Dhillon & Anor v Sandhu

An unless order requiring disclosure is not complied with merely by delivering documents to solicitors. The documents must be made available for inspection and copying within the specified period, and the litigant remains responsible for the solicitors’ failure to take that step.

Late compliance does not ordinarily constitute a material change of circumstances justifying variation of the order under CPR 3.1(7). Relief from sanctions is assessed under the three-stage approach in Denton v T H White Limited and related appeals: seriousness and significance, the reason for default, and all the circumstances, with particular weight given to efficient, proportionate litigation and compliance with court orders.

The appellants appealed against Chief Master Marsh’s order refusing to vary a consent unless order or grant relief from sanctions. The order required disclosure of partnership books and records and provided that, unless disclosure was made within 14 days, the appellants would be debarred from participating in the taking of partnership accounts.

The appellants eventually permitted inspection, but outside the prescribed period. The Chief Master also ordered an interim payment of £350,000. The appeal raised issues concerning breach, variation under CPR 3.1(7), relief from sanctions under CPR 3.9, the effect of the debarring provision, and the interim payment.

1. Permission and breach. Permission to appeal was refused on the findings that the appellants had breached the consent order and that there was no proper basis for variation or an extension of time. The order imposed a single obligation: to give disclosure by making the partnership books and records available for inspection and copying. Delivering them to solicitors, without arranging access, was insufficient. The appellants were responsible for their solicitors’ failure to comply.
2. Variation under CPR 3.1(7). Late compliance was not a material change of circumstances. The obligation to disclose was continuing and existed when the unless order was made. The fact that the respondent later inspected and used the documents did not amount to approbation and reprobation, because the sanction had already taken effect and the respondent continued to enforce the underlying obligation. The application was also made too late.
3. Effect of the sanction. The order debarred the appellants from participating in the taking of the accounts, not merely from relying on evidence. The court entertaining relief from sanctions had to determine the sanction’s true effect before assessing the consequences of relief.
4. Relief from sanctions. Applying the guidance in Denton v T H White Limited, the breach was serious and significant because it substantially delayed and impeded the taking of the account. The alleged failure by former solicitors did not provide a sufficient explanation. The Chief Master’s decision fell within the generous ambit of his discretion and was consistent with the Denton guidance, notwithstanding that it pre-dated that decision.
5. The appeal was allowed only to the limited extent necessary to permit the appellants to attend the taking of the account and make submissions on the respondent’s evidence and documents. They could not adduce their own evidence, including further partnership books or records. The appeal concerning the £350,000 interim payment was refused permission. The appellants were ordered to pay costs of £15,000 including VAT.

• High Court (Chancery Division): Chief Master Marsh refused relief from sanctions, refused variation of the unless order, and ordered an interim payment of £350,000 in [2014] EWHC 1464 (Ch).
• High Court (Chancery Division): The appeal was allowed only to the extent of permitting participation in the taking of the account, without adducing evidence. Permission was refused on the remaining grounds.