Thomson Directories Ltd v Planet Telecom Plc & Ors

I have before me three applications in this action, but this judgment is only concerned with the first of them which is an application by the fourth defendant, Peter Hutcheon, to set aside a judgment given by Deputy Judge Steinfeld on 6 March this year on an inquiry as to damages.

The nature of the application and the issues which arise on it are best understood by setting out something of the history of this litigation. The claimant is Thomson Directories Limited. The fourth defendant, as I have said, is Mr. Peter Hutcheon. He was either a senior executive or heavily involved in the running of three companies who are the first, second and third defendants in this action being, respectively, Planet Telecom Plc, Dancibar Limited and 192.Enquiries.Com Limited.

Those companies were engaged in supplying services to members of the public which the claimant alleged involved unlicensed use of database material, the database rights and copyrights in which belonged to the claimant. Apparently, the claimant had put false entries in its own databases so that they could easily detect whether their databases were being used without permission by somebody else since those false entries would appear in the defendants’ database or extracts from it. This is a common, and frequently effective, anti-piracy technique. In any event, the claimant believed that it could show that all four defendants were guilty of breaches of its intellectual property rights. It began proceedings in the summer of 2001. The action was compromised by a consent order of 3 July of that year when all four defendants submitted to an inquiry as to damages. As it happens, the first three defendants are now of little value, either having been put into liquidation or otherwise ceasing to be of any financial worth. The only defendant of potential substance was Mr. Hutcheon.

The inquiry came on for a hearing on 4 March of this year and that was initially before Pumfrey J. However, at the very beginning of the hearing, a preliminary issue arose in relation to the defences open to Mr. Hutcheon. In substance it appears that part of Mr. Hutcheon’s response to the inquiry was to challenge that he had done anything tortious or that he had inflicted any damage on the claimant. So Pumfrey J. had to determine whether or not those defence were open to Mr. Hutcheon on the inquiry. He gave a ruling to the effect that, because of the consent order, it was no longer open to Mr. Hutcheon to dispute that he had breached the claimant’s rights, and had caused at least some damage.

On the morning of 5 March the claimant applied for a freezing order but this was refused. However, certain problems also arose on that day as to whether or not Pumfrey J. could continue to hear the inquiry because it was said that he had been made aware of material which the judge hearing the inquiry should not have had access to, and for that reason the judge decided that it would be inappropriate for him to hear the substantive inquiry. Instead he directed that the hearing would continue on the following day, that Thursday 6 March before Mr. Alan Steinfeld Q.C. (sitting as a Deputy High Court Judge).

On 6 March at half past ten in the morning the substantive hearing was due to take place. But in circumstances which I will consider in more detail in a moment, it had become known to the solicitors acting for the claimant that Mr. Hutcheon did not intend to appear at the hearing because he claimed that there were medical reasons which would make it impossible for him to do so.

The hearing before Mr. Steinfeld did not proceed immediately, but further inquiries were made which, once again, I will refer to shortly. Eventually, the learned judge proceeded with the hearing on the basis that there was before him an application made on behalf of Mr. Hutcheon to adjourn the inquiry to a later date, or when his medical problems were not so pressing.

The learned judge gave a reasoned judgment as to why he declined to adjourn the hearing of the inquiry. It is not necessary for me to go through it, but I can summarise it as follows. Mr. Hutcheon had communicated with the claimant’s solicitor that he had suffered a significant and extremely painful relapse of a chronic back problem which he had and that this had made it impossible for him to attend at court. Deputy Judge Steinfeld, on the material made available to him and on the submissions made by counsel, came to the conclusion that there was no adequate basis to accept the suggestion that Mr. Hutcheon had suffered pain to an extent which prevented him attending at court. For that reason he declined to adjourn the hearing. Thereafter he determined the inquiry on the basis of the submissions made before him by the claimant. The net result of that was that he made an order against Mr. Hutcheon for a sum in the region of £1.3 million in damages together with in excess of £200,000 of interest and, of course, costs which, as I understand it, have not yet been assessed.

However, in determining that he would accede to the notional application to adjourn the inquiry, the learned Deputy Judge had his attention drawn to the possibility of a human rights objection, and he therefore considered whether or not it would be consistent with the human rights of the fourth defendant to refuse the adjournment and to continue with the inquiry there and then. He came to the conclusion there was no breach of Mr. Hutcheon’s rights. Importantly, he said that one of the reasons why he was of that view was that the provisions of CPR, r.39.3 would allow Mr. Hutcheon to apply to the court to set aside any judgment that he gave, if, of course, the requirements of that rule were met.

More than that, he directed the claimant’s solicitors to notify Mr. Hutcheon not only of the outcome of the application to adjourn, but also to supply him with a copy of the judgment which refers to the provisions of CPR, r.39.3 and to draw Mr. Hutcheon’s attention to that rule. That was done virtually immediately. So Mr. Hutcheon was told that he could make an application under CPR, r.39.3 to have the judgment set aside. It is that application which is now before me.

Before considering the facts of this case, I think I should say a little bit about the law. Mr. Moody-Stuart, who appears on behalf of the claimant, has drawn my attention to Regency Rolls Limited v. Carnall [2000] WL 33148953 (CA), which is a case in which the Court of Appeal had to consider the application of this part of the CPR. CPR r.39.3(3) to (5) provide as follows:

“(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 … paragraph (3) for an order to restore proceedings must be supported by evidence.

(5)

Where an application is made under paragraph ... (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 that the court had exercised its powers to strike out or to enter judgment or make an order against him;

(b)

had a good reason for not attending at trial; and

(c)

had a reasonable prospect of success at the trial.”

In the judgment of Simon Brown L.J., reference was made to the following note in the Spring 2000 Edition of the Civil Procedure White Book:

“Note that the wording of r.39(3)(5) provides more stringent requirements than CCR.O.37, r.2 which it replaces. The court no longer has a broad discretion. There is only jurisdiction to set aside a regular judgment if the party seeking to have the order set aside can satisfy all three requirements in r.39.3(5).”

That in substance was the central issue determined by the Court of Appeal in the Regency Rolls case. A party applying to set aside a judgment or order must demonstrate that all three of the requirements of CPR.39.3(5) have been met. One or two are not enough. As is apparent from the Court of Appeal’s judgment, this can make setting aside a judgment a difficult task. No question of whether or not the other side is prejudiced arises for consideration. What is in issue is whether all three requirements are met so that a new hearing will be justified. The obvious purpose behind CPR.39.3(5) is to prevent the court’s time being unfairly taken up and the parties’ costs being unfairly wasted on rehearings of matters which should have been disposed of earlier.

There is one other matter which I should mention which arises particularly from the judgment of Simon Brown L.J. It will be recalled that the second requirement which the party seeking to set aside the judgment or order has to meet is that he or she acted promptly when he found out that the court had exercised its power to strike out or enter judgment or make an order against him. The Court of Appeal had to consider what was meant by the words “acted promptly”. Lord Justice Simon Brown said as follows:

“I would accordingly construe “promptly” here to require not that an applicant has been guilty of no needless delay whatever, but rather that he has acted with all reasonable celerity in the circumstances.”

Some feel for the strictness with which that is to be applied can be gathered from the facts of the Regency Rolls case itself. There the order was made in the absence of the party on 22 March. The party against whom it was made obtained legal advice from a solicitor on 29 or 30 March. By 31 March it was clear that those solicitors were not to be retained. The Easter holidays then intervened in the period from 2 to 5 April 1999 and on 6 April the party against whom the order had been made contacted new solicitors. On 9 April he attended an appointment with them. They requested more information and, on 12 April, he had a further meeting with the new solicitors and on 14 April those solicitors inspected the court file. On 15 April the party provided further documents to the new solicitors and on 16 April the new solicitors discussed the case with leading counsel which was followed by a consultation with leading counsel on 21 April, the application to set aside being issued the same day. Thus, in that case the party against whom the order was made had allowed a month to pass but, during that time, had taken quite a number of steps. The Court of Appeal unanimously said that he had not acted with reasonable celerity.

I now turn back to the issues in this case. As I have said already, on 6 March the Deputy Judge made an order against Mr. Hutcheon for the very substantial sums I have referred to. On 7 March, that is a Friday, the claimants came back to apply again for a freezing order. That application was successful and apparently was continued again by Jacob J. on 14 March. In the meantime, Mr. Hutcheon had received a copy of the Deputy Judge’s judgment refusing the adjournment and the letter from the claimant’s solicitors, Willoughby & Partners, drawing his attention to the provisions of CPR.39.3. It appears that on 12 March he signed an application notice seeking to set aside the judgment under the provisions of CPR.39.3. He did not at the time provide the necessary fee, and so the court would not issue the application notice. Nevertheless, it appears that by email Mr. Hutcheon notified Willoughby & Partners that he intended to apply to set aside the Deputy Judge’s judgment on the inquiry.

Apparently on 31 March Mr. Hutcheon made a without notice application to set aside the freezing order. It came before Lloyd J. On the same day Mr. Hutcheon took his application under CPR 39.3 back to court and paid a £50 fee. He has told me today that he did that in person to the best of his recollection. It appears that that cannot have been the correct fee because, again, the court would not issue the application notice. The real fee, as I understand it, should have been £60.

In any event, the application before Lloyd J. was stood over to come before the same judge on 3 April. On that day Lloyd J. adjourned Mr. Hutcheon’s application to set aside the freezing order and also made an order in relation to any application which Mr. Hutcheon might make to set aside the damages judgment. In particular, the judge made an order that:

“The fourth defendant must issue and serve on the claimant’s solicitors any application he wishes to make to set aside the order of Mr. Alan Steinfeld QC sitting as a Deputy Judge dated 6th March 2003 by 4 pm on 24th April 2003.”

What precisely happened thereafter is not entirely clear. It appears that on 2 May Mr. Hutcheon paid the final £10 necessary for the issuance of the application notice. The notice was stamped by the court with the date of 7 May 2003. As I understand it, that application as stamped has never been served on the claimant’s solicitors and, of course, it was not issued within the time limit specified by Lloyd J.

It seems to me tolerably clear that the following was the position on 3 April. First, it was apparent that Mr. Hutcheon intended to issue an application notice under CPR39.3 to set aside the damages judgment. Second, as of that date the application notice had not been issued. This must have been apparent to Mr Hutcheon, not least because had it been issued there would have been a no purpose in Lloyd J. giving a period of three weeks for that step to be taken. Third it was clear that the application notice had not been served on the claimant’s solicitors because, had there been any question of it having already been served, once again Lloyd J. would not have made the order he did.

I can therefore turn to consider whether Mr. Hutcheon has overcome the three hurdles placed in his path by CPR.39.5. In relation to the question of the speed with which the application has been brought, Mr. Moody-Stuart advances two arguments. First, he says that Mr. Hutcheon has failed to comply with Lloyd J.’s order of 3 April by failing either to issue or serve within the time limit specified by the learned judge. That, he says, means that the application now made by Mr. Hutcheon should not be entertained. He has breached a court order and that is that. Alternatively, he says that when one has regard to the first part of the 39.3(5), the fact that Lloyd J. set a time limit which has been breached adds significantly to the case that Mr. Hutcheon has not proceeded with reasonable celerity.

I am not persuaded by the first of these arguments. Lloyd J did not make an unless order, and, although Mr. Hutcheon may not have complied with the order made, I do not think that that per se means that this application cannot be proceeded with. If the learned judge had said that failure to issue and serve by 24 April would mean that he would be debarred from making the application, different considerations would have arisen, but he did not. So really the existence of Lloyd J.’s order can only be taken into account as one of the factors which must be put in the balance in deciding whether or not Mr. Hutcheon acted with reasonable celerity. If this were simply a matter of prejudice or lack of it to the claimant, I think a lot would ride upon the fact that the claimant’s solicitors were notified in mid-March that Mr. Hutcheon intended to launch an application to set aside the damages judgment, but, for reasons I have already given, questions of prejudice are of little relevance to the application of CPR.39.3.

The question is, has Mr. Hutcheon acted promptly in making the application required by 39.3? Making that application requires him to issue the necessary application notice. It appears to me that, on the material before me, Mr. Hutcheon must have known, at least by the time of the hearing before Lloyd J. on 3 April, that he had not yet properly launched his application because, as I have already said, had he thought that it was already launched that would have been a matter which would have been drawn to the attention of the court. If it had been launched, and, Lloyd J. would not have made the timetable order that he did. So it seems to me that Mr. Hutcheon should have known, at that time that no proper application had yet been made. It also appears to me that, if anything, the time limit given by Lloyd J. was generous. All that Mr. Hutcheon needed to do was to issue the relevant notice, which is a matter of little technical complexity. He did not do so until 2 May, after the time limit given by Lloyd J. at a hearing at which Mr. Hutcheon was present.

I have been offered no explanation for why Mr. Hutcheon did not pay the necessary fee and issue the application notice at any time within the three weeks after 3 April and before the expiry of the time limit set by Lloyd J. There is no suggestion that Mr. Hutcheon could not afford the extra £10. There is no suggestion that he was immobile or any other suggestion as to why he could not have done it within that time frame. The result is that, by the time he issued his application notice, two months had passed from the deputy judge’s damages judgment. I find it impossible to hold that to be compliance with the requirement to act promptly contained in r.39.3(5)(a).

I can now turn to the second obstacle, that is whether there were good reasons for not attending the trial. As will be understood from the timetable I have already set out above, by the end of Wednesday, 5 March, the parties, including Mr. Hutcheon, were aware that the substantive hearing was to take place on the following day, Thursday, 6 March. The claimant’s case is that there was no reason whatsoever for Mr. Hutcheon to miss the 6 March hearing.

think it would be fair to summarise Mr. Moody-Stuart’s submissions as follows. Mr. Hutcheon determined on 5 March not to attend the following day. It was his decision which may have been related to other business interests which he was anxious to prioritise. In any event he simply had no intention of turning up the next day, and that when properly regarded there is nothing before the court to suggest there was any medical justification for failing to attend. Mr. Hutcheon says that this is grossly unfair to him, that indeed he does suffer from an extremely bad back which is a chronic problem and that properly regarded, it will be seen that he had little choice but to miss the hearing on 6th March.

Although I will have to go through the sequence of events which followed from the close of business on 5 March onwards, I think it is important to bear in mind that the medical certificate upon which Mr. Hutcheon relies to justify his non-attendance was timed at about 11 o’clock on 6 March. It is a medical certificate written by a Dr. Rout. It appears that mid-morning of 6th March, Mr. Hutcheon attended before Dr Rout. He had not consulted medical practitioner in relation to the alleged failure of his back prior to that time but after close of business on 5 March.

Mr. Hutcheon was cross-examined by Mr. Moody-Stuart in relation to the issue of his medical condition only. What because immediately apparent was that Mr. Hutcheon is a very bright man. He is also, as I think he said himself, a quick thinker. At one stage when he was being asked about the events of Wednesday 5 March and about attending at the hearing the following day he said this:

“It was clearly out of the question to me. That is why I did not attend.”

What becomes apparent, it appears to me, when one reads the contemporaneous materials before the court, is that the decision not to attend was taken by Mr. Hutcheon on the evening of 5 March before he had seen Dr. Rout. Indeed at the end of the day, his explanation for not attending ran something like this, he accepted that it would have been possible for him to attend, but he said, and once again I quote from the evidence he gave to me:

“There would be a slight throbbing pain and when it comes to cross-examination of witnesses I might miss a point, and the would be unfair to me”.

Even if that is and was his view, I should make it clear at this stage, it bears no relationship to any of the medical evidence which is before the court now. But I should go to the sequence of events.

As I have said, the first time that Mr. Hutcheon saw a doctor in relation to this alleged medical problem was at about 11 o’clock on the morning of 6 March. At 6:30 p.m. on 5 March, Miss Shireen Peermohamed, a partner in Willoughby & Partners, had been in conversation with Mr. Hutcheon by phone. At that time he was in London. He made no complaints of feeling unwell, as indeed he had not complained at any time during the previous two days. Mr. Hutcheon accepts that he did not complain of feeling unwell. He said that he had twinges in his back, that he is used to hiding the pain and nobody else would have appreciated that he was suffering some discomfort even on 4 and 5 March.

In any event, at three minutes past two in the morning, that is the morning of 6 March, an email was sent to Miss Peermohamed by Mr. Hutcheon. He has explained to me that it was dictated by him and sent by a friend who he was with at the time. It starts off with an important sentence:

“Dear Miss Peermohamed, could you urgently advise the appropriate people that I will not be able to attend court today or tomorrow. I deeply regret this”.

That was said before he had seen the doctor, although his evidence is that he had phoned up his own doctor between 8 and 8:30 on the evening of 5 March because he said he had suffered a severe episode of pain from his back which had made it impossible for him to stand. According to the evidence that he has given to me today, he had been working over his papers in the evening of 5 March and when he tried to stand up he was incapable of doing so because of the severe pain from his bank. He telephoned his own doctor’s emergency service and they recommended that he should make an urgent appointment with a doctor to get necessary drugs. As of 2.03 a.m. on 6 March he had seen no doctor at all, but his intention at that stage in my view is clear.

His email contains of a long explanation of his back complaint. He says that he suffered an agonizing jolt and he said that he was aware from his own experience that it would get worse before it would get better, and would she please notify him of the outcome of his application to vacate the hearing of the inquiry. Miss Peermohamed sent back an urgent email timed at 10.18 a.m. on 6 March. It reads as follows:

“I received your email on my arrival in the office this morning and have since tried to call you on your mobile and office phone numbers to no avail. Please would you produce a medical certificate or signed statement from your doctor as a matter of urgency attesting to the fact that you are unable to attend court today as a result of your condition.”

Once again, that email is important. What Miss Peermohamed required from Mr. Hutcheon, reasonably in my view, was that he should provide a medical certificate stating that he was unable to attend court.

After sending the email, Miss Peermohamed had a telephone conversation with Mr. Hutcheon. He told her that his own doctors would not see him until 11 o’clock. As she then noted to Mr. Hutcheon, “you are back in Liverpool then presumably”. He confirmed that he was. It is now conceded, although Deputy Judge Steinfeld with the assistance of counsel had worked this out from the information before him, that notwithstanding the agonizing back pain which Mr. Hutcheon said he suffered at 8 o’clock on the evening of 5 March, at some time that evening, and I now know it to be somewhere around 10 o’clock, Mr. Hutcheon drove or was driven from London to Liverpool. That is a journey of some three and a half hours. Mr. Hutcheon says that it is comfortable sitting in a car if you have a bad back.

In any event, Mr. Hutcheon explained that he was going to see his doctor. He also made certain comments about his workload at the time which Mr. Moody-Stuart relied on, but I do not think I need to refer to. What was provided by Dr. Rout was a medical certificate saying that Mr. Hutcheon could refrain from work for two weeks. What it did not say was that Mr. Hutcheon was incapable of attending court. Indeed, it now appears that what happened was this, Mr. Hutcheon went to see Dr. Rout, a doctor he had never seen before. Dr Rout did not give him any form of physical examination. It appears that Mr. Hutcheon told him that he had a painful back. Dr. Rout had access to his existing medical records. As I say, there was no examination at all, no manipulation, no attempt to find the location of the pain, no examination of any thoroughness at all took place. The medical certificate exempting Mr. Hutcheon from work was based upon Mr. Hutcheon telling the doctor that his back hurt.

But the matter goes slightly further than this. Miss Peermohamed with Mr. Hutcheon’s consent, spoke to Dr. Rout. This material was before Deputy Judge Steinfeld. I will read from Miss Peermohamed’s witness statement:

“14.

Dr. Rout confirmed that Mr. Hutcheon suffered from chronic lower back pain from time to time and has been on anti-inflammatory medication in the past. He confirmed that he had examined Mr. Hutcheon in the morning of 6th March, but that he could not tell from the examination whether Mr. Hutcheon’s condition had recurred as ‘pain is subjective’. He told me that Mr. Hutcheon had said he had been getting worse for the last few days and had nearly collapsed yesterday. Dr. Rout said that Mr. Hutcheon had claimed the problem only occurred when he stood upright, and that he would not be able to stand up to give evidence.

“15.

Dr. Rout confirmed that he had prescribed anti-inflammatory medication to Mr. Hutcheon and had signed him off work. Dr. Rout told me there was no reason why Mr. Hutcheon could not give evidence sitting down. He also confirmed that if Mr. Hutcheon had been able to travel to see him in Bolton from Liverpool today then he could travel to London today.”

That last paragraph Mr. Hutcheon accepted before me as accurate. That is to say Dr. Rout never suggested that his patient could not attend the hearing and could not give evidence sitting down. It should also be noticed that, according to this evidence, Mr Hutcheon told the doctor that he experienced back problems “only” when he stood upright.

The reference in the last quoted passage to the travelling from Bolton to Liverpool arises as follows. I have already referred to the fact that Mr. Hutcheon, notwithstanding his painful back, had embarked upon a three and half hour car journey from London to Liverpool. It is accepted that he then engaged in a further 40 minute journey from Liverpool to Bolton to see Dr. Rout. In fact, as the evidence has now come out, after that he then walked round the corner to the chemist to get his prescription and there is at least some suggestion by Mr. Moody-Stuart, but which I do not have to resolve today, that he then went abroad on 10 March.

Attendance at a substantive hearing is not a matter of choice. To put it another way, it is not for Mr. Hutcheon to decide to veto a hearing. Miss Peermohamed had told him quite clearly that he needed to provide medical evidence that he was unable to attend court. He did not do so. The reason he did not do so was because the doctor would not provide him with such medical evidence. The doctor’s attitude was that he could attend court. There is nothing to suggest that the doctor’s view was that there was any problem at all with him in dealing with the hearing on 6 March, as long as he was seated. As I have said, even the limited medical certificate Mr Hutcheon obtained was based upon no physical examination of the patient.

Mr. Hutcheon says, without expert medical support, that he believes that he would not have been as on the ball as he might otherwise have been if he was suffering from pain during the hearing on 6 March. In my view, this does not even begin to provide a good reason for not attending the hearing as required by CPR.39.3(5)(b). For what it is worth, I am by no means convinced, having heard Mr. Hutcheon in the witness box, that the pain that he suffered on 5 March was anywhere near as excruciating as he has suggested. The long journeys he undertook suggest otherwise. That he suffered from an agonizing painful episode is dependant entirely upon his say so. There is no medical evidence to support it. I do not feel confident that I could rely on Mr. Hutcheon’s evidence in this respect.

In those circumstances, I have no doubt at all that there was no good reason for not attending the hearing on 6 March. It follows that in my view Mr. Hutcheon has failed to discharge either the first or the second requirement under CPR.39.3(5). In the circumstances I do not think that I need to dwell on the third head, that is to say whether or not he had a reasonable prospect of persuading a court to come to a different conclusion to that arrived at by Deputy Judge Steinfeld on the damages hearing. For the record I should simply state that Mr. Moody-Stuart has argued strongly that there is no material before me to show that Mr. Hutcheon would have overcome that hurdle either. But, as I say, I do not need to determine that issue. I have decided that Mr. Hutcheon has failed to overcome the first two requirements of 39.(3)(5). I will dismiss the application to set aside the judgment.