Breaking a promise

In two recent decisions, the Court of Appeal has considered applications for relief from sanctions where lower courts made 'unless orders' requiring defendants to disclose documents or face orders debarring them from defending. In both Tarn Insurance Services Limited (In Administration) v Kirby & Others [2009] EWCA Civ 19 and Momson v Azeez [2009] EWCA Civ 202, the debarring orders were upheld.

The decisions demonstrate that courts are prepared to take a tough line on those seeking relief.

The appropriate test

In Tarn, the claimant company entered administration in November 2007. Via its administrators, it commenced proceedings against individuals alleged to be de facto directors said to have acted in breach of their fiduciary duties.

The administrators applied for information and documents from Mr Kirby (K). Initially no order was made since he undertook to comply voluntarily. However, later efforts to do so were considered deficient and, ultimately, an order was made that unless he complied, he would be debarred from defending. That deadline passed without compliance.

On hearing K's application for relief, the judge found that the failure to comply was the fault of K's advisers, the effect of the failure was 'relatively slight' and, finally, since K had a real prospect of successfully defending the claim, he should have an opportunity to address what were serious allegations at trial. The last point was a decisive factor in the judge's decision to grant relief.

At the appeal of that decision, the Court of Appeal reconsidered the criteria and found responsibility for default lay with K (not his advisers), the failure was deliberate, the effect was potentially very serious (information being required for tracing claims) and K had shown persistent non-compliance.

Importantly, the test of taking into account the prospect of successfully defending the claim was rejected. The appropriate test was whether the unless order was a proper order to make for the purposes of furthering the overriding objective in (i) the circumstances known at that time it was made and (ii) the circumstances at the time of the application for relief. Absent material change in circumstances '“ or a good reason to excuse continued non-compliance '“ the sanction should take effect as originally intended.

A 'legitimate aim'

Momson concerned a dispute between individuals who, having formerly lived as husband (A) and wife (M), fell out and made competing claims in relation to properties.

A did not comply with a consent order requiring him to produce documents and information and having failed to comply with a subsequent unless order, he was debarred from defending and pursuing his counterclaim.

Applications for relief failed and the matter came before the Court of Appeal. A relied on the following arguments:

1. it was manifestly wrong that a trial without production of documents by A (but with him still being entitled to give evidence and defend) would be unfair on M; and

2. Article 6 of the European Convention on Human Rights (ECHR) required the court to consider whether a debarring order was proportionate.

In relation to the first point, the court accepted that the documentation sought was not going to be directly relevant to the bulk of M's case. However, A had implicitly accepted that production was required.

Regarding the second ground, although a refusal to grant relief would deprive A of a trial, the court held this served a 'legitimate aim' since it had required him to comply with an order of the court made with a view to achieving a fair trial.

As such, the conclusion reached was Convention compliant.

Little comfort for defendants

In limited cases the court may be persuaded to allow a short extension where this may lead to compliance with an unless order.

However, the message from Tarn and Momson is clear: courts will be very slow to grant relief; the legitimacy of debarring orders under the ECHR has been reaffirmed and, assuming the criteria are properly considered, courts will not be swayed to the contrary.

When applying for relief, the correct test is to consider whether an unless order remains an appropriate order, for the purposes of furthering the overriding objective, at the date of the application.

The court will take a robust view in cases of deliberate and/or persistent non-compliance with orders. Save in very exceptional circumstances, relief is unlikely to be forthcoming. Parties must therefore not make promises to the court which might not be met.

The cases underline the need for active case management by parties/practitioners; deadlines must be respected and extensions of time sought, where necessary, in good time.