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This case sets out a clear statement of the philosophy underlying relief from sanctions, particularly in the context of unless orders.

An order was made for disclosure. The claimant ship-owners could not apply and a final extension of time for compliance was granted. The ship-owners then applied to extend that time and to lower the disclosure obligation. The case came on before Flaux J. in the Commercial Court.

A flavour of the dispute is offered by the following comments of Flaux J.,

“45. …[the Defendant’s counsel]… submits that the present case is very far from being such a case. Any extension of time here would be futile, because, on the owners’ own evidence, they have handed over the WWGT archive to Mr G and…there is now little prospect of ever persuading Mr A to hand over the archive voluntarily. The owners’ case…is that Mr Agha now owns WWGT and thus owns the archive. The owners…lawyers hold out no substantial hope of the owners ever succeeding in legal proceedings to recover the archive….
46. Of course, if I decided that the story of handing over the archive to Mr Grigorakis and the reluctance of Mr Agha to release it was a fabrication, an elaborate charade on the part of the owners to provide themselves with an excuse for not disclosing the archive, then there would be no principled basis for granting them any indulgence at all, whether by way of an extension of time or otherwise. [Counsel] submits that in that eventuality (which is in fact what I have concluded, as set out below) the Unless Order of 12 January 2016 should stand and the claim should be struck out.”

The importance of this case lies in what the Commercial Court judge said about the basis of relief from sanctions,

“50. …the necessary underlying assumption in Denton v White is that relief may be granted if either
(i) the relevant default has been cured (in other words, the rule, practice direction or Order has been complied with or is about to be complied with) or
(ii) that compliance can somehow be dispensed with, perhaps on terms, without doing injustice between the parties.
The first situation is not the case here, since on the owners’ own case they cannot comply with the Order of 12 January 2016 by handing over the WWGT archive to [the lawyers] (or, on the insurers’ case, will not comply with the Order).
The second situation cannot apply here either: the Court imposed the sanction of an Unless Order which was tailor-made for the situation which the owners have to accept was properly imposed and there is simply no basis whatsoever for dispensing with compliance with the Order.
51. It is unlikely ever to be the case in relation to the imposition of an Unless Order which has not been complied with, that compliance can be dispensed with, on any terms. As Jackson LJ said in Oak Cash & Carry Limited v British Gas Trading Limited [2016] EWCA Civ 153 at [38]-[41]:

“An ‘unless order’, however, does not stand on its own. The court usually only makes an unless order against a party which is already in breach. The unless order gives that party additional time for compliance with the original obligation and specifies an automatic sanction in default of compliance. It is not possible to look at an unless order in isolation. A party who fails to comply with an unless order is normally in breach of an original order or rule as well as the unless order.
In order to assess the seriousness and significance of the breach of an unless order, it is necessary also to look at the underlying breach. The court must look at what X failed to do in the first place, when assessing X’s failure to take advantage of the second chance which he was given.

The very fact that X has failed to comply with an unless order (as opposed to an ‘ordinary’ order) is undoubtedly a pointer towards seriousness and significance. This is for two reasons. First, X is in breach of two successive obligations to do the same thing. Secondly, the court has underlined the importance of doing that thing by specifying an automatic sanction in default (in this case the Draconian sanction of strike out).” (emphasis added)

52. The present case is an a fortiori one. The Court imposed a tailor-made Unless Order, following on from a similarly tailor-made Final Order, designed to meet the circumstances of the particular case. That Unless Order was imposed because the Court considered that the justice of the case between the parties, in particular the need for full and proper disclosure to the Peruvian Guano standard by the owners where there were allegations of fraud against them, required such an Order to be made and complied with. … I concluded that, even taking their case at face value, the owners had unnecessarily, deliberately and knowingly put the archive beyond their legal control. The fact that they now say that they cannot get it back merely demonstrates how serious a breach of their disclosure obligations there was when they put it beyond their legal control and therefore how appropriate the imposition of an Unless Order was and is.”

See here for a later case on this.

Edited for ease of reading.

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