Lloyds Investment (Scandinavia) Ltd v Ager-Hanssen

The High Court’s power to vary or revoke an earlier order under Civil Procedure Rules 1998 Part 3.1(7) does not provide a substitute for an appeal. A party seeking reconsideration must show a material change of circumstances or that the earlier judge was materially misled about the facts. The jurisdiction does not permit the re-argument of matters that were available, but not deployed, at the earlier hearing. Where the alleged new basis was known to the applicant when the original conditional order was made, the proper course is an appeal, including an application to adduce fresh evidence if appropriate.

The claimant had obtained judgment in default against the defendant in a dispute concerning agreements for the sale and repurchase of shares in a Swedish company. A Deputy High Court judge set aside that judgment on condition that the defendant pay £1.175 million into court. The defendant did not comply, despite an extension granted by Lloyd J, and the claimant proceeded with enforcement.

The defendant then sought permission to defend the action and a stay of execution. In substance, he asked the court to vary or revoke the conditional order. He contended that the condition had stifled his defence because freezing orders over his assets prevented payment, and that the earlier judge had been misled as to the value of assets affected by the Swedish order. He also alleged that a flat had been sold at an undervalue.

The central issue was whether those matters justified revisiting the earlier order under Civil Procedure Rules 1998 Part 3.1(7), rather than by appeal.

1. Application dismissed. Patten J refused to vary or revoke the order which had conditionally set aside the default judgment. The defendant was therefore not permitted to proceed with his defence unless the existing condition was met, and no stay of enforcement was granted.

2. The earlier order had been made in the exercise of the discretion under Civil Procedure Rules 1998 Part 13.3. A judge of coordinate jurisdiction could not entertain what was, in substance, an appeal against that order. A challenge that the condition was disproportionate or wrong in principle had to be pursued in the Court of Appeal, with an application for an extension of time if necessary.

3. Under Civil Procedure Rules 1998 Part 3.1(7), the court could vary or revoke an earlier order. Patten J stated that a High Court reconsideration required a material change of circumstances or that the earlier judge had been misled, innocently or otherwise, about the factual position. The power could not be used to re-argue the earlier application on the same material, or on evidence and submissions that had been available but were not relied on.

4. The freezing orders and the value of the defendant’s assets did not meet that standard. The defendant knew of the orders when the conditional order was made, but did not put their effect before the Deputy Judge. The same point had also been raised, in substance, before Lloyd J. The earlier judge’s lack of information resulted from the defendant’s failure to communicate or deploy it, rather than from any material misleading of the court.

5. The allegation that the flat had been sold at an undervalue was unsupported by professional valuation evidence and could not impeach the sale. Patten J also found no sufficient basis for saying that the claimant had acted improperly in pursuing remedies abroad. Even if reconsideration had been open, the present value of the remaining frozen assets was uncertain and did not clearly assist the defendant.

Patten J added, without deciding the point, that he had reservations about imposing a condition of this kind without expressly enquiring whether the defendant had a realistic prospect of complying with it.

This was a first-instance application. The judgment records the following earlier interlocutory steps in the same proceedings:

• High Court: On 7 November 2001, a Deputy High Court judge set aside a default judgment on condition that the defendant pay £1.175 million into court within 28 days.

• High Court: On 5 December 2001, Lloyd J extended the time for payment to 10 December 2001. He rejected the suggestion that the freezing-order evidence justified a wholesale review, because the defendant had known of it but had not put it before the Deputy Judge.

• High Court (Chancery Division): Patten J dismissed the later application to vary or revoke the conditional order.