Thevarajah v Riordan & Ors

A second application for relief from a sanction cannot circumvent an existing order refusing the same relief. Where the later application would require that order to be set aside, it is substantively an application under rule 3.1(7) of the Civil Procedure Rules 1998. The court must therefore apply the restrictive criteria governing variation or revocation before reconsidering relief under rule 3.9.

Belated compliance with an unless order does not by itself constitute a material change of circumstances. It neither alters the original breach nor supplies a good reason for it. Finality, promptness and the need to avoid successive attempts at the same relief are central considerations.

The claimant obtained a freezing injunction and an unless order requiring the first, second and fourth defendants to disclose financial information. Hildyard J found serious non-compliance, refused relief from sanction and ordered that those defendants be debarred from defending the claim and that their defence and counterclaim be struck out. They did not appeal.

After further disclosure, the defendants made a second application for relief. Mr Andrew Sutcliffe QC, sitting as a deputy High Court judge, granted relief and set aside the debarring provisions: [2013] EWHC 3179 (Ch). The claimant appealed.

The central issue was whether the deputy judge could entertain the second application under rule 3.9 of the Civil Procedure Rules 1998 without first satisfying the criteria for varying or revoking the existing order under rule 3.1(7).

1. Appeal allowed. The second application for relief was, in substance, an application under rule 3.1(7) of the Civil Procedure Rules 1998 to set aside the provisions of Hildyard J’s order which had refused relief and debarred the respondents from defending. Until those provisions were varied or revoked, they remained effective. The deputy judge could not simply make an inconsistent order under rule 3.9. The rule 3.1(7) threshold therefore had to be considered first.

2. The discretion under rule 3.1(7) is constrained by finality, the undesirability of allowing two attempts at the same relief and the need to preserve the appellate process. It will normally be exercised only where there has been a material change of circumstances, the facts underlying the original decision were misstated, or the judge made a manifest mistake in formulating the order. An application must also be made promptly.

3. The respondents failed to satisfy that threshold. Even assuming that they had eventually provided all required disclosure, compliance approximately three months after the deadline and almost two months after relief had been refused was not a material change of circumstances. It did not alter the original non-compliance, provide a good reason for it or undermine Hildyard J’s reasoning. No other basis existed for varying or revoking his order.

4. The court explained that Woodhouse v Consignia plc [2002] EWCA Civ 275 concerned a different situation and did not displace the normal operation of rule 3.1(7) where a second rule 3.9 application required an earlier refusal of relief to be set aside.

5. Although unnecessary to the disposition, the court added that the deputy judge’s approach to rule 3.9 was insufficiently robust under Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537. The efficient and proportionate conduct of litigation and enforcement of compliance are considerations of paramount importance and must receive great weight. The deputy judge also gave insufficient weight to the respondents’ delay in applying only two days before trial.

6. The order granting relief and setting aside the debarring provisions was accordingly overturned. The Court of Appeal left to the trial judge the extent, if any, to which debarred defendants could require proof, cross-examine witnesses or make submissions.

1. Court of Appeal (Civil Division): Allowed the claimant’s appeal in [2014] EWCA Civ 14. The deputy judge should have rejected the second relief application because the criteria for varying or revoking Hildyard J’s order were not satisfied.

2. High Court, Chancery Division: Mr Andrew Sutcliffe QC granted the defendants relief from sanction and set aside the operative parts of the debarring order in [2013] EWHC 3179 (Ch).

3. High Court, Chancery Division: Hildyard J found serious failures to comply with the unless order, refused relief from sanction, debarred the defendants from defending and struck out their defence and counterclaim. No appeal was brought against that order.