Disclosure Non-Compliance, Suspected Fraud And Further Disclosure Orders

Can a judge order further disclosure against an uncooperative party in commercial proceedings, particularly where fraud is alleged? The award-winning commercial litigation lawyers at ParrisWhittaker are experienced in disputes around disclosure, including applying for disclosure orders or defending unwarranted applications in the course of proceedings.

What is meant by ‘disclosure’?

Disclosure is a crucial element in civil proceedings.  Disclosure requires each party to disclose documents or information in (or have been within) their control and are relevant to an issue in proceedings. There are exceptions, such as documents that are privileged.

If one of the parties believes their opponent is withholding information, they can request that the judge orders specific disclosure. The judge can make an order requiring the non-disclosing party to disclose specific documents or information (under Ord 24, rule 7 of the Rules of the Supreme Court).

The UK’s High Court¹ recently ordered further disclosure where earlier disclosure was apparently not being complied with. The ruling has persuasive authority on the courts in The Bahamas.

What happened?

This was a case where freezing orders had been made against the defendant companies who organised and promoted live music events across the UK, Europe and the US. The second and third defendants were individuals (B and S).

Importantly, summary judgment had already been obtained against some of the defendants (including B and S), on the basis that they have no real prospect of successfully defending cases in fraud.

However, there were concerns the defendants were not complying with the terms. They had, for example, become aware that the companies were generating income revenue by leasing private hospitality boxes held at the O2 Arena and Wembley Stadium – some of which was unaccounted for. The claimants were concerned that B and S had diverted the proceeds from the boxes to other, unknown, bank accounts.

The claimants sought further orders. Interestingly, the defendants did not resist the application

Under the UK’s Civil Court Rules Part 31, the judge was unable to make an order for disclosure as the claim was in the Business and Property Courts. However, a Practice Direction 57AD provides an alternative scheme in those circumstances – including giving the court wide powers to order extended disclosure.

Normally, the parties will first be expected to have completed what’s known as a Disclosure Review Document (in the Bahamas, litigants are required to complete a Form G20 ‘list of documents’ as part of the disclosure process – a list to be served on the other party/ies).

However, in this case the court could make the disclosure order sought because initial disclosure had not taken place; the Disclosure Review Document has not been drafted; and the claimant pressing on with the litigation was unlikely to be viable or cost effective.

The judge therefore ordered B and S to provide, by a certain date, detailed information and bank statements detailing where and when certain income had been generated for the defendant companies (specifically income derived from hospitality boxes at the O2 and Wembley Arenas).

The defendants were also ordered to serve a witness statement verified by a statement of truth signed by B and S, with copies of the bank statements annexed to it.

This was a reasonable and proportionate order in the circumstances.

How we can help

For robust advice on your disclosure obligations and expectations, get in touch with the experienced commercial litigation lawyers at ParrisWhittaker on info@parriswhittaker.com or  +1.242.352.6112

¹Lowry Trading Limited and anor v Musicalize and ors [2024] EWHC 773 (Comm)