'Disproportionate' disclosure application denied in swaps mis-selling claim
In Claverton Holdings Ltd v Barclays Bank plc, the Commercial Court rejected an application by the claimant for specific disclosure against the defendant bank.
The court found that the documents sought, which related to other mis-selling allegations against the bank employees featuring in the claimant's case, would have little probative value and adducing them would place a disproportionate burden on the defendant.
In July 2007 the claimant, Claverton Holdings Ltd ("Claverton"), a property holding company based in the British Virgin Islands, purchased an interest rate swap from the defendant, Barclays. In June 2014 Claverton issued proceedings against Barclays, claiming that it had been mis-sold the swap on the basis of alleged negligent (oral) advice and recommendations from two of Barclay's employees. Barclays deny the allegations and a trial is set for June 2016.
The hearing concerned a specific disclosure application made by Claverton for documents relating to allegations of complaints of swaps mis-selling involving the relevant Barclays employees in other legal process. This was to include complaints involving the FCA and the Financial Ombudsman Service, court proceedings and disciplinary processes.
Claverton cited the FCA review of swaps mis-selling which stated that (as at 31 December 2014) Barclays had been obliged to offer redress to 2,896 customers. Claverton inferred that "a significant number" of complaints would have related to the conduct of the same Barclays employees who had provided it with advice. In support of this inference, Claverton submitted two Particulars of Claim from other mis-selling proceedings involving allegations against one of the employees. Although not of direct relevance, Claverton argued that they did establish collateral facts which might be admissible at trial as similar fact evidence, which would support its claim.
The O'Brien test
Claverton relied on the two stage test for determining whether evidence of collateral matters should be admitted as similar-fact evidence, as set out in by Lord Bingham in O'Brien v Chief Constable of South Wales Police  2 AC 534:
- Is the evidence probative? – i.e. would (or might) an entirely rational, objective and fair-minded person attach importance to the evidence.
- If the evidence is deemed probative, in the judge's discretion, should the evidence be admitted? The decision whether to the exercise the discretion in the applicant's favour would involve balancing the significance of the evidence against (amongst other factors) the burden the admission of the evidence would impose on the resisting party.
In relation to the second stage of the test, the potential burden is widely defined and can include time, cost, personnel resources, the lengthening of the trial, the potential prejudice to witnesses called upon to recall matters long closed, the loss of documentation and the fading of recollections.
The claimant's concessions
During the course of its submissions, the claimant, in the face of argument, was forced into a number of concessions
The similarity concession – Claverton accepted that not every allegation or complaint of mis-selling against the two Barclays employees would be probative and narrowed its application to cases involving similar allegations to those that it advanced.
The oral representation concession – as the allegations made by Claverton related exclusively to oral representations (as opposed to written communications such as emails and written presentations), Claverton conceded that only allegations of oral misrepresentation would be probative.
The supporting evidence concession – in order to counter the contention that admitting the evidence would give rise to satellite litigation, Claverton proposed not to call evidence to support any allegations that might appear within the documentation sought and agreed merely refer to their "nature and extent".
The admission concession – as a result of the previous concession, the court expressed the view that the evidence now sought by Claverton amounted to hearsay evidence of the underlying facts alleged which would be "of plainly little if any probative value". Barclays added that no authority existed where similar allegations (as opposed to facts) had been admitted. This prompted a final concession from Claverton to further narrow its application to complaints and allegations which had resulted in an admission by Barclays or a finding by the Financial Ombudsman Service against Barclays.
The court concluded that Claverton failed on both stages of the O'Brien test.
In respect of the first stage, the court did not think that the documents sought in Claverton's application (now in a much reduced form following its concessions) would be relevant and therefore admissible as similar fact evidence. It was highly unlikely Barclays would have admitted liability in any of the claims that it had settled and any determinations made by Financial Ombudsman Service would be based on its view of Barclays' responsibility to compensate the customer and not its view of Barclays' legal liability.
In respect of the second stage, even if that evidence were admissible, the court would not have exercised its discretion to allow it to be admitted on that basis that to require Barclays to undertake the search and disclosure exercise proposed would be disproportionate and oppressive. Furthermore, the court also thought that adducing the requested evidence would risk satellite issues derailing the trial as Barclays might wish to adduce its own evidence in respect of the admissions or findings – either to explain, contradict or distinguish them from the facts of the case.
In the court's view, the application had become a fishing expedition, with Claverton hoping to find an admission by Barclays or a finding of similar facts when there was no reason to suppose either existed.
The judgment makes reference to the inherent tension that existed between Claverton's desire to adduce something more than unsubstantiated allegations but also avoid charges that that intended to engage in satellite litigation. While attempting to balance the two Claverton ultimately failed on both counts.
While Claverton's application was, perhaps, speculative, future applicants can draw a number of points from the case that may guide future similar applications. Potential applicants should consider how likely it is that the requested documents actually exist and whether the documents identify facts as opposed to allegations of facts (with the latter less likely to have probative value). Applicants should also consider how to deal with the proportionality arguments that will inevitably be levelled against them by the resisting party, narrowing their request and considering how the documents might be located and collated so as to minimise the burden on the respondent.