E Group Ltd & Anor v Baker (t/a 'Hello')

An unless order may provide that specified consequences follow automatically upon non-compliance, without a further order. Because that consequence can be draconian, the court imposing the order must first be satisfied that it is appropriate. Once a party fails to comply with a justified unless order, the specified sanction takes effect. A later hearing may confirm the consequence, but it does not ordinarily provide an opportunity to avoid the automatic sanction. Persistent default, the importance of disclosure and the absence of any adequate explanation may justify striking out a defence and counterclaim, while leaving a subsequent hearing limited to assessment of damages.

The claimants sought recovery of approximately £687,000 paid for the design of a computer system which they alleged was unusable. The defendant counterclaimed unpaid fees. After repeated failures to comply with disclosure orders, an unless order required the defendant to provide a compliant witness statement dealing with identified documents. The order provided that, on failure, her defence and counterclaim would be struck out. The defendant submitted materially inadequate information and did not attend the hearing of the claimants’ application to strike out. The central issue was whether the automatic consequence of the unless order should take effect and whether the claim could proceed to judgment on liability.

1. The defendant had wholly failed to comply with the unless order. The document and email provided did not constitute the required witness statement or address the claimant’s document list in the manner ordered.
2. Under Civil Procedure Rules 1998, CPR 3.1(3), an order may be made subject to conditions and may specify the consequences of non-compliance. The specified consequence follows automatically when the condition is breached, without any further order.
3. The automatic and potentially draconian nature of such a sanction requires the court making an unless order to ensure that it is appropriate: Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463. In this case, the earlier order was justified by the defendant’s persistent and substantial failure to provide disclosure, the importance of the documents to preparation for trial, and the absence of any adequate explanation.
4. The defendant’s failure therefore resulted in the defence and counterclaim being struck out. The court confirmed that judgment should be entered for the claimants on liability. The listed trial could proceed solely for assessment of quantum, and an adjournment was refused.