Professional negligence claims often turn on proving that negligent acts or omissions caused a loss. In particular, it is frequently argued by defendant professionals that their clients would not have acted differently, even if they had received the correct advice. Defendants therefore seek to investigate the policies and practices of the client to argue how they would have behaved if, hypothetically, they had received the correct advice. For commercial parties, and in particular lending institutions, those policies are often confidential and commercially sensitive – avoiding their disclosure in legal proceedings would be preferable.
The tension between preserving this confidentiality and a defendant’s right to argue about causation was the subject of an application in Ward Hadaway v DB UK Bank on 11 November 2013. The bank fought to keep some of its high level lending policies confidential on the basis that they were not relevant to the defendant solicitor’s argument that the bank would have completed certain buy-to-let loans even if it had known (which it did not) that the properties were subject to sub-sale agreements.
The bank provided witness evidence that the policies in question were not relevant to loans involving a sub-sale. Despite the solicitors arguing that they could not know this was the case without seeing the policies, the Judge was prepared to accept the bank’s assertions and descriptions and refuse disclosure.
Nonetheless, the arguments were clearly hard fought and turned on the facts of the particular policies. Lenders, and other claimants in professional negligence actions, should go into litigation with their eyes open that confidential policies may well have to be disclosed to their opponents and the Court if they address issues which are relevant to the claim – confidentiality alone is not a reason to refuse disclosure. In an environment where defendant professionals are increasingly seeking to allege that lenders’ policies were themselves imprudent (as a foundation for allegations of contributory negligence), we expect the disclosure of lending policies to be a frequent battleground in the coming months.
Andrew Burnette leads Burges Salmon’s Professional Negligence litigation team.