Griffith & Anor v Gourgey & Anor

The court considered two competing applications arising from three s.994 Companies Act 2006 petitions: (i) a petitioners' application for final relief on the basis that the respondents had failed to comply with an unless order requiring answers to a Part 18 Request for Information, and (ii) the respondents' application for relief against sanctions under CPR Part 3.9. The judge applied CPR principles governing Part 18 requests and the court's strike-out powers, and considered authorities on what constitutes a genuine attempt and a "full and complete" answer to a Part 18 request.

On the facts the court found a number of responses to the Request were not full and complete, that failures were not de minimis but went to the heart of key allegations (intercompany balances, management charges and allocation of sale proceeds), and that the conditions of a prior Relief Order had not been complied with. The Amended Points of Defence was therefore treated as struck out and relief against sanctions was refused. The court made a limited observation that one particular complaint (Request 22) raised primarily a timing failure rather than an adequacy failure, but relief would still be refused given the delay and circumstances.

This is a first instance Companies Court judgment concerning three related unfair prejudice petitions under section 994 of the Companies Act 2006 involving Bankside Hotels Ltd, Pedersen (Thameside) Ltd and G&G Properties Ltd. The petitions raised complaints about intercompany payments, alleged diversion of a development opportunity, treatment of proceeds of sale and refusal to provide information. The Petitioners served a detailed Part 18 Request for Further Information and, after a history of non-compliance, an unless order was made requiring a full and complete response by a specified date as a condition to the reinstatement of the Amended Points of Defence.

Nature of the applications:

• The Petitioners sought final relief (effectively strike-out of the Amended Points of Defence) for failure to comply with the Relief Order.
• The Respondents sought relief against sanctions under CPR Part 3.9 in the event their non-compliance led to strike-out.

Issues framed by the court:

• Whether the Respondents' Response to the Part 18 Request complied "in all respects" with the Relief Order requiring a "full and complete" response;
• What legal test applies to compliance with a Part 18/unless order and the scope of the court's discretion under CPR Part 3.9 (having regard to authorities such as QPS Consultants, Reiss v Woolf and Denton); and
• Whether relief against sanctions should be granted given the history of delay and the importance of the missing information to the merits.

Court's reasoning:

• The court adopted established guidance that a Part 18/unless order requires a real, good-faith attempt to provide particulars but, in this case, the Relief Order's clear terms required a response that complied "in all respects" and any material non-compliance would be treated as not filed for the purposes of the Order.
• The judge examined a number of specific requests (including Requests 21, 22, 37, 73 and 84) and found failures of adequacy rather than trivial or accidental omissions: key documents (company accounts), coherent particulars of intercompany reviews and set-offs, particulars of management charges and full particulars of sale proceeds were not provided or were internally inconsistent or evasive.
• Given repeated defaults, lack of sufficient explanation, and the centrality of the missing material to the unfair prejudice claims, the court concluded the Amended Points of Defence must be treated as struck out and refused relief against sanctions. The court rejected arguments that the tight time provided for compliance justified relief, noting long prior opportunity to respond.

The judge reserved the form of order to be drawn up but was clear in substance: non-compliance with the Relief Order carried the prescribed consequence and relief would not be granted.

This is a first instance decision. The court held that the Respondents had failed to provide the "full and complete" responses required by the Relief Order and that the Amended Points of Defence therefore stood struck out. The Respondents' application for relief against sanctions under CPR Part 3.9 was refused. The rationale was that the deficiencies were more than trivial, went to the heart of the petitions (intercompany accounting, management charges and allocation of sale proceeds), and the Respondents had not shown any material change of circumstance or that the earlier judge had been misled such as to justify relief.