Strike Out: The Ultimate Sanction For Deficient Discovery

Published date09 January 2023
Subject MatterLitigation, Mediation & Arbitration, Compliance, Disclosure & Electronic Discovery & Privilege, Trials & Appeals & Compensation
Law FirmBaker & Partners
AuthorMr William Redgrave
  1. The Royal Court has, in recent decisions on appeal from the Master, affirmed the central importance of compliance with discovery obligations. Failure to give proper discovery can lead to a case being struck out without trial.
  2. In two 2021 decisions, Huda v Minister for Health and Social Services [2021] JRC 196 and Sheyko v Consolidated Minerals Limited [2021] JRC 267, the result of appeals to the Royal Court was that one party's case was struck out for serious discovery failings. In a third, Hard Rock Limited v HRCKY Limited [2022] JRC 172, the Royal Court upheld the Master's decision not to strike out.
  3. Baker & Partners acted for Mr Sheyko, the plaintiff in the second of those two cases. In that case the Master's decision in 2020 to strike out the defence case was upheld by the Royal Court on appeal in 2021. The Court of Appeal refused leave to appeal that decision. An application to the Privy Council for permission to challenge the strike out decision by way of a petition of doléance was refused in November 2022.
  4. These cases are stark reminders of the importance of adherence to the Practice Directions on Discovery (RC17/07) and on Discovery of Documents held in Electronic Form (17/08), which require parties to take immediate steps to preserve documents once litigation is in prospect. PD17/08 states:
    Preservation of Documents
    1. As soon as a party is aware that litigation is contemplated, that party must immediately take all reasonable steps to ensure that potentially discoverable Electronic Documents are preserved.
    2. As soon as a party retains a legal representative, that legal representative must inform its client of the need to preserve all potentially discoverable documents including Electronic Documents.
    3. The party and its legal advisers in either case shall take all reasonable steps to ensure that no potentially discoverable document is destroyed pursuant to any document retention policy or otherwise in the ordinary course of business.
    4. The party and its legal advisers may be required to provide information to the Court and the other parties to demonstrate it has fulfilled its obligation to preserve documents by reference to the questions set out in schedule 1 to this practice direction.
  5. In both Huda and Sheyko the claims arose from disputes arising from an employment contract, and there were serious deficiencies in discovery arising from the failure to preserve material.
  6. In Huda the defendant employer failed to take steps to preserve emails of other employees and former employees with the result that important emails were deleted some time after litigation began. Master Thompson held that while there had been a breach of an unless order to give discovery, nevertheless a fair trial was still possible so the case should continue. He found the decision to be finely balanced, but after analysing the impact of the missing emails he concluded that there was sufficient material available from other email accounts to enable a fair trial to take place. He declined to strike out the defence case.
  7. However on appeal Le Cocq, Bailiff held that the balance fell the other way. He declared that where the breach was of an unless order, and may have prejudiced the other party, then other than in the most exceptional circumstances the defaulting party's case must be struck out. Paragraph 53 of his judgment reads:
    • "It is always uncomfortable for a judge to strike a case out other than in the plain circumstances where it is without merit. However, orders of the Court are to be followed and in my judgment a breach of an unless order (which is already an extremely serious order and should have placed the Defendant on the highest possible alert to comply with it) which may have prejudiced the party who, in terms of the breach of the order, is the innocent party must it seems to me other than in the most exceptional circumstances be met with the natural consequences of that breach - namely that the pleading is struck out."
  8. In Sheyko the Master struck out the Answer and Counterclaim at first instance, and entered judgment on liability in favour of the plaintiff, as a result of breaches by the defendant ("CML") of discovery orders. CML had failed to preserve key communications between people central to the case, and had then sought to withhold discovery of material it had obtained The Royal Court (Commissioner Clyde-Smith and jurats) upheld the strike-out decision on appeal.
  9. In Hard Rock, the Master concluded that there had been a deliberate breach of a discovery order by failure to disclose a relevant and important document, and that this amounted to an abuse of process. However because the defendant did eventually disclose the document, and had in other respects demonstrated a clear willingness to engage in the litigation process on an equal footing with the plaintiff, this was not a case where further proceedings would be rendered unsatisfactory or a fair trial could not be held. He declined to strike out the case The Royal Court (Commissioner Clyde-Smith) approved that decision on appeal. The obvious difference from Huda and Sheyko was that the harm caused by the breach had been rectified, so the trial could proceed satisfactorily and fairly.

The test for striking out when discovery orders are breached

  1. There is more than one way to strike out a claim for breach of discovery...

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