Smailes & Anor v McNally & Anor [2014] EWCA Civ 1299

Case No A3/2013/3166-A3/2013/3168[2014] EWCA Civ 1299
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
(MR JUSTICE BIRSS)
Venue Royal Courts of JusticeDate Wednesday, 30th July 2014
Strand
London, WC2
B E F O R E:
LORD JUSTICE RIMER
LORD JUSTICE LEWISON
LORD JUSTICE CHRISTOPHER CLARKE
Between
ROBERT DEREK SMAILES (1)ApplicantSTEPHEN BLANDFORD RYMAN (2)Applicant-v-
Between
JOHN HENRY MCNALLY(1)RespondentGEORGE SCOTT MACLEAN (2)Respondent
(Digital Audio Transcript ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr J Crow QC & Mr S Robins (instructed by Mischon de Reys) appeared for ApplicantMr S Davenport QC & Mr D Lewis (instructed by Isadore Goldman) Appeared for Respondent
J U D G M E N T
[1]The issue on this appeal is whether the claimant joint liquidators of Atrium Training Services Ltd have complied with an Unless Order made by Henderson J in connection with disclosure in an action they have brought against two former officers of the company. Birss J decided that they had. He did not therefore find it necessary to go on to consider whether on the assumption that they had not relief against sanctions should not be granted. We are only concerned with the question of compliance with the order. We are not concerned with the question of relief against sanctions.[2]Birss J described the underlying litigation and its procedural history. The joint liquidators alleged that the former officers, Messrs McNally and Maclean, are liable for fraudulent trading, contrary to section 213 of the Insolvency Act 1986; and trading whilst insolvent, contrary to section 214 of that Act. What is in issue is an alleged underpayment of tax to HMRC amounting to some £45 million. The events in question took place between 2003 and 2005. The action itself began in May 2011.[3]In July 2011 Registrar Barber gave directions by consent which included provision for statements of case, disclosure by 20th January 2012, witness statements, experts' reports and a trial not before 1st November 2012. The timetable slipped substantially and further orders for directions were made including the deferral of the disclosure date some three times. On 18th April 2012 Registrar Barber gave fresh directions with the former officers' defences to be served on 20th April, subject to an Unless Order, disclosure by all parties to take place on 8th June 2012 and a pre-trial review in January 2013. The trial was then due to take place in February 2013. The former officers gave disclosure by the due date. No complaint is made about that.[4]Although the liquidators also served a purported disclosure list on that date, they had made no attempt to select what documents might be relevant to the action but had, in the judge's words, listed "every conceivable document" offered simply by reference to the boxes in which they were stored.[5]It is common ground that exercise failed to comply with the CPR. As Jacob LJ said in Nochia Corporation v Argos Ltd [2007] EWCA Civ 741, [2007] Bus LR 1753, massive over disclosure carries a substantial risk that the important documents will be overlooked. Mischon de Reya, the former officers' solicitors, raised concerns about the way in which the disclosure process had been carried out.[6]In June 2012 the former officers applied for an Unless Order requiring the joint liquidators to carry out a reasonable search in accordance with CPR Part 31.7 and to serve a list of documents complying with CPR Part 31.10. They also asked for an affidavit from the liquidators explaining what search had been carried out and giving details of the chain of custody of documents.[7]In response to that application Mr Smailes, one of the joint liquidators, made a witness statement dated 21st November 2012. He said in that statement it was his position that full disclosure of all relevant documents had been given.[8]Despite that evidence the liquidators' solicitors conducted an extensive further search about which Mischon de Reya had not been informed. That search had begun in August 2012 but had not completed by the time the application came before Henderson J on 28th November.[9]The parties had by then managed to agree a new order, which required the liquidators to conduct a search for documents and to provide the former officers with a list by 2nd April 2013. The order was not in the "Unless" form. The trial date was vacated and a direction given for a trial to take place on the first available date after 4th October 2013.[10]In giving judgment on the question of costs Henderson J said:
"In my view this is a case where actions speak louder than words and the actions of the liquidator since August do appear to me to evince a recognition of wholesale inadequacy in the way in which schedules C and D have previously been dealt with."
[11]He did not therefore accept the liquidators’ stated position that all relevant documents had been disclosed.[12]The 2nd April was looming and on 28th March 2013 the liquidators applied for a further extension of time and by way of cross application the former officers applied for an Unless Order. Those applications came before Henderson J on 22nd May leading to a judgment on 7th June 2013.[13]On that occasion Henderson J made the Unless Order under appeal. It is not suggested that he was wrong to make the Unless Order. In view of what he described "the lamentable history" of disclosure and his judgment that even after November 2012, when there had been a change of solicitors the liquidators' new solicitors, Isadore Goldman & Co, had shown insufficient urgency in "getting a grip on the situation". He said:
"The main factors which have weighed with me in coming to this conclusion are: (a) the long and unsatisfactory history of disclosure in the Atrium proceedings before November 2012; (b) the deficiencies to which I have drawn attention in the Liquidators' attempts, through Isadore Goldman, to comply with the November order; and (c) the increased emphasis which the court is now obliged to accord to compliance with court orders under the amended overriding objective."
[14]The relevant parts of the order that he made were as follows:
"(1) Unless the Liquidators comply with paragraph (2) below, the Liquidators' claims against the claims the Respondent in proceedings No 3878 of 2011 and No 3879 of 2011 ('the Atrium Proceedings') shall be struck out without further order of this Court and the Respondents shall be at liberty to enter judgment for their costs such costs to be the subject of a detailed assessment if not agreed. (2) In the Atrium Proceedings, the Liquidators shall by 4.00 pm on 28 June 2013. i) conduct a search for documents falling within CPR 31.6, in compliance with the requirements set out in CPR 31.7; and. ii) provide Mr McNally and Maclean and Mr Dick with a list of documents, identifying the documents located as a result of the search described above, in compliance with the requirements set out in CPR 31.10. (3) Requests for inspection (or copies) of documents shall be made by 4.00 pm on 5 July 2013 and complied with by 4.00 pm on 12 July 2013."
[15]This was the sixth disclosure deadline that had been set.[16]CPR 31.6 describes standard disclosure in the following terms:
"31.6 Standard disclosure requires a party to disclose only– (a) the documents on which he relies; and (b) the documents which – (i) adversely affect his own case; (ii) adversely affect another party’s case; or (iii) support another party’s case; and (c) the documents which he is required to disclose by a relevant practice direction."
[17]We were told there is no relevant Practice Direction, so that the only category of document with which we are concerned are those in sub rules (a) and (b).[18]CPR 31.7(1) says:
"(1) When giving standard disclosure, a party is required to make a reasonable search for documents falling within rule 31.6(b) or (c)."
[19]There is, on the face of it, a slight mismatch between 31.7(1) which requires a search to be made only for documents falling within 31.6(b) and (c) and 31.6 itself which requires under sub paragraph (a) a party to describe the documents on which he himself relies. That discrepancy (such as it is) is however ironed out by paragraph 1.2 of Practice Direction 31A which provides:
"In order to give standard disclosure the disclosing party must make a reasonable search for documents falling within the paragraphs of rule 31.6."
[20]It was therefore common ground that documents falling within rule 31.6(a) were within the scope of the Unless Order.[21]It is also common ground that the liquidators had in fact in their possession highly relevant documents known as "scripts". Scripts are weekly reports of the amounts paid to individual operatives, setting out gross pay for each operative and where the individual was an employee, giving details of the deductions for PAYE and NIC; and, when the individual was billed through a service company, details of gross pay and deductions of VAT and corporation tax. These were secondary documents, in the sense they had been complied from expenses claims, time sheets and load sheets. Since the underlying claim in the action is based on an allegation of under payment of tax documents showing what tax was paid in respect of what are obviously vital.[22]Mr Gibbs of Isadore Goldman had spoken to Mr Meadows, an administrator in the liquidators' firm. That conversation took place on 25th January 2013, nearly 6 months before Henderson J made the Unless Order. He asked whether the liquidators had any documents. Mr Gibbs undertook a search of his office and located some documents. These included copy bank statements and copy schedules. These schedules were the scripts. However at the time Mr Meadows believed that the originals of these copies were in the possession of the liquidators' former solicitors, Howes Percival, or their storage agents and that Mr Gibbs would be collecting both together. He therefore said that he did not believe that the liquidators had anything other than copies of documents that were either with the solicitors or the storage agents. Mr Meadows was wrong. The scripts in the liquidators' offices were the only copies that have so far been found.[23]The liquidators envisaged giving disclosure electronically. Although the underlying documents were not held in electronic form but in hard copy form, the idea was to scan the relevant documents into a database and then to interrogate the database by the use of key words. Mr Gibbs described the process in his witness statement dated 14th August 2013. The first step was to assess the volume and nature of the hard copy documents and obtaining a copy of the non selective comprehensive list ("the HP list") which had already been given to the defendants by Howes Percival. The accuracy of the HP list was to be verified by spot checks. There is no reason to suppose that the HP list was inaccurate. There was then an attempt to agree a method of disclosure with the defendant's solicitors.[24]The next two steps in the process are critical for present purposes:
"22.4. Identifying and removing from documents to be disclosed those boxes of documents that contained an HP list which were of no relevance. 22.5. Scanning and upholding of the remaining hard copy documents to an e-disclosure database which was undertaken by Unified."
[25]Unified was an external provider. The scanning was to be done by means of optical character recognition (OCR) software and the database was then to be interrogated by the use of the key words. Mr Gibbs went on to explain that among the documents removed from those to be uploaded were archive boxes containing time sheets and expenses claims or load sheets. Mr Gibbs explained that these categories of document were excluded from the uploading exercise because:
"These figures were recorded in spread sheets produced by the company for this purpose referred to as scripts addressed further below."
[26]Thus the deliberate exclusion of these documents was justified on the basis that the relevant information was to be be included in the scripts. The remaining documents were then delivered to Unified for uploading. As it turned out none of the scripts were delivered to Unified. Consequently none were uploaded and none were listed in the disclosure list.[27]Mr Gibbs knew the scripts were vitally important documents. In the first place the liquidators had placed very heavy reliance on them in seeking a freezing order at an earlier stage in the litigation, which resulted in the giving of undertakings by the defendants in terms of the freezing order. They had exhibited a sample of them.[28]In the second place the former officers' solicitors, Mischon de Reya, had been assured that they would be included in the disclosure list but they were not. There had been correspondence about the disclosure of the underlying time sheets and other documents which Mischon de Reya wanted to see. Isadore Goldman's response was that because the scripts were to be disclosed the underlying documents were irrelevant and disclosure would be disproportionate although they did offer to disclose a sample.[29]In his letter of 13th June 2013 Mr Gibbs said:
"In order to be as co-operative as possible however, our clients are prepared to make disclosure of the load sheets which were used to compile the scripts for the sample as referred to above to in Ms Whiting's affidavit. As referred to above each and every script in the possession or control of our client will be disclosed."
[30]Thus what Mr Gibbs had done was to have deliberately excluded the underlying documents on the basis that the information had been contained in the scripts without checking that the scripts had in fact been given to Unified for uploading. Nor does it appear that following the order of 7th June to conduct a search any further inquiry was made of the liquidators or their employees to ascertain whether there were any relevant documents in their possession. Put bluntly no further search of the liquidators’ own offices was carried out.[31]The disclosure list was served on 27th June. It is in form N265. It stated that a reasonable search had been carried out and also contained the statement:
"I certify that I understand the duty of disclosure and to the best of my knowledge I have carried out that duty. I further certify that the list of documents set out in or attached to this form is a complete list of all documents which are or have been in my control and which I am obliged under the order to disclose."
[32]Mischon de Reya made a number of complaints about the form and contents of the list in their letter of 5th July. There were some 18 complaints, of which only three were in the end pursued to a hearing, including the complaints about the absence of the scripts. When Mischon de Reya pointed out the omission of the scripts from the disclosure list Mr Gibbs contacted Unified. He said it was apparent from a review of the scanned documents in the database that the scripts had not been uploaded. That is not surprising because they have never been delivered to Unified. Mr Gibbs discovered that by 19th July. He then made enquiries of liquidators' former solicitors Howes Percival on 22nd July and drew a blank. So he contacted the liquidators' own offices and copies of the scripts were located and immediately sent to Unified for scanning and uploading. That was completed by 26th July.[33]It is important to note that as I have said, so far as the evidence goes no other copies of the scripts have been found.[34]The whole process, once Mr Gibbs discovered the scripts had not been sent to Unified, took two or three phone calls over the course of a few days. As Mr Gibbs put in paragraph 93 of his witness statement:
"The Scripts and Bank Statements had been identified as part of the search and that there had been an oversight in the delivery of the documents to Unified for scanning the production of the list."
[35]In addition to the absence of the scripts the liquidators served a supplemental disclosure list on 10th September 2013 which revealed the existence of a further 7,000 documents including a large number of bank statements. The former officers rely on this too as showing that a reasonable search had not been carried out before the service of the disclosure list on 8th June 2013.[36]In deciding whether the search is a reasonable search CPR Part 31.7(2) provides:
"(2) The factors relevant in deciding the reasonableness of a search include the following – (a) the number of documents involved; (b) the nature and complexity of the proceedings; (c) the ease and expense of retrieval of any particular document; and (d) the significance of any document which is likely to be located during the search."
[37]Taking these factors in turn: (a). There are 152 scripts. That is not a large number particularly in the context of some 22,000 pages of documents uploaded to the database. (b). The claim is one for £50 million or thereabouts, based on allegations of dishonesty and fraud arising out of events that are a decade old. The liquidators had already been criticised for the previous failings and disclosure. There had been a number of slippages in the timetable and they were under the shadow of an Unless Order, so it was obviously important to make sure that the disclosure list was accurate. (c). The scripts were in fact in hard copy form in the liquidators' own offices. Once Mr Gibbs realised that they had not been provided to Unified, it was the work a matter of a few phone calls and a few days to recover them. (d). This is not a case of finding a significant document, even a smoking gun, on the off chance. Mr Gibbs knew that the documents existed because that was the very reason why he did not deliver the time sheets and so forth to Unified. He also knew that the scripts were the very documents on which the liquidators relied in advancing their case. They were and are central to the litigation. He also promised Mischon de Reya that they would be disclosed.[38]In short, in my judgment, what it comes to is this. Mr Gibbs knew about the importance of the scripts and knew that their disclosure had been promised to Mischon de Reya, yet he failed to check that they had been delivered to Unified. That they had not been uploaded was apparent on checking the database; and that should have alerted him to the need to find them. In my judgment he made no search for these critical documents let alone a reasonable search.[39]Mr Davenport stressed the duty of the parties in co-operate in making disclosure. But I do not see that co-operation is relevant to the conduct of a search which necessarily is carried out by each party, on his own, amongst his own documents. Nor can I see what relevant co-operation is required for the documents to have been removed from the liquidators' offices and delivered to Unified for uploading.[40]I agree with the liquidators that the question whether the Unless Order was complied with is a case management decision in the sense that it is a procedural decision. But I do not agree that it is discretionary: either the order was complied with or it was not. That is a question of interpretation of the order and the rules and their application to the facts. In my judgment the omission to list the scripts is a clear case of failure to comply with the Unless Order.[41]How then did the judge reach the contrary conclusion? The judge began by correctly listing the factors in CPR 31.72. He said at 37:
"A search not carried out in good faith would not be a reasonable search. However a search which was conducted in good faith and was fair and proportionate to the case in hand, given the number of documents involved, the nature and complexity of the case, the ease and expense of retrieval and the significance of any document likely to be located, would be a reasonable search and would be one which complied with the order."
[42]Thus far I agree. He then referred to observation of Morgan J in Digicel (St Lucia) Ltd v Cable & Wireless [2008] EWHC 2522 Ch [2009] 2 All ER 1094, at 46, that the rules do not require that "no stone be left unturned". I agree with that too. But that observation was made in the context of vast electronic disclosure where there was no identified target document. Where, as here, the existence of the documents and their relevance has already been identified, I do not think this observation applies.[43]It is in this point in my judgment that the judge began to go wrong. He went on to say that an allegation that a reasonable search had not been carried out could be established by inference. In so doing he referred to the decision of this court in Realkredit Denmark AS v York Montague Ltd [1999] CPLR 272. However, that was a very different case. It was a case in which the disclosing party had put in evidence on affidavit to the effect that it had no relevant documents other than those that it had discovered by list. That was disputed by the other party which pointed to documents that it would have expected the disclosing party to have had. The disclosing party accepted that the evidence of the other party gave good grounds for an application for specific discovery but did not concede that any further documents in fact existed. It was in that context, and in particular in the context that there might be disputes about relevance and necessity, that the court referred to a list served in good faith. They distinguished the case before them from one in which it had been admitted that the list was deficient.[44]Realkredit was decided under the rules of the Supreme Court but it was approved in the post CPR era in Morgans v Needham (28th October 1999). Stuart-Smith LJ held in that case that the Unless Order in that case was "hopelessly clear and imprecise" because it left it up to the defendant to decide what documents he needed to disclose in order to prove his counterclaim. He held that the order ought not to have been made in that form and ought not to be enforced by striking out. He summarised the duty cast upon the disclosing party as follows:
"What a party has to do is to decide what documents are relevant to the matters in issue and disclose them."
[45]The judge rejected the argument that the copies held at the liquidators' offices should have been disclosed as copies in themselves. He said at 42:
"I agree that the disclosure obligation applies distinctly to all copies of documents in a party's control, which I will call 'original' copies, but it does not apply to copies made for the purposes of the dispute. As I understand the evidence before me, the copies held by Mr Meadows were not what I have called original copies, they were simply copies which had been created in the course of the proceedings or for the purposes of them."
[46]I cannot see Mr Meadows in fact did say that. But even if they were copies made for the purposes of litigation, they are the only surviving copies. CPR Part 31.9 says that a party need not disclose more than one copy of a document, the copies held at the liquidators' offices are the only copies that have ever been disclosed.

The judge recounted at 43:

"This is a substantial case involving very serious allegations. It justifies an extensive disclosure exercise from the point of view of proportionality. However even looking at the exercise with the benefit of hindsight, I can see no justification for saying that it was not a reasonable search. It was very extensive. It was plainly carried out in good faith. It was explained in detail in advance to Mishcon de Reya and indeed was based on a methodology which had been ventilated in court before Henderson J when the unless order was made. It was completed within the time specified by the order. It is true that two classes of relevant documents were missed but there is no suggestion that this was the result of bad faith and I am satisfied that the fact these two classes were missed does not support an inference that the exercise itself was not a reasonable search. In my judgment the liquidators are not in breach of the order of 7th June 2013 on that ground."
[47]I do not understand why the judge thought that any inference is necessary. We know that the list did not list the scripts even though their existence was known and their relevance was also known. This is not therefore a case in which there is any dispute about the existence of documents or the relevance of documents known to exist. We also know that other underlying material was excluded from the database precisely because Mr Gibbs intended to disclose the scripts. We also know from Mr Gibbs' evidence that following the order of 7th June he carried out no further search for the scripts. In so far as the judge relied on Mr Gibbs' conversation with Mr Meadows many months earlier, it seems to me to be irrelevant in the steps that were required to be taken by the Unless Order. But even if that conversation were relevant, the fact remains that Mr Gibbs did not check to see whether Mr Meadows was correct.[48]This is also a case in which Mr Gibbs had already decided what documents were relevant to the matters in issue. They included the scripts. Thus, as Stuart-Smith LJ said, he had a duty to disclose them but he did not do so. This, then, is quite unlike the usual case in which one party alleges that the other party has more relevant documents to disclose but the other denies that. Here it is admitted that relevant and indeed very important documents existed; were in the possession of liquidators; had been promised, and yet were not disclosed. In those respects this case is almost unique.[49]In coming to his conclusion the judge did not go through the factors listed in CPR 31.7(2). In addition some of the factors that he mentioned are, in my judgment, irrelevant. For example, the fact that the methodology has been ventilated in court and explained in detail could only be of any relevance if the database had in fact contained what it was supposed to contain. If the database was defective, no method of interrogating it would have produced the relevant results. Second, the absence of bad faith does not necessarily mean that the order was complied with. A party may conduct a search in good faith but nevertheless fail to comply with his obligation under Part 31.7. As the judge recognised, what is or is not a reasonable search is something that the court must decide. It is not simply left to the discretion of the party concerned.[50]Whether the party has acted in good faith may be highly relevant to the question whether he has made the right decision about what ought to be disclosed. He has what in another context might be called a margin of appreciation. That is the sort of consideration that Morgan J had mind in Digicel. But that is not this case. Mr Gibbs had decided that the scripts ought to be disclosed.[51]Whether the party has acted in good faith may also be relevant to the question whether relief against sanctions should be granted but the judge never got to that stage. I think also that the judge ought to have considered the scripts separately from the remaining documents that were disclosed by the supplemental lists in relation to which different considerations may apply.[52]An alternative view might be that the liquidators had already located the scripts as a result of a previous search which had enabled them to refer to them in their evidence adduced in support of a freezing order. Mr Meadows appears to have known that copies of them were located at the liquidators' offices. But in that event the liquidators would have failed to comply with the second part of the unless order, namely to provide the former officers with a list of documents located as a result of the search. Either way I see no escape from the conclusion that there was a breach of the Unless Order.[53]The liquidators' skeleton argument suggested that the disclosure statement was conclusive. That stated that all relevant documents had been disclosed and the argument is that the only way of challenging that is by way of an application for specific disclosure, rather than the allegation that the Unless Order had not been complied with. They referred to Frankenstein andGavin's House-to-House Cycling Cleaning and Insurance Company [1897] 2 QB 62. But that submission was not pressed in oral argument and, in my judgment, rightly so. Although the court cannot go behind the contents of an affidavit or a disclosure statement simply on the bases of a clash of affidavits, where, as here, it is clear from all the surrounding circumstances and indeed from the admission of the disclosing party itself that documents whose existence was known and whose relevance was conceded have not been disclosed, the disclosure statement cannot be treated as conclusive. There is here no conflict of affidavits or evidence. It is clear from Mr Gibbs' own evidence that the scripts were accepted to be relevant documents and were not disclosed.[54]When the scripts were ultimately disclosed, the list in which they were disclosed also disclosed a large number of other documents which had come to light. Mr Crow relied on the late disclosure of those documents as itself showing there had been a breach of the Unless Order. I find that submission less persuasive. As Stuart-Smith LJ said in Morgans v Needham, it does not follow simply because there was a further order for discovery made there was non-compliance with the first order. We know very little about the provenance or status of the original documents that were disclosed in the supplemental list. I do not rest my decision on that ground.[55]Mr Davenport drew our attention to the recent decision of this court in Denton and TH White Ltd [2014] EWCA Civ 906 and in particular to what the court said about satellite litigation and non co-operation in paragraphs 39 to 45. One of the things that the court said was that:
"... it is wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage."
[56]I entirely accept that, but that was said in the context of twin objectives of compliance with orders and co-operation.[57]In the present case six dates for disclosure had been set. None had been complied with. The trial date had already been vacated twice. A freezing order or its equivalent has been in place against these defendants for over 3 years. I do not think that it is possible to characterise what the former officers had done as sheer opportunism.[58]For the reasons I have given I would allow the appeal.

LORD JUSTICE RIMMER: We have earlier given our judgments allowing the appellants' appeal. The consequence of that is that the Unless Order made by Henderson J on 7th June 2013 takes effect according to its terms, which is that under paragraph 1(1) of that order the proceedings brought by the liquidators stand struck out without further order of the court and the respondents are at liberty to enter judgment for their costs, such costs being subject to detailed assessment if not agreed. That is the ordinary effect of the order and the consequence of our allowing the appeal is that the order takes such effect.

[60]That means, in my judgment, that the proceedings in consequence of our order have reached a final determination within the meaning of the undertakings given by the appellants to the court as recorded in an order dated 10th October 2011, with the consequence that their undertakings have either already lapsed or if not must be regarded as lapsing or being impliedly released as from today.[61]The further matters that we have to deal with are costs. The first matter is the appellants' costs of the appeal. It is not in dispute that they should be entitled to those costs and we so order; that is we order the respondents to pay the appellants' costs on the standard basis to be assessed if not agreed.[62]The point has arisen in the course of argument as to whether we should having regard to paragraph 9.6 of Practice Direction 44 in the CPR, impose some sanction as regards those costs on the successful appellants by reason of the fact that they have not, even though this appeal has been disposed of within a day, produced a schedule of their costs so as to enable a summary assessment to be made. That paragraph, paragraph 9.46 confers a wide jurisdiction on the court but I would not exercise any of the powers that it confers.[63]Mr Crow has persuasively argued that his clients and their advisers reasonably foresaw that this appeal would probably take a full day to argue and that it was likely that judgement would be reserved, the appellants having three separate points they wish to advance. In the event the court decided the appeal on the basis that the appellants were entitled to succeed on just one ground and so the appeal was in the event disposed of comfortably within the day. But I would accept Mr Crow's submission that it was reasonable for counsel and solicitors and clients to foresee that that is not what was going to happen and that it in the ordinary course be open to the appellants, if they won, to produce a costs schedule following the delivery of a reserved judgment.[64]As it seems to me in the particular circumstances I have described it would be unfair upon the appellants to deprive them of any part of their costs of the appeal or to impose any sanction in respect of the costs of the assessment because of their failure to submit the schedule. I would not therefore do that and would simply award the appellants the costs of their appeal to be assessed if not agreed on the standard basis.[65]As for the costs awarded by Birss J by his order of 16th October, the relevant provisions are in paragraphs 9 and 10. He ordered the appellants to pay the respondent's costs of the application or applications before him and ordered them to make an interim payment of £95,000 which has been paid.[66]I would set aside those orders and order the respondents to pay the appellants' costs of the applications before Birss J. Mr Davenport submitted that we should not disturb Birss J's order because although the appellants advanced some 18 grounds in their evidence as to why the sanction imposed by the Unless Order had bitten, in the event counsel then arguing the case confined himself to just two submissions, including the one which has succeeded before this court today. Mr Davenport's submission was that because a large number of grounds had been flagged up but only two in the event were argued we should leave this order by Birss J undisturbed. I would not accept that submission. We do not know precisely what happened at the hearing before the judge but we do know that the argument was tailored down to the advancing of two main points, one of which we have considered well founded. The appellants were therefore entitled to succeed before Birss J but in the event did not. In my judgment it would be appropriate for the respondents to pay the appellants' costs of the applications before the judge.[67]As regards the £95,000, I would order that that is repaid to the appellants by 4.00 pm 14 days from today, together with interests from the date of payment to the date of repayment at 1% above base rate.[68]The next matter to which I should refer is that Mr Crow has asked that we should make an order on payment of account of the appellants' costs of the proceedings in the sum of £1 million. The estimated costs of the appellants of the proceedings being we are told something in the order of £2.5 million. We have before us no schedule supporting the figures said as to justify and interim payment. Mr Davenport opposes it and, in my judgment, rightly so. Given the complete absence of any supporting information, it would not be right for this court to make an interim payment of that order. It would in principle be open to the appellants to apply for an interim certificate in the course of the assessment of their costs before the costs judge.[69]The only remaining matter with which I think need to deal is that Mr Davenport has offered an undertaking to the court that the liquidators will issue an application for relief from sanctions or alternatively and/or will restore the application for relief from sanctions which they have issued on 15th August 2013, within 28 days of today's date. He invites us to accept that undertaking and on that basis to stay various of our orders.[70]I would not accept the undertaking and as follows I would not impose any stay on the orders which I would make. It seems to me that if the liquidators wish now to make or restore an application for relief from sanctions. They may or may not be entitled to do that. But that is a matter for them but as the proceedings have come to an end in the way I have described, I would not consider it appropriate to impose stays on the orders which in my judgment ought properly to be made.

LORD JUSTICE CHRISTOPHER CLARKE: I agree.

LORD JUSTICE RIMER: I also agree.

Cited in 2 later judgments