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Looking for a needle in a haystack – the cost and time implications of the disclosure procedure in England

Posted on Dec 03, 2015 by Liina Tulk  | Tags: RBS, disclosure, shareholder action, documents, High Court, dispute  | 0 Comments

The trial in RBS’ £4 Billion legal dispute with its shareholders has been adjourned until March 2017 as the bank was struggling with reviewing approximately 25 million documents under the disclosure process and preparing witness statements within the timescales given.

High Court’s criticism of RBS’s approach to the disclosure process

When adjourning the case last week, the High Court criticised both RBS and its solicitors, Herbert Smith Freehills for their “unfocused”, “unsettling” and “less than compelling” approach to disclosure.

RBS argued that it needed the trial to be pushed back as the disclosure exercise it had been required to carry out had “vastly exceeded all expectations in terms of scale and the amount of time and resource required”. That in turn according to RBS had the effect of “preventing the [Bank] from making significant progress with the preparation of witness evidence”.

The five separate claimant groups, however, criticised RBS’ approach to date to the disclosure process. The claimants said that “[RBS] have adopted a process of disclosure which, though it has already taken many months, is now said, without any sufficient explanation, to require a re-review of every single one of the disclosure documents by the ’subject specialists’.”

The claimants also pointed out that RBS had failed to make it clear what the re-review analysis involved and why it was necessary given that the documents have been in the bank’s possession since the events they concern.

Whilst the High Court was far from pleased with the way RBS had handled to disclosure process to date, it allowed the adjournment as it was found that there was a sufficient risk of unfairness to the Bank if the adjournment was not granted.

Additional delays add to the costs

Costs are an issue in every litigation and especially in this one, where RBS’ solicitors have estimated their costs until the end of the trial to exceed £90 Million. That makes your average £120,000 to £150,000 Court of Session commercial action appear a bargain.

The High Court recognised that granting a further continuation will add up the costs, as the “costs rise inexorably with every day that passes before trial”.

While the claimants in the present case have been able to afford the costly disclosure process, for a lot of claimants the high costs involved in litigation act as a barrier to justice. Third Party Funders are an option but with costs close to £100 Million, the claims themselves really need to be several Billion. A lot of businesses have significantly smaller claims and while the costs will be smaller they will still be high enough to prevent some claims to be brought. Disclosure process can really increase the costs and it remains to be seen whether the judiciary will help parties to avoid further delays and increased costs by an exercise that is sometimes more close in nature to “document dumping” than providing the other side with information that is relevant to the case.

Contact MBM Commercial LLP

If you have a claim against your bank or have any queries arising from this article then please contact our Dispute Resolution team on 0131 226 8200.

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