Euro-Asian Oil SA v Abilo (UK) Ltd & Ors

An unless order requiring standard disclosure is not breached merely because the disclosure appears incomplete. Where a party serves a document which is prima facie a disclosure list, the party seeking judgment must establish that it is illusory or was prepared in bad faith. The court may consider the party’s understanding of its disclosure obligations and explanations for missing documents. Compelling evidence is required before bad faith is found, particularly where the parties are unrepresented and there is no cross-examination. A wide-ranging review of deficiencies may be necessary where bad faith is alleged, but deficiencies alone do not justify entering judgment.

Judgment had been entered for Euro-Asian Oil SA after Abilo (UK) Ltd and Dan Igniska allegedly failed to comply with an unless order requiring standard disclosure and inspection. The defendants applied to set aside the judgment under CPR 3.6, alternatively seeking relief from sanctions under CPR 3.9. They accepted that fewer documents had been disclosed than might ordinarily be expected, but relied on difficulties concerning documents held by an insolvent associated company, former personnel, and previous solicitors.

The central issue was whether the defendants’ disclosure list was merely illusory or had been served in bad faith, so that the automatic sanction under the unless order was engaged.

1. The judgments were set aside. The defendants’ disclosure was materially deficient in several respects, particularly concerning contractual documents relating to purchases from Glencore and Select Energy and dealings with DGP. Those deficiencies did not by themselves establish the deliberate or bad-faith non-compliance required to trigger the sanction.
2. The authorities described compliance in terms of whether a document was illusory, whether it could fairly bear its description, and whether it had been provided in good faith. The tests were not necessarily identical or cumulative. Since the defendants had served a document which was prima facie a disclosure list, Euro-Asian had to displace that prima facie position.
3. The court considered the defendants’ understanding of their obligations and their explanations for missing documents. Their evidence about lost, inaccessible, archived or unavailable documents was not sufficiently shown to be untruthful. Their limited English and lack of legal representation were relevant to the assessment, although they generally understood the nature of the disclosure obligation.
4. Applying the approach in Reiss v Woolf [1952] 2 QB 557 and Realkredit Danmark A/S v York Montague Ltd (1998) WL 1042171, the court was not satisfied that the list was illusory or had been served in bad faith. The court also relied on the ordinary presumption that people behave honestly, as recognised in Re H (minors) [1996] AC 563.
5. The order of Eder J and the judgments entered pursuant to it were set aside. The alternative application for relief from sanctions was therefore unnecessary. Had bad faith and deliberate withholding been established, relief would have been refused.