Communications Technology Investments Ltd v Gandhi & Ors

Relief from sanctions is discretionary and requires a fact-sensitive assessment of the factors identified in CPR 3.9, read with the overriding objective. Repeated and serious failures in disclosure, particularly where the court finds deliberate concealment or continuing non-compliance, may justify maintaining a debarring sanction even though the consequence is the loss of a defence. The court must weigh the interests of justice, the effect on each party, the feasibility of the trial timetable, the promptness and cause of the default, compliance with other orders, and the prejudice to other litigants. Relief may properly be granted to one defendant whose breach is immaterial or insufficiently serious, despite refusing it to defendants whose positions and disclosure failures are materially different.

The claimants alleged that the first and other defendants had improperly allotted shares in companies within the claimants’ investment group and had stripped company assets. Interim relief included worldwide freezing orders. Following repeated failures by the first to third defendants to comply with disclosure orders, Mr Justice Neuberger made an unless order on 2 December 2003, debarring them from defending unless full disclosure was provided.

The first to third defendants sought relief from that sanction under CPR 3.9. The claimants sought judgment consequent on the debarring order. The first and second defendants also sought a declaration concerning funding legal costs through an unsecured loan. The central issues were whether the disclosure failures justified maintaining the sanction and whether the third defendant should be treated separately.

1. The application for relief from sanctions was refused for the first and second defendants, but granted for the third defendant. The claimants’ application for judgment was therefore refused against the third defendant.

2. Applying CPR 3.9, the court considered the administration of justice, the ability to meet the trial date, promptness, whether the default was intentional, compliance with other rules and orders, the cause of the default, and the effects of refusing or granting relief. The list was non-exhaustive.

3. The first defendant’s disclosure was materially inadequate. The later disclosure of further documents was not de minimis. Disclosure was concerned with all relevant documents, including material bearing on the authenticity of disputed documents, and not merely with documents previously unknown to the opposing party.

4. The first defendant had failed to give a credible account of servers and other equipment which he had previously claimed personally to own. The court inferred deliberate obfuscation and found a continuing failure to comply properly with disclosure obligations. The second defendant’s position was materially indistinguishable, and relief was refused to it also.

5. The failures had caused unavoidable delay, created continuing uncertainty about the adequacy of disclosure, threatened disproportionate use of trial time, and prejudiced the claimants and other litigants. The seriousness of the consequences for the first defendant did not outweigh those considerations.

6. In relation to the third defendant, the court was not satisfied that there had been a material failure concerning documents within his possession, custody or control. Even if there had been a breach, it was not sufficiently serious or continuing to justify refusal of relief. He was not to be made vicariously liable for the disclosure defects of the first and second defendants.

7. The funding application was left without an order. The claimants conceded that taking an unsecured personal loan for legal expenditure would not itself breach the freezing order, but the court considered no order necessary or desirable.