A recent High Court decision has reminded Claimants that pre-action disclosure applications cannot be used as fishing expeditions to form or strengthen any unsubstantiated claims.
Grant Thornton, the Defendant, acted as Assetco's auditors for the financial years ending 2009 and 2010. In 2011, Assetco appointed new auditors. These new auditors identified alleged errors in the accounts prepared by Grant Thornton and also prepared revised accounts for the years 2009 and 2010. On the back of this, Assetco wrote to Grant Thornton, making reference to the Pre-Action Protocol for Professional Negligence claims, suggesting that Grant Thornton had acted negligently in preparing the accounts. Assetco then issued an application for pre-action disclosure. Grant Thornton contested this, saying that the basis of Assetco's claim was not set out properly. Assetco replied saying that they would, in time, provide draft Particulars of Claim but were unable to do so before having access to the disclosure from Grant Thornton that they sought. The issue was whether the criteria set out at CPR r.31.16 (3) (c) and CPR r.31.16 (3) (d) had been satisfied so as to allow an application for pre-action disclosure to succeed.
The Court held that Assetco's original letter referencing the Pre-Action Protocol simply recited the background facts and did not identify or explain the allegations against Grant Thornton or the issues that would arise if Assetco did pursue the action. The Court also pointed out that Assetco had access to its own documents, including Grant Thornton's accounts, as well as their new auditors' documents/revised accounts. Therefore, they should have already been able to say in what way Grant Thornton acted negligently and form their claim. Therefore, CPR r.31.16 (3) (c) was not satisfied. As for CPR r.31.16 (3) (d), the Court placed significant importance on the proper application of the Pre-Action Protocol. The Court pointed out that the Claimant had not yet provided a fully particularised Letter of Claim, compliant with the Protocol, and then proceeded to apply immediately for pre-action disclosure. If the Court allowed pre-action disclosure before exact allegations against the Defendant had been particularised, disclosure would simply have to be done again once the allegations and the claim were finalised, which would result in wasted costs. Justice Blair, therefore, refused the application.