Webb Resolutions Ltd v JV Ltd (t/a Shepherd Chartered Surveyors) [2013] EWHC 3526 (TCC)

Case No HT-12-272[2013] EWHC 3526 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 15/11/2013
Before
THE HONOURABLE MR JUSTICE STUART-SMITH
Between
Webb Resolutions LimitedClaimantJV Limited T/A Shepherd Chartered SurveyorsDefendant
Siobán Healy QC (instructed by Rosling King) for ClaimantAndrew Walker QC and Richard Fowler (instructed by Reynolds Porter Chamberlain) for DefendantHearing Hearing dates: 8 November 2013
Judgment

Introduction

[1]In 2006 and 2007 GMAC was the largest centralised mortgage lender in the United Kingdom. It ceased lending in 2008 and was subsequently acquired by Fortress Investment Group. The Claimant is one of a group of companies that purchased portfolios of mortgages from GMAC by two mortgage sale agreements. The first [‘the 2008 MSA’] was dated 29 May 2008 and sold a portfolio of 632 mortgages, with beneficial title being transferred to Webb SARL and legal title to Wave Lending Limited. Legal title was subsequently assigned by Wave Lending Limited to the Claimant on 17 May 2011, beneficial title remaining with Webb SARL. The second [‘the 2009 MSA’] was dated 30 June 2009 and sold a portfolio of 3000 mortgages, with beneficial title being transferred to Webb SARL and legal title directly to the Claimant. As well as transferring the mortgages themselves, each MSA purported to assign GMAC’s rights to sue professional valuers who had advised GMAC in relation to individual mortgage transactions. The aggregate consideration for the 2008 transaction was £56.7 million and for the 2009 transaction was £159.2 million.[2]The 2008 MSA portfolio included mortgages to borrowers named Moss and Clarke; the 2009 MSA portfolio included a mortgage to a borrower named Hunt. The valuer who advised GMAC in relation to the Moss, Clarke and Hunt mortgages was the Defendant. By this action the Claimant, suing as assignee, claims damages from the Defendant alleging that the valuation reports on the three domestic properties which formed the subject of the Moss, Clarke and Hunt mortgages negligently overstated the true value of each property.[3]The Particulars of Claim set out the transactions by which the Claimant is alleged to have title to sue and make conventional allegations of negligence against the Defendant. The Defence, in addition to denying negligence, asserts that the purported assignments by the MSAs of GMAC’s right to sue the Defendant assign no more than a bare right of action and are void for champerty; and it alleges what Ms Healy for the Claimant during the hearing called “Investment Contributory Negligence”, meaning contributory negligence in relation to the Claimant’s decision to acquire the portfolios pursuant to the 2008 and 2009 MSAs.[4]On 23 November 2012 Edwards-Stuart J gave directions which sub-divided the issues in the action and directed that there should be a separate trial of two sets of issues, which were described as “the Assignment Issues” and “the Lending Issues”. The Assignment Issues were identified as being:
“(i) Whether the assignments pursuant to which the Claimant brings its claim herein were valid and effective; and (ii) Whether the Claimant (as opposed to the original assignor or any other assignee) is entitled to bring the claim; and (iii) Whether the Claimant (as opposed to the original assignor or any other assignee) is entitled to recover any loss from the Defendant; and (iv) Whether the Claimant is entitled to maintain its claim if by reason of the said assignments the original assignor has suffered no loss; being the issues identified in paragraphs 9 to 14 and 23 (in relation to the Clarke Claim), 31 to 35 and 44 (in relation to the Hunt Claim) and 52 to 57 and 66 (in relation to the Moss Claim) of the Defendant’s Defence; and”
[5]The Lending Issues were defined as being:
“(i) Whether, and if so to what extent, the amount of any claim that the Claimant is able to maintain stands to be reduced or extinguished by reason of contributory negligence; and/or (ii) Whether any loss in respect of which the Claimant is able to maintain a claim was entirely caused by matters other than the breaches of duty or of contract alleged against the Defendant; being the issues identified at paragraphs 25 to 28 (in relation to the Clarke Claim), 46 to 49 (in relation to the Hunt Claim) and 68 to 71 (in relation to the Moss Claim) of the Defendant’s Defence”
[6]Edwards-Stuart J directed that the Assignment Issues and the Lending Issues should be determined at a First Trial which was to be listed with a time estimate of 4-5 days on the first open date convenient to the parties and their representatives after 26 July 2013. He gave directions to bring the Assignment Issues and the Lending Issues to the First Trial, including that the parties should give standard disclosure confined to the Assignment Issues and the Lending Issues by way of exchange of lists of documents by 27 March 2013, with any requests for inspection or copies of disclosed documents to be made by 8 April 2013. The parties were then to exchange witness statements of witnesses of fact by 30 April 2013 and, after meeting on or before 17 May 2013, experts’ reports were to be filed and exchanged by 7 June 2013. During the summer of 2013 the date of the First Trial was fixed in March 2014.[7]The parties gave disclosure as ordered on 27 March 2013. The Claimant served its witness evidence on time on 30 April 2013: the Defendant did not serve any. On 7 June 2013 the Claimant’s solicitors, Messrs Rosling King, filed the Claimant’s lending expert’s report with the court and asked the Defendant’s solicitors, Messrs Reynolds Porter Chamberlain, whether the Defendant’s report was ready for exchange. Until this point the Courts’ directions and orders had been fully complied with; but very shortly before the expiry of the time before exchange of experts reports on 7 June the timetable started to go seriously awry.[8]At 3.55pm that day the Defendant’s solicitors sent a 7 page letter asserting that there were “important and substantial gaps” in the disclosure which the Claimant had provided and that “if you do not now give disclosure of the documents we identify below we reserve the right to apply to the court for an order for specific disclosure”. The letter identified 18 wide-ranging categories of documents. They included the manuals and materials used to train underwriters, policy documents for GMAC and others for the period 2002-2008, product details from 2002-2008, all minutes and memos of GMAC’s risk committee relating to lending policies, GMAC’s records of the performance of cases packaged by GMAC’s biggest packagers, and documents showing the source of funds which were loaned. Categories 14-18 are of greatest relevance for present purposes and were: 14. complete [i.e. unredacted] versions of the MSAs with full annexures; 15. A version of annexure 4 to the MSA dated 30 June 2009 which shows the column headings. 16. Any prospectuses or other information regarding the portfolios and state of the loans within them and all information as to the performance of the portfolios that were circulated to(i) Wave, Webb SARL and/or the Claimant at or prior to the dates of the two MSAs;(ii) to any other prospective purchasers of the two portfolios prior to the dates of the MSAs. 17. Any documents attesting due diligence carried out, in relation to the purchase of the portfolios, by or on behalf of the Claimant, Webb SARL and/or Wave, and any memos, records of decisions of minutes or meetings at which such due diligence was discussed, and at or by which the decisions to purchase the portfolio’s and/or to take the alleged assignments of the related rights or claims was taken. 18. Documents relating to the reasons why the Claimant, Wave and WEBB SARL agreed to the transfer of these legal rights from Wave to your client in particular any memos, records of decisions or minutes of meetings (of either your client, Webb SARL or Wave at or by which the decision was taken.[9]At the very end of the letter the Defendant’s solicitors stated “our client’s lending expert will not be in a position to finalise his report until you have disclosed full documents relating to these loans”. The letter did not acknowledge the fact that within a few minutes of it being sent the Defendant would be in breach of the order of Edwards-Stuart J requiring exchange of experts’ reports.[10]On 28 June 2013 the Claimant’s solicitors sent a full response to the letter of 7 June 2013. As preliminary points they noted that the Defendant had had copies of the Claimant’s disclosure since 12 April 2013 and asked whether the Defendant had approached the court for an extension of time to exchange reports and, if not, why it had not done so. In relation to some categories of documents the Claimant’s solicitors stated that the relevant documents had already been disclosed. A copy of the column headings for Annexure 4 (category 15) was provided. The solicitors told the Defendant’s solicitors that the Claimant did not have possession or control of the documents in categories 2, 6, 7, 8, 9, 10, 11 and 12. The Claimant declined to disclose a complete version of the MSA with full Annexures (category 14) on the basis that the relevant redactions related to price sensitive information and information relating to borrowers or loans which were not the subject of the proceedings. It disputed the relevance of the documents in categories 16, 17 and 18. It concluded by asking the Defendant to confirm when its expert would be in a position to finalise his report and to confirm that it had sought or would seek an extension from the court.[11]No substantive reply was provided by the Defendant until 8 August 2013, over a month later. The Defendant had not by then taken any steps either to seek an extension of time or to exchange experts’ reports. Despite that failure the Defendant’s solicitors rejected the suggestion that it was disregarding the order of Edwards-Stuart J. The letter argued again for disclosure of the documents that it had sought on 7 June (2 months before) and said in relation to the documents held by GMAC that the Claimant should ask for them to be provided in accordance with clauses identified in the MSAs. It is now accepted by the Defendant that those clauses do not give the Claimant the power to call for the documents so as to render the documents under the Claimant’s control.[12]The Claimant’s solicitors replied again on 29 August 2013 providing a further detailed response in relation to all the categories of documents. It told the Defendant that the documents that were not in its control had been requested from GMAC.[13]The Defendant took no further step to pursue the question of disclosure until issuing the present application on 21 October 2013. By the application as issued it sought an order for disclosure of 17 of the 18 categories of documents originally requested. Bizarrely, it maintained a request for an order for column headings to annexure 4 of the mortgage sale agreement dated 30 June 2009 despite the fact that this had been provided by the Claimant on 28 June 2013.[14]The application is supported by the second witness statement of Ms Alice Connolly, the Defendant’s solicitor, which repeats the arguments previously set out in the correspondence. Ms Connolly has subsequently provided a third witness statement dated 31 October 2013. In response the Claimant relies upon witness statements from Ms Geary and Ms Squire of its solicitors. As an additional response to the Defendant’s application for disclosure the Claimant issued a cross-application to strike out the paragraphs of the Defendant’s defence which plead champerty and Investment Contributory Negligence, the thinking being that if those allegations were struck out it would remove any possible basis for order for disclosure as sought by the Defendant. In addition the cross-application seeks an unless order requiring the service of the Defendant’s expert report.[15]This provided the background to the hearing on 8 November 2013, by which time the Defendant had still not issued any application seeking an extension of time for service of its expert’s report.

The Issues

[16]By its skeleton argument the Defendant accepted that it could not pursue categories 1-13, category 15 having been withdrawn earlier. It did so “in the light of what is now said in C’s witness statements”, which essentially repeated what had previously been said in correspondence about lack of relevance and the documents not being in the Claimant’s possession or control. However, the Defendant submitted that the Claimant should be directed to disclose the communications by which it had requested GMAC to provide copies and GMAC had declined to do so.[17]The Defendant maintained its application in relation to categories 14 and 16-18. In doing so, it submitted as a threshold argument in response to the Claimant’s contingent counter-application that it is not open to the Claimant to apply to strike out parts of the Defence at this stage.[18]Although the Claimant correctly maintained its submission that the Defendant needs permission in order to be entitled to adduce expert evidence, it sensibly recognised that the Court was unlikely to debar the Defendant at this stage.[19]I deal with these issues in the following[20]In summary, for the reasons set out below, my conclusions are: i) It is not open to the Claimant to apply to strike out parts of the Defence at this stage; ii) the Claimant should not be required to disclose the correspondence with GMAC showing its requests for documents and GMAC’s responses; iii) the defendant’s application for specific disclosure fails; and iv) the Defendant shall file and exchange any expert evidence upon which it wishes to rely by 4pm 14 days after the date of handing down of this judgment, final order. In default of compliance, the Defendant will be debarred from calling or relying upon expert evidence at the First Trial.[21]The November 2012 Order made by Edwards-Stuart J established a framework for determining the Assignment Issues and the Lending Issues. Having identified the issues he gave directions requiring the parties to give disclosure and to serve witness statements and expert reports in preparation for the First Trial. Edwards-Stuart J recorded in his judgment on costs arising out of the drawing up of the order after the November 2012 hearing that “I was told at the CMC, and I accepted, that there were genuine issues in relation to the validity of the assignments.” While it seems likely that he was told this by the Defendant, it appears that the Claimant did not demur. It would have been open to the Claimant to apply to strike out parts of the Defence as hopeless at that time and, although there is no inflexible rule, this was clearly a case where, if such an application were to be made, it should have been made early and before the procedural structure for the future conduct of the action was settled. As it was, the Claimant did not intimate an intention to apply to strike out any part of the Defence until issuing its contingent application in October 2013, nearly a year after Edwards-Stuart J had set the action on course for a full trial of the issues, and months after disclosure and evidence in relation to those issues should have been completed.[22]In these circumstances, I consider that it would be wrong in principle to entertain an application to strike out those parts of the Defence that raise the issues of champerty or Investment Contributory Negligence at this stage. The effect of such an application would be to advance a collateral attack upon the November 2012 Order of Edwards-Stuart J and his carefully constructed procedural directions for the determination of the Lending Issues and the Assignment Issues. Had the Claimant thought it appropriate to dispose of one or more of the issues by striking them out that should at least have been raised in the November 2012 hearing so that the Court could either rule on the striking out submissions then or make provision for a hearing within the procedural framework if it felt that to be appropriate. Because the Claimant did not do so (and did not try to appeal Edwards-Stuart J’s order) the parties were then committed to the subsequent steps directed by the Court, with their implications for resourcing and cost. Even if the Claimant’s present application does not technically amount to a collateral attack, it would involve the disruption of the procedure directed by the Court when both parties have taken significant steps towards the trial of the issues in March 2014.[23]That does not mean that I should have no regard to the nature of the defences being alleged or to authority that is pertinent to the question whether particular documents are or may be relevant to the determination of those defences. But it does mean that I decline to rule on whether the defences themselves have any prospects of success. As things stand, the Claimant is obliged to give disclosure relevant to the Lending Issues and the Assignment Issues, as defined for the purposes of the First Trial. The question to be decided, therefore, is whether the documents in categories 14 and 16-18 fall within the scope of that obligation.[24]Mr Walker QC, for the Defendant, submits that passages in the witness evidence now submitted by the Claimant demonstrate a need for the correspondence to be disclosed because they show that the Claimant has been economical in its descriptions of its requests and GMAC’s declining to provide documents.[25]There is no substance or merit in this submission. By the original letter of response dated 28 June 2013, the Claimant’s solicitors told the Defendant that the Claimant did not have the documents in its control. That was correct. Rather than accepting the information it had been given, the Defendant’s solicitors asserted that the terms of the MSA gave the Claimant the right to call for the documents. That, as is now accepted, was wrong. The Claimant’s solicitors explained the correct position in their letter of 29 August 2013 and said that they had asked for the documents. The passages in the witness evidence upon which Mr Walker QC relies do not cast doubt upon the Claimant’s statements in correspondence and its witness evidence that the Claimant does not have possession or control of the documents, it has asked GMAC for them, and GMAC has not provided them.[26]No useful purpose would be served by requiring the disclosure of the correspondence between the Claimant and GMAC in circumstances where there is no reason, and has never been any reason, to doubt what the Claimant’s solicitors told the Defendant’s. While it is indicative of the spirit in which this action appears to have been conducted, it is in my judgment regrettable that clear statements by one reputable firm of solicitors to another have not been accepted at face value in circumstances where there has been no sensible reason to doubt them. Issue 3: Should disclosure be given in respect of Categories 14 and 16-18? The MSAs as disclosed

Issue 3: Should disclosure be given in respect of Categories 14 and 16-18?

[27]The Claimant has disclosed copies of the 2008 and 2009 MSAs. They are in similar but not identical terms. Each makes plain by its introduction that the portfolio contains “Prime Mortgage Loans” and “Non-Conforming Mortgage Loans”, which were defined as being loans originated by reference to different sets of criteria. Those criteria are contained on a CD-Rom, which constitutes Annexure 3 and which the Claimant declines to disclose. In addition, Clause 11.9(h) of the 2008 MSA gave notice that many of the Mortgage Loans had significant arrears balances and that enforcement actions may have been taken by GMAC, including repossession of the properties. Clause 11.9(h) of the 2009 MSA notified that many of the Mortgage Loans in that portfolio have prior Arrears Balances.[28]By Clause 2 of each MSA, GMAC agreed to sell the legal and beneficial interest in each of the Mortgage Loans in the Portfolio on terms that it also agreed to sell(a) all right, title, interest and benefit of GMAC in the right to receive and sue for all sums payable under the Mortgage Loans;(b) the benefit of all securities for all principal sums and interest and other sums payable under the Mortgage Loans;(c) all right, title, interest and benefit of GMAC under various buildings and other indemnity policies relating to the properties, the Mortgage Loans and their related security comprised in the portfolio; and(d) all causes and rights of action of GMAC howsoever arising against any Asset Manager and any person in connection with any Certificate of Title and/or Valuation Report and/or any other report, valuation, opinion, certificate, undertaking or other statement of fact, advice or opinion given in connection with any Mortgage Loan comprised in the portfolio or its related security.[29]Clause 3 stated that the total consideration “for the sale and purchase of the Mortgage Loans, the relevant Related Security and the other rights referred to in [clause 2] will be the Purchase Price … together with the Servicing Fees and the Daily Funding Costs.” The Purchase Price was defined by reference to a sum payable in respect of each Mortgage Loan, which was said to be set out in Annexure 4, which the Claimant has declined to disclose. The Daily Funding Costs and Daily Servicing Fee were separately defined in the MSAs but the definitions have been redacted by the Claimant.

Submissions

[30]The Defendant relied upon Ms Connolly’s second witness statement in support of its application for disclosure of the documents in categories 14 and 16-18. Her evidence asserted that these categories of document were relevant both in relation to the issue of champerty and in relation to the issue of Investment Contributory Negligence. However, upon the Claimant confirming that its claim is limited to the loss that GMAC could have recovered had there been no assignment of the loans and rights of action, the Defendant accepted that the defence of contributory negligence relating to due diligence on the acquisition of the loans could not reduce the Claimant’s claim. Mr Walker QC’s submissions therefore concentrated on the issue of champerty.[31]The Defendant’s submissions may be summarised as follows: i) Generally, Mr Walker QC submitted that the portfolio of Mortgage Loans and associated rights (such as the right to sue the borrower or to enforce the security if the borrower defaulted) should be distinguished from the right to sue professionals such as the Defendant. His submission was that the right to sue the professionals was a discrete right which did not go to make good the security in the way that the assignment of a cause of action against someone who has damaged physical property may be said to “make good” the assignee’s interest in the property itself. He submitted that the portfolio of Mortgage Loans had been sold by GMAC at a substantial discount with no separate consideration being allocated for the assignment of the right to sue his clients; and that parts of the portfolio have been sold on so profitably that any recovery from his clients should be regarded as a “windfall”, though it was not entirely clear what he meant by that term. On the back of these submissions, he outlined the Defendant’s case that the Claimant has no genuine commercial interest in the causes of action against the Defendant because it is not necessary to protect the primary debt under the Loan Agreements, and that the assignments should therefore be regarded as assignments of a bare cause of action and champertous. ii) Category 14 – unredacted MSAs: a) Ms Connolly submits that the consideration given by the purchasers and the full Annexures are highly material to the issue of champerty and the validity of the assignment; b) Mr Walker QC submitted that knowing the details of the prices allocated to individual Mortgage Loans will be relevant to determining whether the assignment of the right to sue the Defendant is to be treated as ancillary to the Mortgage Loans or as a separate and discrete bare cause of action. He points to the fact that the repossession and sale of the Clarke and Moss properties meant that there was no residual value in those loans, so that any consideration allocated in respect of those loans must be for the right to sue his clients alone. iii) Category 16 – Prospectuses relating to the portfolios and the state of the loans prior to sale: a) Ms Connolly’s witness statement emphasises the significance of any prospectus for the issue of Investment Contributory Negligence, which has now fallen away; b) Mr Walker QC built upon Ms Connolly’s evidence by submitting that a prospectus would set out what was being transferred, which he submitted was relevant to the issue of champerty. iv) Category 17 – documents attesting due diligence on the loans by the Claimant/Webb SARL/Wave: a) Ms Connolly’s evidence went to the relevance of these documents to the due diligence defence; b) Mr Walker QC made submissions specifically on this category which were limited to the due diligence reports referred to in the MSAs, but included it in his submission that disclosure would enable the Defendant better to understand the nature of the transaction. v) Category 18 – documents relating to the assignment of legal title from Wave to the Claimant: a) Ms Connolly said that there was no evidence or disclosure to show the basis on which legal title in the 2008 MSA portfolio was transferred from Wave to the Claimant; b) Mr Walker QC recognised that evidence had been submitted (in the form of a witness statement from a Ms Geary) about the transfer from Wave to the Claimant; but he submitted that it was unsatisfactory that hearsay evidence should be given in the context of the application when no evidence had been given by witness evidence or disclosure for the trial.[32]Ms Healy QC for the Claimant challenged the factual and logical basis for the Defendant’s submissions: i) She challenged the Defendant’s categorisation of the assignment of the rights to sue professionals as either separate and discrete from the transfer of the Mortgage Loans or as being capable of being regarded as the assignment of a bare cause of action. In any event, she submitted that the nature of the transaction appears from the MSAs in their redacted form and that no further documentation is necessary for the Court to be able to rule on the true meaning and effect of those contract documents. ii) Category 14: Ms Healy QC submitted that the sum allocated to individual Mortgage Loans as constituent parts of the Purchase Price under the MSA does not and cannot inform the question whether the assignments of the causes of action against the Defendant are champertous. The overall price paid is known and the fact that it was discounted or that the Claimant has subsequently sold all or part of the portfolio at a profit is irrelevant to the question whether the assignment of the prospective right to sue valuers (who are alleged to have been negligent in circumstances where the primary loan has not been repaid despite realising the security of the property) is champertous. She submitted that it is inconceivable that disclosure of the addresses and details pertaining to other loans than the Moss, Clarke and Hunt transactions will be relevant to the question whether the portfolio was bought solely for the purpose of litigating against surveyors. iii) Categories 16 and 17: Ms Healy QC submits that the Defendant’s submissions do not begin to show relevance to the issue of champerty. iv) Category 18: Ms Healy QC relies upon the evidence of Ms Geary which, she submits, shows that the assignment of legal title from Wave to the Claimant had nothing to do with the trafficking of litigation.

Discussion

[33]In the course of Mr Walker QC’s submissions it became clear that his prime target was information about the prices allocated to individual Mortgage Loans within the two portfolios. It is asserted by the Defendant, and was not disputed by the Claimant during the hearing, that the portfolios were purchased at a discount from the value that they would have had if it had been assumed that all would perform satisfactorily, and that fact forms an essential plank of the Defendant’s submissions. However, that being so, it is necessary for the Defendant to show that information about individual allocations within the portfolios are likely to be relevant to the champerty defence it wishes to establish. In considering this issue, I remind myself that I am not deciding on the merits of the defence, since that is to be decided at the First Trial. However, I cannot ignore the fact that the sale and purchase of bundles of debts with ancillary rights with a view to enforcing those debts and ancillary rights for the benefit and ultimate profit of the purchaser is well established as a form of commercial transaction that gives the assignee of the debts and ancillary rights a genuine commercial interest for the purposes of the law of champerty: see Chitty on Contracts 31st Edn para 19-049 and Camdex International v Bank of Zambia [1996] 3 WLR 759, 770C-D per Hobhouse LJ. Furthermore, even at this stage of the dispute, Mr Walker QC’s submission that a cause of action against valuers does not “make good” the Mortgage Loan needs to be placed in some sort of context: the claim against the valuers will only arise if the borrower has failed to comply with the terms of his mortgage and the realisation of the security provided by the property does not make good the shortfall. Thus, in relation to each Mortgage Loan transferred by the 2008 and 2009 MSAs, the assignment of the right to sue the valuers is to provide protection (even if not, technically, “security”) against a prospective shortfall on the primary Mortgage Loan. It can therefore be described, at least in colloquial and commercial terms, as “making good” defects in the Mortgage Loan transaction, whether those defects have emerged before or after the assignment.[34]That being the essential character of potential claims against valuers, I am unable to see what will be added to the argument on champerty by the disclosure of the individual prices allocated to particular Mortgage Loans given that, viewed overall, they were sold by GMAC at a substantial discount. The suggestion that individual prices might demonstrate that either no value had been attributed to the right to sue valuers or, conversely, that the allocated value was all to be attributed to the right to sue valuers seems to me to be entirely speculative and, however elegantly argued, nothing more than a fishing expedition.[35]For similar reasons, I am entirely unpersuaded that any of the redactions to the MSAs, if uncovered, would advance the champerty argument one way or another. The nature of the transaction appears clearly from the terms of the MSA. Whether that transaction is champertous or not is for decision on another day, having regard to the terms of the MSAs that define the bundle of rights that were assigned in return for the discounted price paid to GMAC.[36]I am also unpersuaded that prospectuses or documents evidencing steps taken in due diligence are either necessary or helpful for the determination of the issues at the First Trial. As I have said, the actual transaction is defined by the MSAs, and that is what matters. The Defendant has not shown that documents relating to the assignment of legal title from Wave to the Claimant will be of any greater relevance.[37]For these reasons, which are essentially those advanced by the Claimant in its correspondence and later in the course of this application, the Defendant is not entitled to any further disclosure within the categories sought. I repeat that this decision is not based upon even a provisional determination of whether or not the Defendant’s champerty defence has substance.

Issue 4: What directions should now be given in respect of the Defendant’s expert evidence?

[38]The Defendant is five months out of time for exchange of its expert evidence. Given the failure of its application for specific disclosure, there is no good reason for its non-compliance. By its skeleton argument, the Defendant asked for 14 days from the provision of any additional disclosure. Since no additional disclosure is being ordered, the Defendant will be ordered to file and exchange any expert evidence by 4pm 14 days after the date of handing down of this judgment. That will be a final order, in default of which the Defendant will not be permitted to rely upon expert evidence at the trial of the Lending and Assignment Issues.

Post-script

[39]The Defendant’s pursuit of additional disclosure as outlined in this judgment is an object lesson in how modern litigation should not be conducted. First, it is not acceptable that the Defendant waited until the day upon which expert reports were due to be served before raising the request for further disclosure. In submissions, it was said that the request for further disclosure had been provoked (at least in part) by reading the witness evidence that the Claimant had served. That may be so, but the evidence had been served on 30 April 2013 and there is no reason or explanation why nothing was said or done to raise the question of additional disclosure for over 5 weeks from that date. Second, the Defendant did not acknowledge at any stage that it was in default of the order for exchange of expert evidence. Even when issuing its application for specific disclosure, and despite repeated reminders from the Claimant, it did not apply for an extension of time or for relief from sanction as it should have done. No explanation has been advanced for this failure. Third, despite full and clear explanations from the Claimant’s solicitors, it pressed ahead with the application for all of its original categories of documents without apparent regard for what it had been told. Fourth, it displayed no sense of urgency at all either in correspondence or in taking the step of issuing the application. The Court was told that the delay in issuing was attributable to the need to obtain instructions from insurer and lay clients, though Mr Walker has made plain that this did not involve delay on the part of any client. That is not a satisfactory or sufficient explanation in the context of a sequence of events that started on 7 June 2013 and where the Defendant had taken weeks to reply to the Claimant’s letters of response and then took nearly two months to issue the application. As it happens, the fact that the First Trial is fixed for March 2014 means that these delays are not critical: but that does not make them acceptable. Fifth, an application for four residual categories of disclosure was eventually accompanied at the hearing by five files of documents with 1645 pages. The only underlying documents that were of real relevance and to which reference was made in the course of the application were the four letters leading up to the issuing of the application, the MSAs and the accounts upon which the Defendant relied to show the level of profit made by the Claimant on these transactions.[40]I will hear submissions on costs relating to the application in due course; that being so I make no further comment in this judgment.

order

i) Is it open to the Claimant to apply to strike out parts of the Defence at this stage? ii) Should the Claimant be required to disclose the correspondence with GMAC showing its requests for documents and GMAC’s responses? iii) Should disclosure be given in respect of Categories 14 and 16-18? iv) What directions should now be given in respect of the Defendant’s expert evidence?