Crabtree v NG

An appellate court will rarely interfere with a first-instance case-management decision enforcing a debarring order or refusing relief from sanctions. Intervention requires a serious error of principle, a misapprehension, or an exceptional new proposal that should be entertained.

The assistance due to a litigant in person, and the fairness of the hearing under article 6, must be assessed overall and are highly case-sensitive. Fairness to the defaulting party must be balanced against the opposing party’s preparation, the risk of further delay, and the public interest in efficient litigation. An appeal from a show-cause wasted-costs order will ordinarily be premature, but exceptional features may justify immediate intervention.

Mr Ng presented an unfair-prejudice petition under section 994 of the Companies Act 2006. The parties subsequently agreed that Mr Crabtree would buy Mr Ng’s shares at their fair value as at 10 March 2005, with the court to determine the value if necessary.

After repeated directions requiring Mr Crabtree to identify disputed factual issues and the evidence on which he wished to rely, he failed to comply. Peter Smith J made a final debarring order and later made a show-cause order concerning possible wasted costs against counsel. Lewison J refused relief from sanctions and restricted the trial evidence largely to the experts’ existing reports.

Mr Crabtree sought permission to appeal the case-management orders and the refusal of relief. Counsel separately challenged the show-cause wasted-costs order. The central issue was whether fairness, including Mr Crabtree’s position as a litigant in person, justified permitting further factual evidence despite the defaults and imminent trial.

Disposition. The Master of the Rolls, with whom Arden and Carnwath LJJ agreed, allowed the appeal against the show-cause wasted-costs order. The remaining applications for permission to appeal were refused. Lewison J’s order was varied by deleting paragraph 2, because it added nothing to the operative restrictions.

1. An appeal from a show-cause wasted-costs order should almost always await determination of the wasted-costs application on its merits. This was exceptional. The issue was already before the court, the order had been made on the court’s initiative, no particulars of the allegations against counsel had been given, further proceedings would cause additional cost, the potential sum was modest, the case for wasted costs appeared weak, and Mr Ng did not support the application. Immediate permission and the appeal were therefore granted.

2. The court would not interfere with the case-management decisions. Enforcement of debarring orders and relief from sanctions are pre-eminently matters for the first-instance judge. Lewison J had carefully considered the relevant factors and there was no serious error of principle, misapprehension, or exceptional new proposal warranting appellate intervention.

3. The latitude and assistance due to a litigant in person depend on the person, the issues, and assistance already received. Looking at the proceedings as a whole, including article 6 fairness, Mr Crabtree had been given a good and fair opportunity to present his case. His non-compliance was not excused by his self-representation.

4. Allowing the late factual evidence would substantially reverse Lewison J’s decision and was likely to jeopardise the imminent trial. The proposed evidence was secondary and of limited value, might require a search for primary material and further disclosure, and was substantially addressed by the expert accountant’s existing evidence. The competing interests of Mr Ng, other litigants, and efficient disposal of the case outweighed Mr Crabtree’s request.

Arden LJ added that, in future, parties agreeing a fair-value share buy-out should define the directions or methodology by which fair value is to be ascertained, rather than leave valuation on an unduly open-textured basis.

• Court of Appeal (Civil Division). In [2011] EWCA Civ 1455, the court allowed the appeal against Peter Smith J’s show-cause wasted-costs order, but refused permission to appeal the remaining case-management decisions and Lewison J’s refusal of relief from sanctions. It deleted paragraph 2 of Lewison J’s order.
• Companies Court (Lewison J). On 4 May 2011, Lewison J refused relief from sanctions and restricted Mr Crabtree from raising disputed factual issues or calling factual witnesses, subject to the treatment of the ZLF debt and the existing expert evidence.
• Companies Court (Peter Smith J). The judge made directions requiring identification of factual issues and evidence, imposed a final compliance deadline with a debarring consequence, and later recused himself while making the show-cause wasted-costs order concerning counsel.