Practice and Procedure

BARON W R JAY & ORS v WILDER COE (a firm) (2003)

PUBLISHED July 30, 2003

An order for pre-action disclosure was made in the exercise of the court's discretion, where the conditions under CPR 31.16(3) were satisfied, the applicants had clearly suffered a misfortune and the respondents declined to provide any answers to the allegations.Application under CPR 31.16 for pre-action disclosure. The respondents ('W') were a firm of accountants who had been retained by the applicants ('B'), a firm of solicitors, to prepare the reports required to comply with s.34 Solicitors Act 1974. For the tax year 1998/99 B engaged a different firm of accountants who noted a substantial shortfall between the monies that B was supposed to have been holding and those it was in fact holding. The shortfall was attributed to the dishonesty of B's cashier and book-keeper. B contended that W were negligent in failing to detect this shortfall in the accounts at an earlier stage. Whether that was the case depended on which client accounts had been subjected by W to test checks and other procedures specified by the Accountant's Report Rules 1991. B had set out their potential claim in a letter of claim in accordance with the professional negligence pre-action protocol and had sought voluntary pre-action disclosure, which had been refused by W on the grounds that the request was merely speculative.HELD: (1) The conditions under CPR 31.16(3)(a) and (b) that B and W were both "likely to be a party to subsequent proceedings" were satisfied. "Likely" meant no more than "may well". This was not a case where the proceedings would be struck out if commenced. (2) The condition under CPR Part 31.16(3)(c), that the documents sought would be covered by standard disclosure, was also satisfied. (3) The condition under CPR 31.16(3)(d) was also satisfied. If it were to appear on disclosure that W had done what was appropriate for the report and that they had not seen anything that should have drawn their attention to the defalcations, then disclosure would aid resolution of the dispute without proceedings and would save costs. Alternatively disclosure could assist the parties to dispose fairly of the anticipated proceedings. (4) Pre-action disclosure could be appropriate even where the complaint might seem speculative or the disclosure sought arguably constituted a "fishing expedition". While the onus was on B to prove its case, W had declined to provide a clear answer to the allegations. B had suffered an undoubted misfortune and needed disclosure to investigate the mechanism of that misfortune. Disclosure was therefore ordered in the exercise of the court's discretion.Application allowed.

[2003] EWHC 1786 (QB)