Statements of Case.
Appeal
On appeal, the High Court explored two questions;
- Are Issues for Disclosure limited to issues which can be identified within the statements of case?
Paragraph 7.3 of the DPS defines "Issues for Disclosure" as (with underlining added) "only those key issues in dispute which the parties consider will need to be determined by the court with some reference to contemporaneous documents in order for there to be a fair resolution of the proceedings. It does not extend to every issue which is disputed in the statements of case by denial or non-admission."
The High Court said that it is right that Issues for Disclosure "does not extend to every issue which is disputed in the statements of case by denial or non-admission". However, just because not all issues in the statements of case are Issues for Disclosure, it does not follow that all Issues for Disclosure have to be issues in the statements of case(3) - it is enough for that issue to be something which will need to be determined by the court in order for there to be a fair resolution of the proceedings as a whole.(4)
The High Court held that in the present case, the proposed amendments alleging fraud, while not yet issues identifiable on the face of the statements of case, were clearly issues which would need to be determined by the court in order for there to be fair resolution of the proceedings as a whole.(5)
- Are "Issues for Disclosure" and "List of Issues for Disclosure" distinct concepts?
The DPS allows for variation of an order for Extended Disclosure. It therefore follows that, in order for the power to arise, there must already be in place an order for Extended Disclosure.(6) There was such an order in the present case.
It also must relate "to a particular Issue of Disclosure". The concept of "Issues for Disclosure" is defined at paragraph 7.3 (above). Paragraph 7.2 introduced the tool of the "List of Issues for Disclosure". The High Court held that the List of Issues for Disclosure is an important tool, but it is only a tool. It is the Issues for Disclosure that is the key concept which informs all concerned with the scope of disclosure.(7) In respect of jurisdiction under paragraph 18, the High Court held at [65]:
"Importantly, however, the power is not limited or restricted by reference to the tool of the List of Issues for Disclosure. It does not matter if a List is in place or not. What does matter is that there is an existing order for Extended Disclosure and that the new disclosure relates to an Issue for Disclosure."
Having held that the Court did have jurisdiction to grant GE's application for disclosure pursuant to paragraph 18.1, the Judge exercised his discretion in favour of making an order. It was reasonable and proportionate to make the order as HMRC had already searched for and collated the documents sought. Secondly, the amount of money involved was substantial and therefore the proposed amendment is one which justified a high level of scrutiny.(8)
Comment
The Pilot Scheme is still only a pilot, having only commenced on 1 January 2019. Therefore, there is little authority on the relevant provisions. In recognising that this was an important point in the context of a relatively new procedural model, Deputy Master Nurse granted permission to appeal to the High Court and in doing so, noted that the lack of reported authority on the application of paragraph 18 was a compelling reason.(9) The decision provides clarification as to the Court's jurisdiction to vary orders for Extended Disclosure. It also confirms that where parties have yet to agree a List of Issues for Disclosure, it will not prevent the Court making an order to vary a pre-existing order for Extended Disclosure.
(1) [2020] EWHC 1716 (Ch)
(2) HMRC at [17] per Pickering J
(3) HMRC at [51] per Pickering J
(4) HMRC at [57] per Pickering J. His Honour also referred to the case of Rome v Punjab National Bank [1989] 2 All ER 136, which reinforced his view that it did not matter that the issue was not a pleaded issue within the statements of case. What was important was that the issue was one which arose within the action in a wider sense, see [52] – [56].
(5) HMRC at [68] per Pickering J
(6) HMRC at [63] per Pickering J
(7) HMRC at [61] per Pickering J
(8) HMRC at [74] per Pickering J
(9) HMRC at [18] per Pickering J