FLOREAT MERCHANT BANK LTD v VS ONE AS (2016)

CIVIL PROCEDUREDISCLOSURE : STRIKING OUT : TRIAL DIRECTIONS

A claim, defence and counter claim were struck out two weeks before a trial date where the parties had failed to progress the case or comply with directions. Two previous trial dates had been vacated, and while the defendant was largely culpable for failing to provide disclosure, the claimant was also to blame as it had failed to pursue the matter by applying to the court or seeking to vacate the trial date.

The claimant applied to strike out the defendant’s defence and counter claim and sought judgment. The defendant applied for disposal of the claim.

The claimant was a financial services company offering bespoke wealth management and merchant banking to high value clients. The second defendant was a property developer who had founded an investment company. The first defendant company owned shares in the second defendant’s company. The claimant and defendants entered into an agreement to form a commercial relationship. Prior to signing the agreement, the second defendant allegedly made representations about the financial viability and regulatory standing of his company. The claimant then put a team together which, it contended, involved significant time, effort and resources. The claimant carried out due diligence in respect of the defendants which revealed that the representations had been untrue. The claimant’s position was that it was entitled to repudiate or terminate the agreement and it sought reimbursement of its expenses. It also sought losses under a number of other heads of claim which necessitated the completion of forensic accounting reports. The defendants denied that the representations had been untruthful, denied the other heads of claim, and contended that expenses had been incurred without their consent. They counter claimed for the cost of setting up an office. Directions were given in respect of disclosure and expert reports and a trial window was set. The defendants changed solicitors and directions were varied with the claimant’s consent and a trial date was set. Neither party complied with the directions. The claimant then changed solicitors and both parties applied for new directions and to vacate the trial date. A new trial date was set for 3 May 2016. Disclosure was to be provided by July 2015, with witness statements and expert reports to follow in October and December. The defendants provided no disclosure despite requests from the claimant. In January 2016 the claimants proposed moving compliance dates to March and again requested disclosure. The defendants did not respond and the claimants issued an application to strike out their defence. The defendants, but stated that the new timetable was impossible. The claimant believed that the trial date, two weeks from the instant hearing, remained achievable. 

HELD: The case was not fit for trial at the time of the instant hearing. The question was whether it should be allowed to proceed. Further adjournments would have considerable implications for the court’s list. A trial date was considered to be a fixed point which would not be moved without compelling reason. The defendants had done nothing to advance the case and there was no basis for the court to exercise its discretion in their favour. They were not entitled to relief from sanctions and their defence and counter claim were struck out. However, the claimant was not blameless. The claimant’s position was that its claim could not be advanced without disclosure which was necessary in order to create forensic accounting reports. The deadline for disclosure had passed in July 2015, but the claimant had failed to apply to the court for an unless order. It appeared that the claimant had lost its appetite for the litigation, or had discovered that the defendants were not solvent. It had taken no active steps to move the case towards trial and it had not sought to vacate the trial date when it became apparent that it was impossible. The claimant was less culpable than the defendants, but its failure to pursue disclosure contributed to the loss of the trial date. The heads of claim required expert accounting evidence which had not been prepared when it could have been. Those heads of claim were therefore struck out. The claim for expenses only could proceed. If pursued, it should be assessed by a master and the defendants were restricted to challenging quantum only. The court found no failure to act properly by the solicitors and counsel in the case and was inclined to think that the parties lost interest in the litigation.

Judgment accordingly.

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