Thevarajah v Riordan & Ors [2013] EWHC 3179 (Ch)

HC13B01932.[2013] EWHC 3179 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Rolls Building,, 110 Fetter Lane,
London EC4A 1NL.
Thursday, 10 th October 2013.
Before
MR ANDREW SUTCLIFFE QC(Sitting as a Deputy Judge of the High Court Chancery Division)
Between
THAVATHEVA THEVARAJAHClaimant- v -
Between
JOHN RIORDANDefendantEUGENE BURKEDefendantPRESTIGE PROPERTY DEVELOPER UK LIMITEDDefendantBARRINGTON BURKEDefendant
MR JAMES BAILEY (instructed by Olephant Solicitors, 4 Snow Hill, London EC1A 2DJ)appeared for Claimant.MR SIMON DAVENPORT QC and MR DANIEL LEWIS (instructed by Moon Beever Solicitors, Bedford House, 21a John Street, London WC1N 2BF) appeared for theDefendants.
Digital Tape Transcription by:John Larking Verbatim Reporters(Verbatim Reporters and Tape Transcribers)Suite 91, Temple Chambers, 3-7 Temple AvenueLondon EC4Y 0HP.Tel: 020 7404 7464 Fax: 020 7404 7443 DX: 13 Chancery Lane LDE
JUDGMENTThursday, 10 th October 2013.JUDGMENT:THE DEPUTY JUDGE:IntroductionDate 2013-10-10
[01]This case has an unusual procedural history. It was listed for a speedy trial with a trial window opening on 1st October this year and closing on 31st October. After close of business on Tuesday 1st October the First, Second and Fourth Defendants (‘the Defendants’) – the third defendant company not being represented, playing no part in the proceedings and only being joined so as to be bound by the result – served notice of change of solicitors and the following day those new solicitors served an application on the Defendants’ behalf asking for the following relief. First and foremost, relief from the sanction in the order of Mr Justice Henderson dated 21st June imposed by the order of Mr Justice Hildyard dated 9th August and consequential orders providing for the Defence and Counterclaim to be restored and further Directions to trial, which will inevitably have to be adjourned if the court accedes to this application. Second, that the freezing injunction dated 17th May 2013 be varied so that the value of assets to be the subject of the injunction are reduced from £4.1 m to £2.5 m and that the Defendants are permitted to spend a reasonable sum on legal advice and representation.[02]This application was listed to be heard on the first day of trial, namely, Monday 7th October. I have had the benefit of helpful submissions over two days from James Bailey on behalf of the Claimant and Simon Davenport QC leading Daniel Lewis on behalf of the Defendants. Before dealing with the issues that arise on the application it is necessary to describe briefly what the case is about and then to set out in some detail the procedural background to the application.

The background facts and allegations

[03]The Claimant is a businessman said to have particular expertise in the travel industry. He also invests in property. The Defendants are property developers who appear to specialise in the development of public houses. The Fourth Defendant was declared bankrupt in May 2001. In February 2002 his discharge from bankruptcy was suspended indefinitely and he remains an undischarged bankrupt. In August 2008 he was disqualified from acting as a director for 10 years. The Claimant alleges that the Fourth Defendant was a shadow director of the Third Defendant at all material times up to 28th March 2013, which is when the Claimant became sole director of the Third Defendant.[04]The Claimant’s case relies on three oral agreements said to be evidenced in writing or by part performance. He says he agreed to purchase a property known as The Jewel, together with a 50% interest in another property called The Devonshire Castle, both being public houses, from the Defendants for a consideration of £2m and a pizzeria valued at £250,000, making a purchase price of £2.25m in money or money’s worth. He says the properties were to be free of encumbrance or the purchase price otherwise adjusted. The Jewel was not to be purchased directly but rather the Claimant was to purchase the entire issued share capital of the company that owned it, namely, the Third Defendant. The interest in the Devonshire was similarly to be acquired through a corporate vehicle but not the Third Defendant. The total purchase price was to be split £1.5 m as to The Jewel and £750,000 for the 50% interest in The Devonshire. As Mr Bailey pointed out on behalf of the Claimant, this agreement created what he described as something of a Gordian knot within the litigation. The Third Defendant owns not only The Jewel but also a public house called The Holloway Castle, referred to by the parties as The Castle, which has never been the subject of the sale agreement. The Castle was to be transferred out of the Third Defendant to the other Defendants at completion. However, the Bank of Cyprus has lent substantial sums to the Third Defendant and these sums are secured on both The Jewel and The Castle. The Bank has not to date been prepared to separate the properties, the lending and the securities.[05]The Claimant says that he took steps in part performance of whatever agreement was entered into in the period from October 2011 until around the middle of 2012. During that time the Claimant paid over £1.572m in cash and in tranches to the Defendants as part payment. He says he entered into what is called “the first collateral contract” in December 2011. By this agreement the First and Second Defendants provided him with 50% of the shares in the Third Defendant and agreed that he would be a director of that company. The Claimant says that in February 2012 the agreement was varied such that he would also acquire 50% of the issued share capital in a corporate vehicle that would own a further public house called The Jester. The additional purchase price was to be £500,000. The Defendants permitted the Claimant to take possession of The Jewel and the Claimant says he has spent about £600,000 renovating it. He says that he presently trades an established and profitable pub and restaurant business from The Jewel.[06]By the beginning of May 2012, on the Claimant’s case, the agreement as varied had still only been partially completed. On 25th July 2012 he says that he entered into what is called “the second collateral contract”. This provided a scheme by which(i) the balance of the purchase monies could be paid over to the Defendants in respect of The Jewel and(ii) the Claimant would become sole shareholder and director of the Third Defendant. It is the Claimant’s case that by 10th August 2012 the Defendants had put themselves in breach of the second collateral contract by having the First and Second Defendants appear as directors of the Third Defendant at Companies House. Matters came to a head in February 2013 when the Claimant discovered that he did not appear to be the sole director of the Third Defendant and the Defendants claimed that the agreed purchase price for The Jewel alone was in fact £2.5 m and refused to complete the sale on the terms alleged by the Claimant.[07]The Defendants deny the contractual arrangements set out in the Particulars of Claim contending instead that the only agreement between the Claimant and the Defendants was for the indirect purchase of The Jewel. They say that the Claimant would purchase the entire share capital of the Third Defendant, which would have The Jewel as its sole asset, for £2.5 m, comprising cash of £1.7 m and the assumption of agreed borrowings of £830,000, and that on entering into the agreement the Claimant would be appointed a director of the Third Defendant and receive a 50% shareholding and on completion the Claimant would become sole director and sole shareholder of the Third Defendant. The Defendants further allege that the Claimant is in breach of this agreement having failed to pay the sum of £1.7 m in cash (having only paid £1.572 m) and having failed to accept the Bank’s mortgage offer to assume responsibility for the Third Defendant’s borrowing in the agreed sum of £830,000 (thereby having failed to service the Third Defendant’s borrowings) and also having purported to be the sole director of the Third Defendant.[08]It is apparent from this summary of each side’s case that whilst certain facts are not disputed (such as the Claimant’s payment to the Defendants of £1.572 m), there is a substantial dispute as to what was agreed. The court’s task at trial will be to work out whether any agreement was in fact reached and if so what the terms of that agreement were, and if no agreement was reached, what the consequences of such a finding should be. It is a dispute which, had it proceeded in the ordinary way, would clearly depend very substantially upon the court’s conclusions as to the parties’ witness evidence. However, this case has not proceeded in the ordinary way and I need to summarise the procedural background to the application now made by the Defendants.

The procedural history

[09]On 22nd March 2013 the Claimant issued a Part 8 claim together with an application notice by which he sought declarations that he was the proper director of the Third Defendant and injunctive relief to prevent the Defendants holding themselves out as directors. His application was heard by Mrs Justice Proudman on short notice to the Defendants and adjourned until 28th March with interim injunctive relief ordered in the meantime. On 28th March the matter came before Mr Justice Sales and ultimately the Defendants consented to an order that the Claimant should be sole director of the Third Defendant until trial or further order.[10]In April 2013 the Claimant became aware of commitments made by the Defendants to a company called Southern Territory Ltd. This company through its directors a Mr Alexandrou and Mr Leonidas had, prior to the Claimant’s involvement with the Third Defendant, had dealings with the Defendants and agreed to provide a £1.1 m guarantee to secure funding from the Bank of Cyprus to enable the Third Defendant to purchase The Jewel and The Castle. Until the security was released, this company was to become temporary owner of the same shares in the Third Defendant that were later in part transferred to the Claimant. Messrs Alexandrou and Leonidas were also to be made the directors of the Third Defendant and were not aware that this position had changed until proceedings were commenced by the Claimant.[11]It was this development together with the awareness of the Fourth Defendant’s undischarged bankruptcy and his disqualification from acting as a director that led to the Claimant making an application without notice for a worldwide freezing order to Mr Justice Arnold on 9th May together with an order for the provision of information by the Defendants as to their assets and liabilities. The Claimant showed Mr Justice Arnold a recent Court of Appeal decision in the case of London and Quadrant Housing Trust v Prestige Properties Ltd [2013] EWCA Civ 130 where Lord Justice Kitchin said of the Second and Fourth Defendants that they deliberately sought to obscure the truth about Prestige Properties Ltd’s financial position, gave brazen and dishonest evidence and failed to disclose anything about the value of the property interests which any of them held. In that London and Quadrant case, which did not involve the First Defendant, Judge Cryan, sitting in the Clerkenwell and Shoreditch County Court, had made a freezing injunction following judgment and in support of an order for costs. He found the allegations and assertions made by the Second and Fourth Defendants in their evidence to be ‘quite brazen in their dishonesty’ and that they told ‘preposterous lies’ which formed the basis of the Defendant company’s defence to the claim, and he made an indemnity costs order against them personally. The Defendants complained to the Court of Appeal that the freezing order contained no maximum sum and said that the judge had erred in failing to impose a financial limit in his order. The Court of Appeal rejected this complaint on a number of grounds including the fact that the Defendants had raised no objection when the order was made and that the injunction was only directed to the freehold or leasehold property in which the Defendants had an interest.[12]On the without notice application on behalf of the Claimant, Mr Bailey, relying on the London and Quadrant decision, sought to persuade Mr Justice Arnold to grant a freezing injunction without a financial limit. Mr Justice Arnold refused to do this, and limited the frozen sum to £2.5 m. However, he was persuaded to make an order at para. 9 of the injunction against the Defendants and four companies in which they had an interest requiring them by 4 pm on 13th May 2013 to inform the Claimant’s solicitors of all their assets and liabilities worldwide exceeding £5,000 giving the value, location and details of all such assets.[13]The return date of the application for the freezing order was before Mr Justice Arnold on 17th May 2013. Both sides were represented by counsel. The Claimant contended that the Defendants had failed to comply with their disclosure obligations under the order of 9th May and sought a more specific formulation of the order which is to be found at para. 8 of the order made on 17th May. It is not clear what discussion took place about this new formulation but I gained the impression that the Defendants effectively consented to it. Sub-paragraph 8(2) of that order provides for nine items of detailed information to be provided by the Defendants. It is this part of the order which has resulted in substantial subsequent satellite litigation and has ultimately resulted in the application I now have to determine.[14]Also at this hearing on 17th May Southern Territory Ltd was given permission to join the litigation as Second Claimant and the sum sought to be frozen was increased from £2.5 m to £4.1 m. Two orders were made, the first concerning the injunctive relief and the Defendants’ disclosure obligations, and the second providing directions for a speedy trial.[15]The Claimants issued a Part 7 claim form joining in the Second Claimant and served Particulars of Claim on 24th May. They complained that the Defendants had not complied with their disclosure obligations under para. 8 of the order of 17th May and on 10th June they made a debarring application seeking to enforce those obligations by way of an unless order. That application came before Mr Justice Henderson four days later on 14th June. The evening before the hearing the Defendants served further evidence and the hearing was adjourned for seven days to allow the Claimants an opportunity to consider the Defendants’ claim that they had now complied. The Defendants were ordered to pay the costs occasioned by the adjournment.[16]The matter came back before Mr Justice Henderson a week later on 21st June. I am informed by Mr Bailey that this hearing was heavily contested by counsel then appearing on behalf of the Defendants, Mr Justin Davies, and I have been provided with an unapproved note of Mr Justice Henderson’s judgment prepared by the Claimant’s solicitor. It is regrettable given the circumstances of the present application that I have not been provided with an approved transcript of this judgment. I have no option but to recite parts of this unapproved note as follows, starting at para. 3 of the note and continuing to para. 16: 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.’
[17]The order of Mr

Justice Henderson records an undertaking by the Defendants in the following terms:

‘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.’
[18]The Defendants were ordered to provide this information by 4 pm on 1st July. It is worth noting that para. 3 of Mr Justice Henderson’s order of 21st June contained an unless order requiring the Defendants’ Defence to be served by 4 pm on 28th June. That order was complied with. The Directions regarding filing of a Reply, disclosure and witness statements made by Mr Justice Arnold on 17th May were all extended by seven days with the result that the date for standard disclosure under CPR Part 31 was extended to 12th July.[19]The Claimant complained that the Defendants had failed to comply with their disclosure obligations as set out in para.1 of Mr Justice Henderson’s order. By an application notice dated 10th July 2013 they applied to debar the Defendants from defending the claim. The Defendants countered with a relief from sanction application issued on 12th July. These applications came before Mr Justice David Richards on 16th July and were adjourned by consent to a consolidated hearing which was listed in a window of 7-9th August, in other words, during the vacation. The matter came before the vacation judge, Mr Justice Hildyard, on 9th August. I have been provided with a transcript of the hearing and an unapproved note of Mr Justice Hildyard’s judgment prepared by the Claimant’s solicitor. Again it is regrettable given the circumstances of the present application that I have not been provided with an approved transcript of this judgment. I have also been handed a note of the judgment prepared by Westlaw, which I regard as in some respects more reliable than the note prepared by the Claimant’s solicitors (although I do not criticise that note; it is obviously the best that solicitor could do in the circumstances) and I therefore read from part of the Westlaw note as follows. This is taken from the second page of the note, beginning at the fourth line from the top:
‘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 [2009] EWCA Civ 19, [2009] 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.’
[20]As a consequence of this judgment Mr Justice Hildyard declared that the Defendants had failed to comply with the unless order of Mr Justice Henderson and were debarred from defending the Claimant’s claim and ordered that the Defence and Counterclaim be struck out, and the determination of the heads of relief claimed by the Claimant in the particular claim be adjourned for a disposal hearing to take place in the current trial window. The Defendants were ordered to pay the Claimant’s costs on an indemnity basis in the sum of £24,461. On the same date, 9th August, Mr Justice Hildyard made a further order staying the proceedings between the Second Claimant and the Defendants on agreed terms, which terms were attached to the order in Tomlin form. It is therefore clear that the Second Claimant plays no further part in these proceedings.

The Defendants’ present application

[21]No appeal was made against Mr Justice Hildyard’s order striking out the Defendants’ Defence and Counterclaim. Instead on 19th August the Defendants consulted new solicitors and steps were taken to prepare a lengthy further affidavit of the First Defendant comprising some 37 pages and a substantial exhibit. This affidavit was filed in support of the present application on 1st October.[22]In summary, the Defendants submit as follows. First, that they have now complied with the disclosure requirements of the order of Mr Justice Henderson dated 21st June. The breach of the unless order was remediable and has now been remedied. Second, that compliance has been delayed is in part due to the wide-ranging nature of the disclosure sought and the limitations on the availability of funding for legal costs. They submit that their efforts to comply should be judged in the context of disclosure orders which require expenditure of significant time and cost, which depended on the cooperation of third parties and in circumstances where the Defendants’ inability to comply was constrained by the terms of the freezing injunction. Third, they submit that they have not acted with intent to frustrate the operation of the freezing injunction; on the contrary, they consented to the disclosure sought by the Claimant at the hearing on 17th May and then took steps to comply although it is accepted that there has not been complete compliance until provision of the affidavit dated 1st October. They say that the history of the case demonstrates a considerable effort to comply although they accept that these efforts were judged to have fallen short. Fourth, while accepting that the Defendants, as the parties, are principally responsible for compliance with court orders their submission is that the historic failings in disclosure were at least in part due to their former solicitors. Finally, they submit that the effect of the refusal of relief is to leave the court to try the claim in circumstances where(1) there is a substantial dispute of fact not capable of fair resolution by reference to the documents alone;(2) the Claimant has not provided disclosure or witness statements in compliance with the Directions order of 17th May; and(3) the Defendants may still participate in any trial subject to the court’s inherent jurisdiction to determine how proceedings are managed but their involvement would be limited as to the issues which it is open to them to pursue. That, they submit, would not be a just result; it would leave the court with witness and documentary evidence which is incomplete and one party limited in its ability to assist the court in evaluating that evidence. It would be, they submit, a disproportionate and unjustified windfall to the Claimant were relief from sanction to be refused. They submit these are substantial claims involving allegations of dishonesty which turn on witness evidence. This is not a case where the court is well placed to make an adequate assessment of the merits based upon the documentation alone.[23]The Defendants also submit that there is no prejudice to the Claimant which has not already been visited on the Defendants in costs. The breach of the unless order does not have any detrimental effect to the underlying proceedings which remain capable of a fair resolution and in that context they draw the court’s attention to the fact that the disclosure obligations required of them were ancillary to the freezing order and not directly relevant to the main issues in the proceedings. They submit that they have not acted in breach of the freezing injunction itself save for the failures in respect of disclosure which have now been remedied. They accept that if relief from sanction were to be granted the Defendants must apply for the adjournment of the trial. They submit however that they will be in a position to fund representation to bring themselves into compliance with the court’s Directions so that a trial could take place within the current trial window which closes on 31st October. They submit that the application has been made promptly, less than two months after the hearing of 9th August, at which the Defendants were found to be in breach of the unless order, and following a change of representation and further substantial efforts to comply with that order.

The Claimant’s response

[24]The Claimant’s case in response to the application broadly falls into two parts. His primary argument is that the second relief application issued on 1st October is an abuse of process because it seeks to litigate something that has already been determined before a court of commensurate jurisdiction. His second argument is that the unless order and striking out of the Defence and Counterclaim were wholly warranted and that in any event the Defendants still have not complied with the unless order.[25]As to the Claimant’s primary argument, he submits that it is a fundamental principle of the civil justice system that a litigant having brought an issue before a judge for determination should not be entitled to have a second bite at the cherry by bringing a similar application before another judge of the same jurisdiction if he does not like the decision at the first time of asking. To do so is an abuse of process. Although the application is brought under CPR 3.9 the Claimant submits that this is tantamount to revisiting the decision of Mr Justice Hildyard to refuse relief from sanction under the same Rule 3.9 and that, although CPR 3.1(7) gives the court power to vary or revoke a previous order, the authorities show that if an applicant wishes to come back on a second occasion having fully argued the matter on the first occasion, it is imperative for him to show that something is different and that that information could not have been put before the court on the first occasion. If a litigant does not like the result, he has the option of bringing an appeal and cannot use CPR 3.1(7) to circumvent the appeal process. The Defendants have not attempted to appeal any of the three orders that the Claimant submits they seek to circumvent and are now substantially out of time for doing so. To succeed on an appeal it has to be shown that the judge exercising the discretion either erred in principle, left out a material consideration, took into account an irrelevant consideration or was plainly wrong in his overall conclusion. None of those points arises here.[26]Alternatively, if the application is not held to be an abuse of process the Claimant submits that it should nevertheless be dismissed because the Defendants have still not complied with the unless order and even if they have finally complied they have delayed too long in doing so. Having failed to comply on five occasions up until 9th August with a trial window opening some nine weeks later, the Claimant complains that the Defendants did not attempt compliance after they were struck out until after the trial window had opened so their position has got worse not better. Any application to revisit a previous decision must be made promptly and this application was not made promptly. Promptness has to be viewed in context. In this case it involves nearly two months of inactivity leading up to the speedy trial. Finally, the Claimant points out that the Defendants have not paid the costs orders made by Mr Justice Henderson and Mr Justice Hildyard.

Discussion

[27]As indicated, the Defendants bring this application under CPR 3.9. This Rule was amended with effect from 1st April 2013 and simplified following the recommendations of the Jackson report and consideration by the Rule Committee. It now provides as follows:
‘(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’.[28]The following principles can be derived from two recent decisions of the Commercial Court on the application of the amended CPR 3.9, namely Rayyan al Iraq Co Ltd v Transvictory Marine Inc, an unreported decision of 23rd August 2013, and Wyche v Care Force Group plc, an unreported decision of 25th July 2013. The principles that can be gleaned from those cases are as follows. First, the matters contained in the old checklist in CPR 3.9 remain of relevance to an application for relief from sanction. Second, the change in CPR 3.9 did not mean that relief should be refused where that would be a disproportionate response and would give the opposing party an unjustified windfall. Third, that the court should not apply the new rules unthinkingly and should make allowance for human error. Fourth, that the amended Rule should not be permitted to encourage parties to exploit minor errors for tactical gain. These decisions show in my judgment that the court in each case while accepting that the purpose of the amended Rule is to counter a culture of deliberate delay still had principal regard to the requirement to do justice between the parties.[29]The Defendants do not seek here to challenge the orders that have gone before. However, they submit – and I accept – that it is appropriate in the circumstances of this case in considering the application for relief and the extent of the previous compliance with those orders for the court to have regard to the following matters. First the burden imposed on the Defendants in complying with these orders and particularly the fact that the disclosure required of the Defendants went beyond that ordinarily required as ancillary to a freezing injunction. Second, the fact that the orders required cooperation from third parties not within the Defendants’ control. Third, the fact that the Defendants relied on their solicitors to advise them in relation to whether or not they had complied with the court’s orders.[30]In its standard form para. 9 of a freezing order requires the Respondent to use his ‘best endeavours’ to provide disclosure of his assets. The order made by Mr Justice Arnold on 9th May included the additional requirement that the Defendants disclose liabilities as well as assets. The inclusion of this requirement was explained in the Claimant’s skeleton argument in para. 9 as follows:
‘The nature of the information sought about the Respondent’s assets is expanded to include liabilities to facilitate the inclusion of a maximum sum on the return date.’
Notwithstanding the fact that no maximum sum order was made, the requirement to provide disclosure of liabilities was not deleted and has subsequently formed a substantial part of the complaint as to disclosure levelled against the Defendants. The second order for disclosure made on the return date of 17th May went further in that it required the Defendants to provide specific categories of information including, for example, valuation of planning evidence in respect of real property and details of bank accounts and bank statements “whether the Respondent is interested in them legally beneficially or otherwise.”[31]The Claimant then applied for and was granted an unless order dated 21st June by Mr Justice Henderson requiring the disclosure of three categories of information; in summary, first, details of any charges on any real property and account statements in respect of any borrowings secured against such real property; second, details of the Defendants’ bank account and any accounts in which they have an interest and bank statements from 1st October 2010; thirdly, particulars as to how the Defendants are funding the litigation. The requirements to provide information in respect of the charges and bank accounts extended to four named companies. In addition the Second Defendant was to send letters to banks in the form of a draft produced to the court and it appears drafted by the Claimant’s lawyers. In default of compliance the Defendants were to be debarred from defending the claim and any Defence filed by them was to be struck out. The Claimant’s application to strike out the Defendants’ Defence relied upon a lengthy ‘Schedule of Deficiencies’ in support of the allegations of non-compliance itemising 39 alleged deficiencies. The presentation of the Claimant’s allegations of non-compliance was described by Mr Justice Hildyard as having painted an overly-bleak picture and having used inflammatory headings – at least that is how it is recorded in the Westlaw note. The number of deficiencies appears to have come down to two or three omissions which formed the basis for Mr Justice Hildyard’s declaration that the Defendants had failed to comply with the unless order.[32]Mr Bailey submits that, notwithstanding the lengthy affidavit and exhibit of the First Defendant relied on in support of the present application, the Defendants have still not complied with the unless order in one respect. He has referred me to some bank statements exhibited by the Fourth Defendant which evidence some five receipts of money from Prestige Properties Ltd, one of the four companies in respect of which disclosure of bank statements was required, and complains that no statements have been disclosed evidencing these payments. In para. 61.25 of his affidavit the First Defendant says this in response to the Claimant’s complaint:
‘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.’
[33]Numerous Bank of Cyprus bank statements have been disclosed for Prestige Properties Ltd and are to be found at bundle 4, tabs 26-29. I have also seen a witness statement from Mr Cook which supports the First Defendant’s evidence and refers to a bank statement which he purported to exhibit which is not now in the bundle and which Mr Bailey told me was handed to Mr Justice Hildyard in the course of the hearing on 9th August but is now mislaid.[34]In the circumstances I conclude that the omission of this evidence does not amount to a breach of the unless order and even if it did, in the context of the disclosure provided as a whole, it is de minimis and would not justify a finding that the Defendants had failed to comply. In assessing a Respondent’s compliance with a requirement under a freezing order to provide information as to assets and liabilities ‘to the best of his ability’ the court will consider all the circumstances of the case. I was referred by Mr Davenport to the case of Oystertech plc v Davidson [2004] EWHC 627 where Mr

Justice Patten said this:

‘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.[35]The Defendants accept that principal responsibility for compliance with court orders rested with them and not with their legal representatives. However, they submitted that they had not been well-served by their former solicitors. In particular they say that in order to comply with the asset disclosure order and the Directions to trial, both orders made on 17th May, it should have been immediately apparent that the Defendants would require expenditure on legal representation in a sum exceeding the £20,000 limit imposed by the freezing injunctions of those dates. No steps were taken on the Defendants’ behalf to obtain an increase of this limit. Second, and in my judgment more pertinently, they rely upon the fact that in advance of the hearing on 9th August they were advised by their solicitors that they had complied with the unless order of Mr Justice Henderson. They have waived privilege in an email exchange between the First Defendant and the partner in PG Legal, their solicitors, Mr Jonathan Fletcher. In the circumstances they say that the failure to obtain further documentation by the time of that hearing was understandable.[36]I refer to p. 95 of the exhibit to the First Defendant’s affidavit which is clearly a privileged document but in respect of which privilege has been waived. This document evidences an email exchange on 6th August – so three days before the hearing before Mr

Justice Hildyard – in which the First Defendant says to his solicitor Mr Jonathan Fletcher:

‘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.[37]Whether a failure to comply with a court order was caused by the party or his legal representative was a relevant circumstance when considering an application for relief from sanction under the pre-amendment CPR 3.9(1)(f). The courts have continued to have regard to the factors under the pre-amendment rule after 1st April 2013, as Mr Justice Hildyard himself accepted at the application hearing on 9th August. In Perreira v Beenlands [1996] 3 All.E.R 528 Mr Justice Robert Walker held that the court’s discretion to decide the consequence of non-compliance with an unless order was not fettered by any binding principle that the default, whether an act or omission, of a litigant’s solicitor should always be visited on the litigant himself. This statement of principle was accepted by the Court of Appeal in Hi Tech Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 at 1675 as ‘a perfect example of the exigencies of justice coming to do justice in a particular case.’ I accept that in circumstances in which wide-ranging disclosure obligations were imposed by the court’s orders, affecting both assets and liabilities, the Defendants were justified in relying on their solicitors to ensure that they had complied with those orders.[38]I regard the email exchange three days before the hearing on 9th August as significant because it shows that the Defendants’ solicitor Mr Fletcher was advising the First Defendant that the unless order had been complied with. The Defendants were entitled to rely on that advice, which is why the outcome of the hearing on 9th August must have come as a considerable shock to them. I have to say I have some sympathy for Mr Fletcher’s view given that the complaints of non-compliance by the Claimant had been so wide-ranging and frankly oppressive in their nature. Mr Bailey even told me in the course of his submissions that he had identified 119 instances of non-compliance which had been whittled down to 39 in the Claimant’s ‘Schedule of Deficiencies’ which Mr Justice Hildyard is reported by Westlaw as having described as painting an overly-bleak picture of the Defendants’ conduct.[39]The Defendants also rely on the fact that, as Mr Bailey conceded before me, the Claimant has failed to comply with the Directions ordered by Mr Justice Arnold on 17th May as varied by Mr Justice Henderson on 21st June. The Claimant has failed to provide disclosure and inspection in accordance with CPR Part 31 by 12th July or at all, or to serve witness evidence in support of the claim, and it appears from his skeleton argument that the Claimant is instead relying upon the evidence filed in support of the previous interim hearings and upon a signed version of the Particulars of Claim. Those omissions are not answered by the fact that the Defendants are currently debarred from defending the claim. First, the Claimant is still required to prove his case at the disposal hearing, Mr Justice Hildyard having rejected his request for judgment at the hearing on 9th August. Second, the obligation to provide disclosure remained in place even after the debarring order. That obligation is not contingent upon there being an existing Defence since under CPR 31.6 the Claimant is required to disclose documents which ‘adversely affect his own case’ and may therefore be relevant when deciding what (if any) remedy the Claimant is entitled to.[40]I consider that, notwithstanding the fact that they are currently debarred from defending the claim and subject to the court’s inherent jurisdiction to regulate its own process, the Defendants are entitled at trial to require the Claimant to prove his claim, to cross-examine and to make submissions.[41]In Culla Park Ltd v Richards, unreported, [2007] EWHC 1687, the court held that striking out the defence to a claim for malicious falsehood did not prevent the Defendants from participating at trial or from testing the allegation of malice which the Claimant was required to prove against them. Mr Justice Eady said this at paras. 11 and 12: ’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.’[42]A similar conclusion was reached in the case of JSC BTA Bank v Ablyasov (No 8) [2013] 1 WLR 1331 where Lord Justice Toulson in a dissenting judgment – the only judgment to consider the effect of the debarring order on the conduct of the trial – stated at p. 1397:
‘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.’
[43]Mr Bailey relied on the case of Momson v Azeez as authority for the submission that once debarred from defending a claim the Defendant had a right to be present in court but no right to test the Claimant’s case. I reject that submission. As Mr Davenport submitted, there was no analysis in those judgments of the effects of a debarring order. It is necessary to refer to the passages in the judgments relied on by Mr Bailey to see precisely what this authority establishes. At first instance ([2008] EWHC 623), Mr

Justice Briggs said at para 26:

‘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.’
[44]Then on the application for permission to appeal ([2008] EWCA Civ 829), which came before

Lady Justice Arden and Lord Justice Wall, Lady Justice Arden referred at para. 5 to the fact that:

‘The judge, therefore, made a barring order at the start of the trial and the effect was that the appellant was present during the trial but took no part’, and at para. 9 she continued: ‘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.’
[45]Permission to appeal was given, and on the appeal itself ([2009] EWCA Civ 202)

Lord Justice Rimer in his judgment stated in para. 3 as follows:

‘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.’
[46]At para. 27 Lord Justice Rimer referred to the fact that on 29th January Mr Azeez attended the court in person; the court was told of the bankruptcy and that the bankruptcy debts had been paid. Mr Azeez did not ask for an adjournment for legal representation. Then at para. 28 Lord Justice Rimer continues:
‘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.’
[47]I do not regard any of the observations by their Lordships at various stages in that case as giving me any particular guidance as to the course a judge should take in circumstances where a Defendant has been debarred from defending a claim but the Claimant is nevertheless still required to prove his claim. I consider that what needs to be considered is the overriding objective and the need to achieve a fair result. The fact that Mr Justice Hildyard was not prepared to give the Claimant judgment in default and required him to prove his case at a further hearing before a judge strongly suggests that he envisaged the Claimant’s case being tested not just by the judge on that further occasion but by the Defendants who would be entitled to assist the judge within suitable parameters designed to reflect the fact that they had been debarred from defending the claim. So, for example, whilst not entitled to challenge the issue of liability, the Defendants would be entitled to make submissions to the court on the appropriate form of relief as well as challenging the Claimant’s liquidated claim.[48]However, the part the Defendants would play in any one-sided trial if the current application were to be dismissed does not arise given that I have reached the very clear conclusion that in all the circumstances the interests of justice in this case dictate that the Defendants should be granted relief from sanction.[49]My conclusion is strengthened by the further consideration that the Claimant needs to give disclosure of documents. This is necessary to ensure a fair process and for the court to be satisfied that any remedy granted to the Claimant is appropriate, particularly where the merits depend heavily upon witness evidence. The fact that the Claimant has not given disclosure in compliance with CPR 31 means that this case is not in any event ready for trial. This is a matter I take into account in the exercise of my discretion. I also note that the Claimant has made no attempt to seek relief from sanction under CPR 3.9 in respect of his failure to comply with the directions order of Mr Justice Arnold dated 17th April 2013, as amended by the order of Mr Justice Henderson dated 21st June 2013.[50]In reaching my conclusion that the Defendants should be permitted relief from sanction I have considered and rejected the Claimant’s submission that the current application is an abuse of process and should be dismissed for that reason alone. There is clear Court of Appeal authority that a second application for relief is permissible. In Woodhouse v Consignia plc [2002] 1 WLR 2558 the Court of Appeal held that the court had power to grant relief from sanction on a second application for relief where an earlier application had been dismissed. The Court of Appeal comprising Brooke, Laws and Dyson LJJ, held that it was possible to make a second application for relief. At para. 33 Lord Justice Brooke said as follows: ’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.’[51]I interpose simply to note that of course the new Rule 3.9 does not require the judge to go through the items listed in the old Rule 3.9, merely, as has been held, to have regard nevertheless to those factors. At paras. 55-58 Lord Justice Brooke said this: ’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 [2001] 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 [1843] 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 [1996]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.’[52]In refusing the Defendants relief on the first application for relief from sanction on 9th August, Mr Justice Hildyard referred to Tarn Insurance Services Ltd v Kirby [2009] TP Rep 22 which it appears was not cited by counsel for either side and in respect of which he did not have the benefit of any detailed submission. In that case it was held that it was to be assumed the judge imposing an unless order accepted that if the sanction was imposed the defaulting party would be deprived of a defence with a real prospect of success. The existence of such a defence was not itself grounds for granting relief. What was required was either some material change in circumstances between the date of the making of the unless order and the hearing of the application for relief or some good reason to excuse continued non-compliance. It is necessary to recite certain passages from the judgment of Sir John Chadwick, beginning at para. 78: ’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.’[53]Then at para. 79:
‘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….’
[54]Then continuing at para. 81: ’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.’[55]Tarn Insurance Services was a case where the Applicant seeking relief remained in breach of the unless order at the time of the application for relief and was unable to show good reason for his continued non-compliance. In contrast, as I find, the Defendants have now complied with their disclosure obligations and I also find that this compliance itself amounts to a material change of circumstances between the time that the matter came before Mr Justice Henderson and Mr Justice Hildyard and the time of this further application for relief. On the basis of the Woodhouse decision, I find that in the circumstances of this case, where the disclosure obligations placed upon the Defendants were significant and wide-ranging and there is no evidence that the Defendants have wilfully failed to comply with the court’s orders (on the contrary, on each occasion the evidence is that they have attempted to comply and acted on their solicitor’s advice), the Defendants are entitled to make a second application under Rule 3.9 for relief from sanction.[56]Mr Bailey relied on two authorities in support of the submission that relief from sanction was difficult to obtain prior to April 2013 and became significantly harder after April 2013 in the light of the Jackson reforms. The clearest of markers, he submits, was put down at para. 5.4 of Lord Justice Jackson’s report as quoted at para. 15 of Lord Justice Lewison’s judgment in Fred Perry Holdings Ltd v Brands Plaza Trading Ltd [2012] EWCA Civ 224:
‘courts at all levels have become too tolerant of delays and non-compliance with orders; in so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed.’
[57]Mr Bailey also relied on the decision of Master Macleod in Mitchell v Newsgroup Newspapers Ltd [2013] EWHC 2355 where he said:
‘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

[58]Of course I have full regard to these dicta but I am quite satisfied that in the circumstances of this case it is entirely appropriate in my judgment to grant relief from sanction under CPR 3.9. The Claimant seeks to rely on the Defendants’ delay of some 7 weeks between the order of Mr Justice Hildyard dated 9th August 2013 and the issue of the present application on 1st October 2013. However I do not regard this delay as significant, in particular in the context of the fact that this case only began in March this year, was the subject of a speedy trial in May, and is now before the court for trial in October. Although an adjournment of the trial is required to enable outstanding directions to be complied with and the case got ready for trial, that adjournment need not be for an excessively long period.

CPR 3.1(7)

[59]In addition, as already mentioned, Mr Bailey submitted that the Defendants were unable to have a second bite of the cherry under CPR 3.9 and had to make their application under CPR 3.1(7). I have rejected that submission. Nevertheless I should refer to the two authorities on which he relied in relation to Rule 3.1(7). The first is Collier v Williams [2006] 1 WLR 1945 where at para. 39 Lord Justice Dyson, giving the judgment of the court, which also comprised Lords Justices Neuberger and Waller, said this:
‘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 [2003] 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).’
[60]That was the first case relied on by Mr Bailey. The second was the case of Tibbles v Sig plc [2012] 1 WLR 2591 where Lord Justice Rix at para. 39 helpfully set out a number of conclusions to be drawn from the jurisprudence. Rather than reciting all of those matters, I simply refer to those that seem most pertinent on the facts of this case:
‘(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.’

Overall conclusion

[61]Having given full consideration to both those Court of Appeal authorities, I am firmly of the view that the appropriate rule of court to consider on this application is CPR 3.9. To the extent that Mr Justice Hildyard’s order of 9th August needs to be varied or revoked pursuant to CPR 3.1(7), I consider that the matters set out in this judgment fully justify such a variation or revocation and that in the circumstances it is appropriate to grant the Defendants’ application.[62]Finally, there were, as I mentioned at the outset of this judgment, two other matters that the Defendants sought by way of variation to the freezing order, namely, that the value of the assets subject to the freezing injunction be reduced from £4.1 m to £2.5 m and that the Defendants be permitted to spend a reasonable sum of their own money on legal representation. As I understand it, certainly the second of those matters is agreed and ought not to be a matter of dispute. As to the first, I am unsure as to whether an agreement has been reached but if necessary I am prepared to rule on it.

Cited in 3 later judgments