Shearer v Neal (Rev 1)

A referral under CPR Part 71 is mandatory where a judgment debtor fails to comply with an examination order. The referring court must certify the specific respects in which non-compliance is established. Issues depending on disputed credibility or whether documents exist are generally unsuitable for determination within the streamlined referral procedure and may require proceedings under CPR Part 81. Later disclosure does not automatically cure an established breach. Indemnity costs require conduct or circumstances taking the case out of the norm. The relevant conduct may include misleading information causing adjournments, failure to prepare required documents, and continuing non-disclosure.

The judgment creditor sought enforcement of judgments entered against the judgment debtor following a Tomlin-order compromise. The debtor was ordered to attend examination under CPR Part 71 and to provide financial documentation. Several hearings were adjourned, and at the final examination he failed to provide specified bank statements and a sub-distribution agreement.

The Deputy Master considered whether the failure required referral to a High Court judge under CPR 71.8(1)(c), the appropriate scope of the certificate, and the judgment creditor’s entitlement to indemnity costs.

1. Referral. The conditions in CPR 71.8(1)(c) were satisfied because the judgment debtor failed to provide documentation required for the examination. The wording of the rule makes referral to a High Court or Circuit judge mandatory once non-compliance is established. The Deputy Master was not entitled to resile from that finding because further documents were supplied after the hearing; whether that later disclosure cured the breach was for the High Court judge.
2. Scope of certification. The certificate was confined to the failures established on the evidence: non-production of the Spanish and English bank statements and the complete Bluefin Sub-distribution Agreement. The court was not satisfied that wider categories of documents existed. Issues involving disputed honesty, inconsistent evidence and alleged false answers were complex and more appropriately dealt with under CPR Part 81.
3. Costs. The judgment creditor was entitled to the costs of the examination. Applying the test in Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson (A Firm) [2002] EWCA Civ 879, the debtor’s conduct and the resulting circumstances took the case out of the norm and justified indemnity costs. Relevant matters included misleading information contributing to an adjournment, inadequate preparation of documentation, and continuing concerns about disclosure.
4. The costs were summarily assessed. In assessing the amount, the court considered the debtor’s conduct, the complexity of his business arrangements and the specialised knowledge required. Doubts about the use of Grade A and B fee earners and leading counsel were resolved in favour of the receiving party under CPR 44.3(3). Costs of £55,843 were awarded.