|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Thevarajah v Riordan & Ors  EWHC 3179 (Ch) (10 October 2013)
Cite as:  EWHC 3179 (Ch)
[New search] [Context] [View without highlighting] [Printable RTF version] [Help]
110 Fetter Lane,
London EC4A 1NL.
B e f o r e :
(Sitting as a Deputy Judge of the High Court Chancery Division)
|- v -|
|(1) JOHN RIORDAN|
|(2) EUGENE BURKE|
|(3) PRESTIGE PROPERTY DEVELOPER UK LIMITED|
|(4) BARRINGTON BURKE|
John Larking Verbatim Reporters
(Verbatim Reporters and Tape Transcribers)
Suite 91, Temple Chambers, 3-7 Temple Avenue
London EC4Y 0HP.
Tel: 020 7404 7464 Fax: 020 7404 7443 DX: 13 Chancery Lane LDE
Crown Copyright ©
Thursday, 10th October 2013.
THE DEPUTY JUDGE:
The background facts and allegations
The procedural history
3. On the evening before this hearing supplementary affidavits were served by the Defendants although these are dated 10th June 2013. They are in a similar form to the Defendants' previous affidavits. They recognise that disclosure was inadequate and make profuse apologies and state that the Defendants have been advised to serve these further affidavits. The details are set out in a reference to a list.
4. These affidavits are better than their predecessors but the information provided is still limited. There are no bank statements for the past three years as required in the order. All there is is one or two bank statement sheets. Efforts have been made to acquire more. I was taken to an inadequate email from Mr Riordan [i.e. the First Defendant] to his bank manager "Hi Andrew, as part of the court proceedings we have been asked to provide statements from October 2010 for Prestige Properties Ltd and Prestige Property Developer (UK) Ltd ... I have cc'd in the relevant parties for this action and ask that you send on the details.' Page 362. This is completely inadequate, there is no urgency and no mention that disclosure has been ordered. It does not say when the information needs to be provided by. There is no indication to the bank that this matter is serious. This is one of the obvious deficiencies.
5. Another obvious deficiency is the lack of information about the borrowing on the properties. Most properties are secured by the Bank of Cyprus. I was taken to an email dated 5th June 2013 on p. 363. There is no reference to the terms of the order. In the circumstances it is hardly surprising that the Claimants' view is that the disclosure is inadequate.
6. The Defendants have provided more disclosure and some of the questions have been conceded. They are not required to answer the questions in relation to Marylebone Enterprises Ltd.
7. Apart from the bank statements and the information on lending there are other material aspects where disclosure is inadequate. I was helpfully taken to a schedule of these. I will give a summary as it is unnecessary to go through them all in detail but it is clear that disclosure is inadequate.
8. For example, regarding the funding of these legal proceedings, in the First Defendant's affidavit the only answer he is prepared to give is that funding is from "day to day business activities". There is no disclosure of these activities. Additionally, the First Defendant has no bank account and no cash. There is need for a fuller explanation.
9. Another aspect where disclosure is inadequate is a lack of clarity regarding which charges and which encumbrances are secured on which property.
10. Barrington Burke owns the 76 Tollington Way head leasehold with a charge in favour of United Trust Bank. Three long underleases have been granted with further borrowings on them. Did the United Trust Bank know about these or give consent? These leases prejudice its security. Do they now have any valid security? We need clarity as to how so much money has been secured on one property.
11. There are enough examples to make it clear that disclosure has been inadequate. I will make an order for further compliance.
12. It has been accepted by the Defendants that letters should be sent to banks and lenders and they have instructions to undertake to send these by close of business on 24th June.
13. Since the Defendants have given undertakings and an undertaking is equivalent to an injunction I will accept these undertakings. I should accept that they will be complied with. Otherwise there can be committal proceedings. I will not attach unless sanctions to this part of the order.
14. Mr Davies has submitted that certain requests are where the Defendants have done their best as possible, but as I am satisfied that there are three core areas where disclosure is seriously inadequate where I will attach unless sanctions. These are (1) bank statements; (2) lender statements; and (3) proper details of the funding of the legal costs of the Defendants and their companies. 15. These items are subject to unless sanctions in the usual form.'
I then miss out a passage where the Judge records an alternative submission made by Mr Bailey. The note continues:
'16. The Claimant's application in its substance succeeds. Unless sanctions are on these three areas, not for the undertakings. The Defendants have realised that they need to comply.'
'Upon the First, Second and Fourth Defendants undertaking to the court by their counsel to cause letters substantially in the form of the six letters produced to this court ("the bank letters") to be sent to the Bank of Cyprus and the five further banks referred to therein by 4 pm on 24th June 2013'
and the order provided as follows in para. 1:
'Without prejudice to the effect of and the obligations imposed by the first and second orders generally,' (those are the orders of Mr Justice Arnold dated 9th May and 17th May) 'unless each of the First, Second and Fourth Respondents do provide the information particularised immediately below by 4 pm on 1st July then the First, Second and Fourth Defendants shall be debarred from defending the Applicant's claim and any Defence that they might have filed is struck out.
1.1 Details of any charges or any similar such encumbrances on any real property as defined in para. 8.2(a) of the second order including particulars of the specific interest that is so charged together with the provision of bank or similar such statements covering the period 1st October 2010 until the date of this order in respect of any and all accounts of any borrowings secured against such real property.
1.2 Details of all of the said Respondents' bank accounts whether or not they are in their own name and whether they are solely or jointly owned and whether the said Respondents and each of them are interested in them legally beneficially or otherwise together with the provision of bank or similar such statements covering the period 1st October 2010 until the date of this order in respect of any and all such accounts.
1.3 Sub-paragraphs 1.1 and 1.2 apply also to those assets, liabilities and bank accounts and other statements in respect of Prestige Properties Ltd, Prestige Property Developer (UK) Ltd, Prestige Property Devloper (UK) Ltd, and In and Out Developments Ltd.
1.4 Full particulars as to how the said Respondents are funding the present litigation including but not limited to the identification of the funder, the amount that the said Respondents have spent and are proposing to spend and the details of the bank accounts from which the funds are being transferred to the said Respondents' lawyers.'
'A further disclosure order was obtained in the form of an unless order. R [that is a reference to the Defendants, and I shall continue to refer to them as R in this recitation] failed to comply with that order. The issues were whether (1) R had complied with the unless order and if not (2) whether R should be granted relief from sanctions under CPR Rule 3.9. R submitted that any deficiencies in disclosure were either de minimis or due to factors beyond their control and conjectured that their failure to disclose charge-related documentation was due to the non-cooperation of a bank with which R's relationship had soured. In relation to whether relief from sanctions ought to be granted, R submitted they had taken real and reasonable steps to comply and that there had been no breach of the freezing order and that if there had been it had not been deliberate. Application refused. 1. Although T's [T is a reference to the Claimant] presentation of various deficiencies in disclosure painted an overly-bleak picture of R's conduct and had used inflammatory headings, R was constrained to accept that the disclosure order had not been complied with in a number of respects. For example, the position in relation to the failure to disclose documents in relation to the charges was less than satisfactory. R's conjecture in that regard was insufficient justification for that failure and it was difficult to reach a conclusion other than that there had been substantial failures to comply with the disclosure order. Another example was R's failure to provide proper details and disclosure in relation to the source of funding for the instant litigation. The purpose of that obligation had been to allow the court to be satisfied that the funds used for the instant litigation were from a disclosed source and used for a purpose that was not inconsistent with the freezing order that had been made. Yet another example of non-compliance included a statement of account that had been filed particularly late which in evidence R had suggested was in relation to a company that had not been named in the disclosure order but it later transpired that it was an account held by P [Prestige]. That was an unsettling turn of events which would impact on the question of relief under Rule 3.9. A final material failure to comply was seen in the fact that although a letter that R had sent to financial institutions requested that documents be sent to T, those documents were in fact sent to R. Although a deficiency or default in disclosure had not been established in every case it was not necessary to do so. It was sufficient that T had established that there had been serious failures in complying with the disclosure order. 2. Although the checklist of relevant considerations under the old Rule 3.9 had been removed, they were nonetheless matters which needed to be considered as they enabled the court to assess whether relief from sanctions was appropriate under the new Rule 3.9. It was not correct to say that the removal of that list meant the introduction of a less rigorous regime rather the court should be less ready to grant leave under the new Rule 3.9 which required the court to be fully satisfied that relief from sanctions was thought appropriate and just in the particular case, the court being slow to draw such a conclusion. If non-compliance with the unless order was established, what was required in order to grant relief from sanctions was a material change in circumstances. Tarn Insurance Services Ltd v Kirby  EWCA Civ 19,  CP Reports 22 followed. R's submissions did not amount to a material change of circumstances. R's position in fact had changed but it had worsened. Where they had earlier denied any contractual basis for liability they now admitted the existence of a contract but questioned its effect. Additionally, R had not taken all reasonable steps to secure compliance. If they had taken a rigorous and concerted effort to obtain the charged documentation then that would have been provided and if not obtained the court ought to be notified and an order obtained to ensure compliance. In light of those circumstances where the court had to be cautious to grant dispensation from a court order and where unless order had been made after numerous previous disclosure applications and given the remarkable instances where R had not provided the evidence expected, the court was constrained to refuse relief from sanctions.'
The Defendants' present application
The Claimant's response
'(1) On an application for relief from any sanction imposed for a failure to comply with any Rule, Practice Direction or court order the court will consider all the circumstances of the case so as to enable it to deal justly with the application including the need (a) for litigation to be conducted efficiently and at proportionate cost, and (b) to enforce compliance with Rules, Practice Directions and orders.'
I have been referred to Lord Justice Jackson's interim and final reports which indicate that in proposing the amendment to CPR 3.9 he considered whether to recommend an approach to the effect that non-compliance with deadlines would no longer be tolerated save in exceptional circumstances but concluded (in para. 6.5 of the final report cross-referring to para. 4.21 of the interim report) that he did not advocate such an 'extreme course or any approach of that nature'.
'I am advised by the Fourth Defendant that the account which made the various payments referred to by [the Claimant's solicitor] is an HSBC account controlled by Andrew Cook. As explained elsewhere, Mr Cook uses the account in relation to his business In Control 4U Ltd. The point was highlighted to our former solicitors PG Legal but a decision was taken not to include the account as part of the disclosure exercise plainly because it is not an account controlled by or in which the Defendants or the associated companies retain any interest. Whilst the account was originally operated by the Third Defendant it was assigned many years ago to Mr Cook with the intention that he would act for the Defendants in collecting rents, managing properties etc. The Fourth Defendant believes that Mr Cook uses the account for his own business purposes including to receive pub takings and PDQ payments [credit/debit card payments]. Mr Cook should have changed the name on the account to his own company. It is regrettable and undoubtedly an oversight that he did not do so.'
'What constitutes disclosure to the best of one's ability has to be determined by assessing the particular position and difficulties in which the Respondent is placed at the time when he is required to comply with the order, and then to assess on an objective basis whether he did all that someone in his position could reasonably have done in the time available.'
I consider on the basis of that guidance that the Defendants have complied with the unless order albeit belatedly. They have complied with all the items in the Claimant's Schedule of Deficiencies relied upon in support of the application before Mr Justice Hildyard on 9th August.
'This is alarming. We are now seemingly in breach of the order. I thought that we had everything place. None of us have asked any bank for further information as we believed that we had it all. I am not in front of the computer. What are the items Justin [a reference to Mr Davies, the Defendants' counsel] refers to?'
The response from Mr Fletcher, which is not dated or timed but I have no reason to believe it was not given on or about the same day, is as follows:
'Not in breach as you can't give what you haven't got. Most of the gaps have been plugged. The items referred to are where we are missing historical statements or there's a month gap. The big gaps are Eugene's. When you get a chance to look at the Schedule of Deficiencies you see we have dealt with most of Justin's queries.'
It is the Defendants' evidence that they were advised by their former solicitors that they had in fact complied with the unless order.
'11. When I adjourned the trial on 1st December 2006 I ordered inter alia the Defence of Mr and Mrs Kristaps be struck out unless they complied with certain outstanding costs orders. That order was not complied with and accordingly Ms Skinner's primary submission is the Defence was automatically struck out. On 16th February 2007 I declined to enter judgment against the Kristaps upon condition that the unpaid costs order was complied with within seven days. Since finally the costs were paid within the time specified, Mr Kristaps submits the Defence was reinstated. There is of course a difference between striking out a Defence and entering judgment. Although I did not allow a judgment to be entered, the Defence remained struck out as a result of the earlier unless order.
12. This means that the Claimants will still need to establish their case in relation to each pleaded publication and to adduce evidence in relation to such matters as aggravated and special damages. The plea of aggravated damages in this case largely overlaps with the plea of malice which is an essential ingredient in support of the claim for injurious falsehood. Even though some defences have been struck out, it seems to me that the Defendants would still be entitled to test the case in relation to such matters and in particular to resist allegations of dishonesty introduced in support of the plea of malice. This relies on evidence as to their respective states of mind at various points over a considerable period of time.'
'I would not expect the court to allow Mr Ablyasov to give evidence at the trial from some place of hiding but it is another matter to debar him through counsel from seeking to test the bank's claims and perhaps call other evidence.'
'I bear in mind of course also the consequence of not granting relief to the Defendant which was that he was unable to attend a trial in which the principal plea in issue was whether there had been between him and the Claimant an agreement or an understanding that properties purchased during their relationship together should be jointly owned.'
'The judge bore in mind that the consequence of not giving relief was that the defendant was not able to attend the trial in which the principal plea in issue was whether there had been between him and the claimant an agreement or an understanding that the properties purchased during their relationship should be jointly owned, but of course the defendant was not debarred from attending, only debarred from defending, and he did as I understand it attend the trial.'
'We have the benefit of Judge Marshall's extempore judgment delivered after the trial on 30th January 2007. We must however put it out of our minds. The relevant question that was before Judge Marshall and is now before us is whether on the morning of 29th January 2007 immediately before the trial it was or was not just to relieve Mr Azeez from the bar preventing his further defending and counterclaiming.'
'Since Mr Azeez was out of time for complying with Judge Cowell's unless order, Judge Marshall treated his application as one for relief from the debarring sanction it imposed. Having heard his representation, Judge Marshall gave her reasons for refusing to grant any relief. To do so would involve adjourning the trial and there was no excuse for Mr Azeez's failure to comply with the consent and 'unless' orders. The fact of his bankruptcy played no part in her reasoning. She then proceeded with the trial over the remainder of 29th and 30th January which inevitably involved hearing only Miss Momson's case, being one untested by cross-examination although it was subject to questioning by the judge.'
'33. The circumstances in which a court may be asked to make a decision of this kind are infinitely varied. This is why the Rule instructs the court to consider all the circumstances of the particular case including the nine listed items. On the other hand, the Rule would lose much of its praiseworthy purpose of encouraging structured decision-making if courts did not consciously go through the exercise of considering all the items on the list when determining how on balance it should exercise its discretion. Provided it does so and in this way ensures that the risk of omitting any material consideration is minimised, it is most unlikely that an appeal court will interfere with its decision. If it fails to do so an appeal court may not be able to detect that it has taken all material matters into account and it may be obliged to exercise its discretion afresh for this reason.'
'55. The application of 8th November 2000 was undoubtedly a "second bite at the cherry." It was supported by evidence that was available at the time of the first application. There was no good reason for the failure to place that evidence before the court on the first occasion. We accept the fact that the evidence relied on in support of the application that was made on 8th November could and should have been put before the court in support of the earlier application is material to the exercise of the discretion conferred by CPR 3.9(1). There is a public interest in discouraging a party who makes an unsuccessful interlocutory application from making a subsequent application for the same relief based on material which was not, but could have been, deployed in support of the first application. In some contexts, this is partly because, as Lord Justice Chadwick said in Securum [Finance Ltd v Ashton  Ch 291] there is a need for the court to allot its limited resources to other cases. But at least as important is the general need in the interests of justice to protect the Respondents to successive applications in such circumstances from oppression. The rationale for the ruling in Henderson v Henderson  3 Hare 100 that, in the absence of special circumstances, parties should bring their whole case before the court so that all aspects of it may be decided (subject to appeal) once and for all, is a rule of public policy based on the desirability in the general interest as well as that of the parties themselves that litigation should not drag on forever. The Defendant should not be oppressed by successive suits when one would do. See per Sir Thomas Bingham MR in Barrow v Bankside Members Agency Ltd 1 WLR 257, 260A-D.
56. In our view although the policy that underpins the ruling in Henderson v Henderson has relevance as regards successive pre-trial applications for the same relief it should be applied less strictly than in relation to a final decision of the court at any rate where the earlier pre-trial applications have been dismissed.
57. To take an example, suppose that an application for summary judgment in a substantial multi-track case under CPR 24 is dismissed and the unsuccessful party then makes a second application based on material that was available at the time of the first application but which through incompetence was not deployed at that time, the new material makes the case for summary judgment unanswerable on the merits. In so extreme a case it could not be right to dismiss the application solely because it was a second bite at the cherry. In those circumstances the overriding objective of dealing with cases justly having regard to the various facts mentioned in CPR Rule 1.1(2) would surely demand that the second application should succeed and that the proceedings be disposed of summarily. In such a case the failure to deploy the new material at the time of the first application could properly and proportionately be reflected by suitable orders for costs and if appropriate interest. The judge would of course be perfectly entitled to dismiss the second application without ceremony unless it could be speedily and categorically demonstrated that new material was indeed conclusive to the case.
58. In the present case it is clear that both the district judge and the judge considered that the fact that the application of 8th November 2000 was a second bite at the cherry was decisive. In our view they were wrong to do so. They failed to take into account the evidence of Mr Collins and to consider how cogent the case was for lifting the stay having regard in particular to the provisions of CPR Rule 3.9(1). In short they failed to exercise their discretion at all. In these circumstances it is necessary for us to exercise our discretion afresh.'
'78. Power to relieve from the sanction imposed by an unless order is conferred by CPR 3.9(1). That power also is exercisable for the purpose of furthering the overriding objective. CPR 3.9(1) requires the court to consider all the circumstances of the case including in particular the matters listed under that Rule. The first of those matters is "the interests of the administration of justice". The interests of the administration of justice require the court, when considering whether to relieve from sanction imposed by an unless order, to have regard to the circumstances in which the unless order itself was made.'
'79. The true test on the application for relief from the sanction imposed by the order of April 16th 2008 was whether - notwithstanding that the order was a proper order to make for the purposes of furthering the overriding objective in the circumstances known at that time - it remained appropriate in the circumstances known at the time of the application for relief to allow the sanction to take effect. It can be seen that each of the specific matters listed under CPR 3.9(1) is directed to that test .'
'81. Applying and adopting what I take to be the true test - whether on the basis that the unless order of April 16th 2008 was a proper order to make for the purposes of furthering the overriding objective in the circumstances known at that time, it remained appropriate in the circumstances known on July 2nd 2008 to allow the sanction to take effect - I was (and remain) in no doubt that relief from sanction should be refused. This was a case where Mr Justice Evans-Lone thought it necessary in order to safeguard the proprietary claims which the Tarn administrators had identified to require the provision of tracing information and the delivery (and so preservation) of documents. He was satisfied that Mr Kirby had failed to comply with the requirements imposed by his freezing order of April 8th 2008; and that there was a real danger that he would continue to fail to comply with those requirements when they were incorporated into the freezing order of April 16th 2008. He was satisfied that continued non-compliance should attract the sanction that Mr Kirby be debarred from defending the claim against him. As I have said, his orders of April 8th and April 16th 2008 were not challenged. Unless there had been some material change in circumstances between April 16th 2008 and July 2nd 2008 or some good reason to excuse continued non-compliance, Mr Justice Evans-Lone's order of April 16th 1008 should be allowed to take effect as he intended. There was no material change in circumstances.
82. I would not rule out the possibility that there will be cases in which between the date that the unless order is made and the date that the court has to consider relief of sanction it has become clear that the prospects of a successful Defence of the claim were very much stronger than had been thought, but this not such a case. And there will be cases where there is good reason to excuse non-compliance or where there is good reason to think that a short extension of time will lead to compliance. But there was nothing in the present case to suggest that Mr Kirby made any serious effort to comply with the orders of April 8th and April 16th in the weeks since April 16th or that he would be likely to do so. On a proper appreciation of the evidence his persistent non-compliance was deliberate. In a case of deliberate and persistent non-compliance with orders to provide information and deliver documents made in order to safeguard proprietary claims, the proper administration of justice requires that, save in very exceptional circumstances, the sanctions imposed should take effect. There were no exceptional circumstances in the present case.'
'Judicial time is thinly spread and the emphasis must be, if I understand the Jackson reforms correctly, upon allocating a fair share of time to all as far as possible and requiring strict compliance with Rules and orders even if that means justice can be done in the majority of cases but not all.'
I have also been referred to a passage in Lord Neuberger MR's 18th Jackson Implementation Lecture where he says this:
'The tougher more robust approach to rule compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases. This requires an acknowledgement that the achievement of justice means something different now.'
Conclusion on CPR 3.9
'CPR 3.1(7) gives a very general power to vary or revoke an order. Consideration was given to the circumstances in which that power might be used by Mr Justice Patten in Lloyds Investments (Scandinavia) Ltd v Christen Aga-Hanssen  EWHC 1740 at para. 7'
and I take part of para. 7 from Mr Justice Patten's judgment which starts:
'It seems to me that the only power available to me on this application is that contained in CPR 3.1(7) which enables the court to vary or revoke an order. This is not confined to purely procedural orders. There is no real guidance in the White Book as to the possible limits of the jurisdiction. Although this is not intended to be an exhaustive definition of the circumstances in which the power under CPR 3.1(7) is exercisable, it seems to me that for the court to revisit one of its earlier orders the applicant must either show some material change in circumstances or that the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him. If all that is sought is a reconsideration of the order on a basis of the same material then that can only be done in my judgment in the context of an appeal. Similarly, it is not, I think, open to a party to an earlier application to seek in effect to re-argue that application by relying on submissions and evidence which were available to him at the time of the earlier hearing but which for whatever reason he or his legal representatives chose not to employ.'
Then at para. 40, the Court of Appeal continue:
'We endorse that approach. We agree that the power given by CPR 3.1(7) cannot be used simply as an equivalent to an appeal against an order with which the applicant is dissatisfied. The circumstances outlined by Mr Justice Patten are the only ones in which the power to revoke or vary and order already made should be exercised under 3.1(7).'
'(i) Despite occasional references to a possible distinction between jurisdiction and discretion in the operation of CPR 3.1(7), there is in all probability no line to be drawn between the two. The Rule is apparently broad and unfettered but considerations of finality, the undesirability of allowing litigants to have two bites of the cherry, and the need to avoid undermining the concept of appeal all push towards a principled curtailment of an otherwise apparently open discretion. Whether that curtailment goes even further in the case of a final order does not arise in this appeal.
(ii) The cases all warn against an attempt at an exhaustive definition of the circumstances in which a principled exercise of the discretion may arise. Subject to that, however, the jurisprudence has laid down firm guidances for the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely, normally only (a) where there has been a material change of circumstances since the order was made or (b) where the facts on which the original decision was made were innocently or otherwise mis-stated.
(v) Where the facts or arguments are known or ought to have been known at the time of the original order, it is unlikely that an order can be revisited and that must be still more strongly the case where the decision not to mention them is conscious or deliberate .
(vii) The cases considered above suggest that the successful invocation of the Rule is rare. Exception is a dangerous and sometimes misleading word: however, such is the interests of justice in the finality of the court's orders that it will normally expect something out of the ordinary to lead to a variation or revocation of an order especially in the absence of a change of circumstances.'