The BVI Court of Appeal recently denied the appellant in Emmerson International Corp v Starlex declaratory relief and upheld the respondents' relief from sanction, as granted by the lower court.
In underlying proceedings, the respondents, having been validly served with an ancillary claim, failed to file an acknowledgement of service or defence within the requisite timeframe due to a breakdown in communication between the companies' agents in Belize and their officers in London and Moscow. In short, the appellant sought declaratory relief to the effect that the respondents had admitted its claim in full while the respondents sought relief from such sanction on the basis that their failures had been due to an inadvertent breakdown in communication.
For relief from sanctions to be granted, all of the preconditions outlined in Eastern Caribbean Civil Procedure Rule 26.8(2) must be satisfied and the applicant must show that:
- the failure to comply was unintentional;
- there is a good explanation for the failure; and
- it has generally complied with all other relevant rules, practice directions, orders and directions.
Failing to satisfy any of these three pre-conditions would be fatal to such an application.
The Court of Appeal considered each of the constituent parts of Rule 26.82(2) in turn and agreed with the lower court that, in this case, these thresholds had been met. The bases for this decision were as follows:
- The respondents' procedural shortcomings could not have been intentional in circumstances where they did not know that the ancillary claim had been served until after the expiration of the time in which they were required to respond.
- The bar for a good explanation was relatively high but had been met because a breakdown in communication was explainable where the claim had been served in Belize and the engines of the company were in London and Moscow.
- There was no evidence before the court of other procedural failures by the respondents.
While this judgment will inevitably provide some comfort to those that find themselves facing sanctions having inadvertently failed to comply with a rule, practice direction or order, it is a timely reminder for everyone that it is better to remain vigilant and compliant than to rely on the court's jurisdiction to grant relief from sanction.
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