Thevarajah v John Riordan and Others
| Jurisdiction | England & Wales |
| Judge | Lord Neuberger |
| Judgment Date | 16 December 2015 |
| Neutral Citation | [2015] UKSC 78 |
| Date | 16 December 2015 |
| Court | Supreme Court |
[2015] UKSC 78
Lord Neuberger, President
Lord Mance
Lord Clarke
Lord Sumption
Lord Hodge
Appellants
Paul Letman Miranda Butler (Instructed by YVA Solicitors LLP)
Respondent
Stephen Smith QC James Bailey (Instructed by Olephant Solicitors)
(with whom Lord Mance, Lord Clarke, Lord Sumption and Lord Hodge agree)
This is an appeal against a decision of the Court of Appeal allowing the respondent's appeal from a decision of Mr Andrew Sutcliffe QC, sitting as a Deputy High Court Judge, who granted the appellants relief against a debarring order, in circumstances where such relief had already been refused by another judge.
The respondent had entered into an agreement with the appellants, John Riordan and Eugene and Barrington Burke, to buy the shares which they owned in Prestige Property Develper UK Ltd. Having paid £1.572m to the appellants, the respondent sought specific performance of the agreement and associated relief, in proceedings issued in March 2013. After obtaining an initial order without notice a week earlier, the respondent obtained a freezing order ("the freezing order") from Arnold J on 17 May 2013 at a hearing attended by the appellants and their legal representatives. This order required the appellants to provide by 24 May 2013 information and documents relating to all their assets, including details of all of their bank accounts and bank statements going back to 1 October 2010. The freezing order also stated that such assets extended to those held by Prestige Properties Ltd ("the Company"). Arnold J also directed that the proceedings be heard during October 2013.
The appellants did not afford the disclosure required by the freezing order by 24 May 2013, and the respondent gave them the opportunity to comply out of time. However, the appellants still failed to comply, although they gave some further disclosure. The respondent issued an application for an "unless" order, which came before Henderson J. On 21 June 2013, he gave a judgment in which he held that the appellants' disclosure was "in many respects seriously inadequate" — [2013] EWHC 3356 (Ch). He also described the failure to disclose "full bank statements for the period of three years in the names of the relevant defendants" as a "particularly glaring omission". Accordingly, he made an "unless" order which required the appellants to disclose certain identified assets that they had failed to disclose, and which also provided that, in default of compliance by 1 July 2013, the appellants would be debarred from defending the claim.
Although the appellants gave some further disclosure, they failed to comply fully with the "unless" order. On 9 August 2013, Hildyard J heard (i) the respondent's application for an order debarring the appellants from defending as they had failed to comply with the "unless" order, and (ii) the appellants' application for (a) a determination that they had complied with the "unless" order, or, if they had not (b) an order for relief from sanctions under CPR 3.9 ("the first relief application"). The appellants' application was partly based on the contention that they had given further disclosure on 31 July 2013. Hildyard J made the debarring order sought by the respondent and dismissed the appellants' application for relief from sanctions – [2013] EWHC 3464 (Ch). There was no appeal against that order.
In his judgment, Hildyard J recorded the appellants' contention "that their failures … were de minimis [or] the product of matters beyond their control". He did not accept that contention, and described "the position" as "less than satisfactory". He rejected the argument that the appellants' failure to produce certain charges had been caused by the refusal of the Bank of Cyprus to cooperate, and also held that there had been "an obvious failure" to give disclosure of certain other documents. He observed that it was "most difficult to reach any other conclusion than that there have been substantial failures to comply with the 'unless' order". He then referred to the fact that just one page of a bank account at HSBC in the name of the Company had been produced, and described this as "a very unsettling turn of events", and "a further illustration of the reasons for my conclusion that there has been a material failure, which cannot be dismissed as de minimis". He then carefully addressed the question whether he should grant the appellants relief under CPR 3.9 from the sanction of the debarring order. Having considered the principles as laid down in earlier cases, he explained that he felt "constrained to refuse any relief from sanctions", while "personally regret[ting] the need for such a step".
The trial of the action was due to start on 3 October 2013, with a time estimate of five days (which apparently was not altered following Hildyard J's order). Having instructed fresh solicitors, the appellants issued an application on 2 October 2013 for relief from sanctions ("the second relief application"), supported by a lengthy affidavit, which provided, at least according to the appellants, full disclosure as required by the freezing order. The trial and the second relief application were adjourned to 7 October 2013, when they came on before Mr Sutcliffe. He heard the second relief application, over the next four days, and granted the appellants relief from sanctions, adjourned the trial, and fixed a new trial window in January 2014 – [2013] EWHC 3179 (Ch).
In his judgment, the Deputy Judge began by summarising the substantive facts and issues and the procedural history. He mentioned that he did not have approved transcripts of the ex tempore judgments of Henderson or Hildyard JJ, but quoted from informal notes or reported summaries of their respective judgments. The Deputy Judge then summarised the appellants' case in support of the second relief application, namely that they had tried hard to comply with the requirements of the freezing and "unless" orders, that their failure to comply was due to the extensive nature of the disclosure required, that any such failure had been relatively slight and some of it due to their former solicitors, that any such failure had now been put right, and that to maintain the debarring order would, in all the circumstances, be disproportionate. He then referred to the respondent's case in reply, namely that the second relief application was an abuse of process, and that, in any event, the debarring order ought to be maintained on the merits – not least because the appellants had still not given the requisite disclosure in full.
The Deputy Judge then addressed the question of how he should resolve the appellants' second relief application. He began by mentioning the court's power to grant relief from sanctions, contained in CPR 3.9, and the guidance as to its exercise in certain judicial decisions. He then referred to the freezing and "unless" orders, and turned to the respondent's contention that the appellants remained in breach of the "unless" order in that they had not disclosed bank statements in respect of the Company's account at HSBC. Because other bank statements had been provided for the Company, the Deputy Judge concluded 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 [appellants] had failed to comply". He also accepted that the appellants' former solicitors were in part to blame for any failure on the appellants' part to comply with the freezing and "unless" orders. After mentioning one or two other factors, he held that the appellants were in all the circumstances entitled to take a full part in the trial, and that the debarring order should be discharged. He added that, if, as the respondent contended relying on CPR 3.1(7), it was necessary for the appellants to show a change of circumstances since the decision of Hildyard J, in order to justify a second application for relief from sanctions, the fact that they had now substantially complied with their disclosure obligations was a sufficient change.
The respondent appealed against the decision of the Deputy Judge to grant the appellants relief from sanctions, and, for reasons set out in a judgment of the court given by Richards LJ (sitting with Aikens and Davis LJJ), the Court of Appeal allowed the appeal and restored the debarring order imposed by Hildyard J —...
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