The Judicial Committee of the Privy Council Decisions

Gaydamak & Anor v. UBS Bahamas Ltd & Anor (Bahamas) [2006] UKPC 8 (28 February 2006)

Privy Council Appeal No 67 of 2004

(1) Arcadi Gaydamak

(2) Alexandre Gaydamak Appellants

v.

(1) UBS Bahamas Ltd

(2) The Attorney General of the Bahamas Respondents

FROM THE COURT OF APPEAL OF THE BAHAMAS

- - - - - - - - - - - - - - - - -

REASONS FOR DECISION OF THE LORDS OF THE

JUDICIAL COMMITTEE OF THE PRIVY COUNCIL, OF THE

31^st January 2006, Delivered the 28^th February 2006

- - - - - - - - - - - - - - - - -

Present at the hearing:-

Lord Bingham of Cornhill

Lord Hutton

Lord Scott of Foscote

Lord Walker of Gestingthorpe

Lord Brown of Eaton-under-Heywood

- - - - - - - - - - - - - - - -

[Delivered by Lord Scott of Foscote]

1. At the conclusion of argument on this appeal (on Tuesday 31 January 2006) their Lordships announced that they would, for reasons to be given later, humbly advise Her Majesty that the appeal should be allowed. These are the reasons.
2. The appeal raises a short procedural point. The appellants before the Board were appellants in an appeal to the Court of Apeal against Austin Davis J's refusal to discharge a restraint order that he had made on 12 April 2002 in respect of the sum, US $9 million or thereabouts, standing to their credit in a joint account with UBS (Bahamas) Ltd. ('the bank'). The restraint order was made pursuant to section 26 of the Proceeds of Crime Act 2000. It resulted from criminal proceedings in France that were being taken, or were about to be taken, against the first appellant. The appellants' appeal was listed for hearing on 22 January 2004 and was called on for hearing when the Court of Appeal sat on that day. But no one was present on behalf of the appellants to prosecute the appeal. So the appeal was struck out pursuant to Rule 37(1) of the Court of Appeal Rules 1965. But Rule 37(2) allows an appellant whose appeal has been struck out owing to his non-appearance to apply to the court by notice of motion, supported by an affidavit, for the appeal to be re-entered for hearing. The court has a broad discretion to deal with the application "as it may deem just".
3. On 6 February 2004 the appellants applied, pursuant to Rule 37(2), for an order directing their struck-out appeal to be re-entered for hearing. The application was supported by an affidavit sworn on the same day, 6 February 2004, by their Bahamian counsel Ms Lockhart-Charles. In her affidavit Ms Lockhart-Charles explained why nobody was present at the court on 22 January 2004 to open the appellants' case on the appeal. It is convenient at this juncture to provide a little more detail of the procedural background.
4. The restraint order had been made on 12 April 2002 on an ex parte application by the Attorney General, the 2nd respondent before the Board. By a summons of 23 May 2002 the appellants applied, inter partes, to Austin Davis J to discharge the ex parte order. At the hearing of the summons Ms Lockhart-Charles appeared for the appellants, Mr Garvin Gaskin for the Attorney General. The bank, too, was represented by counsel.
5. By an order dated 27 January 2003 Austin Davis J dismissed the appellants' application but by a further order made on 31 January (again after an inter partes hearing) he granted the appellants leave to appeal. It is a fair, indeed a compelling, inference that the judge, who presumably had heard submissions from both sides on the merits of an appeal, could not have thought that an appeal would be hopeless.
6. On 10 February 2003 the appellants' Notice of Appeal was filed at the Court of Appeal registry. The Notice of Appeal specified a number of grounds on which the appellants proposed to rely.
7. In the period between the filing of the Notice of Appeal on 10 February 2003 and the calling on of the appeal on 22 January 2004 there were communications by telephone between Ms Lockhart-Charles and the Deputy Registrar of the Court of Appeal, Mrs Demeritte-Francis. Ms Lockhart-Charles has deposed in her affidavit of 6 February 2004 to the content of these communications. No evidence, sworn or otherwise, contradicting or in any way qualifying Ms Lockhart-Charles' account was put before the Court of Appeal on the hearing of the appellants Rule 37(2) application or has been put before the Board.
8. The content of the communications between Ms Lockhart-Charles and the Deputy Registrar is described in paragraphs 12 and 14 of the affidavit. What is said is that at the end of October 2003 Ms Lockhart-Charles told the Deputy Registrar that the appellants wanted to apply for leave to place further evidence before the Court of Appeal but that further time was needed for the evidence to be assembled. The Deputy Registrar asked to be updated in December as to the appellants' progress in preparing for their proposed application. Further telephone communications took place, first in December 2003 and again during the week of 12 January 2004 in the course of which Ms Lockhart-Charles informed the Deputy Registrar that the assembling of the documents and translations intended to be put in evidence was still not complete. On both occasions Ms Lockhart-Charles was given assurances by the Deputy Registrar that the appeal had not yet been set down for hearing and would not be set down during January. It is worth repeating that no part of this account is contested.
9. On 15 January 2004 the registry of the Court of Appeal gave a written notification to the Attorney General that the appeal would be heard on 22 January 2004. A similar notice was sent to the bank. No such notice was sent to the appellants. Provision for the giving of these written notices is contained in Rule 31(2) of the Court of Appeal Rules:

"When the preparation of the Record is completed the Registrar … shall set down the appeal for hearing before the court, and shall thereupon give notice … to the appellant and to all parties upon whom the notice of appeal was served."

It is not contested that a Rule 31(2) notice was not given to Ms Lockhart-Charles or her firm. No explanation for the oversight has been offered. There was, it must be inferred, an administrative oversight in the registry.

10. Receipt of a Rule 31(2) notice is not the only means whereby a litigant, or a litigant's lawyers, may become aware of the date fixed for the hearing of an appeal. There is a notice board at the entrance to the courtroom in which the Court of Appeal sits on which the respective hearing dates of the appeals which have been set down for hearing are specified. Strictly speaking there is no evidence about this notice board but it is referred to in paragraph 25 of the Attorney General's printed case and their Lordships have no reason to doubt the accuracy of what is said. But Ms Lockhart-Charles, who had received assurances from the Deputy Registrar that her clients' appeal would not be set down in January, had no reason to consult the notice board and did not do so (see paras 15 and 16 of her affidavit). She deposed (in paragraph 16) to a telephone call from the registry that she received at about 10.30am on 22 January 2004. She says (at para 17) she was told by a Ms Clarke that the appeal had been set down for hearing that day. She told Ms Clarke that this must be a mistake and recounted the assurances she had been given by the Deputy Registrar. She says that she told Ms Clarke that she would either send an associate down to the court or go there herself if necessary but that Ms Clarke's response was to say that she (Ms Clarke) would get back to her. Ms Lockhart-Charles deposed (at para 18) that she had no subsequent communication from the registry but, on the following day, went to the registry to find out what the position was and was told the appeal had been struck out. None of this is contested.
11. On 6 February 2004 the appellants gave notice pursuant to Rule 37(2) of their application for an order that the struck-out appeal be re-entered for hearing. The application was heard on 5 April 2004 by Churaman, Ganpatsingh and Osadebay JJ A and was dismissed. No reasoned judgment was given. The Court record simply says that

"The oral judgment of the court was delivered by Churaman JA. The application to re-instate this appeal is refused and we make no order as to costs."

Fortunately, however, counsel have supplied their Lordships with an agreed Note of the 5 April hearing. The Note reads as follows:-

"1. The Court raised the question of the Form 5 Notice contained in Appendix A, referred to in rule 31(2) of the Court of Appeal Rules. Counsel for the Attorney General acknowledged that the Attorney General's office had received the said notice from the Court.

2. Miss Dean [counsel for the appellants] referred to the Affidavit of G.Lockhart Charles.

3. The Court stated that the hearing date was published on the notice board.

4. The Court stated that the Applicants must prove that their case has a chance of success; the Court stated that the Applicants must also give a good reason why they did not appear.

5. The Court asked whether the Applicants had asked the registrar to swear an affidavit. The Court further stated that it does not pursue an investigation.

6. The Court stated that a list is published every month on the notice board and that is sufficient notice to every practitioner.

7. The Court stated that it rang the Applicants and still there was no appearance.

8. The Court stated that exceptional circumstances must exist and there were none here.

9. There was no argument as to the merits of the case.

10. The Court then ruled that the application was refused and that there be no order as to costs."

12. In their Lordships' opinion, the Court of Appeal's refusal to re-instate the appeal did not do justice to the appellants. The unchallenged evidence of Ms Lockhart-Charles shows that the non-appearance on 22 January 2004 of anyone to prosecute the appeal when it was called on was not attributable to any fault of the appellants or their legal representatives. Ms Lockhart-Charles had received assurances from the Deputy Registrar that the appeal would not be listed for hearing during January. The Deputy Registrar had ample authority to give those assurances (see section 6(1),(2), and (3) of the Court of Appeal Act 1963) and Ms Lockhart-Charles was entitled to rely on them unless and until they were withdrawn. No written notice specifying the date of the hearing of the appeal, as required by Rule 31(2), had been given to the appellants notwithstanding that the requisite notices had been given to both respondents to the appeal. In these circumstances, in their Lordships' opinion, there was no reason why Ms Lockhart-Charles should have consulted the notice board in order to check whether, contrary to the assurances she had been given, the appeal had been set down. The most that can be said against her is that, on receiving the telephone call from Ms Clarke at 10.30am on 22 January, she did not immediately go down to the court, recount to the Court of Appeal the assurances she had been given by the Deputy Registrar, explain why it was that she was not ready to open the appeal and request an adjournment. If she had done so their Lordships do not think the Court of Appeal would have had any real alternative but to agree to the adjournment.
13. It seems from paragraph 5 of the agreed Note that the Court of Appeal may not have regarded Ms Lockhart-Charles' affidavit evidence as a sufficiently exculpatory explanation for her absence on 22 January. Their Lordships cannot understand why not. She had good reason to believe that the listing of the appeal for hearing on 22 January was due to an administrative error in the registry and that the registry would so inform the Court.
14. The correct approach to an application to re-instate proceedings in a case such as the present one is well-explained, in their Lordships' opinion, in Grimshaw v Dunbar [1953] 1QB 408. The case was one in which a tenant, defendant to a possession claim brought by his landlord on the ground of non payment of rent, had not turned up at court when the case came on for hearing. The hearing proceeded in the tenant's absence and a possession order was made. The tenant applied for a re-trial. His excuse for his absence was that he had paid the arrears of rent into court and had been told by a court official that it would not be necessary for him to attend the hearing since the possession claim would be dismissed by reason of his payment-in. The tenant's application for a re-trial was dismissed but the tenant appealed. The appeal was allowed and the Court of Appeal expressed some general principles which seem to their Lordships to be as well applicable to the present case as to that case. Jenkins LJ (as he then was) mentioned three factors which he regarded as "some of the main considerations" (p.414) that a judge exercising a discretion whether or not to re-instate struck-out proceedings should take into account.
15. First, the court should consider why it was that the litigant had failed to appear when the case was called on. Jenkins LJ referred to "… the undisputed statement of the tenant … to the effect that his absence was due to the wrong advice which he received from one of the officials of the court" (p.415). An official of the court had "unwittingly misled him". The appellants, in the present case, could say much the same. Second, the court should consider whether there had been undue delay by the absent party in seeking re-instatement of the proceedings (p.415). Mr Dingemans QC, counsel for the Attorney General, agreed that there had been no undue delay in the present case. Third, the court should ask itself whether the other party would be prejudiced by the re-instatement of the proceedings (pp 415-416). Mr Dingemans accepted that there would be no prejudice to the Attorney General if the appellants' appeal were re-instated. The US$ 9 million odd in the bank account is protected by the restraint order and will remain so until, if the appeal succeeds, the order is discharged.
16. The other members of the court, Morris LJ (as he then was) and Roxburgh J expressed themselves in similar terms. Morris LJ, at 417, said this:-

"… it seems to me that the tenant showed a very compelling explanation for his non-attendance at the hearing …. He had never been heard: his case had never been before the judge. This was not the fault of the landlord; but in the particular circumstances the tenant had this rather unusual but satisfactory explanation, the accuracy of which was apparently not doubted. That being so, is seems to me that, in the absence of some very good reason, the application for a new trial should have been acceded to; and I think further that, in the absence of some such good reason, not to accede to the application involved proceeding on a wrong principle in such as way as to amount to an error in law."

All of this could be said of the appellants and of their Rule 37(2) application in the present case.

17. But Jenkins LJ also referred, at p.416, to what he described as "a more debatable point", namely, "how far the judge should consider the prospects of success" of the party applying for the re-instatement of the proceedings. As to that he said that

"… a new trial should seldom, if ever, be refused merely on the ground that the applicant's case appears to be a weak one…"

and he concluded by saying

"… common justice demands, so far as it can be given effect to without injustice to other parties, that that litigant who is accidentally absent should be allowed to come to the court and present his case…"

And Morris LJ, at 418, said:-

"… if … it is quite manifest to a judge that there is really nothing to be tried, or if there are some special circumstances which make it clear that on a rehearing the same result as that already announced must again be reached, then it may well be that a judge could refuse an application."

18. It is apparent from these dicta that it would be a rare case in which an application by a blameless absent litigant for re-instatement of proceedings which had been struck out as a result of his absence were refused on account of the hopelessness of his case. And it is also, in their Lordships' opinion, apparent that it would be for the person resisting re-instatement of the proceedings on that ground to satisfy the court that the proceedings were indeed hopeless.
19. The Court of Appeal in the present case were, in their Lordships' respectful opinion, in error in directing themselves that "the Applicants must prove that their case has a chance of success." Where a blameless absent litigant whose case has been struck out is seeking its re-instatement, and where there has been no undue delay and there is no likelihood of prejudice to the other parties, their Lordships consider that it is for the other parties to show that the case had no chance of success. Prima facie justice would require the case to be re-instated. The Court of Appeal could not have had any view as to the likelihood or unlikelihood of the success of the proposed appeal. There had been "no argument as to the merits of the case" (para.9 of the Note). The Court of Appeal knew no more about the merits than that Austin Davis J had given leave to appeal.
20. Mr Dingemans came before their Lordships prepared to argue that the appellants' proposed appeal did indeed have no chance of success and for that reason should not be re-entered for hearing. However their Lordships did not, for two reasons, permit Mr Dingemans to address them on that point. First, the point had not been argued below and their Lordships would not have the advantage of knowing the Court of Appeal's views on it. Second, the merits of the appeal would have been considered by Austin Davis J on the inter partes application for leave to appeal. The Attorney General has, therefore, had an opportunity for contending that the appellants' prospects of success on an appeal were too weak to justify an appeal hearing and, presumably, did so contend on the application for leave. An appeal against the grant of leave to appeal, or an application to discharge the grant of leave, cannot be entertained without some fresh material, unavailable when the application for leave was heard and apparently determinative as to the result of the appeal, being placed before the court. There is no such fresh material that Mr Dingemans relies on. He is, in effect, treating the appellants' Rule 37(2) application as affording the Attorney General the opportunity to appeal against the judge's grant to the appellants of leave to appeal. For both these reasons their Lordships did not think it appropriate to permit Mr Dingemans to address them on the merits of the appellants' appeal, a matter on which their Lordships have formed no view.
21. This is a case in which their Lordships consider justice requires that the appellants' appeal be re-instated. Accordingly, their Lordships will humbly advise Her Majesty that the appeal against the Court of Appeal's order of 5 April 2004 should be allowed and that it be directed that the appellants' appeal against the order of Austin Davis J of 27 January 2003 refusing to discharge the restraint order of 12 April 2002 be re-entered for hearing and be duly heard accordingly. The Attorney General must pay the costs of the appeal to the Board and of the 5 April 2004 hearing by the Court of Appeal of the application to re-instate the appeal.