Grammer v Webster & Ors

An unless order takes effect only where its requirements are sufficiently clear and the party has failed to comply with them. A party cannot avoid disclosure obligations by leaving documents with solicitors who assert a lien, although genuine financial difficulties may support relief from sanctions. The court must distinguish default under the order from failure to produce documents outside its clear scope or documents no longer within the party’s control. Relief from sanctions requires consideration of the interests of justice and the factors in CPR 3.9, including the nature of the default, its explanation, remediation, prejudice and the effect on the proceedings. Relief may be conditional on payment of costs, but need not be where the party’s financial position and available security provide sufficient protection.

The claimant sought a determination that the first defendant, Anthony Webster, was debarred from taking further part in proceedings concerning the parties’ beneficial interests in Ivy House Farm because of non-compliance with disclosure unless orders. The first defendant denied default and alternatively sought relief from sanctions. The dispute concerned disclosure about an advance secured on the Farm, its application, related dealings and alleged profits. Other issues included damages, agricultural tenancy, sale and partition. The court had to determine whether the unless order had taken effect and, if so, whether relief should be granted and made conditional on payment of outstanding costs.

1. Effect of the unless order. The July unless order, as subsequently clarified and extended, required disclosure by 6 January 2010. The order took effect automatically if there was non-compliance, consistent with Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463. The order had to be sufficiently clear to identify the required disclosure. The amended order clearly covered documents concerning the £1.062 million Abbey National advance.
2. Default and control of documents. Mr Webster remained in default because relevant bank statements and the Robinsons file were obtained and disclosed late, although the efforts to comply were genuine. Documents held by former solicitors remained within his control notwithstanding their lien; a party cannot defeat disclosure by placing papers with solicitors and failing to pay their charges. The lien and financial difficulties were relevant to relief, however. There was no default concerning documents outside the clear scope of the orders, documents controlled by third parties, or documents which no longer existed or could not be recreated.
3. Relief from sanctions. Having regard to Civil Procedure Rules 1998 rule 3.9, the court granted relief. The defaults were not intentional, substantial disclosure had been made, the remaining deficiencies were being addressed, the timetable was already unrealistic, and continued debarring would impair determination of the merits and create further non-party disclosure and delay. The defaults concerned only the dealings and part of the damages issues, not the tenancy, sale or partition issues.
4. Costs condition and order. The court had jurisdiction to make relief conditional on payment of outstanding costs, applying Crystal Decisions (UK) Ltd v Vedatch Corp [2008] EWCA Civ 848, affirming Crystal Decisions (UK) Ltd v Vedatch Corp [2006] EWHC 3500 (Ch). It declined to impose that condition because Mr Webster lacked means, held an interest in the Farm, and Mr Grammer was protected by potential charging orders and existing impounding orders. Relief was granted subject to a further supplemental disclosure list.