In the Matter of Bankside Hotels Ltd v Gourgey (2014)
Although a response to a request for further information was inadequate and in breach of an unless order, it was appropriate to grant relief from sanctions. An insistence on enforcing compliance with court orders where there was no effect on the proceedings was not the right approach and would ignore the need to deal with cases justly.
The applicants (P) applied for directions on the basis that the points of defence of the respondents (R) stood struck out for failure to comply with an unless order. R applied for relief from sanctions.
P had served three unfair prejudice petitions in respect of three companies of which the first respondent was a director. P had served a request for further information. R objected to the request's content on the grounds it was neither reasonable nor proportionate, but had later consented to an order that they would provide " a full response". R failed to reply and an unless order was made requiring R to provide "their" response by a certain date, in default of which their points of defence would be struck out. R served a document purporting to comply, but P considered that the reply was defective and in breach of the unless order because it did not contain a signed statement of truth and did not give a "full" response.
R argued that the reference in the unless order to "their" response meant that they could choose how to respond.
(1) The failure to verify a reply to a request for further information did not make the document a nullity. Under CPR r.22.2 it was not struck out simply by virtue of the absence of a statement of truth. Accordingly, R had not failed to comply with the consent order by lack of a statement of truth. (2) The unless order could only sensibly be interpreted against the background of the consent order. The unless order was intended to enforce the consent order and R were not entitled to object to the consent order, BPP University College of Professional Studies v Revenue and Customs Commissioners  UKFTT 644 (TC),  S.T.I. 2598 and QPS Consultants Ltd v Kruger Tissue (Manufacturing) Ltd  C.P.L.R. 710 applied. There were several examples of egregious non-compliance by R which demonstrated a substantial failure to respond adequately to the request. R were obliged to comply with the unless order, particularly because it had been made to enforce a consent order. The reply was plainly incomplete and insufficient, so the unless order was effective unless relief from sanctions was granted. (3) On an application for relief from sanctions under CPR r.3.9 the court had to consider the seriousness of the breach, the reason for the breach and all the circumstances to enable the court to deal with the case justly, Denton v TH White Ltd  EWCA Civ 906,  1 W.L.R. 3926 followed. An assessment of the seriousness of the breach should not consider unrelated failures, which should be considered as part of the overall circumstances. The failure to reply adequately was a serious and significant default and disrupted the litigation process. The default had occurred because R had decided to answer only those questions that they considered to be valid and appropriate, but that had not been open for them to do. There was no good reason for the breach. In relation to the overall circumstances, the evidence fell short of establishing a course of conduct designed to delay the hearing, but delay had been caused. The delay would not affect the trial date, but it might have inconvenienced P. R had also delayed in making their application for relief. It had to be recognised that non-compliance with an unless order always resulted in deprivation. The point of r.3.9 was that the court had a discretion to grant relief if it was right to do so. Taking all the matters into account, and placing weight on r.3.9(1)(a) and (b), relief should be granted. The overriding objective was to deal with cases justly. There was a need to enforce compliance with rules and orders, but Denton had displaced the perception post Mitchell v News Group Newspapers Ltd  EWCA Civ 1537,  1 W.L.R. 795 that relief from sanctions had to be refused where the breach was anything other than trivial, Mitchell considered. An insistence on enforcing compliance with court orders where there was no effect on the proceedings was not the right approach in the light of Denton, and would ignore the need to deal with cases justly. It would not be just, fair or proportionate to refuse relief, but it would be granted on terms that R pay P's costs on a indemnity basis and a further unless order would be made requiring a full response to the request within 21 days, in default of which the defence would be struck out. Baring something extraordinary the court would expect compliance.
LTL 17/11/2014 :  EWHC 4440 (Ch)