COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE LIGHTMAN
CH 1993 R 6492
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE DYSON
LORD JUSTICE MAURICE KAY
| TOMBSTONE LIMITED
|- and -
|STARBIBI RAJA (representing the estate of the late Mohammed Raja)
HEALYS (a firm)
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MR STEPHEN MEACHAM Solicitor of Messrs Sabeers for the First Respondent
MR ANDREW ONSLOW QC and MR CHARLES DOUGHERTY (instructed by Kennedys) for the Second Respondents
Hearing dates: 17th, 18th & 19th June 2008
Crown Copyright ©
Lord Justice Mummery :
A. AN OVERVIEW
B. BACKGROUND DETAIL
(1) In favour of Tombstone he found potential secondary legal liability on the part of the respondents. They could be held legally responsible for any acts of trespass and conversion by the sequestrators, even though the sequestrators themselves were personally immune from liability.
(2) Although the 13 December 2002 order and the amended writ were not nullities, the process by which the amended writ was issued was seriously flawed by reason of irregularities.
(3) The irregularities took the form of the respondents' misrepresentations, non-disclosures and breaches of duty to the court which exposed the order and the amended writ to challenge.
(4) The court had a discretion under the CPR to withdraw retrospectively the protection otherwise afforded to the respondents by the court order.
(5) Tombstone was not precluded from making an application for damages against the respondents by reason only of the fact that the order of December 13 and the amended writ had not been set aside on grounds of irregularity. The Court of Appeal had set aside the amended writ consequent on reversing Peter Smith J's finding of contempt against Mr van Hoogstraten.
(6) The court ought not to exercise its discretion in favour of withdrawing the protection of the court order and the defence of judicial authority. The judge's reasoning is fully set out below.
(7) The tort claims must accordingly fail. The court order protected the respondents from liability for acts committed while the order was in force.
(8) Tombstone's tort claims against the respondents were also an abuse of process and should be struck out.
(9) The claims against the respondents also failed on the ground that Tombstone had no arguable case that it had suffered recoverable loss and damage.
"79. I have no doubt that in the quite exceptional circumstances of this case in the exercise of my discretion I should decline to withdraw the protection. My reasons for so deciding can be shortly stated as follows: (1) it should have been plain to any competent lawyer, with any knowledge or experience of litigation (and accordingly any such lawyer instructed by Tombstone) that: (a) the December 13th Order had been irregularly obtained, for it had been obtained for no apparent or sufficient reason on a without notice application against a non-party to the proceedings against whom there had never been any application of contempt and in contravention of RSC Order 46,5(2), and accordingly the order would practically as a matter of course on any prompt application be set aside on this ground; and (b) in any event at any time, since the order was made on a without notice application, Tombstone could apply for its discharge on the merits, on a full hearing; (2) Tombstone (through Mr van Hoogstraten) at all times knew (but the Defendants did not know) that the December 13th Order could and would be set aside by the Court of Appeal. If Tombstone had challenged the Order forthwith (as any ordinary litigant would have done) there would have been an early finality in this litigation: the December 13th Order and the Amended Writ would have occasioned Tombstone no damage or loss. Instead, not merely was Tombstone content that the December 13th Order and the Amended Writ should remain in force until the Sequestrators applied for power to sell the Properties, but through Engleharts Tombstone requested the Sequestrators to pay tax and trade debts owed by Tombstone. When the Sequestrators did apply to sell the Properties, instead of making any challenge, for no good or sufficient reason, Tombstone left the making any challenge to others who had no locus standi to make it. Tombstone was accordingly in a very real sense the author of the loss in respect of which it seeks the lifting of the protection afforded to the Defendants by the orders and for which it claims relief in this action; (3) an application to discharge the December 13th Order and set aside the Amended Writ and (in default) for permission to appeal could and should have been made at the hearing on 18th December 2002. At that hearing at which Mr van Hoogstraten was represented by Mr Reza, matters arising from the December 2002 Judgment including the form of order and the grant of permission to appeal were on the agenda and dealt with. Tombstone however of which Mr van Hoogstraten was the "corporate embodiment", for its own reasons absented itself and took no action: (4) though the Sequestrators did their best in early February 2003 to prompt Tombstone to be represented at the first hearing of their application for power to sell properties in the name of Tombstone and though Mr van Hoogstraten was represented by counsel Tombstone for their own reasons declined to be represented. The (ultimately successful) application by the Sequestrators for directions authorising the sale of the Properties was the occasion (if not earlier made) for a challenge to the December 13th Order on this ground; for the claim to relief sought by the Sequestrators proceeded on the basis that the December 13th Order was valid and regularly made. Tombstone stood by whilst futile applications to intervene were made at the instance of Mr van Hoogstraten by Ms Hamilton and Willoughbys and made no application at all to the court until the 25th June 2003 and no application on the ground of irregularity until March 2006. So far as reliance as an excuse for this and other actions and delays is placed on the alleged hostility of the Judge to Mr van Hoogstraten and his identification of Tombstone with Mr van Hoogstraten, it is appropriate to have in mind the words of Lord Hoffmann in Arthur S Hall v. Simons  1 AC at 699:
"Whatever may have been the foibles of the Judge who heard the case it cannot be assumed that he would have behaved irrationally. If he did it would have been corrected on appeal."
(5) the application by Tombstone to the Court of Appeal for permission to appeal against the Judge's refusal of permission to intervene was again the occasion to raise any allegation of irregularity, but the allegation of irregularity was only advanced as late as March 2006; and (6) throughout the intervening period the Defendants proceeded on the basis that, whether or not on its merits the December 13th Order should have been made, there was no question of any irregularity which might defeat the protection otherwise afforded to those who procured the Order and secured compliance with it. As Amjad told me in his evidence and I fully accept, any hint of irregularity would have prompted the Estate to make an application to the court for resolution of the issue.
80. In a word I am firmly of the view that in all the circumstances of this case it would be unjust and indeed oppressive to the Defendants to accede to Tombstone's last minute and surprise application to spring upon the Defendants an order depriving them of the protection on which they could reasonably rely over the protracted period since 13th December 2002."
CPR discretion or inherent jurisdiction?
"23.9 (1) This rule applies where the court has disposed of an application which it permitted to be made without service of a copy of the application notice.
(2) Where the court makes an order, whether granting or dismissing the application, a copy of the application notice and any evidence in support must, unless the court orders otherwise, be served with the order on any party or other person –
(a) against whom the order was made; and
(b) against whom the order was sought.
(3) The order must contain a statement of the right to make an application to set aside or vary the order under rule 23.10."
"23.10 (1) A person who was not served with a copy of the application notice before an order was made under rule 23.9, may apply to have the order set aside or varied.
(2) An application under this rule must be made within 7 days after the date on which the order was served on the person making the application."
"..is entitled to apply to have set aside ex debito justitiae in the exercise of the inherent jurisdiction of the court without his needing to have recourse to the rules that deal expressly with proceedings to set aside orders for irregularity and give to the judge a discretion as to the order he will make."
"..is entitled to have set aside ex debito justitiae. That may involve some unfairness to the doctors and nurses at St George's……But the unfairness (indeed injustice) to M.S. would be much greater if the order were not set aside."
"….. Let me quote an analogy. The right to wind up a company is by statute a discretionary right. Yet the books and authorities point out that in many cases as against the company an unpaid creditor on a winding-up petition is entitled to a winding-up order ex debito justitiae. This means no more than that, in accordance with settled practice, the court can only exercise its discretion in one way, namely, by granting the order sought. So in many of the cases where there are defects of procedure, even if the defects are mere irregularities for the purposes of Ord. 70 so that the court has a discretion, it must follow that the applicant, if he is in no wise estopped by conduct or waiver, is entitled to say: I am entitled under Ord. 70 to have the order made upon me set aside ex debito justitiae. Indeed, the only difference between a nullity and an irregularity, to which such a principle applies, is where, being a nullity, it is too late to start again."
"48 …..While it is perhaps possible that there is no rule of the CPR which governs an application to set aside such a judgment and that the court's power to do so stems from some more general power to set aside a judgment ex debito justitiae, it seems unlikely that such a comprehensive code does not cover such a situation. We would hold that the attempted service at the wrong address was an error of procedure within the meaning of rule 3.10. The court is therefore empowered to make an order to remedy the error, and if rule 3.10 (b) was not thought strong enough to give the court power to make an order to the effect that an irregular judgment should be set aside, the necessary power is available under rule 3.1(2)(m). We do not consider it necessary to consider the vexed question whether the word order is wide enough to include judgment in rule 3.1(7): for the problems created by the distinctions between judgments and orders in the CPR see volume 1 of the White Book 2006 at paragraph 40.1.1.
49. On such an application, in construing the CPR, it is not in our judgment appropriate to hold, on the true construction of the wide and unfettered discretion given by those two rules, that the discretion to set aside an irregular judgment can only be exercised in one way, namely by setting aside the judgment. There may be circumstances in which the overriding objective of dealing with cases justly, which of course expressly includes, by rule 1.1(2), saving expense and dealing with the case in ways which are proportionate, requires the discretion to be exercised differently.
50. That is not to say that on an application to set aside a judgment in a case of this kind the just order will not almost always be to set aside the judgment.
However, each case depends upon its own facts and there may be circumstances in which it will not be appropriate to set aside the judgment, or at any rate, the whole judgment, as for instance when the defendant has delayed inexcusably in making his application to the court after learning that the judgment had been entered against him."
Exercise of CPR discretion
Knowledge of 13 December order
Knowledge of defects in 13 December order
Earlier application by Tombstone
Relevant factors mis-stated
Prejudice to respondents
Abuse of process
Respondents' non-disclosure and breaches of duty
D. COSTS APPEAL
Judgment on costs
Tombstone's submissions on costs
Respondents' submissions on costs
Costs: discussion and conclusions
F. SKELETON ARGUMENTS