Laurence Gerald Factor v Houssam Haddad & Ors

An unless order requiring a party to provide full and frank particulars of disclosure must be complied with in substance. The obligation extends to explaining the searches undertaken, defects in the exercise, relevant documents within the party’s control or obtainable from third parties, preservation steps, lost or destroyed documents, and known adverse documents. General assertions that documents are unavailable or irrelevant do not satisfy the order where they leave the court and opposing parties unable to understand or test the disclosure exercise. A material and continuing breach may trigger the sanction specified in the unless order without a further order, subject to any application for relief from sanctions.

The liquidator of Sweetland Limited applied to recover money from seven respondents under claims vested in the company and causes of action under the Insolvency Act 1986. After the first day of a listed trial, the court granted an adjournment and made an agreed unless order requiring the liquidator to provide full and frank particulars concerning his disclosure exercise, relevant documents, preservation, loss or destruction, and known adverse documents.

The issue was whether the witness statement served in purported compliance materially breached that order, so that the application should be struck out.

The application was struck out without further order.

1. The court construed the January Order according to its clear terms and purpose. The requirement for “full and frank” particulars required proper inquiries, disclosure of known facts and facts that proper inquiries would have revealed, and candour and good faith. This reflected the principles explained in Brink's-Mat Ltd v Elcombe [1988] 1 W.L.R. 1350 and Alliance Bank JSC v Baglan Abdullayevich Zhunus [2015] EWHC 714.
2. The witness statement did not adequately describe the disclosure exercise or its defects. It failed to identify relevant documents within the liquidator’s control or obtainable from third parties, explain why documents were unavailable or regarded as irrelevant, address electronic records and preservation, or identify known adverse documents and reasons for non-disclosure.
3. The deficiencies were material rather than technical. They concerned central documents bearing on insolvency, preferences and the impugned payments, and prevented the respondents and the court from understanding and testing the disclosure exercise.
4. An unless-order sanction operates without a further order where there is material non-compliance, although the court may determine whether default has occurred by reference to the order’s purpose: Marcan Shipping (London) Ltd v Kefalas [2007] 1 W.L.R. 1864. The January Order expressly provided for automatic strike-out, and the breach was serious, unexplained and continuing.
5. No relief from sanctions was sought, and there was no basis for the court to grant relief of its own motion. The application therefore stood struck out by operation of paragraph 3(a) of the January Order. Consequential matters were left to be addressed in a draft order.