First Rate FX Ltd v Trading By Telephone Ltd & Ors

Compliance with an unless order requiring disclosure must be assessed by reference to what the order actually required. Where a party serves a genuine, non-illusory list of documents within time, the order is prima facie complied with even if the list is incomplete. An application for specific disclosure is ordinarily the appropriate remedy. Strike-out may be justified where patent deficiencies show apparent rather than real compliance or a lack of good faith. The court must also avoid making procedurally drastic orders where doing so would cause clear injustice, particularly where a claim appears to have been compromised.

The claimant sought further disclosure and inspection orders against several defendants in expedited proceedings concerning alleged unlawful competition and breaches of restrictive covenants. Earlier orders required defences, standard disclosure, inspection and witness statements within specified periods. A Master granted an extension for disclosure, but Wilkie J subsequently set that order aside and made an unless order requiring disclosure and inspection by fixed dates.

The claimant contended that the disclosure supplied by several defendants was inadequate and sought strike-out of their defences. It also sought further disclosure from the second defendant and orders against a former employee who said that the claim against him had been settled. The central issues were whether the unless order had been complied with, when deficiencies justified strike-out, and what further disclosure was proportionate and relevant.

1. Application and notice. Sufficient notice had been given under CPR Part 23.7(4), and the application was heard.
2. Unless orders and disclosure. The question was whether each defendant had complied with the order actually made. Following the guidance in Realkredit Danmark v York Montagu, a list served within time prima facie complied with an order requiring service of a list. Incompleteness ordinarily required an application for specific disclosure rather than strike-out. Strike-out remained available where the list was illusory, or where patent deficiencies justified an inference that the obligation had not been performed in good faith.
3. First defendant. The first defendant’s disclosure was materially deficient. It omitted categories of documents plainly expected to be disclosed, including documents relating to its dealings with the second defendant, and inspection of an email had been improperly provided in a redacted and incomplete form. The defence therefore stood struck out under Wilkie J’s unless order.
4. Other defendants. The individual defendants had served lists which were not obviously deficient and appeared to have acted in good faith. Their defences were not struck out. Mr Gunn and Mr Davis-Gardner were ordered to undertake further searches and provide supplementary lists or explanatory witness statements. No order was made against Mr Ward because it would probably cause gross injustice if his account of settlement was correct; proceedings against him were stayed with liberty to apply.
5. Second defendant and directions. The second defendant was ordered to disclose turnover and profits from foreign currency trades since March 2011, together with documents in the category of the 6 February 2014 email, because those materials were relevant to the relationship and trading arrangements between the first and second defendants. Time for witness statements and the claimant’s updated schedule of loss was extended, and the trial window was moved to 6 May 2014.

This was a first-instance interlocutory decision. Earlier procedural orders had been made by Cox J, Master Eastman and Wilkie J. The court set aside the consequences sought against some defendants, struck out the first defendant’s defence, ordered further disclosure from specified parties, stayed the proceedings against Mr Ward, and varied the trial timetable.