Consult II SRO & Ors v Shire Warwick Lewis Capital Ltd & Ors

INTRODUCTION

The Defendants apply, pursuant to an application notice dated 30 November 2018, for an order pursuant to CPR 3.9 for relief from the sanctions imposed by an order of Moulder J, dated 26 October 2018 and sealed on 29 October 2018, made by consent at a time when the Defendants were legally represented.

The Defendants’ application is supported by the sixth witness statement of the Third Defendant, Mr Pachtinger. The Defendants are no longer legally represented, and were represented at the hearing by the Second Defendant, Mr Lewis. Mr Lewis is a chartered accountant, and told me that he is an FCA-approved individual with a diploma in corporate finance.

Moulder J’s order included at § 1 provision that unless, by 4pm on the date 14 days after the date of order, costs of £102,700 ordered by Jacobs J on 17 August 2018 to be paid had been paid in full to the Claimants’ solicitors, then (a) the Defendants would be debarred from defending these proceedings, any defence served prior to that date would be struck out, and the Claimants would have permission to obtain judgment in default of defence pursuant to CPR 12.4; (b) various sums held by the Claimants’ solicitors by way of security pursuant to previous orders would be discharged from all restriction imposed by those provisions; and (c) the Claimants’ solicitors would be released from their undertakings in respect of those sums as recorded in previous orders.

For the reasons set out below, I have come to the conclusion that relief from sanctions should not be granted, and that the sanctions imposed by the order of Moulder J should take effect.

BACKGROUND TO THE PROCEEDINGS

The Third and Fourth Claimants, who are the active claimants in the proceedings, claim damages of €4,448,416.24 against the First to Third Defendants, jointly and severally, for fraudulent misrepresentation, conspiracy, and breach of contract.

The claim arises from currency trading transactions. Briefly, it is alleged that between September 2016 and March 2017 the Claimants paid sums in respect of margin totalling more than €2.3 million to the First Defendant for the purpose of implementing (by way of a joint venture) a Euro/Czech Koruna currency trading strategy, with profits to be split 75/25 between the Claimants and the First Defendant. The Claimants say that the strategy was successful, and that as at 4 October 2017 the sum of €4,448,416.24 was admittedly due from the First Defendant to the Claimants pursuant to the joint venture.

It is alleged that the First Defendant did not pay any part of that sum to the Claimants, because the Claimants were persuaded by the Third Defendant, Mr Pachtinger (on behalf of the First Defendant and with the approval of the Second Defendant, Mr Lewis), to enter into debt for equity agreements by which the Claimants were instead to receive shares in the First Defendant’s holding company, which is the Fourth Defendant.

The Claimants’ pleaded claims include claims for rescission of the joint venture agreement and the debt for equity agreements, return of the margin they paid, and damages for conspiracy to defraud and for fraudulent misrepresentation. The Claimants’ claims are put at €4,448,416.24.

PROCEDURAL BACKGROUND

On 30 April 2018 Popplewell J granted a freezing injunction against the First to Third Defendants, which was varied by Picken J on 4 May 2018 and by Mr Christopher Hancock QC (sitting as a Deputy Judge) on 11 May 2018.

By an application issued on 1 August 2018, the Defendants applied to discharge or set aside the freezing injunction, leading to a hearing before Jacobs J on 15-17 August 2018 at which the Claimants were represented by leading counsel and the Defendants by leading and junior counsel. The application was originally made on the grounds of both lack of arguable case and material non-disclosure, but due to timing constraints the hearing and Jacobs J’s judgment dealt only with the issue of whether the Claimants had a good arguable case.

Jacobs J dismissed the application based on lack of a good arguable case, concluding in a judgment delivered on 17 August 2018 that the Claimants’ case at least met the threshold of good arguable case overall and, specifically, in relation to misrepresentation, falsity, fraud, causation, damages and rescission.

Jacobs J ordered the Defendants to pay £100,000 in respect of the Claimants’ costs of that application, and a further £2,700 (by consent) in respect of an application the Defendants had made for security for costs, making a total of £102,700, to be paid within 21 days (the “Jacobs Costs Order”).

On 26 October 2018, by consent, Moulder J made orders including the ‘unless’ order referred to in §§ 1 and 3 above (“the Unless Order”).

The Defendants failed to make any payment in respect of the Jacobs Costs Order by the deadline set out in the Unless Order, 9 November 2018, with the result that the sanctions set out in the Unless Order came into effect subject only to the outcome of the Defendants’ present application.

On 12 November 2018 the Claimants filed a request for judgment in default of Defence pursuant to the Unless Order (“the Judgment Application”).

On 16 November 2018 the Third and Fourth Claimants applied to Teare J to vary the freezing injunction in certain respects in the light of the deadline set out in the Unless

Teare J also directed in his order that any application by the Defendants for relief “be supported by a witness statement which is to include such documents as the Defendants are able to supply copies of in relation to that application”, and made this clear at the hearing (at which both Mr Lewis appeared and Mr Pachtinger was also present).

APPLICABLE PRINCIPLES

CPR rule 3.9 provides that:

“(1)

On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

(a)

for litigation to be conducted efficiently and at proportionate cost; and

(b)

to enforce compliance with rules, practice directions and orders.

(2)

An application for relief must be supported by evidence.”

In Denton v TH White Ltd [2014] EWCA Civ 906 at § 24 the Court of Appeal stated:

“… A judge should address an application for relief from sanctions in three stages.

The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.

The second stage is to consider why the default occurred.

The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”….”

(paragraph breaks interpolated)

“Factors (a) and (b)” are those referred to at (a) and (b) of CPR 3.9(1), i.e.:

“the need— (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders”.

As to the application of these principles to litigants acting in person:

I agree with the Claimants that there is no basis for distinguishing in this regard between compliance with rules and compliance with court orders, which are direct and bespoke obligations binding the parties subject to them. Moreover, in the present case the Unless Order was entered into by consent.

I consider, and the Defendants did not seriously seek to contest, that the Defendants’ failure to comply with the Unless Order is serious and significant.

The Jacobs Costs Order was for a significant sum of money representing expense to which the Claimants had been put as a result of the Defendants’ application, held by Jacobs J to be unmeritorious, to set aside the freezing injunction on the ground that the Claimants had no good arguable case. As Sir Richard Field pointed out in Michael Wilson & Partners v Sinclair [2017] EWHC 2424 § 29, the policy behind the imposition of costs orders made payable within a specified period of time before the end of the litigation is that they serve to discourage irresponsible interlocutory applications or resistance to successful interlocutory applications.

The length of time for which the Jacobs Costs Order has remained unpaid since its original due date of 7 September 2018, and since the deadline of 9 November 2018 imposed by the Unless Order, increases the seriousness of the breach.

Further, the fact that the non-payment is a failure to comply with an unless order and is ongoing underlines its seriousness and significance in the present case. As Jackson LJ pointed out in British Gas Trading v Oak Cash & Carry [2016] EWCA Civ 153:

“41.

The very fact that X has failed to comply with an unless order (as opposed to an ‘ordinary’ order) is undoubtedly a pointer towards seriousness and significance. This is for two reasons. First, X is in breach of two successive obligations to do the same thing. Secondly, the court has underlined the importance of doing that thing by specifying an automatic sanction in default (in this case the Draconian sanction of strike out).

42.

On the other hand, as Mr Weston rightly says, not every breach of an unless order is serious or significant. In Utilise the claimant was just 45 minutes late in complying with an unless order. He filed his budget by 4.45 p.m., rather than 4 p.m. when it was due. The Court of Appeal held that a delay of only 45 minutes in compliance was “trivial”. The court also noted that, contrary to the district judge's view, there was no underlying breach of the rules onto which the unless order was attached.”

In the present case, the breach of the Unless Order has remained unremedied (as at the date of the hearing before me) for almost three months from the deadline set out in that order.

Moreover, by consenting to the Unless Order, while still legally represented, the Defendants accepted that the consequences set out in the order would at least prima facie be appropriate in the event of failure to comply.

The Defendants submitted that they are entitled to apply to set aside the order of Jacobs J on the ground that the Claimants failed to make full and frank disclosure when obtaining the freezing injunction, citing the decision of Popplewell J in Fundo Soberano

CPR 3.9(2), which I have already quoted, expressly requires an application for relief from sanctions to be supported by evidence.

I agree with the Claimants that when a party seeks relief from a sanction, the applicable standard of evidence required to explain its failure to comply with the obligation in question should be no lower than the standard that applies when the court decides whether to impose a sanction in the first place. It would be illogical and contrary to the underlying policy mentioned above for a party to be relieved from a sanction based on a lower standard of evidence than would have been required to avoid the imposition of the sanction.

Relevant guidance, including as to the evidence required, was provided by Sir Richard Field in Michael Wilson & Partners v Sinclair at § 29 (subsequently followed and applied by Norris J in Jackson v Feeney [2018] EWHC 1490 (Ch)):

“(1)

The imposition of a sanction for non-payment of a costs order involves the exercise of a discretion pursuant to the Court's inherent jurisdiction.

(2)

The Court should keep carefully in mind the policy behind the imposition of costs orders made payable within a specified period of time before the end of the litigation, namely, that they serve to discourage irresponsible interlocutory applications or resistance to successful interlocutory applications.

(3)

Consideration must be given to all the relevant circumstances including: (a) the potential applicability of Article 6 ECHR ; (b) the availability of alternative means of enforcing the costs order through the different mechanisms of execution; (c) whether the court making the costs order did so notwithstanding a submission that it was inappropriate to make a costs order payable before the conclusion of the proceedings in question; and where no such submission was made whether it ought to have been made or there is no good reason for it not having been made.

(4)

A submission by the party in default that he lacks the means to pay and that therefore a debarring order would be a denial of justice and/or in breach of Article 6 of ECHR should be supported by detailed, cogent and proper evidence which gives full and frank disclosure of the witness's financial position including his or her prospects of raising the necessary fundswhere his or her cash resources are insufficient to meet theliability.

(5)

Where the defaulting party appears to have no or markedly insufficient assets in the jurisdiction and has not adduced proper and sufficient evidence of impecuniosity, the court ought generally to require payment of the costs order as the price for being allowed to continue to contest the proceedings unless there are strong reasons for not so ordering.

(6)

If the court decides that a debarring order should be made, the order ought to be an unless order except where there are strong reasons for imposing an immediate order.”

(my emphasis)

As I have already noted (§ 17 above), Teare J on 16 November 2018 made clear both in the hearing and in his written order that any application by the Defendants for relief from sanctions needed to be supported by a witness statement attaching copies of such relevant documents as the Defendants were able to supply.

The only evidence provided by the Defendants in support of their present application is the sixth witness statement of Mr Pachtinger, dated 30 November 2018. The witness statement provides no details of the Defendants’ general financial position, save to state that the freezing injunction has caused all the Defendants great difficulty in accessing funds from their bank accounts.

As regards the direct effect of the freezing injunction on the Defendants’ ability to pay the Jacobs Costs Order, Mr Lewis accepted in the hearing before me that the existence of the injunction would not prevent the Defendants from satisfying the order, if only because the Claimants would obviously consent to the Defendants using funds for that purpose or, if necessary, the court would approve it. The witness statement of the

Mr Lewis in submissions made a broader point, to the effect that the issue of the freezing injunction and the publicity to which it had given rise had had a huge impact on the Defendants’ investors and business, the perceptions of parties which whom they did business and of persons from whom the Defendants had gone for funding. He added that the Defendants had been unable to trade, had laid off their staff, and had lost a 120 million trading credit facility. However, Mr Pachtinger’s witness statement provides no information about these alleged wider effects, or (most pertinently) how they are said to have prevented compliance with the Jacobs Costs Order.

It was common ground that pursuant to the freezing injunction, affidavits had been served in relation to the Defendants’ financial position. Those had led to correspondence between the parties, and the Claimants had not been satisfied that full and frank disclosure had been given. There had been a hearing before Cockerill J on 30 November 2018 at which the Claimants had cross-examined Mr Pachtinger and Mr Lewis about the Defendants’ assets. On 14 December 2018 Cockerill J ordered the Defendants to pay the Claimants’ costs of the cross-examination hearing, summarily assessed at £27,683.88, indicating in her judgment on costs of 13 December 2018 inter alia that:

Mr Pachtinger’s witness statement of 30 November 2018 focusses on attempts which the Defendants say they have made to obtain funds to satisfy the Jacobs Costs Order either from their own assets or from third parties. These fell into three categories, to which Mr Lewis added a fourth in the course of his submissions.

First, Mr Pachtinger states in his witness statement that he was able to agree with an unnamed third party a loan of €340,000, which Mr Pachtinger intended would be converted into sterling by a Mr Avrum Strom, who Mr Pachtinger describes as a foreign exchange dealer from Geneva with offices in Hatton Garden, associated with Thomas Exchange (an FCA-registered dealer), and well known for highly competitive rates. The sterling proceeds would be remitted to various recipients including the Defendants’ then solicitors, Carter Perry Bailey, who would receive £173,082.95. Mr Pachtinger states that Mr Strom agreed to the transaction, and that the €340,000 was remitted to him on 19 October 2018. However, Mr Strom did not remit the sterling funds to Carter Perry Bailey, and subsequently explained that the transfer had been delayed as a result of a number of anti-money laundering questions and requests for supporting documents from his compliance department. Mr Pachtinger states these questions and requests were answered but that Mr Strom still did not pay. Mr Pachtinger says an ‘accommodation’ was eventually reached with Mr Strom via the good offices of Mr

Mr Pachtinger states that he asked Mr Strom agreed to have the draft couriered to the Claimants’ solicitors, and on 11 November 2018 Mr Strom confirmed that he had arranged this. Mr Pachtinger says:

“On Monday 12 November, Hu Sol, who I understand to be an associate of Mr Strom, emailed to me a document from the couriers, S Express, being the said proof of delivery. A copy of the email and document I received from him is attached. I subsequently called S Express, Edgware Office, who confirmed to me that they had delivered an envelope to the Claimants’ solicitors at around 3 p.m. on the Friday, as stated by Mr Strom.”

Mr Pachtinger exhibits a copy of an email from a “Hu Sol” dated 11 (not 12) November 2018 apparently attaching a delivery receipt from “S. Express” purporting to indicate a “complete delivery” of a letter to “Berwin Leighton Paisner” at the Claimants’ solicitors’ address, with date “11/09/2018” and “P.O. Number 1935Strom”.

Subsequently, Mr Tuson of the Claimants’ solicitors stated in his sixth witness statement dated 13 November 2018 and his seventh witness statement dated 14 December 2018 that, despite careful enquiries he had made (the details of which he set out), no trace could be found of any such letter being received. He made the position known to Mr Sturge, a partner in Carter Perry Bailey, on 12 November 2018 and (Mr Tuson deposes) Mr Sturge confirmed that he had not himself seen a copy of the cheque.

All Mr Pachtinger says on the topic of the apparent non-delivery in his witness statement dated 30 November 2018 is that “Since this time, I have been unable to communicate with Mr Strom who continues not to answer my telephone calls or emails or meet with me in person. I have asked for help in this connection from Rabbi Cohen. Mr Strom continues to hold onto the subject funds and I continue to make efforts to secure their release.”

The only documents Mr Pachtinger exhibits are the declaration before Rabbi Cohen, and the email and S Express receipt referred to above. Mr Tuson in his responsive witness statement of 14 December 2018 pointed out that Mr Pachtinger had provided no documentary evidence or details of numerous aspects of his account of these events, including:

Mr Tuson’s witness statement made clear the Claimants’ position that the Defendants had not provided the supporting documents required in order to comply with the order of Teare J, and that if Mr Pachtinger’s account were true then such documents would exist. Mr Tuson added that he had been unable to find from internet research any evidence of Mr Strom’s identity or existence.

The Claimants’ solicitors in a letter of 9 January 2019 reminded Mr Lewis and Mr Pachtinger of the deadline for evidence in reply under CPR 58.13, but stated:

“Notwithstanding that the deadline for evidence in reply has passed, we are prepared to agree an extension of time for you to provide any such evidence (should you wish to do so) until

4.30pm on 16 January 2018. We reserve our clients’ right to object to the service of any evidence after this date.”

The Defendants did not, however, seek to serve any further evidence.

In my judgment Mr Pachtinger’s evidence about this transaction is very unsatisfactory:

As a result, I do not consider the Defendants to have given a full and frank account of this alleged transaction.

The second potential source of funds which Mr Pachtinger mentions is that “the Claimants will be aware that we have been seeking to realise a position held by Shire Warwick PTC. We are making progress in this regard but we have not yet been successful in obtaining release of the funds.”

The background to this statement is that in addition to the trade agreed between the Claimants and the First Defendant, the First Defendant and Mr Pachtinger were involved in placing a further trade with a BVI company, Shire Warwick PTC (“PTC”). This transaction (“the PTC Position”) is said to have been intended to exploit the same currency trading strategy and to have taken place in September 2016. The Defendants say that the First Defendant and Mr Pachtinger each became entitled, by novation, to a share of the proceeds of the PTC Trade, with the First Defendant’s share of the trade having been estimated to be worth £3,203,396 as at 31 March 2018.

In oral submissions, Mr Lewis referred to this as being the Defendants’ largest asset: a Euro/Czech OTC derivative position with a value of €3.6 million as at 31 March 2018. Mr Lewis said the position was held with a counterparty, PTC, an entity which he said had no connection in terms of ownership or common directorships with the Shire Warwick Lewis Group or the First Defendant.

It was common ground that documents have been produced in the litigation in relation to the placing of the transaction itself. However, none have been produced in relation to the difficulties the Defendants now claim to have in realising it.

Mr Lewis stated in his oral submissions that PTC had refused to release the value of the

The skeleton argument served on behalf of the Defendants made a series of allegations against the Claimants, including that (a) in September 2016 the Third Claimant had told Mr Pachtinger that he represented a named individual who was said to be a smuggler and suspected of involvement in financing Islamic terrorist groups (citing an internet news item about the named individual); (b) the Third Claimant had “as stated in evidence” attempted on a number of occasions to sell counterfeit travellers’ cheques to Mr Pachtinger; (c) the Fourth Claimant had admitted to Mr Pachtinger that the source of funds for a subordinated loan it had made to the First Defendant was fraudulently diverted from the proceeds of a bond issue by a named Czech company; (d) the Third and Fourth Claimants had represented to Mr Pachtinger that the First Claimant engaged in false accounting and was using funds fraudulently diverted from third parties; and (e) when third parties had sought to acquire “the shareholdings of the Claimants”, the Claimants had refused to provide evidence that the source of funds used to make the subordinated loans was from legitimate sources. The skeleton argument adds that the Fourth Defendant owns the First Defendant, is a company incorporated in Delaware and subject to US federal law, and that the payment of costs would cause the Fourth Defendant to infringe US federal law.

None of these matters is referred to in the Mr Pachtinger’s sixth witness statement or its exhibits. Most importantly for present purposes, he gives no evidence, and provides no documents, in support of the assertion that any such matters or concerns have caused PTC to refuse to pay to the Defendants the value of the PTC Position.

Moreover, as Mr Lewis accepted at the hearing, it is not suggested by the Defendants that the PTC Position was bought using funds from the Claimants at all. Nonetheless, he said, PTC’s concern was that “the money they pay to us will be contaminated by the toxicity of the funds that the claimants have injected into the company. And there are very strict federal rules. Also the claimants have got shareholdings in the holding company and [PTC] would be advancing funds into a group which would provide benefit to the claimants, and apparently that is caught by federal law as well”.

Mr Lewis told me that the discussions with a Mr Zucker, who represents PTC, were not evidenced in writing. However, I find it almost inconceivable that if concerns of this nature existed, and had led PTC to refuse to make payment in respect of a substantial transaction of the order of (on the Defendant’s case) €3.6 million, then they would not be reflected in some way in documentary form. I also note that the Defendants’ skeleton argument provides no dates on which the alleged concerns referred to in § 52 above are said to have arisen, save that the first matter is said to have arisen in September 2016 i.e. well before the litigation commenced.

In any event, the Defendants have put forward no evidence of PTC’s refusal to allow the Defendants to realise the value of the PTC Position, even in Mr Pachtinger’s witness statement. I conclude that they have failed to provide full and frank disclosure, or indeed any disclosure or evidence, on the question of why the PTC position could not be realised in order to pay the Jacobs Costs Order.

Mr Pachtinger stated in his witness statement of 30 November 2018 that “As at the time of making this witness statement, I am informed that funds are [en] route through the banking system to enable us to discharge the costs order made by Mr Justice Jacobs and that this will be paid within the next working day or so. On that basis, and for the reasons given below, the Defendants seek relief from sanctions.” He elaborates: “As stated … above, we have recently been in discussions with a third party, and obtained funds to enable us to meet the costs due to the Claimants …”.

It is undisputed that no such funds were ever paid to the Claimants. Mr Lewis told me that the third parties changed their minds at the last minute. Mr Pachtinger’s witness statement provided no details or documentary evidence about the availability of these funds. Nor has Mr Pachtinger subsequently provided any further evidence explaining why these funds did not materialise. This is a further respect in which the Defendants have failed to provide full and frank evidence about their attempts to satisfy the Jacobs Costs Order.

At the hearing before me Mr Lewis stated that there was another party who expected to provide the Defendants with the funds “next week”. However, no evidence of any kind was provided in relation to this alleged further alternative source of funding.

For the reasons set out above, I conclude that the Defendants have failed, by a considerable margin, to provide any adequate explanation of the reasons why the Jacobs Costs Order has not been satisfied, whether from their own assets (in particular, the PTC Position) or from third party funding, still less full and frank disclosure of such reasons.

At this stage, the court has to evaluate all the circumstances of the case, so as to enable it to deal justly with the application, including the need (a) for litigation to be conducted efficiently and at proportionate cost, and (b) to enforce compliance with rules, practice directions and orders.

I agree with the Claimants that the effect of the Defendants’ failure to pay the Jacobs Costs Order has been both:

Had it not been for the Defendants’ failure to comply with the Jacobs Costs Order, their Defence would have been due for service on 16 November 2018, time having already been extended at their request on 3 October 2018 (until 2 November 2018) and on 26 October 2018 (until 16 November 2018). 16 November 2018 is already nearly three months ago, and even now no draft Defence is available. The delay is arguably longer,

The costs orders which the Defendants have been ordered, but have failed, to pay now total £203,083.88, comprising:

The first three of these, totalling £177,400, comprise the Jacobs Costs Order itself and further orders directly or indirectly resulting from the Defendants’ failure to pay that order.

The Cockerill costs order related to the cross-examination hearing which resulted from the Defendants’ separate failure to comply with their disclosure obligations under previous orders, a factor which separately has some bearing on the overall justice of the matter.

Further, bearing in mind the policy considerations stated in Michael Wilson and Barton, it is clear that the purpose of an unless order – encouraging compliance with the court’s rules and orders – would be undermined if parties who fail (particularly in a significant manner as in the present case) to comply with unless orders were permitted to avoid the resulting sanction without providing a clear, full and frank explanation of the reason for their failure that satisfies the court that it is just to grant relief. The Defendants in the present case have clearly failed to do so.

The strength of a party’s case is of at best limited relevance when considering relief from sanctions. In Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] UKSC 64 Lord Neuberger said at § 30:

“… it would be thoroughly undesirable if, every time the court was considering the imposition or enforcement of a sanction, it could be faced with the exercise of assessing the strength of the parties' respective cases: it would lead to such applications costing much more and taking up much more court time than they already do. It would thus be inherently undesirable and contrary to the aim of the Woolf and Jackson reforms.”

It is notable in the present case that (a) Jacobs J found the Claimants to have a good arguable case against the Defendants, including in relation to fraud, and (b) despite being invited to do so in the Mr Tuson’s witness statement of 14 December 2018, the Defendants have so far not produced a draft of their proposed Defence. Mr Lewis made the point in the hearing that the Defendants considered themselves disentitled, based on

Viewing the matter in the round, I conclude that relief from sanctions should not be granted. The Defendants, having consented to the making of the Unless Order, have now been in breach of it for three months. No adequate explanation has been provided for the breach, nor full and frank disclosure made. On the contrary, such explanations as have been provided have been highly unsatisfactory in the respects set out above, and almost completely unsupported by documentary evidence even on matters where it is probable that (were the account correct) documents would exist. The breach of the Jacobs Costs Order has delayed the litigation significantly, and given rise to further costs, both of which constitute prejudice to the Claimants. The Defendants’ record of compliance with previous orders, in particular in relation to asset disclosure is poor. In all the circumstances, and even making allowance for the Defendants’ lack of legal representation, it would not be just to grant relief from the sanctions imposed by the order of Moulder J.

OVERALL CONCLUSION

The Defendants’ application is therefore dismissed. I shall hear further from the parties as to the precise formulation of the order, if not agreed. My provisional view is that in addition to the sanctions imposed by Moulder J on 26 October 2018 taking effect, the measures set out in §§ 2-5 of Teare J’s order of 16 November 2018, which I outline in § 16 above, should have effect. Teare J, having heard argument, considered that those measures should apply if the Defendants did not apply by 30 November 2018 for relief from sanctions. It appears logical that the same measures should apply upon such an application having been made but dismissed.