Mirchandani v Gheewala

Applications to set aside interlocutory orders are governed by finality and procedural fairness. A party must advance all reasonably available points at the first opportunity. The court will generally reopen an interlocutory order only for a material change of circumstances, a material misstatement of the facts, or a manifest judicial error. A freezing injunction ordinarily continues after judgment until the judgment is enforced or the order is set aside. A person affected by an order made without notice has a right to return to the first-instance court under CPR rule 23.10, but relief remains discretionary. An extension obtained without notice may be set aside where the other party was deprived of a fair opportunity to make representations and the delay or prejudice is not satisfactorily explained.

Mr Mirchandani applied to discharge or set aside freezing orders obtained by Ms Gheewala and Augusta Ventures Limited. The orders secured assets against claims arising from unpaid costs and a litigation-funding facility. He relied principally on alleged impecuniosity, newly produced financial evidence, an undertaking concerning sale proceeds, and the subsequent entry of default judgment.

Augusta separately applied to set aside an order made without notice by Spencer J, which retrospectively extended time for Mr Mirchandani to apply to set aside the freezing injunction and postponed Augusta’s entitlement to payment on account of costs. The central issues were whether the freezing orders should be reopened and whether the without-notice extension should stand.

1. Mr Mirchandani’s application to set aside the freezing orders was dismissed. The orders were interlocutory and remained effective notwithstanding the entry of default judgment. A freezing injunction may preserve assets so that enforcement mechanisms have something upon which to operate, as explained in Mercedes - Benz A.G. v Leiduck [1996] 1 A.C. 284.

2. The governing principle was that a party must bring forward all reasonably available points at the first opportunity. An interlocutory order would generally be reopened only where there had been a material change of circumstances, a material misstatement of the facts, or a manifest error by the judge. That was the effect of Chanel Limited v FW Woolworth & Co Ltd [1981] 1 WLR 485 and Orb a.r.l v Ruhan [2016] EWHC 850 (Comm).

3. Mr Mirchandani could have attended or been represented at the earlier hearings. His evidence of impecuniosity was unsupported and inconsistent with his earlier evidence about his wealth, and the court drew adverse inferences from the absence of adequate explanation and corroboration. The alleged new evidence was available to him earlier, the proposed undertaking was inadequate, and neither the subsequent costs position nor the default judgment constituted a material change of circumstances.

4. Augusta’s application to set aside the Spencer J Order was allowed. CPR rule 23.10 gives a person affected by an order made without notice a right to return to the first-instance court, but the exercise of that right is subject to the court’s discretion. The retrospective extension had been granted without Augusta’s representations, despite the direct prejudice caused to its entitlement to payment on account of costs. The coronavirus pandemic did not adequately explain the failure to give notice or seek an agreed extension. Spencer J would not have made the order had the relevant matters been presented. The order was set aside and Augusta became entitled to £15,000 on account of costs and interest.

5. Ms Gheewala’s application for an uplift was resolved by agreement in light of the judgment.

The judgment records that Mr Mirchandani obtained conditional permission from the Court of Appeal to appeal an unless order, subject to payment into court. The condition was not satisfied, and that appeal was stayed and stood out. No appellate decision concerning the applications determined in this judgment is stated.