Herbert Smith's disclosure in Equitable called into question

Herbert Smith last week found its disclosure record in the Equitable Life case under attack from Mark Hapgood QC, lead counsel for the mutual society's former auditors Ernst & Young.

As revealed on www.thelawyer.com (4 May), the Brick Court Chambers silk, instructed by Barlow Lyde & Gilbert (BLG), says that minutes of an Equitable board meeting held on 2 July 2001 had not been disclosed despite a request made to Herbert Smith by BLG in November last year. Hapgood told trial judge Mr Justice Langley that Herbert Smith had then claimed the minutes were not relevant to the case.

In addition, further documents were not disclosed until last week to former director Christopher Headdon. This, Hapgood claims, raised concerns about the amount of disclosure work Herbert Smith had done on Equitable's documents from 2001 and 2002.

The disclosure row even led former Equitable non-executive director Peter Martin, who is appearing as a litigant in person, to call on his former employers to drop the mis-selling aspect of the claim.

"Our concern is that there's never been a proper review by Herbert Smith of the 2001 and 2002 documents starting from the correct position that everything must be looked at to see what's relevant," Hapgood told those gathered in Court 76 last Tuesday (3 May). "And it's not for the defendant to identify relevant areas and then try and second guess what documents there may be, but that it is for Herbert Smith to go through those documents and ascertain what's relevant."

He added: "And above all, has the society ever, or has Herbert Smith ever, conducted a proper review of the society's 2001 and 2002 documents applying the correct test [of standard disclosure]?"

Hapgood called for the individual who sent the letter saying that disclosure was not relevant to be examined in the witness box, or for Herbert Smith to be directed to carry out the disclosure exercise again.

Lead counsel for Equitable, 20 Essex Street's head of chambers Iain Milligan QC, hit back when the case resumed on Wednesday morning, claiming his instructing solicitors had taken a proportionate and "reasonable approach" to the Civil Procedure Rules and that they had disclosed all documents relevant to the case.

Milligan also claimed - to hoots of derision from the opposition - that there had been a "remarkable degree of cooperation" between the parties. "That went down well," Judge Langley commented, cueing further laughter.

Setting out his objections to further disclosure requirements, Milligan then said: "If a wider search were required now it would be an unmanageable test in the context of the trial now, given the number of documents."

To compound the situation - and to highlight something that is potentially far more embarrassing to what is the top litigation firm in the UK - it also emerged in court that one of Herbert Smith's own witnesses, Cynthia Leslie, who is a partner at Equitable's former legal adviser Denton Wilde Sapte, had taken it upon herself to introduce four new pieces of evidence to the trial. One had been missed out of the bundle by accident, but the other three had been discovered by Leslie in her own files when preparing for trial.

Milligan said it was "unfortunate" that the documents had not been found, but pointed out that Herbert Smith holds 140 boxes of Denton Hall (now Denton Wilde Sapte) documents in storage.

Judge Langley said: "There's something unsatisfactory about a witness [about to give] evidence where she's choosing documents."

Judge Langley is expected to return to the issue today (9 May).

A battle over disclosure is part of the staple diet of the courtroom. All litigators hope - often in vain - that among that myriad of boxes of evidence lies that all-important 'smoking gun'. However, since Lord Woolf got his hands on the rules, curtailing the burden of disclosure in his 1999 reforms, much of the fight and the fun has gone out of disclosure battles.

The legal teams representing Ernst & Young and the former Equitable directors clearly believe it was worth having a go, but do not expect Equitable to abandon its claims anytime soon - not when we are only three weeks into an anticipated nine-month trial. And with trial costs expected to hit as much as £90m, do not expect the lawyers to give up either.