Manolete Partners PLC v Mohammed Jawed Karim & Ors

A fixed trial date should be maintained unless grave circumstances justify vacating it. An application framed as a stay may in substance be an application to adjourn the trial, and the burden lies heavily on the applicant. Ill health justifies an adjournment only where it materially affects capacity or the ability to conduct the litigation. Lack of funds for representation is insufficient without full financial disclosure and a realistic plan showing how an adjournment would secure funding and serve a useful purpose. Where parties have substantially failed to comply with disclosure obligations and the trial is imminent, an unless order with a strike-out or debarring sanction may be proportionate.

The claimant brought proceedings arising from alleged breaches of fiduciary duty involving the abstraction of company monies before the company’s liquidation. The defendants applied for a stay, in substance seeking to adjourn a fixed 10-day trial, relying on the first defendant’s ill health and the defendants’ alleged inability to fund legal representation. The claimant also sought an unless order in relation to substantial failures to provide disclosure.

The court had to determine whether the medical and financial circumstances justified vacating the trial date and whether the defendants’ disclosure defaults warranted a debarring sanction.

1. Stay and adjournment. The application was dismissed. The defendants bore a heavy burden because the trial date had been fixed for nearly a year and should be shifted only in grave circumstances.
2. The first defendant suffered from depression and mixed anxiety, but retained cognitive functions and litigation capacity. His memory difficulties did not make preparation impossible or particularly difficult. The transactions were identified and explained in the pleadings, and the other defendants could assist with matters concerning their own involvement.
3. Legal representation would assist, but the case was not legally complicated. It principally required the defendants to give honest evidence and produce documents explaining the transactions. The defendants had previously received quality legal advice sufficient to establish the structure of their defence.
4. An application based on impecuniosity must be supported by full financial information, including assets, liabilities and the realistic availability of third-party funding. Even evidence of financial hopelessness would only begin the inquiry. A stay must have a practical purpose, such as securing funding and representation; poverty alone is not sufficient. No realistic plan or evidence of urgent efforts to raise funds was provided.
5. Disclosure. The defendants had failed to comply with a prior disclosure order. The required Model D disclosure was limited principally to documents in their possession or control concerning the purposes of the disputed transactions, including relevant emails and hard-copy documents. It was not regarded as difficult or impossible.
6. An unless order was made requiring substantial compliance with disclosure by 28 February 2024. Given the prolonged delay and the proximity of trial, no lesser effective sanction was available. In default, the defendants would be debarred from defending, leaving the claimant entitled to apply for judgment on the footing of an undefended claim. The PTR was vacated and directed to be relisted on or near 19 March 2024, with consequential directions for witness statements.