Kazakhstan Kagazy Plc & Ors v Zhunus & Ors

Relief from sanctions under CPR 3.8 and 3.9 requires the court to assess the breach, any good reason for it, and what justice requires in all the circumstances. The seriousness of a default is not judged solely by its effect on the immediate progress of the proceedings. The court must examine the actual defaults, their extent, consequences and the importance of compliance, while avoiding an automatic refusal of relief merely because the breach was serious and unexplained. An unless order may justify partial relief. The court may set aside the sanction affecting an entire defence while maintaining the striking out of particular allegations that should have been withdrawn or properly particularised. Relief may be appropriate where disclosure defaults were limited, remedied, caused no loss of disclosure, and a complete defence-strike-out would be disproportionate.

The claimants sought final charging orders over London properties said to be beneficially owned by a judgment debtor. The charging order respondents had failed to comply fully with an unless order requiring particularisation or withdrawal of pleaded allegations and specified disclosure steps.

The claimants applied for judgment and final charging orders. The respondents applied for relief from sanctions under CPR 3.8 and 3.9, relying on the principles in Denton et al v T H White Ltd [2014] EWCA Civ 906. The central issues were the seriousness of the defaults, the absence of a good reason, the effect of later remedial steps, proportionality, and the extent of any relief that justice required.

1. Applicable test. The court applied the three-stage approach in Denton et al v T H White Ltd [2014] EWCA Civ 906: whether the breach was serious or significant; whether there was a good reason; and what justice required in all the circumstances. CPR 3.9(1)(a) and (b) required weight to be given to efficient and proportionate litigation and compliance with rules, practice directions and orders. The test does not require relief to be refused automatically where the breach is serious and unexplained.
2. The court rejected the submission that relief was unavailable unless every default had first been fully rectified. The extent of outstanding non-compliance was relevant to seriousness and overall justice, but CPR 3.8 and 3.9 imposed no absolute prior-rectification requirement.
3. The pleading defaults were serious and deliberate. The respondents had failed to provide substantive responses or to withdraw important allegations, and had imposed an unjustified condition on withdrawal. The later particulars did not cure the failure to withdraw. Nevertheless, the court concluded that maintaining the sanction striking out the entire defences would be unjust, because the real purpose of the order was to secure withdrawal or proper particularisation of the specific allegations. Relief was therefore granted from the defence strike-out, but the relevant allegations remained struck out and permission for the late responses was refused.
4. The disclosure defaults were non-trivial but limited. The relevant devices and explanations were supplied approximately three and a half months late, but the devices had been searched and the disclosure exercise had been completed. There was no wider finding that the respondents’ disclosure lacked integrity. In those circumstances, complete loss of the right to defend the charging claims was disproportionate, and full relief was granted for the disclosure defaults.
5. The commencement of a later tracing claim did not amount to an election preventing the claimants from seeking judgment. Election would arise, if at all, when judgment was entered. The claimants’ application for judgment was therefore dismissed because the respondents obtained the necessary relief, subject to the specific allegations remaining struck out. Costs were reserved for determination on handing down.

Not an appeal. The judgment determined interlocutory applications in ongoing charging order proceedings.