Tarnjit Singh Gill v Sanjay Anand & Anor

Relief from sanction requires application of the three-stage test in Denton v TH White Ltd [2014] EWCA Civ 906. The court must assess the seriousness and significance of the breach, the reason for it, and all the circumstances, including efficient and proportionate litigation and compliance with court orders. Mental illness may constitute a good reason, but only where the evidence shows a connection with the inability to comply or engage with the litigation. A party’s intermittent ability to instruct lawyers, prepare evidence or address the court may demonstrate that connection was absent. Long delay, repeated defaults, prejudice, disruption and lack of confidence in future compliance may justify refusal, even where the applicant has a potentially triable defence.

The claimant sought repayment of six loans totalling £3,280,000 from the first defendant, alternatively from the second defendant. The first defendant contended that the loans had been made to the second defendant. After repeated procedural defaults, the first defendant’s defence was struck out, summary judgment was entered and damages were assessed.

The first defendant applied under CPR 3.9 for relief from sanctions and sought variation under CPR r.3.1(7) of an order requiring payment of £350,000 into court. He relied principally on depression, anxiety, alcohol and substance misuse, and difficult personal circumstances. The central issue was whether those matters justified relief from the sanctions imposed for his defaults.

1. Relief from sanction refused. The breaches were serious and significant. Two unless orders and other orders had been breached over a substantial period, judgment had been entered and damages assessed, and the proceedings would otherwise have concluded.
2. The court applied the three stages identified in Denton v TH White Ltd [2014] EWCA Civ 906: seriousness and significance; the reason for default; and all the circumstances, including the matters in CPR 3.9(1)(a) and (b).
3. The evidence established anxiety, depression and substance-misuse problems. However, it did not establish lack of capacity or inability to give instructions or engage with the litigation. The first defendant had periodically instructed counsel, settled witness statements and represented himself. Crucially, he engaged with the litigation on the day the unless order was made and sought permission to appeal. His difficulties therefore did not amount to a good reason for the defaults.
4. At the third stage, the delay was exceptionally long and had substantially disrupted the proceedings. The first defendant had repeatedly left preparation until the last minute, sought late adjournments, failed to comply with orders and changed representation. He paid the relevant costs only on the day before the hearing and had not explained his continuing defaults after instructing solicitors. The court had little confidence that relief would lead to future compliance and considered that granting it would cause further cost and require additional court time.
5. The apparent merits of the defence, including the possibility that the loans were made to the second defendant, were considered but did not outweigh the other circumstances. The application was dismissed. The variation application did not require determination. Had relief been granted, the court would likely have required full financial evidence and considered any variation on the basis of a material change in circumstances.