Akkurate Limited (in liquidation) & Ors v John Christopher Richmond & Anor
[2023] EWHC 2392 (Ch)
Reeds Carpeting Contractors Limited v Martin Cairns & Ors
6 September 2023
[2023] EWHC 2713 (Comm)
High Court
A company sued its ex-employee and their new company for stealing clients. The ex-employee didn't give all the requested documents on time, multiple times. The judge almost kicked the ex-employee out of court, but gave them another chance to provide the documents, warning that failing to do so this time would result in the case being thrown out.
Key Facts
- •Reeds Carpeting Contractors Ltd (Claimant) sued Martin Cairns (First Defendant) and four other companies (Defendants) for allegedly diverting business.
- •The Claimant alleged breach of fiduciary duty by the First Defendant, and knowing assistance by the other Defendants.
- •The First Defendant disputed the dates of his resignation and termination of employment.
- •The case involved significant disclosure disputes, with the Defendants repeatedly failing to comply with disclosure orders.
- •The Claimant applied for judgment or strike-out of the Defence due to non-compliance with disclosure orders.
- •The Defendants applied for an extension of time and relief from sanctions for their disclosure failures.
- •The court considered the Defendants' disclosure failings in light of the Civil Procedure Rules (CPR) and Practice Direction 57AD (PD57AD).
Legal Principles
Court's powers to manage disclosure and impose sanctions for non-compliance.
CPR Part 31 and PD57AD
Solicitor's duty to ensure proper disclosure, including investigating client's documents and explaining disclosure obligations.
Hedrich v Standard Bank [2009] PNLR 3, Square Global v Leonard [2020] EWHC 1008
Principles for relief from sanctions (seriousness of breach, reason for breach, and all circumstances of the case).
Denton v White, Mitchell v News Group Newspapers
Strike-out is a draconian sanction, only justified where other measures are insufficient and there's a risk of unfair trial.
Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926, Mozambique v Credit Suisse International [2023] EWHC 1650 (Comm)
Court may draw adverse inferences from inadequate disclosure.
Holander on Documentary Evidence
The importance of obeying court orders and the consequences of non-compliance.
Prince Abdulaziz Bin Mishal Bin Abdulaziz Al Saud v Apex Global Management Ltd [2014] UKSC 64
Outcomes
The Claimant's application for judgment or strike-out of the Defence was dismissed.
While the Defendants' disclosure failures were serious and repeated, the court found that a fair trial was still possible with further disclosure orders. The court considered the breaches were not deliberate and that an unless order for further disclosure would be a more proportionate remedy.
The Defendants' application for an extension of time and relief from sanctions was granted.
The court considered that refusing relief would be disproportionate given the dismissal of the strike-out application and the close connection between the disclosure failures and the late filing of documents. The court also deemed it impractical to assess each document individually for admissibility.
Further disclosure orders were made, with the sanction of striking out the defence if non-compliant.
To ensure a fair trial and prevent further delays, the court ordered further searches, a revised disclosure certificate, and a disclosure list. Non-compliance with these new orders would result in the strike-out of the Defence.
Costs were reserved to a further hearing.
Given the complexity of the costs issues and the need for further submissions, the court reserved the costs decision to a future hearing.
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