Morten Høegh v Taylor Wessing LLP
| Jurisdiction | England & Wales |
| Judge | Master McQuail |
| Judgment Date | 13 April 2022 |
| Neutral Citation | [2022] EWHC 856 (Ch) |
| Docket Number | Case No: BL-2020-002279 |
| Court | Chancery Division |
[2022] EWHC 856 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Deputy Master McQuail
Case No: BL-2020-002279
Mr Patrick Lawrence QC and Mr Charles Phipps (instructed by Fieldfisher LLP) for the Claimants
Mr Christopher Greenwood (instructed by Clyde & Co LLP) for the First Defendant
Mr Ben Hubble QC and Mr Ben Smiley (instructed by Mayer Brown International LLP) for the Second Defendant
Hearing date: 22 March 2022
Approved Judgment
This application seeking the production of documents was issued on 11 January 2022 by the second defendant ( the Production Application). The application form states that it is made “pursuant to paragraphs 21.1(2) and 21.4 of Practice Direction 51U … that the claimants produce the documents mentioned at paragraphs 32, 33, 34 and 55 of the Third Witness Statement of Jonathan Paul Ray-Smith, namely the review that the claimants instructed PriceWaterhouseCoopers LLP ( PwC) to undertake in around March 2021”.
I heard an application in these proceedings made by the claimants for permission to amend their particulars of claim in January of this year. I gave permission for those amendments to be made and gave a judgment dated 28 February 2022 with neutral citation number [2022] EWHC 392 (Ch). I will not unnecessarily repeat matters recorded in that judgment here.
The evidence that was filed in connection with the amendment application included:
(i) the statement of Jonathan Ray-Smith (partner in Fieldfisher LLP, solicitors to the claimants) dated 17 September 2021 (“Ray-Smith 3”) referred to in the Production Application;
(ii) the first statement of the first claimant dated 29 December 2021 (“Morten 1”), in support of the application.
The following evidence was filed in connection with the Production Application:
(i) the third witness statement of Jonathan Michael Oulton (partner in Mayer Brown International LLP, solicitors to the second defendant) dated 11 January 2022 (“Oulton 3”) in support of the application;
(ii) the fourth witness statement of Jonathan Ray-Smith dated 16 February 2022 (“Ray-Smith 4”), opposing the application.
Brief Summary of Background
By their claim the claimants seek damages from the first defendant, Taylor Wessing LLP, their former solicitors, and the second defendant, MSR LLP (formerly Moore Stephens LLP), their former accountants, for alleged negligent advice in relation to their tax affairs.
After the claimants had lost confidence in the first defendant they consulted Mr Golden, then at Linklaters. Mr Golden and the second defendant worked together in preparing disclosures made to HMRC in early 2019 on behalf of the claimants. Following the termination of the second defendant's retainer in September 2020, Pricewaterhouse Coopers LLP ( PwC) was appointed in the second defendant's place. It is apparent that PwC gave advice to the claimants from 2020 onwards.
The Application
By the Production Application the second defendant seeks an order under paragraphs 21.1(2) and 21.4 of Practice Direction 51U (Disclosure Pilot) for the production of what is said to be a document which it is said was mentioned in four paragraphs of Ray-Smith 3.
The relevant paragraphs of Ray-Smith 3 are as follows:
“32. Moore Stephens' ongoing retainer to provide tax and accountancy advice to the Applicants was terminated. PriceWaterhouseCoopers LLP ( “PwC”) were instructed in place of Moore Stephens. The first tax return that PwC prepared for the Applicants was for the tax year 2019/20, which had to be filed with HMRC by no later than 31 January 2021. As part of this process, in early 2021, PwC had identified further errors and issues in the approach previously taken by Moore Stephens. As a result PwC were instructed to undertake a review of the Applicants' tax affairs (the “Review”). Without waiver of privilege, the Review included advice on any further tax liabilities which may have arisen as a result of the Respondents' negligence.
33. Given that the Respondents had previously reviewed the Applicants' position and prepared disclosures to HMRC under the Worldwide Disclosure Facility (the “WDF Disclosures”), it was initially anticipated that the bulk of the Review had already been substantively completed by the Respondents in 2018 and that the role of PwC was simply to confirm that no further issues arose.
34. In the event, however, since their instruction in relation to the Review in around March 2021, PwC has uncovered multiple further issues as a result of the Respondents' negligence. In particular, without waiver of privilege, between around late April and June 2021, PwC identified a number of other relevant person companies which had made transfers that gave rise to undeclared taxable remittances for which the Applicants were liable, which had not been identified by either of the Respondents in the course of preparation of the WDF Disclosure.
…
55. In the present case, the proposed amendments are not “completely outside the ambit of and unrelated to those facts” of that currently pleaded. They simply include all of the consequences of the original negligence, some of which were only revealed by PwC's Review (over which privilege is not waived). They do not change the underlying matters that the Respondents will need to investigate in order to defend the claim. As such the draft amended Particulars satisfy the test in CPR 17.4 and the criteria set out in Libyan Investment Authority.”
The claimants resist the Production Application on the basis that:
(i) No document is mentioned by the relevant paragraphs of Ray-Smith 3;
(ii) Further or alternatively, any document mentioned is likely to be the subject of legal advice privilege or litigation privilege;
(iii) Further or in the yet further alternative, any document mentioned is highly confidential, its production is not required for the fair disposal of the proceedings, and the request to produce it is unreasonable and/or disproportionate.
In the face of those three objections, a hearing bundle of nearly 500 pages, an authorities bundle of nearly 600 pages, the best part of 50 pages of skeletons and notes from counsel and a hearing listed for only two and a half hours, I invited the parties to address me on the claimants' first objection in the first instance. If I accept that point the further questions will not need to be considered, at least at this stage of the litigation.
The Rules
Paragraph 21 of PD51U provides relevantly as follows:
“21.1 A party may at any time request a copy of a document which has not already been provided by way of disclosure but is mentioned in… …(2) a witness statement…
21.2 Copies of documents mentioned in … witness evidence … and requested in writing should be provided by agreement unless the request is unreasonable or a right to withhold production is claimed.
21.3 A document is mentioned where it is referred to, cited in whole or in part or there is a direct allusion to it.
21.4 … the court may make an order requiring a document to be produced if it is satisfied such an order is reasonable and proportionate (as defined in paragraph 6.4).
Paragraph 21 of PD51U is the successor in the Disclosure Pilot to CPR 31.14, which provides relevantly:
“(1) A party may inspect a document mentioned in…
…(b) a witness statement…”
The Law
Under the heading “…document mentioned…” the first paragraph of the White Book 2022 note at 31.14.2 (which is in identical terms in the 2021 edition) reads as follows:
“The statement of case, witness statement, witness summary or affidavit must specifically identify or make a direct allusion to the document or class of documents in question. It is insufficient that a witness statement etc. refers to a transaction which on the balance of probabilities will have been effected by the document for which inspection is sought; the document itself needs to be mentioned or directly alluded to. See Rubin v Expandable Ltd [2008] EWCA Civ 59; [2008] 1 W.L.R. 1099 at [23]–[24] per Rix LJ and National Crime Agency v Abacha [2016] EWCA Civ 760; [2016] C.P. Rep. 43, at [22]–[23] per Gross LJ, both applying the RSC-era authority of Dubai Bank Ltd v Galadari (No.2) [1990] 1 W.L.R. 731 at 738–739 per Slade LJ. “The expression ‘mentioned’ was ‘as general as could be’—it was not intended to be a difficult test”: National Crime Agency v Abacha (above) at [23]. Reliance is not a requisite but may be relevant to any issue of waiver. Reference by inference is indirect and insufficient.
The first case I was taken to was Dubai Bank Limited v Galadari [1990] 1 WLR 731, which was obviously concerned with the old RSC 24, rule 10 in which the wording was “reference is made” rather than “mentioned.” The Court of Appeal referred to the case of Smith v Harris (1883) 48 L.T. 869 in which a party had referred to the content of “letters and bill heads” during a certain period, which Chitty J held to be both a
“general reference and also a special reference to each and every bill head and each and every letter; because the plaintiff, instead of setting out each document separately, refers to them compendiously, that is no reason why inspection should not be allowed”
The Court of Appeal in Dubai Bank acknowledged the correctness of the decision in Smith v Harris and Slade LJ said at 738C:
“a compendious reference to a class of documents, as opposed to a...
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