Solanki v (Intercity Technology Ltd & Anor (Rev 1)

Adjournment on health grounds: Mr Small rightly accepted that the question of whether or not to grant an adjournment of a trial on health grounds was a discretionary matter for the trial judge. However, as he submitted, and as I accept, the jurisdiction of this court is not confined simply to considering whether irrelevant factors were taken into account, or relevant ones were ignored in the Wednesbury sense, or whether the decision not to adjourn lay within the broad band of judicial discretion of the trial judge. Rather, the authorities make clear that, in reviewing the exercise of discretion, the Court of Appeal has to be satisfied that the decision to refuse the adjournment was not “unfair”: for example, see Terluk v Berezovsky [2010] EWCA Civ 1345 (per Sedley LJ at paras 18-20), quoted below, particularly in circumstances where his right to a fair trial under Article 6 ECHR is at stake.

For example, in Teinaz v London Borough of Wandsworth[2002] IRLR 721 CAPeter Gibson LJ gave the following guidance (Footnote: ¹):

“20 Before I consider these points in turn, I would make some general observations on adjournments. Every tribunal or court has a discretion to grant an adjournment, and the exercise of such a discretion, going as it does to the management of a case, is one with which an appellate body is slow to interfere and can only interfere on limited grounds, as has repeatedly been recognised. But one recognised ground for interference is where the tribunal or court exercising the discretion takes into account some matter which it ought not to have taken into account:. … Although an adjournment is a discretionary matter, some adjournments must be granted if not to do so amounts to a denial of justice. Where the consequences of the refusal of an adjournment are severe, such as where it will lead to the dismissal of the proceedings, the tribunal or court must be particularly careful not to cause an injustice to the litigant seeking an adjournment.

…

21 A litigant whose presence is needed for the fair trial of a case, but who is unable to be present through no fault of his own, will usually have to be granted an adjournment, however inconvenient it may be to the tribunal or court and to the other parties. That litigant's right to a fair trial under Article 6 of the European Convention on Human Rights demands nothing less. But the tribunal or court is entitled to be satisfied that the inability of the litigant to be present is genuine, and the onus is on the applicant for an adjournment to prove the need for such an adjournment.

22 If there is some evidence that a litigant is unfit to attend, in particular if there is evidence that on medical grounds the litigant has been advised by a qualified person not to attend, but the tribunal or court has doubts as to whether the evidence is genuine or sufficient, the tribunal or court has a discretion whether or not to give a direction such as would enable the doubts to be resolved. Thus, one possibility is to direct that further evidence be provided promptly. Another is that the party seeking the adjournment should be invited to authorise the legal representatives for the other side to have access to the doctor giving the advice in question. The advocates on both sides can do their part in assisting the tribunal faced with such a problem to achieve a just result. I do not say that a tribunal or court necessarily makes any error of law in not taking such steps. All must depend on the particular circumstances of the case. I make these comments in recognition of the fact that applications for an adjournment on the basis of a medical certificate may present difficult problems requiring practical solutions if justice is to be achieved.”

Helpful guidance is also found in Andreou v The Lord Chancellor's Department[2002] IRLR 728.

In Terluk the Court of Appeal was concerned with a judge’s refusal to adjourn a civil trial in order to give a party further opportunity to obtain legal representation. Sedley LJ said:

“18 Our approach to this question is that the test to be applied to a decision on the adjournment of proceedings is not whether it lay within the broad band of judicial discretion but whether, in the judgment of the appellate court, it was unfair. In Gillies v Secretary of State for Work and Pensions [2006] UKHL 2, Lord Hope said (at section 6) '[T]he question whether a tribunal . . . was acting in breach of the principles of natural justice is essentially a question of law.' As Carnwath LJ said in AA (Uganda) v Secretary of State for the Home Department [2008] EWCA Civ 579, section 50, anything less would be a departure from the appellate court's constitutional responsibility. This 'non-Wednesbury' approach, we would note, has a pedigree at least as longstanding as the decision of the divisional court in R v S W London SBAT, ex parte Bullen (1976) 120 Sol Jo 437; see also R v Panel on Takeovers, ex parte Guinness plc [1990] 1 QB 146, 178G-H per Lord Donaldson (who had been a party to the Bullen decision) and 184C-E per Lloyd LJ. It also conforms with the jurisprudence of the European Court of Human Rights under Article 6 of the Convention – for we accept without demur that what was engaged by the successive applications for an adjournment was the Defendant's right both at common law and under the ECHR to a fair trial.

19 But, as Lord Hope went on in his next sentence in Gillies to point out, the appellate judgment 'requires a correct application of the legal test to the decided facts . . . .' Thus the judgment arrived at first instance is not eclipsed or marginalised on appeal. What the appellate court is concerned with is what was fair in the circumstances identified and evaluated by the judge. In the present case, this is an important element.

20 We would add that the question whether a procedural decision was fair does not involve a premise that in any given forensic situation only one outcome is ever fair. Without reverting to the notion of a broad discretionary highway one can recognise that there may be more than one genuinely fair solution to a difficulty.As Lord Widgery CJ indicated in Bullen, it is where it can say with confidence that the course taken was not fair that an appellate or reviewing court should intervene. Put another way, the question is whether the decision was a fair one, not whether it was 'the' fair one.”

Subsequent cases in this court have followed the approach of Sedley LJ in Terluk.

Two other points are worthy of mention. Obviously overall fairness to both parties must be considered. Further, where medical evidence is produced which is deficient is some respect, it may be appropriate to give consideration to a short adjournment in order to enable a litigant to make good such deficiency.

Applications to set aside under CPR 39.3. The rule provides as follows:

“Failure to attend the trial”

39.3

(1)

The court may proceed with a trial in the absence of a party but –

(a)

if no party attends the trial, it may strike out the whole of the proceedings;

(b)

if the claimant does not attend, it may strike out his claim and any defence to counterclaim; and

(c)

if a defendant does not attend, it may strike out his defence or counterclaim (or both).

(2)

Where the court strikes out proceedings, or any part of them, under this rule, it may subsequently restore the proceedings, or that part.

(3)

Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.

(4)

An application under paragraph (2) or paragraph (3) must be supported by evidence.

(5)

Where an application is made under paragraph (2) or (3) by a party who failed to attend the trial, the court may grant the application only if the applicant –

(a)

acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;

(b)

had a good reason for not attending the trial; and

(c)

has a reasonable prospect of success at the trial.”

In Bank of Scotland plc v Pereira[2011] 1 WLR 2391, Lord Neuberger MR provided the following guidance in relation to the three limbs of CPR 39.3(5) (see paras 24-26). (He also usefully articulated six guidelines which he set out at paras 36-48 as to the relationship between a defendant’s application under CPR rule 39.3 to set aside an order, and any attempt to appeal against the order):

“24.

First, the application to appeal Judge Ellis's refusal under CPR 39.3 to set aside the Order. An application to set aside judgment given in the applicant's absence is now subject to clear rules. As was made clear by Simon Brown LJ in Regency Rolls Ltd v Carnall[2000] EWCA Civ 379, the court no longer has a broad discretion whether to grant such an application: all three of the conditions listed in CPR 39.3(5) must be satisfied before it can be invoked to enable the court to set aside an order. So, if the application is not made promptly, or if the applicant had no good reason for being absent from the original hearing, or if the applicant would have no substantive case at a retrial, the application to set aside must be refused.

25.

On the other hand, if each of those three hurdles is crossed, it seems to me that it would be a very exceptional case where the court did not set aside the order. It is a fundamental principle of any civilised legal system, enshrined in the common law and in article 6 of the Convention for the protection of human rights and fundamental freedoms that all parties in a case are entitled to the opportunity to have their case dealt with at a hearing at which they or their representatives are present and are heard. If the case is disposed of in the absence of a party, and the party (i) has not attended for good reasons, (ii) has an arguable case on the merits, and (iii) has applied to set aside promptly, it would require very unusual circumstances indeed before the court would not set aside the order.

26.

The strictness of this trio of hurdles is plain, but the rigour of the rule is modified by three factors. First, what constitutes promptness and what constitutes a good reason for not attending is, in each case, very fact-sensitive, and the court should, at least in many cases, not be very rigorous when considering the applicant's conduct; similarly, the court should not pre-judge the applicant's case, particularly where there is an issue of fact, when considering the third hurdle. Secondly, like all other rules, CPR 39.3 is subject to the overriding objective, and must be applied in that light. Thirdly, the fact that an application under CPR 39.3 to set aside an order fails does not prevent the applicant seeking permission to appeal the order. It is not very convenient, but an applicant may be well advised to issue both a CPR 39.3 application and an application for permission to appeal at the same time, or to get agreement from the other party for an extension of time for the application for permission to appeal.

27 An appeal against a judge's decision under CPR r 39.3 to refuse (or indeed to allow) an application to set aside a judgment does not, at least normally, involve challenging a discretion. However, an appellate court should be slow to overturn a decision of this nature, unless satisfied that the judge went wrong in principle. The decision will often involve making findings of fact, and, while the findings will normally be based on written evidence only, an appellate court should never lose sight of the principle that the first instance tribunal is the primary finder of fact. In so far as the decision involves a balancing exercise, an appellate court should pay proper respect to the judge's views. Another way of making essentially the same point is that the appellate court normally has a reviewing, as opposed to a rehearing, function in such a case, and it can therefore only interfere if satisfied that the judge was wrong.”

The later judgment of this court in Mohun-Smith v TBO Investments Ltd [2016] EWCA Civ 403 (Lord Dyson MR, Macur and Lindblom LJJ) also gives important guidance as to the material and important distinction between an application for an adjournment of the trial and an application pursuant to CPR rule 39.3 to set aside judgment entered into in default because of the non-attendance of a party. That case also emphasises that, on an application to set aside a judgment, a court should not in general adopt too rigorous an approach to the question whether a good reason had been shown for the non-attendance. Rather the court should have regard, when applying rule 39.3 (5), to the need to give effect to the overriding objective of dealing with cases justly and to the applicant’s right to a fair trial under article 6. That was particularly important where the applicant would have a reasonable prospect of success at trial, because he would have no opportunity to have an adjudication on the merits at all if the application failed: see, in particular, per Lord Dyson at paras 23-28 which merit citation in full:

“24.

I recognise that an appellate court should be slow to interfere with a decision of a lower court on the question of whether a litigant had a good reason for not attending a trial. Such a decision is a fact-sensitive evaluation made in the light of all the circumstances. It is the kind of decision that an appellate court will only strike down for reasons analogous to those which justify interfering with an exercise of discretion. But in making that assessment, the judge must have regard to the guidance given in Pereira and Estate Acquisition and the need, when applying rule 39.3(5)(b), to seek to give effect to the overriding objective of dealing with cases “justly” and to comply with article 6 of the European Convention on Human Rights (“the Convention”). This is particularly important where, as in the present case, the party has a reasonable prospect of success at the trial. In such a case, the court should usually not adopt a very rigorous approach to the question whether the litigant has shown a good reason for not attending.

25.

At first sight, it might appear that there is a conflict between the Pereira guidance (which is similar to that given in Estate Acquisition) on the one hand and the guidance given in Levy on the other hand. Nothing that I say in this judgment should be interpreted as casting doubt on the guidance given in Levy. Generally, the court should adopt a rigorous approach to scrutinising the evidence adduced in support of an application for an adjournment on the grounds that a party or witness is unfit on medical grounds to attend the trial. In Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926 at para 89, Jackson LJ emphasised the general undesirability of adjourning trials in the context of applications under CPR 3.9. I entirely agree with what he said.

26.

But I accept the submission of Mr Burgess that there is a material distinction between an application under rule 39.3(3) and an application for an adjournment of a trial. If the court refuses an adjournment, there will usually be a trial and a decision on the merits, although the unsuccessful applicant will be at a disadvantage, possibly a huge disadvantage, by reason of the absence of the witness or the party himself. Despite their absence and depending on the circumstances, it may still be possible for the disadvantaged claimant to prove the claim or the disadvantaged defendant to resist it. I accept that, in some cases, the refusal of an adjournment will almost inevitably lead to the unsuccessful applicant losing at trial. That is a factor that must be borne in mind when the court exercises its discretion in deciding whether or not to grant an adjournment. But if the application to set aside a judgment under rule 39.3(3) fails, the applicant will have had no opportunity whatsoever to have an adjudication by the court on the merits. This difference between an application under rule 39.3(3) and an application for an adjournment of the trial is important. Although it has not been articulated as the justification for generally adopting a more draconian approach to an application for an adjournment than to an application under rule 39.3(5), in my view it does justify such a distinction. It follows that the judge should have applied the Pereira guidance rather than the Levy guidance in so far as there is a difference between the two.

27.

Although the judge correctly referred to the Pereira guidance, it seems to me that he lost sight of it when he came to consider whether there was a good reason for Mr Robinson not attending on 30 June. He made no mention of it when he came at para 21 to make his overall assessment of whether a good reason had been established. At para 18 he said that the fact that the GP’s initial diagnosis was made over the telephone and in advance of any physical examination “does not encourage confidence in the accuracy of the diagnosis”. But he rightly went on to consider the rest of the medical evidence, including the opinion expressed by the doctor after she had seen Mr Robinson. The unequivocal effect of all the evidence was that, in the opinion of the doctor, Mr Robinson was suffering from stress and on that account he was not fit to attend court during the week commencing 30 June. The judge did not say in terms that he rejected this opinion. He expressed misgivings about it. I accept that it would have been better if the evidence had been more comprehensive in the respects suggested by the judge. The evidence might not have sufficed to persuade the judge on the basis of the Levy guidance to accede to an application to adjourn the trial on 30 June. But that was not the application that the judge had to deal with on 31 July. He had already refused the application for an adjournment on 30 June and there was no appeal from that decision.

28.

Having identified shortcomings in the defendant’s evidence, the judge should have reminded himself of the general need not to adopt a very rigorous approach and to have regard to the overriding objective of dealing with cases “justly” and in accordance with article 6 of the Convention. This was particularly important in a case where (i) the claim was for approximately £2 million; (ii) the defendant had a defence which had reasonable prospects of success; and (iii) it must have been apparent that a refusal to set aside the earlier decision would be likely to have very serious consequences for the defendant. The judge knew that this was a small company. In my view, he adopted too rigorous an approach to his assessment of the medical evidence. If he had kept the Pereira guidance in mind, he could not reasonably have rejected the doctor’s opinion. If the sick note had stood alone, I do not consider that, even in the context of an application under rule 39.3(3), the judge could have been criticised for dismissing it. But there was evidence that the doctor’s opinion was based on an examination of Mr Robinson. The opinion expressed in the sick note was confirmed by the doctor in her letters dated 25 and 30 July. I do not consider that there is much force in the point made by Mr Lazarus about the different causes to which the defendant attributed Mr Robinson’s stress. The differences do not cast doubt on the medical opinion that Mr Robinson was suffering from stress and unfit to attend the trial. More importantly, the judge did not take these inconsistencies into account in reaching his decision.

Conclusion on the good reason for not attending trial issue

29.

I would, therefore, reject both reasons given by the judge for holding that the defendant did not have a good reason for not attending the trial on 30 June. I wish to emphasise that it does not follow that any assertion by a party, supported by a sick note, that it did not attend the trial for reasons of ill health will be accepted by the court. Far from it. Neither the overriding objective of the CPR nor article 6 of the Convention requires the court to adopt such an approach. But for the reasons given in Pereira and Estate Acquisition and which I have elaborated above, the court should not generally adopt too rigorous an approach in its assessment of the evidence adduced in support of an application under rule 39.3(3).

30.

I accept that the court should not overlook the position of the opposing party (the claimants in the present case). If the court is satisfied that the conditions in rule 39.3(5) are met and that it is right to exercise its discretion to grant the application, it will often be appropriate to allow the application on condition that the applicant pays the other side’s costs and pays a sum on account of those costs within a short period. ”

Despite Mr Pritchard’s helpful submissions to the effect that this was a case where this court should not interfere with the various decisions of the judge, whom he submitted was in the best position to judge what was the appropriate procedural course to take, I have no doubt that the judge was wrong, both in relation to his decision to refuse the adjournment and in his refusal to set aside his judgment. I also conclude that, even if the judge had been right not to adjourn the case, he was wrong in all the circumstances not to have set aside his judgment. My reasons may be shortly stated as follows.

First, the judge gave no satisfactory reasons either on the papers, or at pages 2-4 of the transcript of the subsequent hearing on 24 February 2015, as to why he regarded the medical evidence supporting the adjournment as inadequate or for rejecting such evidence. From the tone of his language (“a further purported application on the grounds of ill-health”) the judge clearly thought that the appellant was putting on an act; the judge said:

“I have seen him on a number of occasions in court and I have read through the emails that he has been sending to the court. I am perfectly satisfied that he is capable of acting for himself in this case and there is no valid reason for an adjournment.”

Mr Pritchard additionally submitted that “the request for an adjournment was a further attempt to manipulate and/or derail the proceedings".

But the judge’s own view, apparently based on his observation of the appellant in court, was no substitute for the professional medical evidence provided by the general practitioner which clearly demonstrated that the appellant had a genuine history of depression and mental problems, for which he had been prescribed medication over a period of time. The judge did not explain why he felt able to reject the doctor’s view that the appellant had reported suicidal thoughts (6 days before the hearing), and that examination of his mental state was consistent with a diagnosis of ‘severe depression’. The appellant was plainly ill and there was no evidence to suggest that the illness was contrived. Moreover, the judge did not appear to base his view on any suggestion that the appellant had previously applied for adjournments, whether on grounds of ill health or otherwise, nor did he indicate in what respect, if any the medical evidence was inaccurate. The requirement in the order dated 23 February 2015 that the appellant would have to obtain further psychiatric evidence (to the extent that it was not already contained in the doctor’s letter dated 18 February), if he wished to make a further application on 24 February 2015, was also unrealistically impractical. Nor was I impressed by the respondents' submission that, because the appellant had arranged to see his general practitioner only once he had heard (on 17 February 2015) that his earlier application for an adjournment, extended legal aid and permission to put in the additional statements had been refused, that somehow undermined its veracity. That refusal (with no reasons) may well – not surprisingly – have subjected him to additional stress.

Whilst the judge was correct to consider the issue of fairness to the respondents in making his decision, the reality was that, by 24 February 2015, the appellant’s contempt of court had been purged, the relevant materials had been delivered up, and the appellant had given undertakings, or agreed to be subject to injunctions, which removed any urgency from the need for an early trial date. Further, the judge’s apparent reliance on the fact that the trial had been listed for some time was also misplaced, since it had only been fixed on 26 January 2015 - by agreement between the parties.

Finally, and, perhaps most importantly, the judge gave scant attention to the substance of the application to rely on the additional 11 statements. He dealt with this purely as a technical matter (see page 2 of the transcript of 24 February 2015) on the basis that:

“That was not admitted so far by the case management orders that I have made. It is too late to do that.”

But, if the judge had read the witness statements de bene esse, he should have appreciated that they were, or might have been, of critical importance to the determination of not only issues of liability but also of quantum. Nor was this a case of late filing of witness statements, since the 11 statements were filed on or shortly after the date on which the respondents, as claimants, had been required to serve their statements.

In my judgment, therefore, this was one of the rare circumstances, as considered by Peter Gibson LJ in Tienaz, where an adjournment had to be granted, because not to do so amounted to a denial of justice. The consequences of the refusal of an adjournment in this case, apparently based on the judge’s personal assessment of a litigant in person’s health, notwithstanding the appellant’s general practitioner’s view that he was suffering from depression, were particularly severe. The appellant’s defence was struck out and he was deprived of an opportunity to give live evidence, to cross-examine any of the respondents’ witnesses or to call evidence on his own behalf. The respondents’ evidence was adduced without any challenge since the two witnesses called did nothing more than state that their witness statements were true. Moreover, the appellant faced a claim for what, so far as he was concerned, was a substantial sum in damages and resultant legal costs.

I have no doubt that, on a proper evaluation of the relevant considerations, the appellant’s Article 6 rights and the irreversible prejudice occasioned to him as a result of the refusal of an adjournment, clearly outweighed the costs and unavoidable inconvenience to the respondents that would have been occasioned by a short adjournment.

But even if I were wrong in relation to the issue of adjournment, this is clearly a case where, in my judgment, the necessary conditions were satisfied in relation to the appellant’s application under CPR 39.3(5) and the judge was wrong as a matter of principle not to accede to the application. Since the judge gave no reasons for his rejection of the application, it is not possible to discern the reasons upon which he based his decision. However, he must necessarily, in my judgment, have failed to apply the relevant principles and guidance set out in Pereira and Mohun-Smith. My reasons for this conclusion may be shortly stated as follows.

So far as the first requirement imposed by CPR 39.3(5) is concerned, it is clear that the appellant acted promptly once he found out that judgment had been awarded against him.The judgment and Order was entered on Friday 27 February 2015 and the appellant’s application was made on Monday 9 March 2015 (6 clear working days later). It obviously took him some time to provide the judgment to the three clients of the respondents and to obtain their responses and witness evidence.

I have already considered, in the context of the adjournment appeal, the second requirement - namely a good reason for not attending the trial, albeit not through the less stringent focus of CPR 39.3(5); see citations from Pereira and Mohun-Smith above. As I have said, there was no good reason to doubt the veracity of the medical report from his GP dated 18 February 2015 or the appellant’s assertion that he was not medically fit to represent himself for a 5 day hearing on account of his severe depression, suicidal thoughts, and lack of concentration as well as managing only 2-3 hours of sleep each night. This was not a case as the judge suggested, where the appellant could have taken part in the trial ‘but declined to do so’ or that the witnesses could have given evidence at the trial. The defence had been struck out as the judge had already refused the appellant’s application to adduce witness evidence which had been served on 9 February 2015. Even if the judge had been entitled to have some misgivings as to the seriousness of the appellant’s depression and the extent to which it impeded him from participating in the trial, the unequivocal effect of the evidence from the doctor and the appellant himself, was that he was taking medication for his depression, that he had been diagnosed with suffering from “severe” depression, that the doctor had “concerns as to whether he is medically fit to be able to represent himself in court at the present time”, and that the appellant himself said that he was unfit. I have no doubt that the relevant condition of there being a “good reason” for non-attendance at trial was satisfied.

So far as the third condition was concerned, it is clear in my judgment that, on the basis of his own witness statements and other evidence:

We were taken through this evidence at the hearing of the appeal by Mr Small. It showed (at least prima facie) that, in relation to all the clients referred to in paragraph 40 of the judgment (and indeed various other clients), there was credible evidence in the clients’ witness statements to the effect that either they had not dealt with or engaged with the appellant in any way since his resignation, or that there were reasons, other than any alleged breach on the part of the appellant, as to why their accounts with the appellant had ended, or, importantly, that their accounts had in fact continued with the respondents. In other words, the point was that the appellant’s existing and additional evidence could or might have cast doubt on the truth of the respondents’ contentions in relation to the fact of loss, and/or in respect of causation, and possibly also in relation to breach. However, because of his non-attendance at trial and the consequential strike out of his defence, the appellant had no opportunity of presenting that evidence for consideration at trial. It appears from the transcript of the trial that the judge was not referred either to his evidence or to that of his witnesses. Mr Pritchard correctly pointed out that the judge was familiar with the case and had read at least the appellant’s witness statements on previous occasions. However, that would in no way have enabled the judge to do any proper analysis of the evidence which went to the issues of loss and quantum.

Mr Pritchard also emphasised that, as he had made clear to the judge, the quantum of loss was difficult to calculate and, necessarily, therefore any calculation was to some extent speculative. But that point had little weight in circumstances where the respondents had specifically picked clients whom they identified as ones where “either their business had been lost entirely … or the companies are not engaging as they would normally do … and there are strong suspicions that business will be lost.” The appellant’s evidence, if believed, had a reasonable prospect of undermining the respondents’ claims in respect of all, or at least a substantial number of, the clients identified in para 40 of the judgment.

In all those circumstances, I am unable to conclude that this case has been dealt with justly, or in accordance with the appellant’s Article 6 rights or the overriding objective. For these reasons, I consider that the judge was wrong in principle in refusing the application to set aside his earlier judgment. It was unfortunate, to say the least, that he gave no reasons for his refusal.

Accordingly, I would allow the appeal, set aside the judgment dated 27 February 2015 and direct a new trial in the Circuit Commercial Court, with liberty to the appellant to rely on the additional witness statements referred to above.

Mr Small took us through the chronology of the injunction and committal proceedings to support his submission that the judge’s decision in his order dated 15 June 2015 summarily to assess the costs of the committal proceedings in the sum of £83,583.73 was disproportionate and wrong. He submitted that the summary assessment should be set aside and that the matter should be remitted for a detailed assessment on a proportionate basis by a costs judge.

Mr Pritchard on the other hand sought to support the judge’s order for the reasons which the latter gave.

I have no doubt that, taking into account the chronology of this case, and the conduct of both the respondent and the appellant in relation to the contempt application, the judge’s order was wrong and contrary to the basic principle that costs in relation to a contempt application should be reasonable and proportionate, and not penal. Accordingly, I would remit the matter to the Birmingham District Registry for a detailed assessment of the respondent’s costs of the contempt applications taking into account the following reasons why I consider that the judge’s approach was wrong and disproportionate.

In order to assess whether the judge’s order was proportionate it is necessary to bear in mind the key features of the chronology of the committal proceedings. I summarise this briefly as follows.

On 27 May 2014, at the hearing of the respondent’s application for an injunction, the appellant gave various undertakings including an undertaking in the following terms:

“where the Defendant has retained any information or data referred to in this paragraph 3 in electronic format the same is to be copied on to a USB memory stick and the Defendant is required to deliver up such information to the Claimants.”

Pursuant to that undertaking, the appellant delivered up a Kingston USB stick.

On 4 September 2014 the respondents applied for an order to enforce the appellant’s undertakings and to obtain delivery up of further specifically named USB sticks and specific disclosure.

On 24 September 2014, on the hearing of the respondents’ application, HHJ Simon Brown QC ordered specific delivery of the two USB sticks. The appellant delivered up the sticks to the respondents’ solicitors at the end of the hearing and in open court explained that he was impecunious, unemployed and insolvent.

On 16 October 2014 the respondents made an application to the court for the appellant’s committal inter alia on the grounds that he had deleted material on two USB memory sticks, but also on numerous other grounds. On 30 October 2014 the appellant applied to adjourn the first hearing of the respondents’ contempt application on the grounds that he was without solicitors.

On 3 November 2014 the respondents made a further application for committal on the basis that the appellant had knowingly sworn false affidavits and knowingly made false statements and representations in court. On the same date the applications were heard for the first time by HHJ Simon Brown QC and adjourned by consent because of the appellant’s lack of representation. The judge gave directions as to the service of an affidavit by the appellant which was to provide certain further information. For reasons which are unclear, the judge ordered that the appellant should pay the costs of the hearing, which were summarily assessed at £6,425, but that otherwise costs were reserved. It is not clear, at least from the terms of the order, why the judge ordered the appellant to pay those costs in circumstances where, in the absence of solicitors available to act for him in connection with the contempt applications, an adjournment was inevitable.

The contempt applications came on for hearing for the second time on 17 November 2014, when they were adjourned by consent until 26 January 2015 with further directions given by the judge and costs reserved. It appears that by this time the respondents had allegedly incurred some £31,000 in respect of their costs of the committal applications.

The committal applications came on for the third time on 26 January 2015. Critically, at this stage, the appellant admitted (at paragraphs 23 and 24 of his affidavit dated 14 November 2014, and again at the hearing itself) that paragraphs 4 (d) and (e) of his affidavit dated 8 October 2014 had been in contempt of court because documents had in fact been deleted from 2 memory sticks in March/April and September 2014. (In his affidavit he had stated that the only steps which he had taken in relation to the memory sticks was that he had taken them to his solicitors. In fact, a number of documents had been deleted from the memory sticks.) In the annex to the order made on 26 January 2015 (in which the appellant was represented by counsel) the appellant stated that the reason why he had done so was that he thought they would mislead the court, but that he now knew that it was wrong to have done so. The order also recited that the appellant had agreed to purge his contempt and, importantly, that the respondents had agreed not to proceed with the very many additional allegations as specified in their two committal applications. These amounted to 38 additional allegations of some complexity which the respondents indicated they would not pursue. HHJ Simon Brown QC directed that the question of the appropriate sanction for his contempt should be reserved to himself for determination after the trial of the substantive claim in the action.

In addition, the judge made an order that the appellant should pay the respondents’ costs on the standard basis of the contempt applications, such assessment, if not agreed, being reserved until after the trial of the action. The judge also ordered that the appellant should make a payment on account of the respondents’ costs in the sum of £20,000. It appears that, as at 26 January 2015, the respondents’ costs of the committal application allegedly stood at approximately £69,000 in total. The judge also gave directions for trial. Although made on 26 January 2015, the order bore the date of 13 February 2015.

The sanction hearing for the appellant’s admitted (but purged) contempt for deleting files on two USB memory sticks was originally listed for 23 April 2015 before HHJ Simon Brown QC. At a hearing on that date, the case was adjourned until 15 June 2015 at the Royal Courts of Justice in London because of the sudden death of the appellant’s father the day before and his consequent inability to appear. At the hearing, the judge made an order for delivery up by the appellant of various items of financial information for the purpose of considering his means in relation to any sanction for contempt. The appellant complied with this order and delivered up the relevant documents to the respondents’ solicitors on 2 June 2015. Contrary to the appellant’s own submissions (not repeated by Mr Small), I do not regard it as inappropriate or disproportionate that the respondents requested that information - at least in general terms.

Prior to the adjourned hearing on 15 June 2015, an associate solicitor employed by the respondents’ solicitors’ firm produced a further witness statement dated 12 June 2015, referring to further investigations on behalf of the respondents having been carried out by third-party investigators. These apparently identified concerns as to the level of information provided by the appellant and purported to show that the information which he had provided may not have been complete. In my judgment, whatever the inadequacies of the information which had been provided by the appellant, it is highly doubtful whether the employment of third-party investigators by the respondents could have been justified as proportionate in the circumstances of a case of this sort, where the contempt for which sanctions were going to be ordered was extremely limited, the appellant had already provided evidence to show that he was unemployed and insolvent, and the requirement that a defendant should pay a fine was not, in any event, going to compensate the respondents for any loss which they had suffered as a result of the contempt.

The second hearing of the contempt sanctions took place on 15 June 2015 before HHJ Simon Brown QC. At that hearing the judge ordered that the appellant should pay a fine to the court for his admitted contempt of court in the sum of £2,500, by 15 June 2016. The appellant duly paid that sum on 9 March 2017. The judge also ordered that the appellant should pay the respondents’ costs of the contempt applications in accordance with the order dated 13 February 2015, which he assessed in the sum of £69,933.73. He further ordered that the appellant should pay the respondents’ costs described as “of and occasioned by the hearing on 15 June 2015 to determine sanction” in the sum of £13,650, making a total of £83,583.73. There is no indication in the transcript of the hearing on that date as to why the judge considered that, what he himself referred to as “extremely high costs”, were proportionate or appropriate, or whether they reflected standard costs, in the context of litigation against an apparently insolvent defendant who had admitted his breaches and who had only been penalised (in relation to limited contempts) to pay a fine of a relatively small amount. The only explanation he gave was that:

“this is a case where they [the respondents] have had to deal with Mr Solanki in person throughout, who has contested these matters throughout from the word go until he had to admit his contempt.”

That to my mind is not an adequate summary reflecting the chronology of these proceedings nor amounts to any adequate consideration as to whether, in the event, it was proportionate in a case of this sort for the respondents to have incurred such substantial costs merely in connection with what, in the event, turned out to be limited committal applications. It is to be noted that the respondents’ costs of the substantive trial were some £15,000 less than this figure.

Accordingly, I would allow the appellant’s appeal in relation to the judge’s decision summarily to assess the costs of the committal proceedings and his actual summary assessment and the figures which he awarded the respondents. The judge failed adequately to consider whether, as a matter of principle and in the particular circumstances of this case, the considerable alleged expenditure by the respondents in pursuing the committal proceedings was proportionate or justified. Whilst, in light of the appellant’s admission that he had, to a limited extent, been in contempt of court, the judge was entitled to make an order for payment of standard costs against the appellant in relation to the committal proceedings, he was not, in my judgment, by virtue of his summary assessment, entitled to require the appellant to pay the entirety of the respondents’ alleged costs of what appears to have been a wholly disproportionate exercise, without further enquiry into issues such as the level of those costs, whether they were reasonably incurred and their overall proportionality. I also suspect that the judge’s views were coloured by what I regard as his inadequate determination of the substantive merits of the case, to which I have already referred.

Accordingly, I would set aside the judge’s summary assessments. I would remit the issue of the assessment of the costs of the committal proceedings to be determined by way of a detailed assessment by the costs judge at the Birmingham Registry. Such detailed assessment should take place after the retrial. Whilst I would leave in place the judge’s order that the appellant should pay the respondents’ reasonable costs of the committal proceedings on the standard basis, the quantum of those costs will have to be determined by the costs judge. He or she will need to consider not only whether, and to what extent, such costs were reasonably incurred, but also whether, in all the circumstances of this case, the incurring of such costs in the context of (effectively) satellite litigation of contempt proceedings against someone who appeared to be an insolvent defendant, was proportionate. He or she will have a wide discretion, therefore, as to whether to disallow all, or any proportion of, the respondents’ incurred costs on the grounds that there was no, or little, utility in their expenditure.

For the above reasons I would allow the appellant’s appeal on all grounds.

I agree.