Disclosure: what you don’t know can still hurt you

Written on 24 Sep 2020

The Disclosure Pilot Scheme began in the Business and Property Courts on 1 January 2019 and will continue until 31 December 2021, at which point it is likely to become permanent. The pilot scheme introduced the concept of Known Adverse Documents (KADs). A recent case has examined a party's duty in relation to KADs for the first time.

What are KADs?

KADs are described in the pilot scheme as:

"documents (other than privileged documents) that a party is actually aware (without undertaking any further search for documents than it has already undertaken or caused to be undertaken) … are adverse".

A party is aware of adverse documents if "any person with accountability or responsibility within the company…for the events or the circumstances which are the subject of the case, or for the conduct of the proceedings, is aware". But what is awareness exactly?

The scheme appears to work on the assumption that parties generally know if they have an adverse document and so there is no need to search for these. Whilst that may be right in many cases, it may also be the case that a seemingly innocuous, and perhaps mundane, email sent by a party only becomes "adverse" in light of later events. In that case, it is perhaps doubtful that a party will be "aware" of this adverse document and so it may remain uncovered in the absence of a search. This is particularly so given that standard disclosure is no longer the default position, so the party may not always be required to conduct a reasonable search under the pilot scheme.

Known unknowns

In Castle Water v Thames Water, the judge relied on paragraph 2.9 of the scheme, which requires a company to take "reasonable steps to check the position" with any person with accountability or responsibility who has since left the company, as well as the need to be sure KAD haven't been ignored or buried, to say that this "leads to the conclusion that a party is obliged to take reasonable steps to check whether it has any known adverse documents".

The practice direction does not give any detail as to what amounts to "reasonable steps to check". Stuart-Smith J said that these steps require a party to "check" whether it has any KAD. This might involve identifying the issue to which the KAD may relate and asking the right people within the organisation whether they are aware of any KAD. If so, the party should undertake reasonable and proportionate steps to locate those documents (and to disclose to the other party if it believes KAD exist but it cannot locate them).

Comment

"Locating" and "searching" for a document might be said to be the same thing, but a party is not searching to find adverse documents in the first place, instead it is tracking down the KAD it already knows it has. The danger is that even that process of 'locating' runs the risk of turning up KADs that were not already known about, or references to likely KADs, which might require further locating. The line between "locating" and "searching" may be hard to find.