Griffiths v Gourlay & Ors

This is a renewed application for permission to appeal against an order refusing relief against sanctions which had the consequence that defences to a number of petitions under section 994 of the Companies Act remained struck out. The application concerned responses to a Request for Further Information pursuant to an Unless Order: 88 requests were made and 25 responses were criticised, some criticisms falling away during the application and four being dealt with by the judge. The applicant argued that the judge failed to apply stage three of the Denton three-stage test and failed to consider the particular nature of petitions under section 994 and that the inadequate particulars related to only one of three companies. The applicant also advanced a principle of "partial severance" — refusing relief against sanctions only as to those paragraphs not adequately particularised while granting relief as to those that were adequate. The court held that the partial severance point raised a point of principle with a real prospect of success and granted permission to appeal on the grounds set out in paragraph 24 of the grounds of appeal; permission to appeal was refused as to other grounds and was refused in relation to the original imposition of the Unless Order.

This was a renewed application for permission to appeal to the Court of Appeal against an earlier order (of Simon LJ) refusing relief from sanctions, resulting in the strike-out of defences to petitions under section 994 of the Companies Act. The proceedings below involved a Request for Further Information under an Unless Order requiring responses to 88 requests; 25 responses were criticised and four criticisms were dealt with by the judge.

The applicant (would-be appellants) argued that the judge failed to consider stage three of the Denton test when refusing relief against sanctions, failed properly to account for the specific nature of unfair prejudice petitions under section 994 (and the fact that the inadequate particulars related to only one of three companies), and failed to consider the availability of a remedy of "partial severance" so that relief might be granted in part.

The court (Lewison LJ) concluded that the partial severance point raised a point of principle with a real prospect of success. Rather than attempt to isolate discrete grounds, the court granted permission to appeal on the grounds set out in paragraph 24 of the grounds of appeal. Permission to appeal was refused in relation to all other grounds and the court also refused permission to appeal the order imposing the original Unless Order.

Nature of the application: renewed application for permission to appeal against refusal of relief from sanctions leading to strike-out of defences to section 994 petitions.

Issues framed by the court: (i) whether the judge applied stage three of the Denton test; (ii) whether the judge took into account the particular nature of section 994 petitions and that inadequate particulars impacted only one of three companies; and (iii) whether "partial severance" was a principle which should have been considered.

Reasoning: the court identified a real prospect of success on the partial severance point and therefore granted permission to appeal on the substantive grounds in paragraph 24, while refusing permission on other grounds and refusing permission against the original imposition of the Unless Order.

Permission to appeal was granted in part. The court accepted that the "partial severance" point presented a point of principle with a real prospect of success and therefore granted permission to appeal on the grounds set out in paragraph 24 of the grounds of appeal. Permission to appeal was refused in relation to all other grounds and the court refused permission to appeal the original order imposing the Unless Order.