Brampton v Rust & Anor [2008] EWHC 216 (QB)

[2008] EWHC 216 (QB)Case No HQ06X03017IN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONVenue St. Dunstan’s House 133-137 Fetter Lane London EC4A 1HDDate Wednesday, 6th February 2008
Before
MR JUSTICE COULSON
Between
BRAMPTONClaimantRUSTDefendantsANOTHERDefendant
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Mr Andrew Thomas (instructed by Messrs Prince Evans) for Claimant.Mr Ben Douglas-Jones (instructed by Messrs Garstangs) for Defendants.
Judgment
[1]This is an application by the defendants to adjourn the trial currently listed to start on 18th February 2008. It is hotly contested. In so far as any grounds for that application are identified in the papers, it appears to be the defendants’ case that the financial constraints imposed by the freezing order of 9th October 2006, coupled with the restrictions secured by the claimant on the first defendant’s properties, have made proper preparation for the trial impossible. It is, therefore, necessary to set out a little bit of the background before considering the application to adjourn.[2]The claimant is an IT consultant. The first defendant is a chartered accountant and the principal in the second defendant accounting firm. The defendants gave investment advice to the claimant. It is alleged that, between 2001 and 2004, the defendants made fraudulent misrepresentations to the claimant in respect of various investments and that the claimant lost a good deal of money as a result.[3]There were criminal proceedings against both the claimant and the first defendant in respect of these matters. The first defendant was originally convicted of money laundering offences, and his assets were frozen by a restraint order. However, the first defendant successfully appealed against his conviction and was retried at St. Alban’s Crown Court in October 2007. At the conclusion of that second trial, he was acquitted, and the restraint order was discharged. Although the statement of Mr Harris, the defendants’ solicitor, makes various points about the restraint order imposed in the criminal proceedings, it does not seem to me that they have any real relevance to this application to adjourn the civil trial.[4]On 9th October 2006, at the commencement of these QB proceedings, the claimant obtained a freezing order against the first defendant. That order remains in force today. The following terms of the freezing injunction are relevant for today’s purposes: “5. Until the return date or further order of the Court the Respondent must not remove from England and Wales or in any way dispose of, deal with or diminish the value of any of his assets which are in England and Wales up to the value of £581,662.37… 8. If the total value free of charges or other securities (unencumbered value) of the Respondent’s assets in England and Wales exceeds £581,662.37, the Respondent may remove any of those assets from England and Wales or may dispose of or deal with them so long as the total unencumbered value of his assets still in England and Wales remains above £581,662.37… Exceptions to this[5]The listing of this civil trial took place in April 2007. The proposed date for the commencement of that trial was principally dictated by the probable timing of the second criminal trial. On 26th April 2007, at the listing appointment attended by both parties, the trial was listed for seven days beginning during the week of 18th February 2008. This date was chosen on the basis that, on any view, the second criminal trial would have been completed by that date.[6]There has been some reference to an “order” made by Master Foster on 17th April 2007, to the effect that the listing should be dealt with by way of a CMC following the conclusion of the second criminal trial. It is plain to me that Master Foster did not make any such order. He made a note on a letter on the court file which was never issued to the parties, and which was in any event overtaken by the events at the listing appointment the following week. It is completely irrelevant to the matters before me today.[7]The directions included the exchange of witness statements, which has now occurred. There is no provision for expert evidence. Both Mr Thomas and Mr Douglas-Jones confirmed that their respective clients did not intend to rely on such evidence.[8]The basis of the application for an adjournment is set out in the statement of Mr Harris, the defendants’ solicitor. It is accepted that the first defendant is “a man of considerable means”. The problem, so it is said, is that he has been unable to realise his assets in order to pay his legal bills. At paragraph 15 of his statement, Mr Harris says this:
“By 23rd November 2007, £15,733.46 was owed to my firm, including counsel’s fees. At this point I concluded that neither counsel nor this firm should conduct any further work in respect of this matter until the outstanding fees had been paid. By 21st December 2007, the first defendant had been able to secure some funds which were paid to us on that date on account of fees to date and fees to be incurred. The first defendant was only able to obtain this funding by agreeing a personal loan from a friend. Those funds are insufficient to cover monies owing to this firm including counsel’s fees to date. They will enable some of the work to be done to perfect the witness statement of the first defendant. However, this firm has no funds to prepare for and conduct a trial.”
[9]Mr Douglas-Jones on behalf of the Defendants puts the matter even more starkly at paragraph 18 of his skeleton argument. He says that, if the trial is not adjourned:
“D1’s solicitors and counsel will be forced to consider themselves professionally embarrassed for want of funds. In those circumstances, Messrs Garstangs will have to come off the record and D1 will have to represent himself.”
[10]However, an examination of the correspondence demonstrates that it was only very recently that the defendants’ legal team took such an apocalyptic view of the defendants’ financial position. Indeed, the correspondence tells a rather different story, as follows:(a) In addition to the freezing injunction, the Claimant secured restrictions on the first defendant’s properties. This was known to the first defendant and his solicitor by late October or early November 2007.(b) On 29th October 2007, the claimant’s solicitors wrote to the defendants’ solicitors to say:
“We consider that the freezing order continues in relation to the fixed assets over which our client has a restraining order. Should your client consider the sale of any of these assets, you must immediately notify us, whereupon we will give consideration for the sale with a balance of sale proceeds held to our client’s order.” (c) In their letter of 21st November, the defendants’ solicitors referred to both the restrictions and “difficulties over funding”
. But these two propositions were not linked in that letter, and it is certainly not said that the latter was the result of the former. The points are all made in support of the defendants’ requested extension of time in respect of the service of the witness statements. (d) In their reply of 23rd November 2007, the claimant’s solicitors reiterated their points as to the sale of the assets and prior notification being necessary. They noted that they did not get a response to this point in the letter of 21st November. (e) Still further, on 21st December, the claimant’s solicitors wrote again to say:
“As you know, as far as the restraining order is concerned, we have stipulated to you that we are quite prepared for your client to sell any of the properties in his possession provided you can demonstrate that there is adequate property retained in order to discharge your clients’ responsibilities under the freezing order.”
[11]The defendants’ solicitors never responded to the offer made in those three separate letters from the claimant’s solicitors. Instead, on 11th January 2008, without notice, they launched this application to adjourn the trial. The application was heard by Master Rose on 16th January but, because the application should have been made to a judge, it could not be dealt with on that occasion, and has now been relisted for today before me.[12]As to the principles relevant to an application for an adjournment, I have had regard to the following extracts from the Queen’s Bench Guide:
“9.8.2 Applications for adjournments will not be granted except for the most cogent reasons. 9.8.3 Applications for an adjournment immediately before a hearing begins should be avoided as they take up valuable time which could be used for dealing with effective matters and if successful may result in court time being wasted. … 9.8.5 If the application is opposed, the applicant should apply to either the nominated judge or the judge dealing with the matter who has been allocated. A short summary of the reasons for the adjournment should be lodged with the Listing Office… 9.8.7 If a party or his/her solicitor’s failure to take reasonable steps necessitates an adjournment, the court may dismiss the application or may make other order including an order penalising the defaulting party in costs.”
[13]In addition, it seems to me, as I made plain in argument, that the provisions of CPR 3.9 (relief from sanctions) are also of some relevance to a last-minute application to adjourn a trial, in particular the necessity for the court to consider:(a) any delay in making the application;(b) the underlying merits; and(c) overall prejudice. In that regard, I have considered the decisions of the Court of Appeal in Thorn plc v MacDonald [1990] CPLR 660 and Hussain v Birmingham City Council [2005] EWCA (Civ) 1570.[14]It is clear to me that, to the extent that there were funding difficulties for the defendants created by the combination of the freezing injunction and the restrictions, those difficulties were or should have been apparent to Mr Harris some months ago. Even on his own evidence, he was aware of them no later than 23rd November. However, there was no application for an adjournment until 11th January 2008 and no cogent explanation has been offered for that delay.[15]In addition, again as I noted during argument, Mr Harris’ evidence fails to deal with what I regard as the obvious answer (or potential answer) to this argument, namely that the freezing order of 9th October expressly permitted the Defendants to spend money on “reasonable sums by way of legal advice and representation” and required dialogue between the respective representatives as to where such money might be obtained. To the extent that it was difficult for the defendants to realise any assets to pay their legal bills, Mr Harris ought to have been on the telephone to his opposite number months ago to try and work out a sensible solution to such difficulties. What is more, for the reasons that I have already mentioned, such an opportunity was provided expressly by the claimant’s solicitors’ letters, in particular those of 29th October and 21st December 2007. It is regrettable that neither of those letters was apparently answered.[16]For those reasons, therefore, I consider that the application to adjourn has been made unjustifiably late. It has certainly not been made diligently. For the reasons that I have given, that failure appears to be something which lies firmly at the door of the defendants and/or their solicitors.[17]As to the question of readiness for trial, the position is a little more uncertain. Although neither side intend to call expert evidence, and both sides have exchanged lists of documents and witness statements, they may still be some way from readiness for trial in the week commencing 18th February. Furthermore, although Mr Douglas-Jones talked of the possibility of amending the pleadings and seeking further information, it seemed to me that those were not unusual steps at this stage of any High Court litigation. However, the trickier consideration concerns the position of the defendants and their legal advisers. There can be no doubt from the evidence that, for whatever reason, they are far behind in their preparation for the trial and either cannot or will not be properly ready for the trial starting on 18th February. That is plainly a factor that I must take into account when considering this application.[18]Indeed, this brings me on to the critical aspect of the application to adjourn, namely the prejudice that each side would suffer if I either allow or refuse the application. If I allowed the adjournment, the claimant would be kept out of his money for longer and his own cross-undertakings would also subsist for a longer period. It seems to me that interest and costs ought to provide proper compensation for those contingencies. Furthermore, if I adjourned the trial, there can also be no doubt that the claimant would be entitled to the costs of that adjournment. Although it is said that a delay will mean that memories will fade, I do not consider that that submission is of any real weight in the present case given that:(a) there are apparently transcripts of interviews under caution with both the claimant and the first defendant; and(b) the trial will only be delayed for about three months, until a window starting on 14th April 2008.[19]However, if I refuse the adjournment, the defendants face:(a) the possibility that both their counsel and solicitors will be unable to act at the imminent trial because of the funding difficulties and/or the lack of preparation;(b) the prospect of acting for themselves in a complex Queen’s Bench action, and having to deal with potentially difficult matters, such as the relevance and admissibility of the material that arose in the criminal trials, which might be relevant to this litigation; and(c) the inevitability that, with or without their existing or new lawyers, they will not be anything like as well prepared as they might have been had the adjournment been granted.[20]I also accept Mr Douglas-Jones’ submission that there is what he described as a “human aspect” to all this. The first defendant has obviously been through a difficult time and has emerged successfully from his criminal trials. It is perhaps unsurprising that, from his perspective, this action was not given the priority that it plainly should have been. It is clear that this adjournment application would have been unnecessary, or would in any event have been made some months ago, if the first defendant and/or his legal team had focussed even for a moment in September or October on these civil proceedings. But that they did not is, in my opinion, understandable given the important criminal proceedings that were then extant. In such circumstances, it seems to me it would be unduly harsh to penalise the defendants for the delays by refusing this application.[21]In the unusual circumstances of this case, therefore, I consider that the proper exercise of the court’s discretion is to grant the application to adjourn and for the trial to be refixed in a window commencing on 14th April 2008. However, I make it clear that I only make such an order on condition that the defendants pay the claimant’s costs of the adjournment, which costs I will summarily assess and which will thereafter be payable in short order.[22]I make no order in respect of the terms of the freezing injunction or the restrictions, or any possible variations thereto. For the reasons that I have given, it seems to me that the claimant’s solicitors have been willing for some time to reach a sensible agreement as to the realisation of assets by the first defendant in order to fund this litigation. I am in no doubt that a sensible compromise in relation to such matters can be reached between the solicitors and it would, therefore, be inappropriate for me to make any order.

order

11(1) This order does not prohibit the Respondent from spending £300 per week towards his ordinary living expenses and also a reasonable sum on legal advice and representation, but before spending any money the Respondent must tell the Applicant’s legal representatives where the money is to come from… 11(3) The Respondent may agree with the Applicant’s legal representatives that the above spending limit should be increased or that this order should be varied in any other respect, but any agreement must be in writing.” Exceptions to this order: