Vannin Capital PCC (a Jersey Protected Cell Company incorporated in accordance with the Companies (Jersey) Law 1991) v Rbos Shareholders Action Group Ltd
| Jurisdiction | England & Wales |
| Judge | Miss Joanna Smith |
| Judgment Date | 17 June 2019 |
| Neutral Citation | [2019] EWHC 1617 (Ch) |
| Date | 17 June 2019 |
| Court | Chancery Division |
| Docket Number | Claim No. BL-2017-000561 |
[2019] EWHC 1617 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
BUSINESS LIST (ChD)
Rolls Building
Fetter Lane
London EC4A 1NL
Miss Joanna Smith QC sitting as a Deputy Judge of the High Court
Claim No. BL-2017-000561
Mr Harris QC and Mr Bird (instructed by Reynolds Porter Chamberlain LLP) for the Claimant
Ms Glover (instructed by Signature Litigation LLP) for the Second Defendants
Hearing date: 17 June 2019
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated authentic.
Introduction
At a case management conference on 27 February 2019, I made an order for directions which included an order for Extended Disclosure under the Disclosure Pilot in CPR PD 51U (“ the Disclosure Order”). In particular, I ordered that disclosure should be provided in the form specified in the joint Disclosure Review Document (“ the DRD”) and that the parties use all reasonable endeavours to agree a final form of Appendix 1 to the DRD identifying the individual Second Defendants who were to provide the necessary disclosure. Appendix 1 as agreed by the parties included all 46 of the so-called Corporate Defendants in this matter and 9 of the numerous so-called Retail Defendants (as more particularly described and defined in my Judgment in the summary judgment application). Following agreement between the parties, the Retail Defendants included in Appendix 1 were chosen by reference to the size of their shareholding in RBS, which was to be in excess of 200,000 shares.
The Claimant and the Second Defendants now each apply to the court in relation to the Disclosure Order. The Second Defendants apply to vary the Disclosure Order pursuant to CPR PD 51U, paragraph 18.1 to exclude SG UK DB Trustee Company Limited (“ SG UK”) from Appendix 1. The Claimant applies pursuant to CPR PD 51U paragraph 17 to request further searches to be carried out by the entities listed in Appendix 1 so as to ensure compliance with the Disclosure Order.
In circumstances where a point of law has arisen during the course of these applications which is capable of affecting future similar applications under the Disclosure Pilot, I reserved judgment. However, insofar as the Claimant's application is concerned, I granted this application at the hearing and ordered the Second Defendants to start the disclosure exercise immediately. I set out my brief reasons for that decision later in this judgment.
Before addressing the detail of the applications, I note that there has been no attempt by either party in this case to seek guidance from the court in accordance with the procedure identified in CPR PD 51U, paragraph 11, in advance of making formal applications to the court. Whilst applications to vary an order for Extended Disclosure do not appear to be contemplated as suitable for Disclosure Guidance Hearings, applications concerning the scope of Extended Disclosure expressly fall within that provision. Lengthy skeleton arguments have been filed on both sides in respect of these applications and detailed submissions have been made which took more than half a day of court time. This approach seems to me to be both undesirable and contrary to the spirit of the Disclosure Pilot which requires the parties to cooperate so as to promote the reliable, efficient and cost-effective conduct of disclosure. Whilst the differing positions of the parties appear to have been amply explored in inter partes correspondence and, it seems, were not capable of resolution without further intervention from the court, this seems to me to be just the sort of situation in which guidance could have been sought from the court under paragraph 11 (at least) on the issue of whether the Claimant's application fell within the scope of the existing Disclosure Order. Had such guidance been sought and obtained, some of the issues arising on this hearing might well have fallen away, thereby saving time and costs.
The Second Defendants' Application
As I have already said, the Second Defendants' application seeks a variation to the original order for Extended Disclosure.
Ms Glover, on behalf of the Second Defendants, submits that the circumstances in which the court may exercise its discretion to vary an order made under the Disclosure Pilot are set out in paragraphs 18.1 and 18.2:
“ 18.1 The court may at any stage make an order that varies an order for Extended Disclosure….
18.2 The party applying for an order under paragraph 18.1 must satisfy the court that varying the original order for Extended Disclosure is necessary for the just disposal of the proceedings and is reasonable and proportionate (as defined in paragraph 6.4)”.
She relies on two witness statements from Ms Rebecca Hogan dated 14 May 2019 and 12 June 2019 which, she submits, support the proposition that the proposed variation is (i) necessary for the just disposal of proceedings (ii) reasonable and (iii) proportionate. In summary these statements record that shortly after the Disclosure Order was made, Signature Litigation LLP (“ Signature”), acting on behalf of all of the Second Defendants, became aware that SG UK (one of the 46 Corporate Defendants, all of whom were to provide disclosure without any reference to the size of their shareholding in RBS by agreement between the parties at the CMC) did not meet the 200,000 share threshold that had been applied to the selection of the Retail Defendants for inclusion in Appendix 1. SG UK's shareholding is only 85,427 shares. Ms Hogan says that “ if [SG UK] were required to give disclosure, it is almost certain that the costs associated with that would completely extinguish any recoveries that [SG UK] may obtain from the Rights Issue Litigation Settlement”. She confirms that the maximum gross recovery from RBS that is attributable to SG UK is £70,000.
Mr Harris QC, on behalf of the Claimant opposes this application, on a number of grounds to which I will return shortly. However, his first point is that the court may not exercise its discretion to vary its own order unless it is persuaded that the factors identified in Tibbles v SIG Plc [2012] 1 WLR 2591 are present; in particular “(a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated” (per Rix LJ at [39(ii)]). Mr Harris points to the policy behind this decision, namely considerations of finality, the undesirability of allowing litigants to have two bites of the cherry and the need to avoid undermining the concept of appeal. He goes on to say that neither of these requirements is present in this case.
On the applicability of Tibbles v SIG Plc, I reject Mr Harris' submission. That case concerned the general (apparently broad and unfettered) jurisdiction of the court under CPR 3.1(7) to revoke or vary its own order. It is, as the notes in the White Book, Vol 1 at 3.1.17 record, an “ omnibus provision”, designed to deal with orders which, in the ordinary course, would not be revisited. In contrast, the Disclosure Pilot expressly contemplates the potential for orders for Extended Disclosure to be varied and sets out the requirements that a party making such an application must satisfy. In my judgment, the circumstances in which an order may be revoked or varied under CPR 3.1(7) must give way to the specific requirements of paragraph 18 of the Disclosure Pilot, which expressly sets out a different test.
Furthermore, I note that Rix LJ made it clear in Tibbles v SIG Plc that “ successful invocation of [CPR 3.1(7)] is rare. Exceptional is a dangerous and sometimes misleading word: however, such is the interest of justice in the finality of a court's orders that it ought normally to take something out of the ordinary to lead to variation or revocation of an order, especially in the absence of a change of circumstances in an interlocutory situation” [39(vii)]. There is nothing in the Disclosure Pilot to suggest that applications to vary orders for Extended Disclosure will only be granted where something out of the ordinary has occurred. If the draftsmen of the Disclosure Pilot had intended to import the criteria set forth in Tibbles, it is to be expected that they would have made that clear. In circumstances where they have identified a different test in paragraph 18, I can only infer that they had no such intention.
Notwithstanding my conclusion on this point I note one curiosity about the wording of paragraph 18. The examples given in 18.1 of circumstances where variations may be made refer to situations where additional orders for disclosure are to be made and the test in 18.2, at least insofar as it requires the court to consider the question of whether the proposed variation is proportionate, perhaps applies more naturally to the situation where a variation is sought to expand the scope of disclosure...
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