PRACTICE — Case management orders — Relief from sanctions — “Unless” order requiring defendants to disclose assets — Defendants failing to comply — Application for relief from sanctions refused — Order preventing defendant from defending claim — Defendants subsequently making full disclosure making renewed application for relief — Whether later compliance with original order for disclosure change of circumstances — Whether judge to hear second application for relief — CPR rr 3.1(7), 3.9

Thevarajah v Riordan and others

[2015] UKSC 78; [2015] WLR (D) 540

SC(E): Lord Neuberger of Abbotsbury PSC, Lord Mance, Lord Clarke of Stone-cum-Ebony, Lord Sumption and Lord Hodge JJSC

16 December 2015

When a party was subject to a debarring order for failing to comply with an “unless” order to do something within a specified period because relief from sanctions had been refused at a time when he had been in default, the mere fact that he had subsequently complied with the unless order could not amount to a material change of circumstances entitling him to make a second application for relief from sanctions.

The Supreme Court so held in dismissing the appeal of the defendants, John Francis Riordan, Eugene Burke, Prestige Property Develper UK Ltd and Barrington Burke, from the decision of the Court of Appeal (Richards, Aikens and Davis LJJ) [2014] EWCA Civ 15; [2014] CN 45; [2014] CP Rep 19 to allow the appeal of the claimant, Thavatheva Thevarajah, against an order of Andrew Sutcliffe QC who sitting as a deputy judge of the Chancery Division [2013] EWHC 3179 (Ch) had granted the defendants relief from sanctions for failure to comply with an order made by Henderson J on 21 June 2013 that, unless the defendants made disclosure of assets by 1 July 2013, they would be debarred from defending the claim. The Court of Appeal restored the order of Hildyard J made on 9 August 2013 that, since the defendants had failed to comply with the “unless” order, their application for relief from sanctions would be rejected and their defence struck out.

LORD NEUBERGER OF ABBOTSBURY PSC (with whom the other members of the court agreed) said that, as a matter of ordinary principle, when a court had made an interlocutory order it was not normally open to a party subsequently to ask for relief which effectively required that order to be varied or rescinded, save if there had been a material change in circumstances since the order had been made. Accordingly, unless (perhaps) they could show that theirs was not a “normal” case, the defendants had had to establish a material change in circumstances since the hearing before Hildyard J before the deputy judge could properly have considered the second relief application on its merits: see Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485; Mitchell v News Group Newspapers Ltd (Practice Note) [2014] 1 WLR 795; Denton v TH White Ltd (De Laval Ltd, Part 20 defendant) [2014] 1 WLR 3926. The defendants had been unable to point to any factors which rendered the case relevantly not normal.

The defendants’ second point was that the Court of Appeal had been wrong to hold that their subsequent alleged compliance with the “unless” order was not a material change of circumstances. That point had also to be rejected. Where a party was subject to a debarring order for failing to comply with an “unless” order to do something within a specified period and relief from sanctions had been refused at a time when he had still been in default, the mere fact that he had then complied with the “unless” order (albeit late) could not amount to a material change of circumstances entitling him to make a second application for relief from sanctions. By refusing the party’s first application for relief from sanctions, the court would have effectively been saying that it was then already too late for that party to comply with the “unless” order and to obtain relief from sanctions. So, if the court on a second application for relief from sanctions had granted the relief sought simply because the “unless” order had been complied with late, its reasoning would ex hypothesi be inconsistent with the reasoning of the court which had heard and determined the first application for relief. In the present case, such subsequent compliance with the “unless” order which had occurred after the hearing before Hildyard J had not been accompanied by any explanation which could possibly have justified a court concluding that there had been a material change of circumstances since that hearing. Accordingly, the deputy judge had simply had no grounds to justify his entertaining the second relief application on its merits.

Appearances

Paul Letman and Miranda Butler (instructed by YVA Solicitors LLP, North Finchley) for the defendants.

Stephen Smith QC and James Bailey (instructed by Olephant Solicitors) for the claimant.

Reported by: Ms B L Scully, Barrister.

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