England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
THE HONOURABLE MR JUSTICE SIMON
[2015] EWHC 1080 (Ch)

		Royal Courts of Justice Strand, London, WC2A 2LL
		05/07/2017

Lord Justice Longmore:

1. This appeal is about the consequences of failure to respond adequately to requests for information made in respect of defences to three unfair prejudice petitions launched as long ago as 12^th March 2013. The respondents to those petitions ("the appellants") appeal against orders of Simon J (1) declaring that the appellants' points of defence had been struck out since 4 p.m. on 22^nd April 2014 and remain struck out and (2) dismissing the appellants' applications for relief from an order of Mr S. Monty QC of 13^th November 2014.
2. The relevant chronology is as follows:-

1. The initial Part 18 Requests were made by the petitioners on 3^rd September 2013. The appellants initially proposed that a response would be provided by 22^nd October 2013, without suggesting that any objection was taken to the content of the Part 18 Requests. The petitioners agreed that timeframe on 17^th September 2013.

2. The appellants then objected to the content of the Part 18 Requests on 4^th October 2013, over a month after they had been served, on the grounds that they were "neither reasonable nor proportionate". The petitioners therefore applied on 15^th November 2013 for an order requiring the Part 18 Requests to be answered.

3. In the event, that application, together with an application by the appellants seeking to strike out parts of the pleadings, was disposed of by a consent order made by Mr Hollington QC (sitting as a High Court Judge) on 27^th February 2014. Paragraph 5 of that order provided that the appellants "do provide a full response to [the Part 18 Requests] by 4 p.m. on 21^st March 2014".

4. The appellants did not provide any response (full or otherwise) to the Part 18 Requests by 4 p.m. on 21^st March 2014. Rose J therefore made an unless order at a CMC on 4^th April 2014, requiring them to file and serve their responses to the Part 18 Requests by 4 p.m. on 22^nd April 2014, failing which the amended points of defence ("the defences") would be struck out. That order has never been appealed.

5. The appellants served a purported response to the Part 18 Requests (the "First Response") shortly before the deadline of 4 p.m. on 22^nd April 2014.

6. The petitioners then issued an application dated 27^th May 2014 seeking directions to be given for the future conduct of the proceedings on the footing that the defences stood struck out.

7. The appellants issued a cross-application dated 5^th June 2014, seeking relief from sanctions.

8. Following a hearing of those two applications on 13^th November 2014, Mr Monty QC (also sitting as a High Court Judge) determined that the First Response was deficient in various respects, and that the reason given by the appellants for the deficiencies (that the nature and extent of the Part 18 Requests was excessive) was one which not having been taken before Mr Hollington QC or Rose J, it was not open to them to take. Nevertheless he was persuaded, in his discretion, to grant relief from the strike-out sanction on strict conditions, including that the appellants would by 4^th December 2014 serve a full and complete response to the Part 18 Requests; he so ordered on 13^th November 2014 ("the Monty Order").

9. The appellants served their purported full and complete response on 4^th December 2014 ("the Second Response").

10. The petitioners took issue with the adequacy of the Second Response, and applied on 29^th January 2015 for relief on the footing that the defences remained struck out.

11. On 4^th February 2015 the appellants applied for a second time for relief from sanctions.

12. Following a hearing of those applications on 23^rd and 24^th March 2015, Simon J gave judgment on 23^rd April 2015, finding that the Second response was not, even now, a full and complete Response to the Part 18 Requests, that in consequence the conditions laid down in the Monty Order for the grant of relief from sanction had not been met, and that the defences accordingly remained struck out as from 22^nd April 2014. He additionally refused the appellants' further application for relief from sanctions, on the basis that there had been no material change of circumstances since the Monty Order which remained in force.

3. The terms of Mr Monty QC's order are important and relevantly provided:-

"UPON the respondents [whom I have called the appellants] having been further required by paragraphs 3 and 4 of the order of the Honourable Mrs Justice Rose dated 4^th April 2014 (the "Unless Order") to file and serve their response to the RFI [request for further information] by 4 p.m. on 22^nd April 2014, failing which the points of defence would be struck out.

AND UPON the respondents having filed and served by 4 p.m. on 22^nd April 2014 a response to the RFI that was plainly incomplete and insufficient, with the result that the amended points of defence stand struck out pursuant to paragraph 4 of the Unless Order (subject to the relief application).

AND UPON the Court considering that it is appropriate to grant relief from the sanction applied by paragraph 4 of the Unless Order strictly on the terms set out in this Order, and that in the absence of truly extraordinary circumstances the respondents should not be permitted to participate in the future conduct of these petitions if those terms are not strictly adhered to.

AND UPON READING the third witness statement of Paul Matthew Caldicott dated 27^th May 2014, the witness statement of Jonathan Hill dated 5^th June 2014, and the fourth witness statement of Paul Matthew Caldicott dated 18^th July 2014.

AND UPON HEARING leading counsel for the appellants and counsel for the respondents

IT IS ORDERED that:

…

4. If the respondents do:

(a) by 4 p.m. on 27^th November 2014 pay the costs ordered to be paid by paragraph 10 of this order in full in cleared funds by transfer into the client account of Blake Morgan LLP at Barclays Bank plc, Oxford City Branch, 54 Cornmarket Street, Oxford OX1 3HB …

(b) By 4 p.m. on 4^th December 2014 file with the Court and serve on the petitioners a full and complete response to (1) the RFI and (2) any request made under paragraph 1 of this order to which paragraph 3 of this order applies,

the amended points of defence shall be reinstated.

5. For the avoidance of all doubt, the response to be provided by the respondents under paragraph 4 (h) of this order shall:

(a) be verified with a statement of truth in accordance with Part 22 of the Civil Procedure Rules 1998, and

(b) give a full and complete response to each and every request made in the RFIs and to any request made under paragraph 1 of this order to which paragraph 3 of this order applies,

and a response that fails to comply in all respects with the provisions of this paragraph at the time when it is filed and served shall be treated as not having been filed and served for the purposes of paragraph 4 of this order.

…"

4. Mr Monty QC had found the First Response to be defective. He gave judgment in strong terms:-

1. He agreed with counsel for the respondents that once the consent order of Mr Hollington QC had been made the appellants "could not thereafter decline to comply with the order so far as compliance was possible", and that their failure to comply had been a deliberate decision made for a reason – namely that the Part 18 Requests were too wide and extensive - which was not open to them to rely on, given that they had consented to provide a full response.

2. He agreed that the appellants had failed to answer the Part 18 Requests in all the ways alleged by the respondents, although for the purposes of his judgment he limited himself to citing just eight examples of the non-compliance.

3. He felt that the evidence before him "as a whole falls short but not far short of establishing a clear course of conduct deliberately designed to delay the hearing" on the part of the appellants (para 48).

4. While he in the end considered it appropriate to grant relief on the stringent terms described above he added that "Without wishing to fetter the discretion of the court in the future, it should be noted that, barring something extraordinary, the court would expect complete compliance with such an order and would not look kindly upon any further application for relief under either limb" (para 63).

The judgment of Simon J

5. The judge first considered whether there had been a full and complete response to the requests for further information as required by the order of Mr Monty QC. He decided that there had not been and he took four examples of what he regarded as inadequate answers. He held further that the failures went to the heart of the allegations made against the appellants, and that they were to a significant extent evasive. The result was that the amended points of defence stood struck out.
6. He then turned to the application for relief against sanctions and held that there had been no material change of circumstances since Mr Monty QC had made his order relieving the appellants from the sanction of the strike-out order made by Rose J. Accordingly no fresh application for relief for sanction could be made. He then said that, if it were open to the appellants to apply for relief from sanctions he would have refused it.

This appeal

7. Mr Daniel Lightman QC for the appellants (who did not appear below) submitted that it was unnecessary for them to show any change of circumstances since Mr Monty QC made his order and that he could therefore address the court on the basis that Mr Monty QC had applied a new sanction of strike-out or, if he had not, that he could again apply for relief from the sanction of strike-out imposed by Rose J. He then wished to submit that the judge should have relieved the appellants on the facts of the case instead of coming to the disproportionate conclusion he had.
8. We decided to hear argument on the first submission since, if it failed, the second submission would not arise.
9. Mr Lightman said that he was relying on CPR 3.9(1):-

"On the application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

a) for litigation to be conducted efficiently and at proportionate cost; and

b) to enforce compliance with rules, practice directions and orders."

He then submitted that there was nothing in the rule imposing any requirement that there should be any change in circumstances between one application for relief and another.

10. There might be some force in this argument if the order of Mr Monty QC had applied a new sanction different from the strike-out sanction imposed by Rose J. In fact it did nothing of the sort; it merely activated the original strike-out sanction by declaring that the amended points of defence were to stand struck out subject to the relief application and then providing that, if the appellants filed and served a full and complete response to the request for further information by 4^th December 2014, the amended points of defence "shall be reinstated". That is no new or different sanction from that imposed by Rose J by her order of 4^th April 2014. The only sanction from which the appellants could seek relief was thus that of Rose J; that relief they had conditionally achieved but the condition was never satisfied.
11. The position was, therefore, that the application to Simon J was a second application for relief when the first application to Mr Monty QC had failed. In these circumstances it is axiomatic that a second judge (here Simon J) could not and should not entertain a second application after the application before the first judge (here Mr Monty QC) had failed (or, I would add, only succeeded on conditions that were never fulfilled), unless there has been a material change of circumstances.
12. A similar situation arose in Thevarajah v Riordan [2016] 1 WLR 76 in which Arnold J granted a freezing injunction together with an order requiring the defendants to disclose information relating to their assets. Henderson J made a subsequent order stating unless disclosure was made by a certain date, the defendants would be debarred from defending the claim. No disclosure was given and the defendants applied for relief from sanctions under CPR rule 3.9. Hildyard J refused the requested relief and ordered that the defence be struck out. The defendants then made a second application for relief on the basis that they were now in a position to disclose the required information. This application was granted by Mr Andrew Sutcliffe QC. Both the Court of Appeal and the Supreme Court held that it was not open to the defendant to rely either on the power to revoke or vary a previous order contained in CPR 3.1(7) or on the power to give relief contained in CPR 3.9 unless there had been a material change of circumstances or the facts on which the first decision was made had been misstated. In paragraph 15 Lord Neuberger cited with approval para 44 of Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795:-

"The discretion [exercisable under CPR r 3.1(7)] might be appropriately exercised normally only (i) where there had been a material change of circumstances since the order was made; (ii) where the facts on which the original decision was made had been misstated; or (iii) where there had been a manifest mistake on the part of the judge in formulating the order. Moreover, as the court emphasised, the application must be made promptly. This reasoning has equal validity in the context of an application under CPR r 3.9."

13. Lord Neuberger then applied that reasoning saying that the defendants' application was to be rightly regarded as an application to vary or revoke Hildyard J's order. He then added:-

"18 However, even if that were not right, it appears to me that, as a matter of ordinary principle, when a court has made an interlocutory order, it is not normally open to a party subsequently to ask for relief which effectively requires that order to be varied or rescinded, save if there has been a material change in circumstances since the order was made. As was observed by Buckley LJ in Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485, 492-493:

"Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter."

Accordingly, even if CPR r 3.1(7) did not apply to the second relief application, it appears clear that the defendants would have faced the same hurdle before the deputy judge. That conclusion also derives support from the last sentence in para 44 in the Mitchell case [2014] 1 WLR 795, quoted in para 15 above.

19 There was no question of the facts having been misstated by Hildyard J or of manifest mistake in formulating his order. Accordingly, unless (perhaps) they could show that this was not a "normal" case, the defendants had to establish a material change in circumstances since the hearing before Hildyard J before the deputy judge could properly consider the second relief application on its merits. Mr Letman was unable to point to any factors which rendered this case relevantly not normal. Accordingly, I reject the defendants' first point."

14. This shows the necessity for a defendant, who has already made one application for relief from sanctions, to show a material change of circumstances before he can make a second such application. It is true that there is a factual distinction between Thevarajah and the present case in that in Thevarajah Hildyard J had refused relief against the strike-out sanction whereas here Mr Monty QC had granted relief on the condition of a full and complete response; that condition was never fulfilled and so Mr Monty QC's order stood as a refusal of relief and the amended points of defence remained struck out. Mr Monty QC's order was an effective refusal and has therefore to be regarded in the same light as Hildyard J's refusal in Thevarajah.
15. Here there has been no material change of circumstance since the order of Mr Monty QC or, indeed, that of Rose J. In Thevarajah it was at least arguable that late compliance with the order of Henderson J was a change of circumstance (an argument which the Supreme Court in fact rejected). In this case there has been no compliance at all with the order of Rose J or the conditions of relief required by Mr Monty QC. Simon J was therefore correct to say at para 106 that the case was not one.

"in which relief against sanctions could or should be granted in view of the history of the litigation and the form of the relief order."

16. Mr Lightman tried to rely on the tentative words of Lord Neuberger in paragraph 19 "unless (perhaps) they could show that this was not a "normal" case to run an argument that this was not a "normal" case. He sought to amend his notice of appeal to allege the facts on which he would rely in support of this argument but we refused permission to amend his notice of appeal at this very late stage of the proceedings.

Conclusion

17. These are the reasons why we decided to dismiss the appeal on Tuesday 27^th June 2017. I do so all the more readily because the one point that the single lord justice thought was arguable, namely that the strike-out should have applied only to the paragraphs of the pleading in relation to which further information had been requested, had been ventilated before Mr Monty QC and (as Mr Christopher Parker QC for the petitioners was able to show us) had been rejected by him. There is no appeal from the order of Mr Monty QC and it could hardly have been open to Simon J to take a different view even if the point had been argued before him, which it was not.

Lady Justice Sharp:

18. I agree.