Orexim Trading Ltd v Mahavir Port And Terminal Private Ltd

On an application to strike out a defence for non-compliance with a court order, the court should apply the three-stage approach in Mitchell v News Group Newspapers and Denton v TH White Ltd: identify the seriousness of the breach, establish why it occurred, and consider all the circumstances.

Strike-out is an extreme remedy. The court must assess whether the sanction itself is proportionate. Where the breach concerns disclosure, the automatic sanction for non-disclosure may not provide an adequate remedy. An unless order may therefore be appropriate even where the breach is serious and unexplained. Declaratory or injunctive relief should generally not be granted without full argument.

Orexim applied to strike out Mahavir Port and Terminal Private Ltd’s defence, obtain judgment for US$7,391,600 and interest, or alternatively obtain an unless order. The application arose after the defendant failed to comply with directions requiring disclosure, factual witness statements and expert evidence.

The defendant did not appear or participate in the application. It contended, through earlier pleadings, that it had been unable to participate after being struck off the Indian company register. Orexim disputed that contention and sought damages, declarations and an injunction arising from a settlement agreement and related arbitration proceedings.

The central issues were whether service was valid, whether the non-compliance justified striking out the defence, and what order was proportionate.

1. Service. The application had been validly served at the email addresses approved by an earlier order. The defendant had been given adequate notice and Orexim had done everything reasonably possible to bring the application to its attention.
2. Applicable approach. Under Walsham Chalet Park Ltd v Tallington Lakes Ltd [2014] EWCA Civ 1607, the principles in Mitchell v News Group Newspapers [2013] EWCA Civ 1537, as restated in Denton v TH White Ltd [2015] 1 All ER 880, apply to an application to strike out for non-compliance with a court order. The court must consider: the seriousness of the breach; the reason for it; and all the circumstances, so as to deal with the application justly.
3. Seriousness and explanation. The failure to comply with disclosure, witness statement and expert evidence obligations was extremely serious because it placed the trial date in jeopardy. The defendant had provided no good reason. On the unchallenged evidence of Indian law, striking off did not deprive the defendant of capacity to defend the proceedings. Its continued participation in Indian arbitration proceedings reinforced that conclusion.
4. Proportionality of sanction. The rules supplied sanctions for failure to serve factual and expert evidence. The disclosure sanction was incomplete because the duty extended to adverse documents. Nevertheless, strike-out was not proportionate at that stage. The appropriate order was that, unless the defendant complied within 28 days with its disclosure and evidence obligations, Orexim would be at liberty to enter judgment on its damages claim.
5. Declaratory and injunctive relief. The application for declaratory and injunctive relief was adjourned. A declaration should not generally be granted without full argument, and an injunction required fuller consideration of the claims and of the interaction between the Indian arbitrator’s decisions and the English court’s decisions.

The judgment describes an earlier appeal concerning jurisdiction under section 423 of the Insolvency Act 1986. The Court of Appeal upheld the earlier decision that the claim could not proceed on the facts, although for different reasons. No citation for that decision is stated in the judgment.