JSC Mezhdunarodniy Promyshlenniy Bank & Anor v Pugachev & Ors

Procedural applications raising jurisdictional and compliance issues should receive proper consideration, particularly where a litigant has recently become unrepresented and seeks to place material before the court. The court should not make an order requiring disclosure of potentially privileged material without a properly made application and an opportunity for affected parties to respond. A failure to comply with a procedural order does not necessarily require an immediate declaration of breach where the explanation remains to be considered and relief from sanctions may be available. Confidentiality restrictions should not be relaxed precipitously without hearing the relevant parties. Even a contemnor remains entitled to due process.

The judgment concerned two applications made during the trial of a claim about the validity of certain New Zealand discretionary trusts. The first application sought an adjournment of the trial and the second sought to set aside a default judgment. Both were based on an alleged absence of jurisdiction arising from service out of the jurisdiction.

The applications were made very late. Conditions had been imposed requiring security for costs and an affidavit explaining the source of legal funding. The applicant subsequently became unrepresented by UK lawyers and sent material directly to the court, some of which might have been privileged. The court had to decide how to deal with the applications, the alleged non-compliance, access to a solicitor’s witness statement, and confidentiality restrictions.

1. Procedural fairness. The court should not determine significant applications precipitously where the parties have not had a proper opportunity to consider and answer the material. This applied especially to the proposed order for access to a solicitor’s witness statement, given the possible privilege and the specific treatment of such material under Civil Procedure Rules 1998 Practice Direction 5A, Part 5 and paragraph 4.2A.
2. Alleged breach. The court accepted that the order had not been complied with within the specified time, but declined to declare a breach immediately. There was material capable of explaining the delay, and it was not appropriate to prejudge whether the material should be treated as an application for an extension of time or for relief from sanctions.
3. Confidentiality. Material sent directly to the court was properly circulated to the relevant parties within a confidentiality club. The restrictions were not relaxed because the court had not yet heard full submissions and there was no demonstrated urgency requiring immediate disclosure.
4. Disposition. Both applications were adjourned until the handing down of the judgment in the Trusts Claim, with liberty to apply to all persons involved, including the applicant, the other defendants, the claimants and the former solicitors. The court emphasised that, notwithstanding the applicant’s status as an unpurged contemnor, he remained entitled to due process and an opportunity to be heard.