Lakatamia Shipping Co Ltd v Nobu Su & Ors

Factual and Procedural Background

The Defendants applied under CPR 3.9 for relief from a sanction imposed by an order dated 13 December 2013 by Judge Cooke, which struck out their defence and counterclaim unless standard disclosure was provided by 17 January 2014 ("the Order"). The Claimant's claim sought payment of US$45,854,200.24 allegedly owed by the First to Sixth Defendants under a contract for a series of FFAs made around 6 July 2008, with the Seventh Defendant acting as guarantor.

A case management conference held in July 2013 resulted in an order dated 17 July 2013 setting directions leading to a six-day trial scheduled for 20 October 2014. The order required standard disclosure by 30 August 2013. The Defendants failed to meet this deadline but the parties agreed to extend it to 6 December 2013, recorded in a consent order dated 18 November 2013.

On 5 December 2013, the Defendants requested a further extension, which the Claimant refused. The Defendants then applied to the court for an extension to 17 January 2014. Judge Cooke granted this but imposed the extension in "unless" terms, stating that failure to provide standard disclosure by 17 January 2014 would result in striking out the Defendants' defence and counterclaim.

The Order did not specify a time of day for compliance. According to the Commercial Court Guide, absent specific provision, compliance is required by 4:30 pm on the day stated. The Defendants' solicitors mistakenly believed the deadline was 5:00 pm and worked accordingly, causing the disclosure list to be ready only by about 4:40 pm. They offered to exchange lists by email at 4:45 pm, but the Claimant's solicitors raised a concern about timeliness at 4:54 pm. The Defendants then served the disclosure list at 5:16 pm, 46 minutes after the 4:30 pm deadline. The Claimant did not provide any disclosure list by the deadline or thereafter.

The Defendants notified the Claimant on 19 January 2014 of their intention to apply for relief from sanctions. The application was issued on 20 January 2014 and opposed by the Claimant. The next procedural step was the exchange of witness statements due on 10 March 2014, with trial starting on 20 October 2014.

Legal Issues Presented

1. Whether the Defendants should be granted relief from the sanction of striking out their defence and counterclaim imposed for failure to comply with the disclosure deadline.
2. Whether the non-compliance with the disclosure deadline was trivial or serious.
3. Whether there was a good reason for the Defendants' default in failing to comply on time.
4. How the principles established in Mitchell v News Group Newspapers Ltd and related authorities apply to the facts of this case.

Arguments of the Parties

Defendants' Arguments

• The delay in disclosure was minimal—46 minutes late—and could be considered trivial.
• The disclosure provided was proper and constituted real compliance with the Order.
• The late provision of some documents by the Defendants contributed to the delay but did not affect the validity of the disclosure served on 17 January 2014.
• The solicitors' misunderstanding of the deadline time was understandable given the Order's silence on the time of day for compliance.
• The application for relief was made promptly after the default.

Claimant's Arguments

• The non-compliance cannot be characterised as trivial due to the Defendants' history of earlier defaults.
• The disclosure provided was seriously deficient and therefore did not comply with the Order.
• The Defendants have a pattern of non-compliance, including filing inaccurate affidavits, ignoring disclosure obligations, dissipating assets despite a freezing injunction, and failing to pay costs orders.
• The Defendants' prior conduct shows cavalier disregard for court orders and undermines their entitlement to relief from sanctions.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537	Established the "robust" approach to relief from sanctions, emphasizing the paramount importance of enforcing compliance with court rules and orders and conducting litigation efficiently.	The Court applied Mitchell to hold that relief from sanction will usually be granted if the non-compliance is trivial or there is a good reason for default. The Defendants narrowly missed the deadline, which was considered a trivial default justifying relief.
Newland Shipping & Forwarding Ltd v Toba Trading FZC [2014] EWHC 210 (Comm)	Summarised the approach to relief from sanctions post-Mitchell, focusing on the nature of non-compliance and reasons for default as paramount considerations.	The Court relied on this summary to analyse the Defendants' default as trivial with an understandable explanation, supporting the grant of relief.
Dinsdale Moorland Services Ltd v Evans [2014] EWHC 2 (Ch)	Clarified that compliance with an "unless" order for disclosure requires providing a genuine list of documents, not an illusory one, and that failure to comply may be remedied by further disclosure applications.	The Court found the Defendants' disclosure list was not illusory and constituted real compliance with the Order despite some additional documents being disclosed later.
Realkredit Danmark v York Montagu [1998] WL 104421	Held that providing a list of documents prima facie complies with a disclosure order unless the list is illusory or prepared in bad faith.	Applied to conclude the Defendants' disclosure list was valid and not illusory, thus satisfying the Order.
Re Atrium [2013] EWHC 2882	Confirmed that serving a list of documents complies with a court order unless the list is illusory, and dissatisfaction with the list should be addressed by further disclosure applications.	Supported the Court's view that the Defendants complied with the disclosure order by serving a genuine list.

Court's Reasoning and Analysis

The Court analysed the Defendants' failure to comply with the disclosure deadline by reference to the principles in CPR 3.9 and the Mitchell case. It identified two paramount considerations: the need for litigation to be conducted efficiently and at proportionate cost, and the enforcement of compliance with rules and orders.

The Court found the non-compliance was trivial since the Defendants missed the deadline by only 46 minutes. This was consistent with the Court of Appeal's recognition in Mitchell that narrowly missing a deadline is usually insignificant and deserving of relief. The non-compliance caused no prejudice to the Claimant.

The Court rejected the Claimant's argument that the history of earlier defaults transformed this trivial non-compliance into a serious one, emphasizing that the characterisation must focus on the specific default leading to the sanction.

Regarding the adequacy of the disclosure, the Court applied the reasoning from Dinsdale Moorland and Realkredit, concluding that the Defendants' disclosure list was not illusory and constituted real compliance with the Order, notwithstanding some additional documents disclosed later.

On the question of good reason for default, the Court attributed the delay mainly to a misunderstanding by the Defendants' solicitors about the time of day for compliance, compounded by late provision of documents by the Defendants themselves. Although this mistake was understandable due to the Order's silence on the time, it did not constitute a good reason under Mitchell, which requires circumstances outside the party's control.

The Claimant was also found to be in breach of the Order by not serving a disclosure list by the deadline, and appeared to have adopted a "wait and see" approach. This reduced the impact of the Defendants' default.

The Court considered other circumstances under the previous version of CPR 3.9(1) and found most factors favoured relief, including prompt application, absence of prejudice, and the ability to meet the trial date. The Court acknowledged prior non-compliance by the Defendants but held that it had been accounted for in the sanction imposed and was not sufficient to deny relief for the trivial default.

In exercising its discretion, the Court concluded that the trivial nature of the default, the understandable explanation, and the overall circumstances justified granting relief from the sanction.

Holding and Implications

RELIEF FROM SANCTION GRANTED.

The Court granted the Defendants relief from the sanction of striking out their defence and counterclaim imposed for failure to comply with the disclosure deadline. The direct effect is that the Defendants may continue to defend the substantive claims on their merits, and the case proceeds towards trial as scheduled. No new legal precedent was established; the decision applies established principles affirming that trivial non-compliance with court orders, coupled with an understandable explanation and prompt application, will usually attract relief from sanctions.