Three-Strikes and out

Posted by Paul Caldicott on
Blake Morgan is currently instructed on behalf of the Petitioners in three linked unfair prejudice petitions issued pursuant to section 994 of the Companies Act 2006 which concern the affairs of three companies.

In a previous article (see: When an Unless Order means no less) we commented upon the judgment of Mr Simon Monty QC dated 13 November in determining applications in the petitions whereby he granted relief from sanction to the Respondents.

Those applications concerned the Respondents' failure to provide a response to our clients' Part 18 Request on two separate occasions: they failed to comply with a consent order which required a response by 21 March 2014 and a subsequent Unless Order which required a response by 22 April 2014.

Following the latter failure Mr Monty QC was prepared to grant relief against sanctions on the basis that the Respondents complied with two conditions: first, that they pay the Petitioners' costs of both applications on an indemnity basis; and secondly that there should be a further Unless Order requiring the Respondents to provide a full response to the Part 18 request within 21 days, failing which the Points of Defence would be struck out.

Mr Monty QC added in his judgment that:

"Without wishing to fetter the discretion of the court in the future, it should be noted that, barring something extraordinary, the court would expect complete compliance with such order and would not look kindly upon any further application for relief under either limb."

Pursuant to a minute of order agreed following judgment the Petitioners' were required to give a "full and complete response to each and every request made" due by 4pm on 4 December 2014.

That order also made provision for the Respondents to make an application for an extension of time and to request clarification or further information in relation to the requests.  They did not do so.

In purported compliance with the order a response was served shortly before 4pm on 4 December.  However the Petitioners maintained that it did not constitute compliance with the order of Mr Monty QC.

The matter came before Mr Justice Simon on 23 and 24 March 2015.

Mr Justice Simon noted that most of the cases which have come before the Courts in recent years in the context of relief against sanctions concerned questions as to the time in which things were to be done pursuant to Court orders rather than the substance of what was to be done.

Having summarised the principles to be applied in such cases Mr Justice Simon analysed the responses provided by the Respondents and considered that certain of those responses were plainly inadequate. He held that:

"… although I have not dealt with every criticism of the responses which were made by [the Petitioners] during the hearing, there was justification in his criticisms that responses to one request were inconsistent with responses to others, revealing an internal incoherence which was relevant to the overall adequacy of the responses.

However, focussing on the responses which I have identified above, I am satisfied that the Respondents have not given full and complete responses to each and every request made."

The Judge went on to consider whether relief from sanction should be granted.  He held that it should not, concluding that:

"… considerations which bear on the need for litigation to be conducted efficiently and at proportionate cost, and the importance of compliance with Court Orders point in only one direction: refusal of the application for relief in relation to this matter"

He found that the failures in the provision of responses were not excusable and went to the heart of the allegations made against the Respondents.  Further, a significant number of responses were not simply insufficient, they were evasive.

As a consequence the Respondents' Points of Defence stood struck out.

The Respondents are presently pursuing an appeal against this decision, limited to the refusal to grant relief from sanction.

The team at Blake Morgan LLP has extensive experience of dealing with various Corporate Insolvency matters providing both for directors and also liquidators. If you'd like to discuss a specific issue or case please call 029 2068 6199 to speak to Delme Griffiths or 029 2068 6181 to speak to Paul Caldicott.

 See: Griffith & Others v Gourgey & Others [2015] EWHC 1080 (Ch)

About the Author

Paul is a specialist corporate restructuring and insolvency Solicitor in our Business Support & Insolvency team based in Cardiff.

Paul Caldicott
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