England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBENI 97/0499/E

(MR JUSTICE MAY )

Royal Courts of Justice

Strand

London WC2

Thursday, 1 May 1997

B e f o r e:

LORD JUSTICE LEGGATT

LORD JUSTICE MORRITT

LORD JUSTICE PHILLIPS

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DAVY INTERNATIONAL LTD & ORS

PLAINTIFF/RESPONDENT

- v -

TAZZYMAN & ORS

DEFENDANT/APPELLANT

and

DAVY INTERNATIONAL LTD & ORS

APPLICANT/RESPONDENT

v.

HERGERT DURNIG & ORS

RESPONDENT/APPELLANT

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR A BOYLE QC with MR P GOULDING (Instructed by Messrs Travers Smith Braithwaite, London EC1A 2AC) appeared on behalf of the Appellants, the Fourth Defendant and First Respondent

MR M CRAN QC with MR A McGREGOR QC and MR N PORTER (Instructed by Messrs Linklaters & Paines, London) appeared on behalf of the Respondent Plaintiff

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J U D G M E N T

(As approved by the Court )

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©Crown Copyright

Thursday, 1 May 1997

J U D G M E N T

LORD JUSTICE MORRITT: On 24 May 1996 Sir John Wood, sitting as an additional judge of the Queen's Bench Division, granted to the plaintiffs ("Davy") an Anton Piller order in respect of the office premises of the fourth defendant ("Vai") in Poole, Dorset. The order, in normal form, required Vai to permit various named individuals to enter such premises and to search for and, subject to the usual conditions, to remove the documents listed in the second schedule to the order. Parts of the order were mandatory requiring Vai, through its servants or agents, to hand over the listed items, inform Davy's solicitors as to the whereabouts of the listed items, and within three days to swear an affidavit giving further particulars as to the listed items; and parts were prohibitory requiring Vai not to destroy, deface, hide or part with possession of any listed item.

The order was executed on 28 May 1996. It was served at about 9.25 am by the supervising solicitor on Miranda Cotton, who had identified herself as the most senior employee of Vai present. The order, as served, did not have on its face the penal notice required by RSC Ord.45,r.7(4). Davy contends that certain named officers or employees of Vai, on whom the order was not personally served, sought to frustrate the execution of the order by removing and destroying documents listed in the schedule to it.

On 4 June 1996 Mr Herbert Durnig, a director of Vai and a resident of Austria, swore an affidavit in purported compliance with that part of the Anton Piller order which required one to be sworn within three days of service of the order. Davy contends that the affidavit did not conform to the obligation and is false in a number of material particulars.

On 10 December 1996 Davy issued and served a notice of motion seeking orders for the sequestration of the assets of Vai and the committal to prison of named employees alleged to have been responsible for the alleged breaches of the order. It also sought the committal to prison of Mr Durnig in respect of the alleged defects in his affidavit. Thus the respondents to the motion include Vai and Mr Durnig. I understand that the motion is fixed for hearing on 9 June 1997 with an estimated length of hearing of 15 days.

In the meantime, in January and February 1997, both sides issued a number of summonses. Davy sought to amend its notice of motion; Vai sought an order that it should be struck out on a number of grounds. Those applications came before May J in March 1997. By his order made on 24 March, he gave Davy leave to amend its notice of motion and refused to strike it out. This is the appeal of Vai and Mr Durnig, brought with the leave of May J, from his refusal to strike out the motion against them.

Of the many grounds on which Vai and Mr Durnig relied before May J, in substance, only one was pursued before us, though I will refer to others at the conclusion of this judgment. The essential point is whether the power conferred on the court by RSC Ord.45,r.7 "to dispense with service of a copy of an order under this rule if it thinks it just to do so" is exercisable in respect of a mandatory order retrospectively, that is to say, after the occurrence of the events alleged to constitute its breach, or only prospectively, that is to say before the expiration of the time limited for compliance with it. Vai and Mr Durnig submit that the answer is in the negative and that this court is bound by two of its own previous decisions so to hold. The decisions referred to are Lewis v. Lewis [1991] 1 WLR 235 and Denman v. Temple (unreported) (9 May 1991). This is disputed by Davy. It submits that the rule permits retrospective as well as prospective dispensation. Moreover, it contends, far from being bound by the two decisions on which Vai and Mr Durnig rely, we are bound by two earlier decisions of this court to which reference was not made in the two cases on which Vai and Mr Durnig rely and which conflict with them. The cases on which Davy relies are Turner v. Turner (1978) Sol J 696 and Hill Samuel v. Littaur (unreported) (3 April 1985). May J preferred the submissions of Davy. He said:

"In my judgment Turner and Hill Samuel are in conflict with Lewis and Denman v. Temple . I am obliged to chose between them. I prefer Turner and Hill Samuel . There are difficulties in this view arising from the relationship between rules 7(6) and 7(7). But in my view the more fundamental difficulties which I have identified can arise if the Turner solution is not available for cases such as Turner exemplifies. Accordingly Order 45 rule 7(7) does, in my view, confer a dispensing discretion which is capable of being exercised for mandatory orders retrospectively. It is unnecessary and undesirable to attempt to define at this stage of the present case the circumstances in which the discretion might be exercised."

It is convenient to start by setting out the provisions of the rules. The material rules are all contained in RSC Ord.45, which is headed "Enforcement of Judgments and Orders: General". The relevant ones are rules 5 and 7, respectively headed "Enforcement of judgment to do or abstain from doing any act" and "Service of copy of judgment, etc, prerequisite to enforcement under r.5". They provide:

"5(1) Where -

(a) a person required by a judgment or order to do an act within a time specified in the judgment or order refuses or neglects to do it within that time or, as the case may be, within that time as extended or abridged under Order 3, rule 5, or

(b) a person disobeys a judgment or order requiring him to abstain from doing an act,

then subject to the provisions of these rules, the judgment or order may be enforced by one or more of the following means, that is to say -

(i) with the leave of the Court, a writ of sequestration against the property of that person;

(ii) where that person is a body corporate, with the leave of the Court, a writ of sequestration against the property of any director or other officer of the body;

(iii) subject to the provisions of the Debtors Act 1869 and 1878, an order of committal against that person or, where that person is a body corporate, against any such officer."

Rule 7(2):

"Subject to Order 24, rule 16(3), Order 26, rule 6(3), and paragraphs (6) and (7) of this rule, an order shall not be enforced under rule 5 unless -

(a) a copy of the order has been served personally on the person required to do or abstain from doing the act in question, and

(b) in the case of an order requiring a person to do an act, the copy has been so served before the expiration of the time within which he was required to do the act.

(3) Subject as aforesaid, an order requiring a body corporate to do or abstain from doing an act shall not be enforced as mentioned in rule 5(1)(ii) or (iii) unless -

(a) a copy of the order has also been served personally on the officer against whose property leave is sought to issue a writ of sequestration or against whom an order of committal is sought, and

(b) in the case of an order requiring the body corporate to do an act, the copy has been so served before the expiration of the time within which the body was required to do the act.

(4) There must be prominently displayed on the front of the copy of an order served under this rule a warning to the person on whom the copy is served that disobedience to the order would be a contempt of court punishable by imprisonment, or (in the case of an order requiring a body corporate to do or abstain from doing an act) punishable by sequestration of the assets of the body corporate and by imprisonment of any individual responsible.

...

(6) An order requiring a person to abstain from doing an act may be enforced under rule 5 notwithstanding that service of a copy of the order has not been effected in accordance with this rule if the Court is satisfied that pending such service, the person against whom or against whose property is sought to enforce the order has had notice thereof either -

(a) by being present when the order was made, or

(b) by being notified of the terms of the order, whether by telephone, telegram or otherwise.

(7) Without prejudice to its powers under Order 65, rule 4, the Court may dispense with service of a copy of an order under this rule if it thinks it just to do so."

In the absence of authority I should prefer the submissions for Davy. The wording of rule 7(7) is wholly general and is included in an order dealing with the enforcement of judgments and a rule prescribing the prerequisites for such enforcement. It is true, as counsel for Vai and Mr Durnig observed, that the powers under Ord.65, r.4 saved by the paragraph are concerned with substituted service and that paragraph (7) does not sit very happily with paragraph (6). It is also true, as observed by Chadwick J in Moerman-Lenglet v. Henshaw (unreported) (23 November 1992), that dispensing with service of a mandatory order may be self-defeating if the order is expressed to require an act to be performed a given number of days after service of it. Nevertheless, in my view, the wording of the paragraph and its context would not warrant the conclusion that the court had no power in the enforcement of a mandatory order to dispense with its service. Its generality, following not only the specific requirements of paragraphs (2), (3) and (4) but the very limited power of dispensation provided for by paragraph (6), and the condition prescribed for its exercise, "if the court thinks it just to do so" point strongly to a power not confined in its operation to any particular time. If the paragraph is not so construed, it seems that the court would be powerless to deal with cases where a party, who is not served with the order during the period for compliance, deliberately refused to comply with a mandatory order made in his presence. This was described by May J as a conundrum. Counsel for Vai and Mr Durnig sought to escape from it by suggesting that the court could spot such cases in advance and dispense with service at the time the order is made. I find it difficult to understand how at that stage the court is to determine whether it would be just so to do. But in any event, in my view such a solution is, with respect to those who advance it, so unrealistic as to confirm that the construction I favour must have been intended by the draftsman. Thus, the question is whether this court is bound by authority to conclude otherwise.

It is convenient first to consider Gordon v. Gordon [1946] 1 All ER 247. In that case the husband was ordered to hand over the child of the marriage to his wife by 7pm on the following day. He deliberately failed to do so, but the order had not been served on him before the time for compliance had expired. The relevant rules were the Matrimonial Causes Rules 1944 which contained no power to dispense with service of the order. The Court of Appeal held that there was no power to commit the husband. Lord Greene MR said (page 252A):

"The principle that where a definite time is mentioned in the order for doing something, service of the order after the expiration of that time is not sufficient to found proceedings for contempt is well established."

Later at page 253G he said:

"In the present case it is perfectly clear that the order was not properly served in time. In view of that, there was no such breach of the order as would justify proceedings in contempt and the fact, which I am assuming, that the father knew all about the order in plenty of time does not justify us in any way in departing from the requirements of the rule."

The first case on which Davy relies is Turner v. Turner (CA, 15 September 1978). In that case the County Court judge had ordered the father, who was present in court at the time, to hand the child of the marriage to the mother that very afternoon. The husband was not served with any order to that effect and failed to comply with what he had heard the judge had required of him. On a subsequent application the judge ordered the arrest of the father who was duly apprehended and imprisoned. On the father's appeal it was submitted on his behalf that the court had had no power to order his committal. At page 3D of the transcript, Lord Denning MR said:

"Mr Turner, through his counsel Mr Stewart, has submitted that the Court was in error and that it had no jurisdiction either to make an Order for arrest or committal. He said that the Order to return the child was not operative until it was drawn up and served. In order, therefore, to get the child returned on that afternoon of 30th August, it would have been necessary to draw it up on that very day - 30th August, and served that very afternoon on Mr Turner or his solicitor. For that proposition Mr Stewart relied on the case of Gordon v. Gordon (1946) Probate, page 99, but reported more fully in 1946 (1) All England Reports at page 247. That case would appear at first sight to favour Mr Stewart's submission. But, when read carefully, it seems to me that it turned on the construction of the Matrimonial Rules as they were at that time. The court was unhappy with the decision and recommended that the rules should be altered.

I am glad to say that the rules, so far as the High Court is concerned, have been altered. This has been done by Order 45, Rule 7, sub-rule 7. It says the court may dispense with service of a copy of an order under this rule if it thinks it just to do so. No similar rule has yet been made for the County Court but the general rule is that the County Court always follows the High Court in these matters. So I think the County Court also may dispense with the service of a copy writ if it thinks right to do so. This is very desirable in cases concerning children. I think that dispensation is in accord with the common law. I agree with the observation of Lord Justice Cotton in Hyde v. Hyde 13 PD at page 171, where he said: 'If it were proved, for instance, that the person was actually in court at the time the order was made, service would be unnecessary in order to obtain process for contempt'.

If there ever was a case for service of a copy to be dispense with it is such a case as the present. The husband was present in court. He heard the Order. He knew all about it. Then he disappeared long before the order could be drawn up and long before it could be served. It cannot be right that he should be able to defy the law in this way. The Court can dispense with service and proceed at once against him for contempt."

Eveleigh LJ, the other member of the Court agreed. He added (at page 5 of the transcript):

"Gordon v. Gordon was a case governed by the Rules of the Supreme Court as they then were, order 41, rule 5. That rule has been replaced by order 45, rule 7, and by sub-rule 6 in particular it is stated, 'An order requiring a person to abstain from doing any act may be enforced under rule 5 notwithstanding that service of a copy of the order has not been effected in accordance with this rule if the court is satisfied that pending such service the person against whom or against whose property it is sought to enforce the order has had notice thereof either by being present when the order was made or by being notified of the terms of the order whether by telephone, telegram or otherwise'. That rule governs the case of an order requiring a person to abstain from doing an act. But sub-rule 7 goes on, without prejudice to its powers under order 65, rule 4 the court may dispense with service of a copy of the order under this rule if it thinks just to do so. The rules have clearly been altered to ameliorate the position as it existed in Gordon v. Gordon , and I do not think that Gordon v. Gordon governs this present case at all. This case is governed by the rules of the County Court in the first instance, and nothing in the County Court rules can be found to say, where a man is present in court and hears the order, as this man was, and then deliberately makes himself scarce in order to defy the order of the court, that in such circumstances strict procedural rules must be observed before he can be committed for contempt of court."

Counsel for Vai and Mr Durnig submit, by reference to the decision of Sir Nicholas Browne-Wilkinson V-C in Re Hetherington (1990) 1 Ch 1, that this Court is only bound by a decision of the court not an assumption made by the court. It is submitted that the statements of Lord Denning MR and Eveleigh LJ indicate only their assumptions as to the scope of Ord.45,r.7(7). I can only say that I disagree. The rule was referred to expressly. Though not directly applicable to the proceedings in the County Court, the Court of Appeal plainly applied it by analogy so as to confer on that court the jurisdiction possessed by the High Court. The rule was regarded as a reversal of the situation revealed in Gordon v. Gordon . The Court of Appeal may not have analysed the wording or context of the rule and did not refer to the details of the argument of counsel save by reference to Gordon v. Gordon . But it was inherent in that argument that the difficulty revealed by the facts in Gordon v. Gordon had not been changed by the rule. The court held that it had. In my judgment that holding must be a decision on the point not merely an assumption.

That decision was followed by the Court of Appeal in Hill Samuel v. Littaur (unreported) (13 April 1985). In that case the court was concerned with a prohibitory order but because the conditions prescribed by rule 7(6) had not been complied with, it could not be enforced unless the power conferred by rule 7(7) was both available and exercised. The judge had held that he could and should exercise that power and proceeded to enforce the order. The Court of Appeal concluded that he was right. The argument, as summarised by Parker LJ (on page 150 of the first respondent's bundle of authorities) was:

"(a) In the case of mandatory orders there was no power to dispense with personal service, save in the case of both knowledge and evasion of service, or possibly in the case of minor technical defects;

(b) Although there was previously a more extensive power in the case of prohibitive orders, when in 1967 Order 45, rule 7 replaced Order 41, rule 5, which had applied only to mandatory orders, and dealt with mandatory and prohibitive orders alike, it had, in the case of prohibitive orders, altered the pre-existing position. Since personal service and the endorsement of a penal notice was not obligatory in the case of such orders, the dispensing power, it was argued, must be the same as for mandatory orders."

These arguments were rejected. Parker LJ (at page 154) said:

"In the light of the history of the matter, the terms of the rule and the judgment of this court in Turner v. Turner, the argument advanced by Mr Blom-Cooper that there was no power under rule (7) to dispense with service in my judgment fails. Here the defendant knew precisely the terms of Mr Justice Robert Goff's order. He knew also, and admitted as much, that he knew that that order had been continued. He knew, and the judge so found, that he was acting in breach of the order and he resorted to substitutes in order to flout the order of the court. As to the exercise of the discretion, the only point made was that the plaintiffs had failed to serve, but that can avail nothing, for sub-rule (7) is to deal with cases where there has been a failure to serve. I would say, as Lord Denning said in Turner v. Turner, 122 SL 696, that, if ever there was a case where exercise of the discretion was justified, this case is it."

Sir David Cairns (at page 159) said:

"Despite the interesting excursion into the history of the penal notice which Mr Blom-Cooper developed before us, I am quite satisfied that Order 45, rule 7(7) of the Rules of the Supreme Court means what it says, that the discretion thereby conferred on the court is not restricted in the way contended for on behalf of the defendant and that the sub-rule enables the court to dispense with the service of a copy order endorsed with a penal notice. It was very properly conceded that, if there was no such restriction as contended for, the learned judge's exercise of his discretion was not open to criticism."

Kerr LJ, the third member of the court, added (at page 160):

"... in my view Mr Blom-Cooper's approach to the construction of what is now Order 45, rule 7 of the Rules of the Supreme Court was misconceived in principle when he sought to rely on the old authorities before the changes to the Rules were made in the mid-1960s."

He continued in that vein, and concluded:

"On the other hand, it introduced ... an unfettered judicial discretion in sub-rule (7) to dispense with these requirements. The present case is one which very clearly calls for the exercise of this discretion against the defendant, and I agree that his appeal must be dismissed."

Once again it is submitted on behalf of Vai and Mr Durnig that the members of the Court of Appeal merely assumed that rule 7(7) was exercisable retrospectively and were not concerned with the enforceability of a mandatory order anyway. I do not agree. It is clear that the ratio decidendi of that case was that rule 7(7) was exercisable retrospectively; it is nothing to the point that the order in that case was prohibitory. In my judgment both Turner v. Turner and Hill Samuel v. Littaur were decisions binding on this court as establishing that rule 7(7) is not restricted in its operation to a prospective operation.

I understood counsel for Vai and Mr Durnig to accept that if this was the view of he court then their appeal must be dismissed on this point for neither of these cases was cited in any of those on which he relied. In Hussain v. Hussain [1986] Fam 134 this question did not arise for decision, but at page 141 D-E, Sir John Donaldson MR said in relation to the equivalent provisions in the County Court Rules:

"At first reading, the wide discretion conferred by paragraph (7) might appear to render the narrower discretion conferred by paragraph (6) quite unnecessary. Mr Laws sought to explain this apparent overlap by submitting that paragraph (7) applies at the stage at which the order is being made and paragraph (6) at the stage at which it is being enforced. I am inclined to think that this is correct, although it does not arise for decision in the present case, because we are concerned with breach of an undertaking and not an order."

Likewise, in Sofroniou v. Szgetti (CA, 19 September 1990) McCowan LJ said (page 123 of the bundle of authorities):

"Protection is provided for the person against whom it is sought to enforce the order by the words in paragraph (6) 'may be enforced.' (I should add that neither counsel relied on paragraph (7). It is stated to be without prejudice to the court's powers under Order 65, rule 4, which are powers to order substituted service where it appears to the court to be impracticable to serve a document in the manner prescribed. This suggests to me that the dispensing power provided by paragraph (7) is intended to be exercised prospectively)."

In Lewis v. Lewis [1991] 1 WLR 235, the mother had refused to comply with the court's order for access to the child over the Christmas period, but the order was not served on her until after the relevant period had expired. On a subsequent committal application the judge dispensed with service of the order under the provisions of the County Court Rules equivalent to rule 7(7). The Court of Appeal concluded that he had no power to do so. The court was referred to Hussain v. Hussain but not to Turner v. Turner or Hill Samuel v. Littaur . The relevant passages in the judgments are the following. At page 139 in the judgment of Sir Stephen Brown P:

"Sir John Donaldson MR there accepted, so it appears the submission of Mr Laws that paragraph (7) is designed to apply at the stage which the order is actually made.

Accordingly, Mr Cusworth argues before this court that since the effective order was made on 19 December 1990, the judge could not on 10 January 1991 dispense with service of a copy of that order. Service in fact took place on 8 January 1991."

At the foot of that page he added:

"For the purposes of this appeal it is sufficient to say that the 'informal' procedure here adopted by the judge was defective. He did not have power under Ord.29,r.1(7) to dispense with service of the order and even if he did have such power, in my judgment, he was wrong in the exercise of his discretion to do so in the circumstances which I have outlined."

At page 241A, Stuart-Smith LJ said:

"The judge in this case purported to dispense with the necessity for service of the order under paragraph (7). In my judgment he was wrong in so doing. That paragraph is concerned with what is to be done at the time of the making of the order and not in relation to the enforcement of the order. There is a clear distinction in my judgment between paragraph (6) and paragraph (7) to that effect."

He then referred to the passage in Hussain v. Hussain and added:

"In my opinion Sir John Donaldson MR was clearly right there, although he was merely expressing an opinion. The distinction is borne out by the fact that there is a reference in paragraph (7) to Ord.7,r.8 which is concerned with substituted service. It seems to me to be plain that paragraph (7) is concerned with the question of service at the time that the order is made and not at the time of the enforcement."

Mann LJ, the third member of the Court, agreed.

Plainly that is a decision on the point at issue. To the same effect is the other case on which Vai and Mr Durnig rely, namely Denman v. Temple (CA, 9 May 1991). That case concerned a prohibitory order which had not been served. The judge purported to dispense with service and made an order for committal. The Court of Appeal held, by reference to Hussain v. Hussain and Lewis v. Lewis , that he had no power to do so.

In these circumstances it appears to me that the decisions on which Davy rely were binding on the courts which decided those on which Vai and Mr Durnig rely. All four cases involved decisions on the point, and the one pair conflicts with the other. It is not disputed that this court is entitled and bound to chose between the two pairs: see, Young v. Bristol Aeroplane Co Ltd [1944] KB 718, 729; and Davis v. Johnson [1979] AC 264. In my judgment this Court should follow the decisions in Turner v. Turner and Hill Samuel v. Littaur . First they were the initial decisions and as such binding on the courts which decided the later cases. Second, they were not cited in the later decisions. Had they been, I consider that the courts deciding the later cases would have been bound to reach the same conclusion and, in consequence, would have done so. Third, such a decision is in accordance with what I consider, with the greatest respect to those who had thought otherwise, to be the true construction of rule 7(7) in its context. In the light of the third reason, it is unnecessary to reach any conclusion on whether, in making the choice between the conflicting decisions, this court could chose the later of the two by which it was bound in preference to the earlier.

Accordingly, on the central point I would dismiss this appeal. I should however refer briefly to some other matters. First, we did not hear argument from Davy on the issues raised by their respondent's notice as to whether there was jurisdiction to proceed against Vai or Mr Durnig for contempt of court otherwise than under and in compliance with RSC Ord.45. Counsel accepted that, given our decision on the power conferred by rule 7(7), if he failed to persuade the judge hearing the contempt motion to exercise it, then he was unlikely to succeed under the alternative jurisdiction in relation to contumacious behaviour intended to frustrate orders of the court for which he contended. The exception to this was the conclusion of May J that the affidavit sworn by Mr Durnig stood in a separate category. This aspect of the decision of May J was not appealed so that the decision of the judge stands.

In relation to Vai and Mr Durnig they are concerned to argue on the contempt motion when it comes to be dealt with on its merits that recklessness is an insufficient state of mind for the contempt of interference with the administration of justice. This point may well arise in connection with the affidavit of Mr Durnig. May J declined to decide it on the basis that for other reasons he was not prepared to strike out the notice of motion and it was a point better decided in the light of specific findings of fact. I agree. The dismissal of this appeal does not foreclose any issues in that respect. Likewise Vai and Mr Durnig were concerned that their point as to the alternative jurisdiction of interference in the administration of justice being unavailable against a party should remain arguable in respect of the affidavit sworn by Mr Durnig as well as in other contexts. May J reached no conclusion on this point and nor do I.

For all these reasons, I would dismiss this appeal.

LORD JUSTICE PHILLIPS: I agree.

LORD JUSTICE LEGGATT: I agree. Turner v. Turner has been binding on this Court since the judgments in it were given on 15 September 1978. In cases since where it has not been cited, it must have been followed if it had been. For the reasons given by my brother Morritt, we follow it now. The appeal is dismissed.

ORDER: Appeal dismissed with costs to include the costs of the respondent's notice; leave to appeal to the House of Lords refused.