John Simpson v Michael Agapios Diamandis & Ors

An adjournment application must be determined by applying the overriding objective and balancing the prejudice of proceeding against the prejudice caused by losing the fixed trial date. A party should not ordinarily derail a trial because of difficulties caused by its own unexplained disclosure breaches, late preparation or other defaults. Where further evidence may prove unnecessary, the court may proceed with the listed trial and, if required, direct a separate and shorter hearing on the remaining issue. A late application based on unsupported assertions of financial hardship and inequality of arms is unlikely to succeed.

The judgment concerned an application by three respondents to adjourn a seven-day trial of a petition under section 994 of the Companies Act 2006. The respondents relied on alleged deterioration in the financial health of the company whose value was central to the dispute, the consequent need for further disclosure and evidence, and the loss of legal representation by two respondents.

The application was made on the eve of trial. The alleged administration was corrected to a notice of intention to appoint administrators. The respondents accepted breaches of their continuing disclosure obligations, and provided little evidence explaining the delay, their financial position or the prospect of obtaining representation. The central questions were whether the trial should be adjourned to permit further preparation and whether proceeding would cause unfair prejudice.

1. The application was refused. The power to adjourn a hearing under CPR 3.1(2)(b) had to be exercised in accordance with the overriding objective, including fairness, proportionality, expedition, equal footing and enforcement of compliance with procedural obligations.
2. The court applied the balancing exercise identified in Elliott Group Ltd v GECC UK (formerly GE Capital Corp) [2010] EWHC 409 (TCC): the desirability of retaining a fixed trial date and avoiding additional cost had to be balanced against the risk of irredeemable prejudice if a party lacked proper time to prepare.
3. Grounds based on the company’s financial difficulties and further evidence failed because the predicament was attributable to the applicants’ own unexplained defaults. They had failed to disclose relevant documents and to alert their experts to the alleged deterioration when there was time to obtain supplemental evidence. The application was also made only one day before trial, despite an earlier pre-trial review at which the alleged difficulties were not raised.
4. The court considered that the proposed evidence might prove irrelevant. The petitioner might fail on liability, or the valuation date might precede the recent financial changes. The court could determine the valuation date before hearing valuation evidence, following Re Phoenix Contracts (Leicester) Ltd [2010] EWHC 2375 (Ch). If later evidence proved necessary, it could be dealt with at a shorter subsequent hearing rather than by postponing the entire trial for approximately 18 months.
5. The inequality-of-arms ground also failed. The assertions of financial hardship and inability to retain counsel were unsupported. The court could not assess the alleged prejudice, its duration or whether an adjournment would cure it. R3 remained represented and could address the applicable law on overlapping issues. An applicant could not obtain an adjournment through the court’s inability to test unsupported claims caused by the applicant’s own failure to adduce evidence.
6. An order for specific disclosure concerning the company’s financial health was made. Costs of the application were reserved to the consequentials hearing if not agreed.