Introduction
Facts
Decision
Comment


Introduction

In Phaestos Limited v Ho(1) the claimants were granted relief from sanction when they did not comply with an 'unless' order involving disclosure. The judge based his decision on the balance of prejudice that would be caused in striking out the claim: the claimants would have suffered a greater injustice had the order been brought into effect, given the substantial sum at stake in the claim and counterclaim and having regard to the fact that the trial date could still be met.

Facts

Mr Ho was a former employee of the claimants (Phaestos Limited, IKOS CIF Limited and Mindimaxnow LLP). It was alleged that he had breached his obligations not to copy documents belonging to the claimants for his own purposes. The claimants sought return of confidential company information from Ho. He counterclaimed, complaining that the claimants had engaged in illegal surveillance of him.

In December 2011 the court set a deadline of July 2 2012 for disclosure, with inspection by July 16 2012. Numerous contested hearings took place in February and March 2012 as a result of the claimants' failures to comply with various orders relating to e-disclosure. The delays relating to the production of disclosure were largely the claimants' own fault. In July 2012 the judge imposed a final order on the claimants for disclosure of all documents and inspection. The order provided that if this did not take place by 4pm on August 10 2012, the claimants' claims would be struck out without further order and Ho would be entitled to receive the full amount of his counterclaimed sum. However, in the event of any unforeseeable or unforeseen matters beyond the claimants' control, this order could be varied.

The claimants provided certain disclosure by the deadline, but Ho alleged that there had been material non-compliance with the unless order, and that accordingly, the claimants' claims and defence to counterclaim should be struck out. The claimant argued that there had been no material non-compliance with the order, but if there had, there should be relief from sanction.

Decision

The judge was satisfied that there had been a breach of the unless order on the following facts:

  • The claimants' disclosure statement had been made by an employee who was not sufficiently connected with all of the claimants.
  • The disclosure statement was submitted late.
  • The claimants tried to impose confidentiality restrictions on certain documents without making an application to court or previously alerting Ho of such restrictions.
  • The claimants disclosed a limited number of documents relevant to the counterclaim.

The judge then considered whether there could be relief from sanction under Rule 3.9 of the Civil Procedure Rules. He considered that it was in the interests of the administration of justice to grant relief. There was a genuine claim with substantial sums at stake and significant work had been done on the case. In addition, the breaches would not affect the trial date if they were remedied quickly. He considered that the application for relief from sanction could have been made more promptly but, given that the claimants had informed all parties that they were unlikely to meet the deadline six days before it passed, it was not overly critical.

Comment

The judge's decision was surprising, considering that he had referred to Lord Justice Jackson's comment in Fred Perry v Brands Plaza(2) that indulgence should not be granted to litigants that breach unless orders, as to do so may result in a denial of justice to the other party or to other litigants whose cases await resolution by the court. However, in this case the judge was prepared to give the claimants yet another chance, diluting the impact of the unless order and lending some comfort to future litigants which choose to ignore final orders.

For further information on this topic please contact Rebecca Birkby at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (rebecca.birkby@rpc.co.uk).

Endnotes

(1) [2012] EWHC 3159 (TCC).

(2) [2012] EWCA Civ 224.

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