How to Apply for Third-Party Disclosure in Business Litigation

Business disputes often depend on documents that are not held by either party to the litigation. Important evidence may be in the possession of accountants, banks, auditors, consultants, former employees, regulators, cloud service providers, insurers, suppliers, customers, or other organisations that are not directly involved in the legal proceedings.

In England and Wales, the courts have powers to order disclosure of documents from non-parties where certain legal requirements are satisfied. These powers can be crucial in commercial litigation, allowing parties to obtain evidence that may support their case or undermine the position of an opponent. Third-party disclosure applications are governed primarily by Rule 31.17 of the Civil Procedure Rules (CPR).

This guide explains what third-party disclosure is, when it can be used, how to apply for it, the legal tests that must be satisfied, potential costs implications, and the practical considerations businesses should understand before making an application.

What Is Third-Party Disclosure?

Third-party disclosure refers to a court order requiring a person or organisation that is not a party to the proceedings to disclose documents relevant to the dispute.

The purpose is to ensure that important evidence is available to the court, even where that evidence is held by someone outside the litigation.

Examples include:

• Bank statements held by a financial institution.
• Audit records held by accountants.
• Technical reports held by consultants.
• Correspondence held by a former employee.
• Transaction records held by payment processors.
• Data held by cloud service providers.
• Insurance records.
• Supply chain documents.
• Regulatory communications.

The court will not automatically grant access to documents simply because they may be useful. Strict legal requirements must be met before an order can be made.

The Legal Basis for Third-Party Disclosure

The primary rule governing disclosure against a non-party is CPR 31.17.

Under CPR 31.17, the court may order disclosure against a person who is not a party to the proceedings where:

• The documents sought are likely to support the applicant’s case or adversely affect another party’s case; and
• Disclosure is necessary to dispose fairly of the claim or save costs.

Both requirements must be satisfied before the court will consider exercising its discretion.

When Is Third-Party Disclosure Commonly Used?

Third-party disclosure applications frequently arise in commercial disputes involving:

Breach of Contract Claims

A supplier, customer, subcontractor, or intermediary may hold documents proving what was agreed or how a contract was performed.

Shareholder and Partnership Disputes

Accountants, company administrators, auditors, and banks may possess records relevant to company finances or management decisions.

Fraud and Misrepresentation Claims

Financial institutions, payment providers, and third parties may hold evidence regarding transactions, communications, or asset movements.

Professional Negligence Cases

Consultants, experts, insurers, or regulatory bodies may possess documents relevant to the disputed advice or services.

Intellectual Property Disputes

Third parties may hold licensing agreements, sales records, hosting information, or communications relevant to infringement allegations.

Understanding the Court’s Two-Stage Test

The court applies a specific legal test before granting disclosure.

Stage One: Relevance

The applicant must demonstrate that the documents are likely to:

• Support their case; or
• Adversely affect the case of another party.

The applicant does not need to prove exactly what the documents contain. However, there must be a reasonable basis for believing the documents are relevant.

Fishing expeditions are generally discouraged. Courts expect applications to identify specific documents or categories of documents rather than making broad requests for anything potentially useful.

Stage Two: Necessity

The applicant must also show that disclosure is necessary either:

• To dispose fairly of the claim; or
• To save costs.

The court will consider whether the information can be obtained from another source.

If the documents are already available through ordinary disclosure processes, a third-party disclosure application may be unnecessary and therefore unsuccessful.

What Documents Can Be Requested?

The term “document” is interpreted broadly under the CPR.

It includes:

• Paper documents.
• Emails.
• Electronic files.
• Databases.
• Audio recordings.
• Video recordings.
• Text messages.
• Digital communications.
• Accounting records.
• Cloud-stored documents.
• Information stored electronically.

The court order must specify the documents or classes of documents sought. General requests for all records relating to a dispute are unlikely to succeed.

Identifying the Correct Third Party

Before making an application, it is important to identify precisely who holds the relevant information.

Potential respondents may include:

• Banks.
• Accountancy firms.
• Auditors.
• Solicitors holding non-privileged records.
• Insurance companies.
• Consultants.
• Surveyors.
• IT service providers.
• Cloud hosting companies.
• Former directors.
• Former employees.

The applicant should have a reasonable basis for believing that the third party possesses relevant documents.

Steps to Apply for Third-Party Disclosure

Step 1: Identify the Evidence Required

The first step is determining exactly which documents are needed.

Questions to consider include:

• What issue in the case requires evidence?
• Which documents are likely to address that issue?
• Who possesses those documents?
• Why are those documents relevant?

The more specific the request, the greater the likelihood of success.

Step 2: Consider Alternatives

The court will expect parties to consider whether the documents can be obtained through:

• Ordinary disclosure.
• Specific disclosure applications.
• Requests for further information.
• Voluntary disclosure.
• Witness evidence.

If alternative methods are available, the court may refuse a third-party disclosure application.

Step 3: Gather Supporting Evidence

CPR 31.17 requires the application to be supported by evidence.

This usually involves a witness statement explaining:

• The nature of the dispute.
• Why the documents are relevant.
• Why the respondent is believed to possess them.
• Why disclosure is necessary.
• Why alternative methods are inadequate.

The witness statement forms a crucial part of the application.

Step 4: Make the Application

Applications are generally made using the court’s application procedures.

The application should clearly identify:

• The respondent.
• The documents sought.
• The legal basis for the application.
• The reasons disclosure is required.

The court will usually require the documents or classes of documents to be described with reasonable precision.

Step 5: Serve the Application

The respondent will normally receive:

• The application notice.
• Supporting witness evidence.
• Any draft order.

This allows the respondent to decide whether to comply voluntarily or oppose the application.

Step 6: Attend the Hearing

If the application is contested, the court will usually hold a hearing.

The judge will consider:

• Relevance.
• Necessity.
• Proportionality.
• Costs.
• Confidentiality concerns.
• The burden imposed on the respondent.

The court has a discretion even where the legal tests are satisfied. A successful application is never guaranteed.

What Happens if the Court Grants the Order?

If the application succeeds, the order will usually specify:

• Which documents must be disclosed.
• Time limits for disclosure.
• Inspection arrangements.
• Any confidentiality protections.
• Cost obligations.

The respondent may be required to explain what happened to documents no longer within their control and identify documents over which privilege or another right to withhold inspection is claimed.

Confidentiality and Commercially Sensitive Information

Commercial disputes frequently involve confidential information.

Examples include:

• Trade secrets.
• Pricing structures.
• Customer lists.
• Financial records.
• Technical information.
• Strategic plans.

The existence of confidentiality does not automatically prevent disclosure.

However, courts may impose safeguards such as:

• Redaction of sensitive information.
• Restricted inspection arrangements.
• Confidentiality undertakings.
• Limited use orders.

The court will seek to balance the need for disclosure against legitimate confidentiality concerns.

Legal Professional Privilege

Certain documents remain protected from disclosure.

Legal professional privilege commonly applies to:

• Confidential communications between lawyers and clients.
• Documents prepared for litigation.
• Legal advice communications.

A third-party disclosure order cannot generally override valid claims to privilege.

Costs of Third-Party Disclosure Applications

Costs are an important consideration.

The court may order:

• The applicant to pay the respondent’s reasonable costs of compliance.
• The unsuccessful party to pay costs.
• Costs to be dealt with later in the proceedings.

Businesses should therefore assess whether the likely value of the evidence justifies the expense involved.

Applications involving extensive electronic disclosure can become particularly costly.

Risks of Making a Third-Party Disclosure Application

Application Refused

The court may conclude that:

• The documents are insufficiently relevant.
• Disclosure is not necessary.
• The request is too broad.
• Alternative sources exist.

Adverse Costs Orders

An unsuccessful applicant may be required to pay significant legal costs.

Delays to Proceedings

Disclosure disputes can increase litigation costs and extend the timetable for resolving the underlying claim.

Confidential Information Concerns

The requested documents may contain commercially sensitive information that becomes subject to further disputes regarding inspection and use.

Third-Party Disclosure Compared with Pre-Action Disclosure

It is important to distinguish third-party disclosure from pre-action disclosure.

Pre-action disclosure under CPR 31.16 applies before proceedings begin and generally concerns prospective parties to litigation. The court may order disclosure where doing so is desirable to dispose fairly of anticipated proceedings, assist resolution, or save costs.

Third-party disclosure under CPR 31.17 applies where proceedings are already underway and the documents are held by a non-party.

The two procedures serve different purposes and have different legal requirements.

Practical Tips for Businesses

Businesses considering third-party disclosure should:

• Identify the precise documents required.
• Investigate whether alternative sources exist.
• Act promptly.
• Preserve relevant evidence.
• Prepare detailed witness evidence.
• Consider confidentiality implications.
• Evaluate likely costs.
• Ensure requests remain proportionate.

Applications that are focused, evidence-based, and proportionate are generally more likely to succeed than broad or speculative requests.

Common Questions from our Readers

Can I obtain documents from a bank that is not involved in the case?

Potentially yes. If the legal requirements under CPR 31.17 are satisfied and the documents are relevant and necessary, the court may order disclosure.

Do I need court permission?

Yes. Third-party disclosure generally requires a court order obtained through a formal application.

Can electronic documents be disclosed?

Yes. Disclosure obligations extend to electronic documents and digital records as well as paper documents.

Can confidential documents still be disclosed?

Yes. Courts may order disclosure while imposing safeguards to protect confidential information.

Can privileged documents be obtained through third-party disclosure?

Generally not. Legal professional privilege remains an important protection and may prevent disclosure.

Final Thoughts

Third-party disclosure can be a powerful tool in business litigation where crucial evidence is held by someone outside the proceedings. Under CPR 31.17, the court may order disclosure from a non-party when the documents are likely to support a party’s case or undermine another party’s position and where disclosure is necessary to resolve the dispute fairly or save costs.

Successful applications require careful preparation, detailed supporting evidence, and a clear explanation of why the documents are relevant and necessary. Businesses should ensure requests are specific, proportionate, and focused on identifiable documents rather than broad searches for potentially useful information.

When used appropriately, third-party disclosure can uncover vital evidence, strengthen claims or defences, encourage settlement, and assist the court in reaching a fair and informed decision.