Phaestos Ltd & Anor v Ho & Ors

A consent case-management order may be varied under the Civil Procedure Rules 1998, but the court must consider the overriding objective and all the circumstances. Relevant considerations include the nature of the agreement, supervening events, costs, the timetable, whether the breach was deliberate, and the prospect of compliance. An unless order must impose a proportionate sanction. Striking out an entire claim is inappropriate where the default concerns only separable parts of the pleaded case. The court may refuse an extension where the party seeking it has stated that it will not comply with the order.

The claimants brought substantial claims arising from alleged breaches of contract by the defendants. Following repeated failures to provide adequate particulars of quantum, the parties agreed a consent order requiring further information by 5 April 2012. The claimants accepted that they had not complied with the order concerning requests for information about investor redemptions and potential investors.

The claimants sought an extension of time, explaining that disclosure of investor identities might contravene Cayman Islands confidentiality law and that they wished to investigate an alternative basis of loss. The defendants sought an unless order leading to strike-out. The central issues were whether the consent order should be varied and, if not, what sanction was proportionate.

1. The claimants’ application for an extension of time was dismissed. Under CPR 3.1(7), and the related case-management powers identified in Pannone LLP v Aardvark Digital Limited [2011] EWCA Civ 803, the court had power to vary a consent order. The overriding objective governed the exercise of that discretion.

2. The fact that an order was made by consent was relevant but not decisive. The court had to consider all the circumstances, including the procedural or substantive nature of the agreement, any unforeseen or supervening circumstances, the effect on costs and the trial timetable, whether the breach was deliberate, and whether there was any realistic prospect of compliance. The principles in S v S [2002] EWHC 223 (Fam), Hudson v New Media Holding Co LLC [2011] EWHC 3068 (QB) and Weston v Dayman [2006] EWCA Civ 1165 were considered in that context.

3. There was no utility in extending time for compliance where the claimants had made clear that, for commercial reasons, they did not intend to provide the information. Their proposed expert investigation and possible amendment did not justify continuing a breach of the order.

4. The defendants’ application for an unless order was granted in part. Applying the guidance in Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463, an unless order had to impose a sanction justified by the circumstances. Striking out the whole claim would be disproportionate. The appropriate sanction was strike-out of paragraph 30, the specified words in paragraph 26.10, and the related passages of the further information if the claimants failed to comply by 4 pm on 28 May 2012.

5. The claimants were ordered to pay £28,000 costs, payable within 14 days of 18 May 2012.

Not stated in the judgment.