HT-2022-000043 - [2024] EWHC 3180 (TCC)

The principles governing applications for relief from sanctions in Mitchell v News Group Newspapers [2013] EWCA Civ 1537 and Denton v TH White Ltd [2015] 1 All ER 880 are relevant to the question of whether the sanction of a strike-out should be imposed for non-compliance with a court order. The Mitchell/Denton principles are: (1) the significance and seriousness of the default; (2) if the default is significant and serious, whether there is a good reason for it; and (3) consideration of all of the circumstances of the case to enable the court to deal justly with the application..

However, the question for the Court in an application for strike out is materially different because the proportionality of the sanction is in issue, whereas in a relief from sanctions case the Court must proceed on the basis that the sanction was properly imposed.

Striking out a statement of case is one of the most powerful weapons in the court’s case management armoury and should not be deployed unless its consequences can be justified.

In Arrow Nominees v Blackledge [2000] 2 BCLC 167, Chadwick LJ held at paragraph 54:

“I adopt, as a general principle, the observations of Millet J in Logicrose Ltd v Southend United Football Club Ltd (1988) Times, 5 March, that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules, even if such disobedience amounts to contempt for or defiance of the court, if that object is ultimately secured, by (for example) the late production of a document which has been withheld. But where a litigant’s conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled, indeed, I would hold bound, to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him.”

Ward LJ added at paragraph 72:

“…there is still every indication that [the trial judge] regarded the risk of a fair trial not being possible as the factor of crucial, even overriding, weight. It undoubtedly is a factor of very considerable weight. It may often be determinative. If the court is satisfied that the failure to disclose a document or the effect of a tampered document can no longer corrupt the course of the trial, then it would be a factor of much less and perhaps even little weight in considering a strike out….”

In Hayden v Charlton [2010] EWHC 3144 (QB) at paragraph 75, the Court considered that the factors which are of particular importance are:

In Candy v Holyoake [2017] EWHC 373 (QB), Warby J refused to strike out the Defendants’ statements of case notwithstanding that they admitted that they had been guilty of “serious and significant breaches of their duty of disclosure” (see paragraph 11). This was for the reasons set out in paragraph 14, which included:

“(1)

Striking out a case is the ultimate sanction, which is only appropriate in the most serious of cases. It involves, on the face of things, a deprivation of the Convention right to a fair trial.

(2)

It is not suggested that the admitted defaults have a made a fair trial impossible in this case.

(3)

I am not persuaded that I should conclude at this stage, without cross-examination, that the defendants’ failures are evidence of a wish to ensure there is no fair trial, or that they amounted to deliberate suppression of documents, as alleged by Mr Candy. Nor do I see any other sufficient ground for concluding that the entry of judgment on the merits is the right response to these procedural failures.”

The Judge added at paragraph 34 of Candy that a key consideration in determining this application was whether the failures to provide disclosure were the result of deliberate suppression. As to whether he should make such a finding on a summary application, the Judge said:

“The standard of proof is the ordinary civil standard, but the gravity of the allegation means that the court should take account to the extent appropriate in the circumstances, the improbability of such serious misconduct. Also relevant is the fact that I am invited to reach these serious conclusions on the basis of the documents alone, without hearing those accused under cross-examination. There are circumstances in which a court can properly reject an explanation given in a witness statement, without cross-examination of the witness. That would be so if the explanation offered lacked any reality, for instance because it was inherently improbable or because it was inconsistent with a document of established authenticity. It is however a relatively unusual case in which the court is justified in taking that course. I do not consider this to be such a case.”

Further, the Judge explained at paragraph 38 that applying the Denton test, the sanction of strike out could not be justified:

“Adopting the Denton three part test, the breaches were serious and significant; the explanations given are not “good” ones, because they do not involve serious oversights so far as the emails are concerned – but the explanations are innocent rather than guilty ones, which I do not feel justified in rejecting on this application; and having regard to all the circumstances, the striking out and the entry of judgment without a trial would represent an excessive, disproportionate, and inappropriate sanction. That is all the more so when I consider, as I must, that this is not a case where the defendants are seeking relief from a sanction that has already been justifiably imposed. The question is the logically prior one of whether a sanction should be granted.” [emphasis added]

In Active Media Services Inc v Burmeister Duncker & Joly GmbH & Co KG [2021] EWHC 232 (Comm) (a case where documents were deliberately destroyed, but the claim was not struck out), the Court summarised the applicable principles at paragraph 302 - 314 and emphasised that:

Disclosure is a means to the end and the end is a fair trial. The Court is not to allow a contest over a piece or area of disclosure to be viewed as though that is the dispute between the parties. Further, the overall requirement is always informed by what is reasonable and proportionate: The Republic of Mozambique v Credit Suisse International [2023] EWHC 514 (Comm) (see paragraph 37).

The seriousness of the breach, the extent if at all to which it is excusable and the consequences of the breach will be very important factors, but the overriding criterion is for the sanction to be proportionate and just: Byers v Samba Financial Group [2020] EWHC 853 (see paragraph 123).

There is a high bar for strike-out: see Al-Najjar v Majeed [2022] EWHC 363 (Ch) at paragraph 7.By way of example, the Court has declined to strike out a party’s case even in circumstances where the disclosure failures in question related to the deliberate destruction of documents (see Active Media). (Footnote: ⁵)

The Mitchell/Denton test is relevant, namely (a) the significance and seriousness of the default; (b) if the default is significant and serious, whether there is a good reason for it; and (c) consideration of all of the circumstances of the case to enable the court to deal justly with the application (Walsham).

However, the remedy of striking out must be proportionate and just, should not be deployed unless its consequences can be justified, is only appropriate in the most serious of cases, should not be used unless it is impossible to conduct a fair trial and is a high bar (Walsham, Byers, Candy, Arrow Nominees, Active Media and Al-Najjar).

Particularly important factors include: (a) whether the breach is deliberate and constitutes wholesale non-compliance amounting to a disregard of the court’s orders; (b) whether the conduct is contrary to the overriding objective (including whether it has caused serious delay); (c) whether there is an explanation for the failures; (d) whether the behaviour is part of a pattern of conduct; and (e) whether the party’s conduct has a significant prejudicial and oppressive effect on the innocent party (Hayden).

The Court’s foremost concern must be the fairness of the trial and one of the things required for a fair trial is disclosure of relevant documents - Mozambique v Credit Suisse International [2023] EWHC 514 (Comm)….:

The withholding of positive supportive documentary evidence may not be sufficiently remedied by the sanction of adverse inferences at trial and strike out may in some cases be the most appropriate sanction: Mozambique v Credit Suisse at …. §40-§43: “…it may be difficult and sometimes, perhaps impossible to rely on the sanction of adverse inferences given the matrix of allegation and cross-allegation”.

In Byers v Samba Financial Group [2020] EWHC 853 (…. at §120 to §124), Fancourt J formed the view that disclosure was necessary to the fair trial of the action and therefore refused to revoke or vary the order for standard disclosure. He held that: