STRIKING OUT DEFENCE AND COUNTERCLAIM FOR BREACH OF "UNLESS ORDER"
In Saxo Bank A/S v Innopac Holdings Limited [2021] SGHC 214 (“Saxo v Innopac”), the High Court upheld a decision to strike out the defendant’s defence and counterclaim and to enter judgment for the plaintiff due to the defendant’s repeated failures to comply with its discovery obligations, including those subject to an “unless order”
Brief background. It suffices to say that in Saxo v Innopac, the High Court found that the defendant had repeatedly breached its discovery obligations, including failing to comply with an “Unless Order” made by the High Court that unless the defendant complies with a further discovery order that was made, judgment shall be entered in favour of the plaintiff (see [55] – [93] Saxo v Innopac). This article will be focusing more on some of the key principles set out by the High Court rather than on the facts of the case.
Key principles. The High Court summarized the principles for the striking out of pleadings for breaches of discovery obligations at [94] Saxo v Innopac.
While the principles are not new, it is important to refresh ourselves and bear in mind the following:
While whether the court will strike out the pleadings is a matter of discretion for the court and is fact specific (see [94(a)] – [94(b)] Saxo v Innopac), breaches of an “unless order” will “automatically trigger” its consequences and it is for the defaulting party to demonstrate why the consequences should not apply (see [94(c)] – [94(d)] Saxo v Innopac).
The court will still consider the sanction to be imposed even if there is a breach of an “unless order” (see [94(e)] Saxo v Innopac), though it is important to note that even subsequent rectification of non-compliance may not be enough to save the case from being struck out (see [94(f)] Saxo v Innopac).
A failure to comply with court order “through negligence, incompetence or sheer indolence” as opposed to “wilful disobedience” may also be enough to justify a striking out.
Further, as the High Court held at [58] – [62] Saxo v Innopac, while it is open to a party to respond to an application for a further and better list of documents on the basis that there are no such documents, once the Court has rejected the argument and ordered for a further and better list, it is not open to that party to then maintain the position.
This is because issue estoppel will apply to that issue, and even if issue estoppel does not apply, it would amount to an abuse of process as it would be tantamount to a collateral attack on the earlier decision.
Conclusion. Saxo v Innopac is an important reminder to parties to take their discovery obligations seriously. Repeated failures to comply with discovery obligations can have severe consequences for a party, including but not limited to the striking out of the relevant action or defence.
More importantly, Saxo v Innopac is also a reminder to parties that once a court order for further discovery of particular documents has been made, unless that court order is, e.g., subsequently varied or successfully appealed against, it stands as a valid order of the court and must be complied with. Attempts to “side-step” or “argue” against the court order such as, e.g., by insisting that there is no document to disclose when the court has ordered for that document to be disclosed will be viewed dimly by the court (to say the least) and will not bring the party far.
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