Raja v Van Hoogstraten & Ors

By an application notice issued on 2 August 2018, the Second Defendant applied for various orders. The application notice appeared to have been issued on behalf of the Second Defendant alone. However, the Second Defendant has told me that he had intended to issue the application on behalf of the Second to Seventh Defendants and that he appeared at the hearing of that application on 19 November 2018 on behalf of himself and the Third to Seventh Defendants. I will proceed on that basis.

By their application, the Second to Seventh Defendants applied for three orders. Taking the orders sought in a logical order, the first order was that “this case” be transferred to a judge other than myself. In the circumstances of this application, I understood the reference to “this case” to be a reference to, at least, the present application of the Second to Seventh Defendants. The Second Defendant supported the application with a witness statement which made various comments about my own position and suggesting that I was “conflicted”.

When this application was called on, I asked the Second Defendant which of the orders he sought should be considered first as it seemed to me that I needed to decide in the first instance whether I would hear the application or transfer it to another judge. At that point, the Second Defendant stated that he no longer pursued the application for a transfer to another judge and that matter was not further considered. I should add that when I pre-read the papers, I could see no basis on which I ought to transfer this application to another judge and indeed I considered that it was my duty to hear the application rather than pass it to another judge. In that regard I had in mind what was said in Triodos Bank NV v Dobbs (Application for Stay of Appeal) [2006] CP Rep 1 at [7] and Otkritie International Investment Management Ltd v Urumov [2015] CP Rep 6 at [27] in relation to the duty of judge who is wrongly asked to recuse himself.

The second order sought by the application is an order “amending” paragraph 7 of an earlier order of 26 February 2018. The third order sought by the application is an order setting aside earlier orders of 11 May 2018, 25 June 2018 and 20 July 2018.

In order to present this application, the Second Defendant had prepared a bundle of communications between the Second to Seventh Defendants and their solicitors, Janes Solicitors (“Janes”). When the Second Defendant asked me to receive this bundle, in view of the fact that he was acting in person and on behalf of others who did not have legal representation, I asked whether he had considered the suitability of a waiver of legal professional privilege in these documents. He confirmed that he did wish to waive that privilege and indeed he wished to rely heavily on these documents for the purposes of the application. At a later stage in the hearing, the Second Defendant wished to show me a document which I considered ran the risk of incriminating him and the Third to Seventh Defendants in relation to a possible contempt of court and I again asked him to consider the suitability of the court and the Claimant seeing that document. The Second Defendant again confirmed that he wished the court to see the document; at the hearing, the Claimant had been provided with all of the privileged documents.

As will be seen, the privileged communications between the Second to Seventh Defendants and their solicitors do not help the case of the Second to Seventh Defendants and, indeed, reveal matters harmful to the submissions made on their behalf.

On 26 February 2018, I gave an earlier judgment in this case. That judgment was given orally but it has since been transcribed and I have been provided with a transcript. The judgment has a neutral citation number: [2018] EWHC 609 (Ch). I have also been provided with a transcript of the discussion between the court and counsel for the parties following judgment. I will assume that anyone reading the present judgment has access to my earlier judgment which has been made available on bailii.

My earlier judgment related to a preliminary issue as to whether the First Defendant, Mr van Hoogstraten had any beneficial interest in two properties, one in Hove and one in Brighton. Mr van Hoogstraten had been barred from defending the proceedings but the Second to Seventh Defendants who are his children did defend the proceedings and were represented by solicitors, Janes, and by Mr Mark Warwick QC. The Claimant, Mrs Raja, was represented by Mr Peter Irvin of counsel.

Although he was not himself permitted to defend the proceedings, Mr van Hoogstraten gave evidence at the trial of the preliminary issue in support of the case put forward by the Second to Seventh Defendants, who are his children. He was not separately represented but was present in court throughout all or most of the trial although I understand that he was not in court when I gave judgment on 26 February 2018.

At the trial of the preliminary issue, the case of the Second to Seventh Defendants, supported by the evidence of Mr van Hoogstraten, was that he held the title to both of the relevant properties on trust for the Second to Seventh Defendants. In my earlier judgment, I determined the preliminary issue in favour of the Second to Seventh Defendants. Following judgment, I heard submissions as to the costs of the claim and I gave a ruling, with reasons, as to costs. I ordered the Claimant to pay one-third of the costs of the Second to Seventh Defendants. I was not provided with a transcript of the ruling which I gave as to costs.

Following my ruling on costs, I raised two matters with counsel for the Second to Seventh Defendants. The first matter is not now relevant but the second related to evidence which I had heard at the trial as to the tax treatment of the income produced by the two properties which, in accordance with my judgment, was trust income. In my judgment, I had referred to this topic at [37], [38] and [53], in these terms:

“37 It emerged at a late stage in the trial that since around 2006 the income from 12 The Drive and 208 Preston Road has been treated as the income of a limited company Hamilton Property Holdings Limited. The 6 children are the shareholders in this company. As the income is treated as the income of the company and not the income of a trustee, corporation tax is potentially payable on the income, save that the losses of the company in other respects have reduced the relevant income to nil, or nearly nil, so that minimal tax is paid. Of course, if the net income had been treated as trust income, as the children assert in this court it should have been, a much higher rate of tax would have been payable.

38 Mr van Hoogstraten did not tell me about these arrangements in his evidence. The second defendant suggested that HMRC had agreed to this method of accounting and taxation. He did not produce any document to record any such agreement. I understood from his evidence that he himself had not seen any such document. I am very sceptical as to whether this evidence is true as to the position of HMRC. However, as the matter emerged late in the trial and was not fully explored, I am cautious as to whether I should find there has been a blatant attempt to cheat HMRC, although I can say that the position looks very suspicious indeed.

…

53 As to the tax treatment of the tax income, this point only arose at a late stage. Prima facie the trustee has not paid the tax which he ought to have paid. The second defendant told me that this underpayment of tax was with the agreement of HMRC on an interim basis. I have already explained that I am very sceptical about the truth of that statement, but I am not able to make a firm finding one way or the other. However, even if I had held that Mr van Hoogstraten was a trustee and that he was not paying the correct tax, that would still not persuade me to hold that the trusts were not genuine. In those circumstances, the right finding would be that the trusts were genuine, but that Mr van Hoogstraten, assisted by his children, were cheating HMRC.”

The transcript of the discussion following judgment contains the following exchanges:

“MR JUSTICE MORGAN: … The next matter is the tax treatment of the trust income. I have not made a finding about whether the Inland Revenue have been misled. I have expressed scepticism about the answers I have been given. It seems to me that the Inland Revenue should be made aware of the findings in this case, and it will be for them to decide what action to take by way of recovery of tax, penalties, any other criminal sanction they may wish to visit upon a cheating taxpayer, if that is what I am dealing with.

There are two things that can be done. One is for the defendants to obtain a transcript of my judgment and send it to the Inland Revenue, together with any mitigating circumstances or explanatory circumstances they wish. The other is for me to obtain a transcript of the judgment and send it to the Inland Revenue and invite them to investigate. I am happy to hear which of those two options might be more appropriate. Mr Warwick, can you help on that?

MR WARWICK: My Lord, I have instructions. We would invite your Lordship to follow the former course. We will obtain a transcript and we will send it with appropriate submissions to the Inland Revenue.

MR JUSTICE MORGAN: Right. The order I make following this judgment will contain a direction to that effect. Are there any other matters?

[Later]

MR IRVIN: There is just one small thing that does slightly worry me. My Lord, I was not asked to make any submissions about which of the two courses in relation to tax should be followed. My client has an understandable suspicion of the way in which the defendants conduct their business.

MR JUSTICE MORGAN: Yes.

MR IRVIN: And I would ask that we be copied in on the submission to the Inland Revenue, because we are not confident that a proper picture would necessarily be given to the Inland Revenue (or HMRC, as we should now call them I suppose).

MR JUSTICE MORGAN: Yes.

MR IRVIN: Our preference would have been for your Lordship to send the judgment direct.

MR JUSTICE MORGAN: One course I could add is that the second to seventh defendants will send to the court a copy of the letter they send to HMRC, so that if I become concerned that they are telling HMRC things different from the sworn evidence they gave at this trial, I will be in a position to make sure HMRC are aware of the true facts, whatever the true facts might be.

MR IRVIN: I would be very happy with that course, my Lord.

MR JUSTICE MORGAN: Right. Mr Warwick, is there a problem about your clients sending to the court a copy of whatever is sent to HMRC?

MR WARWICK: I hear the word “No” from behind me.

MR JUSTICE MORGAN: Then I will require them to do that.

MR WARWICK: And I will write that into the minute. In the usual way, I will agree a minute with my learned friend.”

It is clear from the transcript of the discussion that the proposed order as to sending a transcript of the judgment and the explanation to HMRC was made at the express request of leading counsel for the Second to Seventh Defendants (as the preferred alternative to the court itself writing to HMRC). The privileged documents contain a number of references to these events in court which describe in more detail the way in which Janes and Mr Warwick took instructions from the Second to Seventh Defendants. The instructions given in court were described in an email from Mr Berg of Janes to the Second Defendant of 6 March 2018 at 17:23. That email records that the Second Defendant told Mr Berg that he had no worries about HMRC having a transcript of the judgment. The matter was described again in an email from Mr Berg of Janes to the Second Defendant of 17 May 2018 at 16:37. It is clear from the privileged material that the Second to Seventh Defendants gave instructions to Janes and Mr Warwick to ask the court to make an order in the terms which were later ordered in preference to the alternative of the court itself sending a transcript of the judgment to HMRC.

As the transcript of the discussion shows, counsel agreed to submit a minute of order. I understand that Mr Warwick QC drafted the minute of order and that Mr Irvin accepted Mr Warwick’s draft. The minute of order was then submitted to the court. The draft order dealt with the preliminary issue and made various orders and directions as to costs. In that regard, I ordered the Claimant to pay one third of the costs of the Second to Seventh Defendants and to make a payment on account of this liability in the sum of £35,000. Paragraph 7 of the draft order was in these terms:

“The 2^nd to 7^th Defendants do obtain a transcript of the Judgment delivered today, and send a copy to HM Revenue and Customs, together with an explanation as to the tax treatment of the monies received on behalf of the trusts of the Properties. A copy of that explanation is also to be sent to Mr Justice Morgan”

As the minute of order was not in dispute, I was minded to make an order in the terms which had been drafted. I recall that I specifically considered the terms of paragraph 7 of the draft order (as I explained to the parties in a later email of 2 May 2018, to which I refer below). I then approved the minute of order and it was sealed by the court on 5 March 2018.

On 8 March 2018, Janes wrote to my clerk. They said that their note showed that, in the course of the discussion following judgment, I had referred to “the Defendants” without specifying the First Defendant or the Second to Seventh Defendants. Janes said that subject to checking a transcript of the discussion, it was their intention to apply to vary paragraph 7 of the order under the slip rule so that the reference to the Second to Seventh Defendants was removed and replaced by a reference to the First Defendant. Janes added that the reason for this change was that the First Defendant as the trustee had “the locus standi with the Inland Revenue as to the Trust’s tax affairs, not the 2^nd to 7^th Defendants”.

The Second Defendant wished me to see the privileged documents which led up to this letter of 8 March 2018. I was told that the desire to change paragraph 7 of the earlier order was due to the views expressed by Mr van Hoogstraten to Janes. He did not want the order to refer to the Second to Seventh Defendants but he wanted the order to refer to himself. In view of Mr van Hoogstraten’s previous history of non-compliance with orders, I can say that it would be naïve to think that this suggestion was in an attempt to be helpful and to allow HMRC to have a full picture of the tax position from him at an earlier point in time. In view of Mr van Hoogstaten’s wishes, the Second Defendant then insisted that Janes apply to the court to amend paragraph 7 of the earlier order.

I was shown advice from Mr Warwick as to the ability of the Second to Seventh Defendants to comply with paragraph 7 of the earlier order. He did not see any difficulty in their complying with that order. Nonetheless, the Second Defendant was highly critical of Janes and Mr Warwick for allowing the court to include paragraph 7 of the earlier order even though the Second Defendant had given them instructions to agree to that paragraph in court on 26 February 2018. On 8 March 2018, the Second Defendant told Janes that if paragraph 7 of the earlier order was not changed, then the Second to Seventh Defendants would appeal it.

On 23 March 2018, the solicitors for the Claimants wrote to Janes with a copy to the court objecting to any change to paragraph 7 of the order of 26 February 2018.

There was no further communication with the court until my clerk wrote to the solicitors for the parties on 2 May 2018. My clerk asked Janes to confirm that having checked the transcript of the discussion following judgment they no longer intended to pursue an application under the slip rule. My clerk also informed the parties that I had myself considered whether paragraph 7 of the order involved a slip and that it did not appear to me that there was any slip. My clerk also asked Janes if the Second to Seventh Defendants had complied with paragraph 7 of the previous order.

On 9 May 2018, Janes wrote to my clerk and stated that the Second to Seventh Defendants did not intend to make an application to amend paragraph 7 of the order. Janes also stated that their clients had “not yet” complied with paragraph 7 of the earlier order in that they had not sent a copy of the transcript of the judgment nor any explanation to HMRC. The Second Defendant told me (at the hearing of this application) that he did not know that Janes had written to the court on 9 May 2018 but he became aware of that fact on 14 May 2018 and Janes sent him a copy of the email of 9 May 2018 on 16 May 2018. In a covering email, Janes referred to advice being given by Janes and counsel that there was no basis for amending the order under the slip rule.

On 11 May 2018, in the light of the Second to Seventh Defendants’ non-compliance with paragraph 7 of the earlier order, of my own initiative, I made a further order requiring paragraph 7 to be complied with not later than 4 pm on 1 June 2018.

On 16 May 2018, the Second Defendant instructed Janes to apply to set aside the order of 11 May 2018. On 17 May 2018, Janes emailed the Second Defendant to say that steps were being taken to apply to set aside the order of 11 May 2018. Janes referred to advice given to the Second Defendant about the consequences of failure to comply with the order and the Second Defendant is reported as having said that that was not a matter which concerned him for various reasons.

Janes then prepared a draft application to set aside the order of 11 May 2018. On 17 May 2018, Mr Warwick advised that the application, as then drafted, was “hopeless”. Mr Warwick said that he had “a solution” to the suggested difficulty with the wording of paragraph 7 of the earlier order. The solution was for Mr van Hoogstraten to provide an explanation of the tax position to the Second Defendant who could then send it to HMRC. On 18 May 2018, Janes advised the Second Defendant of the difficulties in applying to set aside the order of 11 May 2018. Janes suggested that non-compliance with paragraph 7 of the earlier order could be “so easily avoided”. No application was made to set aside the order of 11 May 2018.

On 19 June 2018, my clerk wrote to Janes and asked if paragraph 7 of the earlier order had been complied with and requiring a written explanation of the current position. Janes asked the court to give them time to take instructions and on 20 and 22 June 2018, Janes informed the court that the order had not been complied with. The Second Defendant told me that he had not seen the email from Janes of 22 June 2018.

On 21 June 2018, Janes wrote to the Second Defendant saying that he was cutting off his nose to spite his face, which could be avoided. On 22 June 2018, the Second Defendant wrote to Janes stating that the Second to Seventh Defendants had no intention of complying with the “nonsense Order”. He said that if the judged wanted the Second to Seventh Defendants to come to court, they would have no problem pointing out to the judge his “fuck up” should the judge be so foolish as to pursue “his nonsense Order”.

On 25 June 2018, I made a further order requiring the Second to Seventh Defendants to comply with paragraph 7 of the earlier order by 4 pm on 9 July 2018. I also ordered the Second to Seventh Defendants to appear at a hearing on 20 July 2018 in order to establish to the court’s satisfaction that they had complied with this order. The order of 25 June 2018 contained a penal notice. The order also imposed a stay on enforcement of the costs orders in favour of the Second to Seventh Defendants pending the hearing of 20 July 2018 and until further order of the court. This order was served on Janes who communicated with the court on various points arising. However, as subsequently explained in an affidavit by Mr Berg of Janes, as a result of a high level of incompetence on his part, the order of 25 June 2018 was not sent to the Second to Seventh Defendants until 19 or 20 July 2018.

On 20 July 2018, the hearing referred to in the order of 25 June 2018 took place. Mr Warwick and Janes appeared at that hearing although the Second Defendant told me that they did not have instructions at that point to act for the Second to Seventh Defendants. Following the hearing, I made a further order to the effect that an order in the terms of paragraph 7 of the earlier order was to be complied with by 4 pm on 10 August 2018 and the matter would be further heard on 3 September 2018. The order contained a penal notice and ordered a further stay of enforcement of the costs orders in the order of 26 February 2018. On the same day, the Second to Seventh Defendants disinstructed Janes and in due course they came off the record as solicitors for those parties.

On 20 July 2018, the Second Defendant wrote to my clerk requiring the orders of 25 June 2018 and 20 July 2018 to be set aside and the matter passed to another judge on the ground that I was “conflicted”. On 30 July 2018, my clerk replied stating that I saw no grounds for setting aside the orders and I took the view that I was not “conflicted”.

On 2 August 2018, the Second to Seventh Defendants made the application which is now before me.

Before I consider the grounds put forward in support of the application of the Second to Seventh Defendants, I wish to emphasise that I intend to deal with the application on the narrow basis on which it is put forward. I have set out the facts above in some detail even though it might be said that was not strictly necessary to deal with this application. I did so because the Second Defendant took me in detail to the history of the matter and showed me the privileged communications he had with his solicitors.

There has not been an application to commit the Second to Seventh Defendants for contempt of court for breach of the various orders which have been made. If a committal application were to be made, the applicant would have to comply with the procedural safeguards available to the respondents to such an application, in particular, the safeguards in CPR 81. Those safeguards would have to be observed either by complying with the letter of CPR 81 or, if the court took the initiative of directing that the question of the Second to Seventh Defendants’ contempt of court was to be determined at a hearing, the safeguards would be observed by the court giving appropriate directions leading to such a hearing. If the issue of contempt of court were to be determined, it would be decided on the material which was then before the court which might conceivably be different from the material which is now before me.

Having made it clear that I am not making any finding as to contempt of court and I am not considering what penalty ought to be imposed in the event of such a finding, I consider that that does not prevent me making appropriate findings, if relevant to the present applications, on the material which the Second to Seventh Defendants have chosen to place before me, as to whether they are in breach of the various court orders and as to the circumstances surrounding any such breaches.

The application is supported by the Second Defendant’s witness statement. He stated that Mr van Hoogstraten as trustee was entirely liable and responsible for all tax affairs in respect of the trust and that he was the only person who had locus with HMRC as to the trust’s tax affairs. He then said that the Second to Seventh Defendants had legal advice from someone other than Janes that it should have been pointed out to me on 26 February 2018 that Mr van Hoogstraten was the only person with locus with HMRC in this respect. He then criticised Janes for not pointing this out to the court before the order of 26 February 2018 was sealed. He then said:

“We believe that not only does Paragraph 7 of the Order of 26^th February order us to do something that we do not have power to comply with, but also something with which we are legally unable to comply.

Also, Paragraph 7 of the Order of 26^th February orders D2-D7 when D7 is a minor and is therefore, in any event, clearly unable to comply.”

Paragraph 7 of the order of 26 February 2018 required the Second to Seventh Defendants to do four things:

I consider that the Second to Seventh Defendants were able to do all of these four things. In particular, there was no legal difficulty about them complying with the order.

There is no dispute as to the first of the four obligations; the Second to Seventh Defendants have obtained a transcript of the judgment.

I can see no impediment to the Second to Seventh Defendants sending a copy of the transcript of the judgment to HMRC and it was never explained to me how there was any practical or legal impediment to that being done.

The Second Defendant’s argument appeared to be that the real problem came with the third requirement as to an explanation as to the tax treatment of the monies received on behalf of the trusts. The Second Defendant gave evidence at the trial which I recorded in paragraph [37] of my judgment that the income from the trust properties was treated as the income of a company of which the Second to Seventh Defendants were the shareholders. The Second to Seventh Defendants are plainly able to explain that to HMRC. They can also explain to HMRC that the income was in fact the income of the trusts and not the income of the company. If the Second to Seventh Defendants do not have any further relevant information to give to HMRC then they are plainly not required to give an explanation in relation to matters of which they have no knowledge. The order never required them to do that. But the possibility that there might be matters about which they do not know does not mean that they are practically or legally unable to comply with the order that they provide their explanation to HMRC. I make it clear that I do not accept that the Second to Seventh Defendants do not have more extensive knowledge of the tax position than that which I have stated in this paragraph.

Finally, the Second to Seventh Defendants are plainly able to comply with the fourth requirement.

As to the Seventh Defendant, he is a minor but he was a party to the litigation and was represented by a litigation friend who instructed Janes on his behalf. Janes then instructed Mr Warwick on behalf of the Seventh Defendant. At the hearing on 26 February 2018, Mr Warwick asked the court to make the order which I later made. Mr Warwick drafted the minute of order containing paragraph 7 and I made that order. I do not see why the order could not be made against the Seventh Defendant as well as against the Second to Sixth Defendants.

The Second to Seventh Defendants do not ask me to set aside paragraph 7 of the order of 26 February 2018 but to amend it so that it refers to the First Defendant instead of them. Of course, if the First Defendant intended to comply with such an amended order, one would wonder what all the fuss is about. The Second to Seventh Defendants are on good terms with the First Defendant and it would be open to the First Defendant to prepare the explanation which is to be given to HMRC and to provide it to the Second to Seventh Defendants to be sent to HMRC. If the First Defendant intended to comply with the proposed amended order, then there would be at most a formal difference between the First Defendant sending the explanation to HMRC and the First Defendant providing the explanation to the Second to Seventh Defendants for them to send to HMRC. Indeed, the privileged material I was shown reveals that Mr Warwick specifically advised proceeding in that way if there was thought to be any difficulty in complying with paragraph 7 of the order of 26 February 2018. I was not shown any explanation as to why Mr Warwick’s advice could not be implemented. In truth, the Second to Seventh Defendants have never had any practical or legal difficulty in complying with the order and I do not believe that they ever genuinely thought that there was any such difficulty.

There is an obvious explanation as to why the Second to Seventh Defendants have made all this fuss about paragraph 7 of the order of 26 February 2018. It is clear that the decision to attempt to change the order was made as a result of what Mr van Hoogstraten said to them when he realised that such an order would be made. He had not been in court on 26 February 2018 when the proposed order was discussed but he became aware of the order soon afterwards. He realised that if the order were to be made and complied with then the Second to Seventh Defendants would be required to inform HMRC as to what had happened in relation to the trust income and the way in which it had been inappropriately dealt with for tax purposes. Mr van Hoogstraten did not want that to happen. He therefore proposed that the order be amended to require him to give the explanation to HMRC. I find that Mr van Hoogstraten never intended to comply with that order and to rely on the fact that he was normally resident in Zimbabwe, rather than in the United Kingdom, to enable him to get away with non-compliance. I pointed out in paragraph [4] of my judgment of 26 February 2018 that Mr van Hoogstraten feels able to ignore orders which the court has made against him and indeed he has repeatedly, defiantly, said that he does not intend to comply with earlier orders requiring him to pay monies to the Claimant. The only explanation for the whole fuss in relation to the order of 26 February 2018, which fuss has been at the initiative of Mr van Hoogstraten, is that he did not intend to comply with any order requiring him to give an explanation of the position to HMRC.

It follows that I will dismiss the application to amend paragraph 7 of the order of 26 February 2018. I make a few further comments in the light of some of the matters raised at the hearing. The Second Defendant never identified the power he was asking me to exercise to amend the earlier order. He did not seem to rely on the slip rule. An application had previously been intimated by reference to the slip rule but that application was not pursued. In any case, there was no slip in relation to the earlier order. If there had been some shortcoming in the earlier order, I am not clear whether I would have had any power to amend it but as there was no shortcoming in that order, it is not appropriate to consider any further the power of a judge to amend his own order, as distinct from the powers of the Court of Appeal on an appeal from the order. Further, although the Second Defendant spent a considerable period of time submitting that his solicitors had been dishonest and told lies and even committed criminal offences, he wholly failed to appreciate that so far as the Claimant and the court were concerned they were dealing with Janes as the solicitors who were acting for the Second to Seventh Defendants and those Defendants are bound by the actions and the statements of their solicitors. It is not necessary for me to comment on the position as between Janes and the Second to Seventh Defendants but I will say that I have not seen anything which could possibly lead to the court amending the order of 26 February 2018. The only shortcoming in the conduct of Janes which I saw was when they failed to notify the Second to Seventh Defendants of the order of 25 June 2018 but the principal body which suffered as a result of that was the court which was not able to make effective progress in this matter at the hearing on 20 July 2018.

The application made by the Second to Seventh Defendants also sought an order setting aside the orders of 11 May, 25 June and 20 July 2018. Those orders contained a number of directions but, as I understand it, the particular directions which the Second to Seventh Defendants wish to have set aside are the directions that, in effect, they comply with paragraph 7 of the order of 26 February 2018 by specified dates, which are now all in the past. In relation to my decision to specify dates, the dates specified were all reasonable dates when the orders were made and I see no reason now to set aside those orders. Other directions in those orders have now been complied with by others or have taken effect or have been overtaken by events and there is now no reason to set aside any of those directions.

It follows that I will dismiss the entirety of the application of the Second to Seventh Defendants.

I was asked by the Claimant to certify that the application of the Second to Seventh Defendants was totally without merit. At the hearing on 19 November 2018 I indicated that I would so certify. The behaviour of the Second to Seventh Defendants since 26 February 2018 has involved them making a fuss about nothing and without any possible justification for that behaviour.

I am also asked by the Claimant to order the Second to Seventh Defendants to pay the Claimant’s costs, to be assessed on the indemnity basis. At the hearing on 19 November 2018, I awarded the Claimant her costs on the indemnity basis. I have described the way in which the Second to Seventh Defendants have behaved. They have acted unreasonably and in a belligerent and abusive manner. Their behaviour has been well outside the norm. In my experience, it is unprecedented as regards their desire to make a fuss about nothing but with the intention of avoiding the result required by the orders of the court and to waste an enormous amount of everyone’s time, including the time of the court.

At the hearing on 19 November 2018, the Second Defendant applied for permission to appeal against the orders made on this application. I refused permission to appeal on the ground that an appeal did not have a real prospect of success and there was no other compelling reason to grant permission to appeal.

On 26 February 2018, I indicated that the court could itself communicate with HMRC as an alternative to ordering the Second to Seventh Defendants to provide information to HMRC. I was asked by Mr Warwick for the Second to Seventh Defendants not to take that course but instead to allow them to write to HMRC. I acceded to that application because I considered that it might conceivably be fairer to allow them to put forward any explanation or any mitigation of their behaviour before HMRC considered what to do. The Second to Seventh Defendants have wholly abused the position under the various orders by not complying with them and wasting everyone’s time in the process.

I consider that the time has now come for the court to bring the facts of this case to the attention of HMRC. Accordingly, I will now write to HMRC with a copy of my judgment of 26 February 2018 and a copy of this further judgment. My letter may draw attention to specific matters within that judgment and I will then invite HMRC to consider the course of action which they think appropriate in relation to the past tax treatment of the income of the trust.

At the hearing, I indicated that I could make another order requiring the Second to Seventh Defendants to write to HMRC. On reflection, I have decided not to make a further order. The previous orders were made, at their request, on the basis that it would be fairer to the Second to Seventh Defendants to allow them to write to HMRC instead of HMRC hearing about this matter from the court. However, as the Second to Seventh Defendants have abused the benefit of the orders previously made they have forfeited any right to have their interests considered in this respect. I consider that the public interest is better served by the court itself writing to HMRC rather than continuing to press the Second to Seventh Defendants to do so. I make it clear that although I am not making a yet further order that the Second to Seventh Defendant write to HMRC, that does not in any way detract from the earlier orders which were made and which have not been set aside.

By an application notice dated 29 August 2018, the Claimant applied for a permanent stay to the effect that the Second to Seventh Defendants should not be entitled to enforce any part of the order of 26 February 2018 which is in their favour, in particular, paragraphs 2 and 3 of that order. In effect, such a stay would only apply to paragraphs 2 and 3 of that order.

Paragraph 2 of the earlier order required the Claimant to pay one third of the costs of the Second to Seventh Defendants, to be assessed if not agreed. I was told that those costs have been agreed in a sum of approximately £250,000 (of which one third is payable). I am not clear if the parties have agreed that VAT is to be added to the sum payable. Paragraph 3 of the earlier order required the Claimant to pay, by 26 March 2018, £35,000 on account of those costs. The Claimant has not paid any sum to the Second to Seventh Defendants pursuant to those orders.

On 25 June 2018 and 20 July 2018, of my own initiative, I ordered interim stays of the above orders for costs payable to the Second to Seventh Defendants. When I granted those stays, I considered that it appeared to be the case that the Second to Seventh Defendants wished to take steps to enforce orders in their favour while at the same time flouting orders which had been made against them. I could see that it might be argued that the Second to Seventh Defendants were thereby in contempt of court and that a court might rule that they should not be entitled to invoke the processes of the court to enforce the above orders for costs while they remained in contempt of court.

Mr Beeby who appeared for the Claimant on her application submitted that I had power to grant a permanent stay of the orders for costs pursuant to CPR 40.8A which provides:

“ … a party against whom a judgment has been given or an order made may apply to the court for –

(a)

a stay of execution of the judgment or order; or

(b)

other relief,

on the ground of matters which have occurred since the date of the judgment or order, and the court may by order grant such relief, and on such terms, as it thinks just.”

Mr Beeby submitted that the conduct of the Second to Seventh Defendants and their failure to comply with paragraph 7 of the order of 26 February 2018, and the similar provisions of later orders, amounted to relevant matters which had occurred since the date of the orders for costs. He submitted that this produced the result that the court could stay the costs orders if the court considered that to be just. He then submitted that such a stay would produce a just result.

There does not appear to be any authority as to the application of CPR 40.8A. The rule is referred to in Michael Wilson & Partners Ltd v Sinclair (No 2) [2017] 1 WLR 3069 but not in any way which is relevant or helpful in the present case. Further, there was no authority on RSC O. 45, r. 11 which was the predecessor of CPR 40.8A. Other rules in the CPR provide for the court to grant a stay of proceedings or orders: see CPR 3.1(f), 52.16 and 83.17. Mr Beeby did not seek to rely on those other rules and I do not suggest that any of them could be relied upon in this case.

Mr Beeby made it clear that the stay which was sought was a permanent stay. Accordingly, I am not asked to order a stay for a temporary period until something else happens which might determine whether the orders for costs are to be set aside or determined to be unenforceable. Although the application is for a stay of the orders, the effect of granting a permanent stay would in substance be much the same as an order setting aside the orders for costs. Of course, an earlier order can be set aside on a successful appeal against the order but that is not the jurisdiction I am asked to exercise and, indeed, the Claimant does not suggest that there would be any ground for appealing the costs orders. There is some authority to the effect that the court has power, otherwise than on appeal, to set aside an earlier order where new events have occurred since the making of the order which invalidates the basis of the order or the fundamental assumption on which the order was made: see Barder v Caluori [1988] AC 20 at 43. However, it was not suggested that this case could be brought within that principle. CPR 3.1(7) does give the court power to vary or revoke an earlier order. That power was considered in Roult v North West Strategic Health Authority [2010] 1 WLR 487 and Tibbles v SIG plc [2012] 1 WLR 2591. I do not consider that the court would set aside the costs orders under that power by reason of the subsequent bad behaviour of the Second to Seventh Defendants which has occurred in this case. If the court would not set aside the costs orders under CPR 3.1(7) that suggests that the court ought not to grant a permanent stay of the orders under CPR 40.8A.

The orders for costs were expressed in unqualified terms. They were not expressed to be conditional on the Second to Seventh Defendants complying with paragraph 7 of the order of 26 February 2018. Paragraph 7 of that order was not inserted for the benefit of the Claimant but was inserted in the public interest. The position of the Claimant will not be affected by the Second or Seventh Defendant’s compliance or non-compliance with that paragraph of the order. Although the Second to Seventh Defendants have behaved badly since 26 February 2018, that bad behaviour has not had an impact on the Claimant. These considerations suggest that the conduct of the Second to Seventh Defendants since 26 February 2018 should not affect the Claimant’s liability under the orders for costs.

As I have explained, my decision to impose interim stays on the enforcement of the costs orders was attributable to the fact that the Second to Seventh Defendants appeared to regard themselves as beyond the reach of the court when it came to adverse orders but they were keen to enforce orders of the court in their favour. Before the hearing on 19 November 2018, I considered the case law as to when a court could deny access to a court to a person who was in contempt of court. In particular, I considered the decision of the Court of Appeal in JSC BTA Bank v Ablyazov (No 8) [2013] 1 WLR 1331. From the full discussion of the authorities in that case, it can be seen that a court can deny access to a court to a contemnor where the contempt of court could prevent justice being done to the other party, for example, where the contempt could create a risk that a trial might not be fair or a risk that the other party might not be able to enforce a judgment against the contemnor. At the hearing, Mr Beeby did not seek to rely on this approach and did not suggest that the failure by the Second to Seventh Defendants to comply with the orders of the court had had any such impact on the Claimant. Having now fully considered the matter, I conclude that it would not be right to prevent the Second to Seventh Defendants enforcing the costs orders because of their bad behaviour. That bad behaviour has not had an impact on the Claimant and will not prevent justice being done to the Claimant. If I were to deny to the Second to Seventh Defendants the right to enforce the costs orders because of their bad behaviour, I would be going well beyond any previous authority. I also note that although the Second to Seventh Defendants might arguably be said to have conspired to commit a breach of the court’s orders, that conspiracy would not be actionable by the Claimant because there was no relevant intent to injure the Claimant and the Claimant did not thereby suffer loss; for those reasons, this case can be distinguished from JSC BTA Bank v Ablyazov (No. 14) [2018] 2 WLR 1125.

In these circumstances, I conclude that I ought not to grant a stay of the costs orders under CPR 40.8A nor should I grant a stay on the basis that I should deny the Second to Seventh Defendants access to the enforcement powers of the court on the ground that they have to date failed to comply with orders binding them. Accordingly, I will not grant the stay sought by the Claimant. Consistently with that conclusion, if it is necessary to do so, I will make an order making it clear that the interim stays granted on 25 June 2018 and 20 July 2018 cease to apply.

Following hand down of this judgment, I will deal with the costs of the Claimant’s application. It may assist the parties if I indicate my provisional view as to those costs. My provisional view is that I should make no order as to costs and, in particular, I should not order the Claimant to pay the costs of the Second to Seventh Defendants. The Second to Seventh Defendants have appeared in person so their costs will have been modest. Further, the Second Defendant made no contribution to the argument on the Claimant’s application for a stay. Further, the provocative behaviour of the Second to Seventh Defendants understandably led the Claimant to make her application. If there is no dispute about costs or any other consequential matter, it will not be necessary for the parties to attend the hand down of this judgment.