FAILURE TO COMPLY WITH AN ORDER FOR E-DISCLOSURE: DECISION THAT A PARTY HAD COMPLIED OVERTURNED IN THE COURT OF APPEAL

The first instance decision in  Smailes -v- McNally (Re Atrium Training Service) [2013] EWHC 2882 (Ch) was looked at in detail in a previous post in October last year.  It is worth noting that the Court of Appeal have overturned the judge’s decision that the liquidator’s had complied with the terms of a peremptory order. (This post is based on the short Lawtel summary).

THE FACTS

The court made a peremptory order that the liquidators conduct a search for documents falling within CPR r.31.6.

1. The liquidators failed to make any, or any reasonable, search for the documents.

2. The judge had erred in considering that the methodology of the search had been agreed between the parties.

3. The question of whether there had been compliance with the unless order was not a matter of discretion.

4.  The liquidators had failed to disclose relevant documents that were in their possession, whose disclosure had been promised.

5. The judge found that the liquidators had acted in good faith but this did not warrant an inference that a reasonable search had been made.

6. There had also been a failure to make a proper disclosure list.

THE CONSEQUENCES: THE ACTION IS STRUCK OUT

It is not clear from the Lawtel report what the consequences were for the liquidators.  However the terms of the original order were set out in the decision at first instance.

“(1) unless the Liquidators comply with paragraph (2) below, the Liquidators claims against the Respondents in proceedings No 3878 of 2011 and No 3879 of 2011 (“the Atrium proceedings”) shall be struck out without further order of this Court and the Respondents shall be at liberty to enter judgment for their costs, such costs to be subject of a detailed assessment if not agreed.

(2) In the Atrium Proceedings, the Liquidators shall by 4.00pm on 28 June 2013:

i) conduct a search for documents falling within CPR 31.6, in compliance with the requirements set out in CPR 31.7; and

ii) provide Mr McNally and Mr MacLean and Mr Dick with a list of documents identifying the documents located as a result of the search described above, in compliance with the requirements set out in CPR 31.10

(3) Requests for inspection (or copies) of documents shall be made by 4:00pm on 5 July 2013 and complied with by 4.00pm on 12 July 2013.”

TREAT DISCLOSURE WITH CARE

I will deal with this case in more detail once the full judgment is available.  For the time being note the very, very significant consequences of failing to fully comply with the order for disclosure.