GOING ON A FISHING EXPEDITION? DON’T BANK ON AN ORDER FOR SIMILAR FACT EVIDENCE

In Claverton Holdings Ltd -v- Barclays Bank PLC [2015] EWHC 3603 (Comm) Mr Justice Phillips was highly critical of the claimant’s application for similar fact evidence.

“The application has, at this point, in my judgment, become a fishing expedition, hoping to find an admission by Barclays or a finding of similar facts where there is no reason to believe that such exists. It would involve the bank in an extensive and expensive search and analysis of a large number of cases to determine what specific allegations were made and to what extent those allegations were “similar” to the allegations in this case, and, further, the extent to which they have been admitted or are the subject of a “finding”. In my judgment such an exercise is wholly disproportionate in the context of this claim.”

KEY POINTS

  • A party seeking disclosure in relation to “similar fact evidence” faces a two-fold test of legal admissibility and persuading the court to exercise its discretion.
  • The application in the current case for evidence of similar complaints did not meet either test.  The documents sought were not relevant and would probably derail the case.
  • In any event ordering the defendant to disclose such documents was disproportional.

PRACTICE POINTS

  • This case highlights the requirement for a party seeking disclosure in relation to “similar fact” evidence to hone their case; know exactly what is being sought; why it is required and to consider the difficulties posed by the tw0-fold test.

 

THE CASE

The claimant was bringing an action alleging mis-selling of an interest rate swap by the defendant bank. Disclosure had taken place and the matter listed for trial in June 2016.

THE APPLICATION

The claimant sought specific disclosure relating to documents relating to other allegations of complaints involving two of the bank’s employees. There was also a Part 18 application for further information, however this was essentially identical to the disclosure application.

SIMILAR FACT EVIDENCE

There is, essentially, a two-fold test in relation to whether similar fact evidence is permitted:

  1. Is the evidence legally admissible?
  2. Whether the evidence should be admitted? That is a case management decision.

O’Brien v Chief Constable of South Wales Police [2005] 2 AC 534.

THE APPLICATION OF THAT TEST IN RELATION TO THIS CASE

The judge considered the arguments in relation to the test applied to the current case.
  1. Ms Bayliss submitted that following the above approach, evidence of other complaints and allegations against Messrs Bulloch and Challis would clearly and obviously be probative of matters alleged in the present case. She acknowledged that in JP Morgan Chase Bank v Springwell Navigation Corporation [2005] EWHC 383 (Comm) Gloster J (as she then was) had struck out pleaded allegations that a bank official, engaged in selling a financial product to the defendant, had made similar statements to other shipping customers at the bank in a similar position, on the basis that they were not logically probative of any of the following matters:
34 … (a) that the contractual relationship was in any case the same as in the case of Springwell and Chase; (b) that each had the same investment objectives or attitude to risk, or that each had the same views on emerging markets; (c) that each had the same level of sophistication; or (d) that each dealt with Chase in the same way.
  1. Ms Bayliss suggested that that approach was wrong, but in any event pre-dated the flood of complaints in relation to derivative products from 2008 onwards and thereafter and the general recognition that there had been systematic mis-selling of such products to unsophisticated customers.
  2. In the course of argument, however, Ms Bayliss accepted that the mere fact that other allegations or complaints of mis-selling had been made against Messrs Bulloch and Challis was not itself probative that there had been mis-selling in this case: the facts of each case would be different and issues of duty, breach, reliance and causation would require specific determination. Neither could other complaints or allegations be relevant to the extent that the allegations in the present case were based on written communications such as emails and written presentations. The only potential relevance was if other cases contained allegations that similar oral representations or statements were made by the relevant persons, supporting the likelihood that they had been made in this case.
  3. Ms Bayliss therefore proposed a revised form of order requiring disclosure of documents relating to complaints and allegations which involved similar allegations to those set out in paragraphs 85 and 95 of the Particulars of Claim in this case.
  4. A further issue that arose in argument related to the use Claverton proposes to make of the documents relating to other complaints and allegations if disclosed. Ms Bayliss stressed that Claverton did not intend to call evidence to support the other allegations and complaints, but merely to refer to their nature and extent, including by way of cross-examination of witnesses called by Barclays. She contended that this removed the risk of satellite litigation derailing the trial.
  5. However, that approach entails that Claverton would not be seeking to adduce evidence of similar facts, but merely evidence that similar allegations had been made. To the extent that evidence of allegations amounts to hearsay evidence of the underlying facts alleged, such evidence is of plainly little if any probative value. As Mr Sinclair, counsel for Barclays, pointed out, neither party had found any authority where evidence of similar  allegations had been admitted. The passage from the judgment of Lord Carswell cited above, if properly understood, does not support such a course. The question Lord Carswell was addressing was whether it was necessary for similar facts to be proven facts before they can be admitted. It is clear that Lord Carswell anticipated that the admission of allegations proposed to be adduced as similar facts entailed calling evidence of those similar facts, as is apparent from his statement at paragraph 77 in O’Brien that a factor in the second stage of the test is that “the lengthening of the trial and increase of costs to which the calling of similar fact evidence will give rise must not be disproportionate“.
  6. To meet this further objection, Ms Bayliss sought to refine further the order sought against Barclays by way of limiting it to complaints and allegations which had resulted in an admission by Barclays or a finding by the Financial Ombudsman Service against Barclays. I would add that such admission or finding would, to be probative, have to relate clearly to the specific allegations of fact said to be similar to the alleged facts of the present case.
  7. Ms Bayliss was therefore attempting to avoid both the criticism that Claverton wishes to adduce no more than unsubstantiated allegations on the one hand and a charge that Claverton intends to engage in satellite litigation on the other. In my judgment her solution fails on both counts.
  8. First, it is highly likely that any settlements entered by Barclays with customers who have purchased swaps will have been made without admission of liability, let alone an admission of specific factual allegations underlying any claim. Further, any determination by the Financial Ombudsman Service will be as to the Ombudsman’s view of Barclays’ responsibility to compensate the customer, not a finding of legal liability and certainly not one which would bind Barclays in these proceedings in relation to any particular allegation of fact. Findings of a court, on the other hand, if there are any, would be readily accessible in any event.
  9. Second, to the extent that Claverton was permitted to adduce evidence of admissions or findings of the Financial Services Ombudsman, it would remain open to Barclays to adduce its own evidence to explain the admissions or findings, to re-open and contradict any admission and to seek to distinguish the facts of the case in which any admission or findings were made. The possibility of satellite issues derailing the trial remains very real to the extent that Claverton were to be permitted to rely on allegations in other cases.
  10. The application has, at this point, in my judgment, become a fishing expedition, hoping to find an admission by Barclays or a finding of similar facts where there is no reason to believe that such exists. It would involve the bank in an extensive and expensive search and analysis of a large number of cases to determine what specific allegations were made and to what extent those allegations were “similar” to the allegations in this case, and, further, the extent to which they have been admitted or are the subject of a “finding”. In my judgment such an exercise is wholly disproportionate in the context of this claim.
  11. In conclusion, I am not satisfied that the application, even as refined, is for documents which would be relevant and therefore admissible as similar fact evidence. I further doubt that, even if they crossed the threshold of admissibility, they would be admitted as a matter of discretion. That would be sufficient to refuse to make an order for specific disclosure of documents relating to transactions not directly in issue in these proceedings. But in any event, I am further satisfied that to require Barclays to undertake the search and disclosure exercise proposed would be disproportionate and oppressive. Claverton’s applications are therefore dismissed.

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