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If anyone was still in any doubt about the far-reaching effects of the “Mitchell decision” the recent Judgment of the Court of Appeal in Thavatheva Thevarajah v (1) John Riordan (2) Eugene Burke (3) Prestige Property Devloper UK Limited (4) Barrington Burke  EWCA Civ 15 provides a useful illustration.
The Claim related to a dispute arising out an agreement for the Appellants’ purchase of assets from the Respondents. Prior to the agreed sale taking place, the Appellant discovered that, inter alia, the Respondents had agreed to give some of the shares to another party and the Fourth Respondent - who purported to be a de facto director of the Third Respondent - was an undischarged bankrupt disqualified from acting as a company director. It further became apparent that at least two of the Respondents had sought to make themselves Judgment-proof in other litigation. A Claim was issued by the Appellant, the chronology of which is set out below:
9 May 2013: Ex parte Freezing Order granted directing disclosure of the Respondent’s assets and liabilities (‘The First Order’)
17 May 2013: Order made providing greater particularisation of the disclosure obligation and timetabling the matter for Trial (‘The Second Order’)
21 June 2013: ‘Unless Order’ granted in light of unsatisfactory disclosure provided by the Respondents (‘The Unless Order’)
July 2013: Application issued by the Appellant for declaration that the sanction in the Unless Order had come into effect and an Order for strike-out of the Defence and Counterclaim. Cross-application made by the Respondents for Relief from Sanctions.
9 August 2013: Findings made by Hildyard J that there had been serious failures to comply with the terms of the Unless Order. Relief from Sanctions refused and an Order made debarring the Respondents from defending the Claim. (“The Debarring Order”)
September 2013: Matter listed for Trial on 3 October 2013. Disclosure is provided.
1 October 2013: Respondents file a second application for Relief from Sanction pursuant to CPR 3.9
7 October 2013: Five day Trial commences at which four of the five days are taken up by the application for Relief from Sanctions. Despite the Appellant’s submissions that the application amounted to an abuse of process, Andrew Sutcliffe QC considered that it was open to the Respondents to make a second application for Relief from Sanctions and that their subsequent compliance with the terms of the Unless Order rendered the breach de minimis. It was further considered that the Respondents were entitled to rely upon their former solicitors, who had, wrongly, informed the Respondents that they had complied with the Unless Order. The Court stated that Relief would not always be refused if disproportionate and that the new rules did not intend for minor errors to be exploited for tactical gain. Relief was granted accordingly.
The Appellant sought to appeal against the decision of Mr Andrew Sutcliffe QC and permission was subsequently granted.
The Appellant’s primary submission was that the Respondents’ application amounted to an abuse of process and that they could not “have a second bite of the cherry under CPR 3.9”. The Debarring Order did not properly constitute a sanction to which CPR 3.9 could apply, and therefore the appropriate procedure for challenging the Order would have been to make an application for the Order to be varied/set-aside pursuant to CPR 3.1(7). In the alternative, it was submitted that on the facts of the case it was simply not open to the Court to find that the conditions set out in CPR 3.9 had been satisfied following the decision of the Court of Appeal in Mitchell.
Lord Justice Richards gave the Judgment of the Court which can be summarised as follows:
It is clear from the Judgment that the Courts will be very reluctant to allow a “second bite at the cherry”; any attempt at a second application for relief would likely be construed as an application pursuant to CPR 3.1 (7) and the Applicant would be required to satisfy the onerous requirements as set out in Tibbles. It would of course remain open to the Applicant to seek to appeal the Order, but what is clear is that an Order does not generally constitute a sanction to which relief can be sought under CPR 3.9.
The Court once again emphasized the robust approach required post-Mitchell and the importance of compliance with Rules, Practice Directions and Order, which is now of paramount importance and to be given great weight. Whilst the Respondents had remedied their breach by complying with their obligations under the Unless Order, this did not amount to a material change of circumstances that would enable relief to be granted. Further, the delay in both complying with the Order, and issuing the Second Application for relief, fell foul of the post-Mitchell requirement for promptness.
This Judgment provides yet further confirmation that the parties are under a strict obligation to comply with all Rules, Practice Directions and Orders – failure to do so, whether as a result of inefficiency or otherwise, will no longer be accepted, and defaulting parties will bear the consequences.