The Court of Appeal allowed an appeal by the first, second and third defendants, the Fayed brothers, from an order of Mr Justice Swinton Thomas that they should be cross-examined on their affidavits of documents.
Following the acquisition of House of Fraser plc (HOF) by House of Fraser Holdings plc - a company owed by the Fayed brothers - Lonrho, which had also wished to bid for HOF, brought an action against the Fayeds alleging the torts of wrongful interference with Lonrho's business, and conspiracy. Lonrho alleged that the Fayed brothers misled the Office of Fair Trading by pretending they came from a rich, old established family in Egypt so that their offer for HOF would not be referred to the Monopolies and Mergers Commission.
Pursuant to an order for specific discovery under Order 24, rule 7 to identify documents relating to the source of funds for the acquisition, to the fortune of the Fayeds and their origins and early business concerns, affirmations were made by the Fayeds exhibiting lists of documents and verifying the facts about documents no longer in their possession.
Lonrho applied to strike out the defence under Order 24, rule 16, alleging that the Fayeds' discovery was deficient and their evidence about documents not in their possession was untrue.
The Fayeds' case was that the acquisition was funded by profits from oil trading activities, but that, in the tradition of business in the Middle East, there were no documents evidencing the existence of their oil trading partnership. Mr Justice Swinton Thomas ordered cross-examination of the Fayeds on their affirmations.
Jonathan Sumption QC, James Munby QC and Alistair Walton (Herbert Smith) for the Fayeds; Gordon Pollock QC, Ian Geering QC and Victor Lyon (Denton Hall Burgin & Warren) for Lonrho.
LORD JUSTICE STUART- SMITH said that the rule that prohibited cross-examination on affidavits of documents was affirmed in Jones v The Monte Video Gas Co (1880) 5 QBD 556. There was a procedure for obtaining a further affidavit of documents but the oath of the deponent on the further affidavit was conclusive. There was no authority for altering or modifying the well-established rule laid down for over a century.
Reported cases on Order 24, rule 16 or its predecessor were very few. They were all cases where either the breach of the discovery obligation was admitted or where the breach could be deduced from the documents, affidavits or pleadings put forward by the party against whom the order was made.
The reasons for the rule that the statement in the affidavit of documents was conclusive, save to the extent that a further affidavit might be ordered, were not far to seek.
In the great majority of cases where it was alleged that one party had suppressed documents, the issue would be crucially relevant to the issues in the trial and could only properly be determined after the trial judge had heard all the evidence. To try the issue at an interlocutory stage could involve injustice to both sides.
One of the most serious indictments of our civil litigation was the time taken in cases coming to judgment and the expense involved in doing so. Protracted interlocutory applications added to both the delay and expense; they should be avoided as far as possible.
Allowing the appeal did not mean that the court had no sanction to enforce obligations for discovery. The commonest use of Order 24, rule 16 was to enforce a party's obligation to serve a list of documents.
Moreover even if a party had to await the outcome of the trial to discover if there had been a breach of discovery, a party in default was liable for committal under Order 24, rule 16(2).
The judge erred in admitting cross-examination in this case.
LORD JUSTICE McCOWAN and LORD JUSTICE KENNEDY agreed.