The New Disclosure Pilot scheme and application to the Insolvency and Companies Court

The Chief Insolvency and Companies Court Judge recently issued guidance to confirm that the provisions of the Disclosure Pilot apply to the Insolvency and Companies List. That is except for some express exclusions from discrete parts of the scheme, including Part 7 without any particulars, Part 8 claims and where the Insolvency Express Trials procedure applies.

That being said, in Part 8 proceedings, the Court may, pursuant to its own case management powers or at the request of the parties, order disclosure and such disclosure will be required to be in accordance with the Disclosure Pilot scheme provisions.

When the scheme was introduced in the Business and Property Courts in January this year, there was intentionally no transitional period and, following the comments of Chief Insolvency and Companies Court Judge Briggs, it is likely that the same will apply for the Insolvency and Companies Court. Practitioners and IPs therefore need to be up to speed with their revised obligations in respect of disclosure to avoid being non-compliant.

What is the Disclosure Pilot scheme?

The Disclosure Pilot scheme came into effect on 1 January 2019 and is now mandatory in all cases in the Business and Property Courts in the pilot areas, including London. The Disclosure Pilot scheme is the product of two years’ worth of work by the Disclosure Working Group in response to widespread concerns and criticism from Court users and regarding the excessive costs and complexities involved in disclosure in its current form.

The scheme will be piloted for two years and the Working Group have made it clear that they welcome any comments from users as to the efficiency. The aim is to ultimately reduce the time and money spent in carrying out the disclosure exercise and to ultimately modernise the rules and to try and avoid “document dumping” a vast amount of irrelevant material on the other side. At the end of the pilot, if it is considered successful, it is intended that the new rules will be implemented more widely to include other areas and other Courts. 

What is the difference?

PD51U sets out the way in which disclosure should now be approached where the Disclosure Pilot scheme will apply. Firstly it is noteworthy that there is no automatic entitlement to search-based “standard disclosure.” Instead, parties will be required to carry out “initial disclosure” of documents when serving their statement of case. Initial disclosure will include those documents which are key to a party’s case, or key for the other party to be able to understand the case against them. There is no obligation at this stage to undertake a kind of search, nor any obligation to disclose known adverse documents. Parties are also required to actively notify third parties that may have relevant documents in their position of their obligations at the earliest possible opportunity.

After initial disclosure, the parties will need to work collaboratively on the Disclosure Review Document (DRD). The purpose of the DRD is to assist the Court to identify whether any extended disclosure is required. Extended disclosure involves the use of disclosure models. In order to avoid overly burdensome document review tasks, different disclosure models can be applied to different issues. There are 5 models for extended disclosure (A-E) which include disclosure confined to known adverse documents, limited disclosure, request-led search-based disclosure, narrow search-based disclosure and wide search-based disclosure. It is thought that the widest search-based disclosure model is only relevant to a very small number of highly complex cases.

The parties will be strongly encouraged to make use of technology in order to streamline the disclosure process in terms of costs and time.

Whilst disclosure searches are likely to be far more limited, parties must be aware that if extended disclosure is ordered, there is a positive obligation to disclose adverse documents whether they would fall within the search criteria or not.

Obligations are placed both on the parties themselves and on their legal advisors to ensure that the obligations are taken seriously and complied with.

Use specifically in the Insolvency and Companies Court

Welcome clarity has been given to those regularly using the Insolvency and Companies Court to confirm that Forms of originating process, such as petitions and applications, are not “statements of case” for the purpose of the Disclosure Pilot scheme.

An exception has, however, been made for petitions issued for relief pursuant to sections 994-996 of the Companies Act 2006 and/or for winding up on the “just and equitable” ground, since these are equivalent to Part 7 proceedings with statements of case. This suggests that the Disclosure Pilot Scheme will apply, in full, to such cases.

Practitioners and regular users of the Insolvency and Companies Court are advised to familiarise themselves with the new regime to avoid being reprimanded by the Court for failing to take the steps required at the early stages.

As with the Business and Property Courts, it is hoped that the introduction of the Disclosure Pilot scheme will streamline the process, minimise time and costs incurred and inevitably speed up the Court process.