England and Wales Court of Appeal (Civil Division) Decisions

Solanki v (Intercity Technology Ltd & Anor (Rev 1) [2018] EWCA Civ 101 (09 February 2018)

Last Updated on December 9, 2020 by LawEuro

Neutral Citation Number: [2018] EWCA Civ 101

Case No: A3/2015/1224; A3/2015/1222 and A3/2016/1843; and, A3/2015/2080

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION (MERCANTILE COURT)
BIRMINGHAM DISTRICT REGISTRY
HHJ Simon Brown QC
A40BM029

Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 09/02/2018

Before :
LADY JUSTICE GLOSTER,
Vice-President of the Court of Appeal, Civil Division
and
LORD JUSTICE SINGH
– – – – – – – – – – – – – – – – – – – – –
Between :
SANJAY SOLANKI
Appellant
– and –
(1) INTERCITY TECHNOLOGY LIMITED (FORMERLY INTERCITY TELECOM LIMITED)
(2) GUIDINGLIGHT FINANCE LIMITED (FORMERLY MODERN OPERATIONS LIMITED)
Respondents
– – – – – – – – – – – – – – – – – – – – –
– – – – – – – – – – – – – – – – – – – – –
John Small Esq (acting Pro Bono) for the Appellant
Simon Pritchard Esq (instructed by Shakespeare Martineau LLP) for the Respondents
Hearing dates : 4 and 5 October 2017
– – – – – – – – – – – – – – – – – – – – –
Judgment Approved

Lady Justice Gloster:

Introduction

1. There are three live appeals before the court by the defendant to the action, Mr Sanjay Solanki (“the appellant”), from decisions of HHJ Simon Brown QC sitting in the Mercantile Court in Birmingham. They are as follows:

i) application notice A3/2015/1224 – against the judge’s refusal to adjourn the trial on health grounds (“the adjournment appeal”);

ii) application notices A3/2015/1222 and A3/2016/1843 – against the judge’s actual judgment dated 27 February 2015 and against his refusal on 11 March 2017 to set aside judgment under CPR rule 39.3 (“the set aside appeal”); these appeals were dealt with effectively as one because the appellant was seeking a retrial, rather than a variation of the amount of the judgment;

iii) application notice A3/2015/2080 – against the judge’s decision in his order dated 15 June 2015 summarily to assess costs of the committal proceedings in the sum of £83,583.73 (“the costs appeal”).

2. I gave permission to appeal on 11 May 2016.

3. Mr John Small appeared on behalf of the appellant under the COAS – the Court’s pro bono scheme – in relation to all three appeals. The court is grateful to Mr Small for acting under the scheme. Mr Simon Pritchard appeared on behalf of the respondent claimants, Intercity Telecom Ltd and Modern Operations Limited, (“the respondents”). He also appeared at the trial below.

Brief factual summary and procedural history

4. The appellant was employed by the respondents between May 2000 until he resigned with immediate effect in February 2014. At the time of his resignation, the appellant was employed as one of two National Account Managers. The respondents are one of the largest independent communications service providers in the United Kingdom, providing tailor made communications packages to businesses.

5. On 13 May 2014, the respondents issued proceedings against the appellant claiming damages for breach of contract and database rights; delivery up of confidential information; and injunctive relief. The respondents alleged that the appellant breached his contract of employment and their database rights by downloading highly confidential customer information from their databases onto memory sticks and by using electronically stored information (‘ESI’) to solicit their customers and potential customers. It was alleged that this misconduct occurred during the last few months of his employment, and subsequently in the 12 months following his resignation, when he was bound by post-termination restrictive covenants (judgment paras 1-2). The appellant denied wrongdoing.

6. On 27 May 2014, the appellant gave various undertakings to the Mercantile Court which made an order of the same date, backed with a penal notice and directions for a speedy trial.

7. On 4 July 2014, the appellant filed a defence. Although admitting that he had downloaded documents solely for the purposes of a claim for unfair and wrongful dismissal, he denied liability, asserted that his resignation constituted a constructive dismissal in that he resigned in response to the respondents’ repudiatory breach. In consequence, if this was accepted, the post-termination restrictions ceased to have legal effect. Further, he denied occasioning the respondents loss and damage.

8. On 4 September 2014, the respondents made an application to the court seeking enforcement of the order of 27 May 2014. On 24 September 2014, the appellant admitted that two additional memory sticks existed.

9. On 14 November 2014, the appellant swore an affidavit admitting that he had assisted and referred customers and potential customers to various companies after his resignation.

10. At a hearing on 26 January 2015, the appellant admitted two contempts of court and agreed to purge his contempt. Upon that agreement, the respondents agreed not to proceed with the remaining elements of their contempt application. The judge directed that the trial should begin on 24 February 2015 with a time estimate of five days and that the question of the relevant sanction should be reserved for determination after trial of the substantive claim. He also ordered that the respondents should file and serve statements of fact upon which they intended to rely by 9 February. For some reason the order was dated 13 February 2015.

11. On 11 February 2015, the appellant applied for:

i) the Legal Aid order to be extended to the substantive trial (on the basis that the sanction for contempt would depend upon the findings made during the trial). The appellant informed the court that his retained solicitors (Cartwright King) were no longer able to continue acting for him;

ii) an adjournment of one month in the interests of justice to allow a fair hearing and ‘to allow reasonable time for counsel for preparation’; and

iii) permission to rely upon 11 further witness statements; the appellant stated that the

‘… attached 11 witness statements have already been served on the Claimants’ solicitors on 9 February 2015. The Claimants have made a specific allegation that the appellant was specifically targeting a certain set of customers and the new witness statements clearly rebut these allegations and they are therefore highly relevant to these proceedings and need to be relied upon’.

This issue was expanded upon in his witness statement filed in support of the application. The 9 February date was material because the case management orders required the respondents to serve any statements of fact by 4pm on that day. Thus, the appellant had already filed his evidence by the very date by which the respondents were directed to serve their evidence.

12. The appellant actively contacted the court seeking an update on the application dated 11 February 2015. On 17 February 2015, he was informed by a member of court staff on the telephone that the application had been refused in its entirety but that no reasons were available. On the same date he attended his general practitioner’s practice and sought medical advice regarding stress and suicidal ideation.

13. On 18 February, he again attended his general practitioner’s practice and sought similar advice.

14. On 19 February 2015, the order refusing his application was sealed. However, it was not received by the appellant until 23 February 2015. It gave no reason for the refusal of the appellant’s application for an adjournment or for permission to rely on the 11 further witness statements. In relation to the application to extend legal aid, the order said:

“clarification only: the appellant already has legal aid for contempt proceedings where only judgment stands to be delivered at conclusion of trial. The application for extension of legal aid is refused as is the application for an adjournment.”

15. On 20 February 2015, the appellant emailed the court (but not the respondents) again raising the fact that he had not received written confirmation in respect of his application and again seeking an adjournment. He wrote, inter alia:

‘The fact that I as a lay individual, have been forced to deal with these Court proceedings predominantly by myself since May 2014, compounded by the fact I have not yet received any written confirmation to my urgent application made in the Court over a week ago, has led to further significant impact on my mental and physical health.

Unfortunately, these Court proceedings have naturally put a huge amount of strain and pressure on me as an individual, and these proceedings have now taken an unbearable toll on my overall wellbeing and reached a point where matters have become completely intolerable.

As a result of receiving no written confirmation to my urgent application made last week, my stress and anxiety levels have increased to the point where I was forced to make an urgent appointment with my GP this week…. Further assessments were carried out with regard to my mental state of mind and my GP has advised me that I am not mentally fit to stand trial next week. My GP is on leave from 19 to 20 February, however, I have been assured by the surgery that a suitable letter from my GP and a report providing confirmation on my current mental state of mind, and the fact I am not fit to stand trial next week, will be made available to me by 4:00pm Monday 23 February 2015. As soon as I have this supporting evidence I will forward it to the Court no later than 4:00pm Monday 23 February 2015…

In any event, taking all the above into account, please accept this email communication as confirmation that I am not in a position to attend Court on 24 February 2015 for a 5 day trial based on the professional advice received from my GP. I therefore respectfully ask the Court to adjourn the matter for at least 6-8 weeks to allow me reasonable time to recover from my illness and subsequently allow me reasonable time to prepare for the trial…’ (My emphasis.)

16. On 23 February 2015, the appellant sent a further email to the court (marked for the urgent attention of the judge), seeking an adjournment on health grounds. He attached a copy of a letter from his GP, Dr Watson, dated 18 February 2015. This application was not copied to the respondents. The appellant raised various matters including:

i) that he had been signed off as being not fit for work by his GP since March 2014; and

ii) that

‘… my overall mental and physical health has substantially deteriorated over time which has been illustrated by evidence in the form of a letter and report from my GP’.

He also attached a copy of Article 6 ECHR. However, he refused to provide a copy of the medical evidence to the respondents on grounds of confidentiality.

17. On 23 February 2015, HHJ Simon Brown QC refused the application on the papers. The order was in the following terms:

“The applications have been refused on paper. Any further representation to adjourn the trial must be made in court at 10:30am on 24th February 2015 upon notice to the Respondents and the court supported by psychiatric evidence and signed witness statement of truth by the Applicant. ”

However, the judge did not give any reasons for the refusal. In particular, he did not indicate that the medical evidence provided in support was deficient, or that further information was required from the GP.

18. On 24 February 2015, the first day of the trial, the appellant (who was not in attendance) submitted a fresh application notice, as directed by the order. It (i) sought an extension of legal aid to the trial “to avoid a breach of [the appellant’s] Article 6 rights”; (ii) again sought an adjournment of the trial of 6 to 8 weeks due to the appellant’s ill-health and to allow reasonable time to seek legal representation; and (iii) again applied for permission to submit the further witness statements said to be “highly relevant to these proceedings”. The application appended the appellant’s GP’s medical report dated 18 February. The appellant stated that:

‘I am unable to attend Court in person on 24 February 2015 due to ill health, which is supported by a medical report in the form of a letter by my GP. My ill health and poor mental state of mind prevents me from travelling from Leicester to Birmingham and to represent myself in Court without professional legal representation which I believe I have a right to under my Article 6 rights’.

19. The letter from Dr Watson dated 18 February 2015 was a comprehensive letter. It described the appellant’s symptoms and treatment since 18 March 2014 when his treatment for depression started and he was prescribed Fluoxetine 20 mg daily. On 13 June 2014, he was assessed by the practice therapist as suffering from ‘moderately severe depression’ and ‘severe anxiety’. On 19 December 2014, he complained of a ‘feeling of overwhelming stress and reported transient but daily suicidal thoughts…’ His medication was doubled in dose to 40mg daily. On 18 February 2015, the GP noted that he complained of decreased concentration, poor sleep (2-3 hours each night), as well as further suicidal thoughts. The mental state examination was ‘consistent with severe depression’. The GP concluded:

“In view of the above I have concerns as to whether he is medically fit to be able to represent himself in court at the present time”.

In an email to the court on the morning of the trial, the appellant, in response to the respondents’ solicitors request, agreed that the court should show a copy of the medical records to the respondents’ counsel at the start of the hearing. However, counsel for the respondents declined the invitation as he did not wish to see the letter if it were not made available to his solicitors and clients.

20. In the morning of 24 February 2015, HHJ Simon Brown QC, after hearing counsel for the respondents, and considering the application notice, the medical report and the court file, dismissed the application and directed that the trial should proceed at 2pm on that date. At pages 2 to 4 of the transcript of proceedings the judge gave certain reasons as to why he had refused the application for an adjournment, which I address more fully below. The judge directed that the trial would not include consideration of the sanction for the appellant’s admitted contempt. On being informed of the judge’s direction, the appellant emailed the court at 13.59 to confirm that he was unable to attend trial on medical grounds. Accordingly, the trial proceeded in the appellant’s absence for the rest of that afternoon.

21. The first thing which Mr Pritchard invited the judge to do was to strike out the appellant’s defence and counterclaim under CPR rule 39.3 on the grounds that the defendant had not attended the trial. The judge agreed to do so, stating as follows:

“Well, there has been a wilful failure to attend, I am satisfied, because even by the latest email it is perfectly apparent that he [the appellant] is fully cognizant of the whole case and he should be here at court, that these are attempts to avoid coming to court. The Defence itself, which is a statement of defence which goes to about sort of 27 pages of 88 paragraphs are bits of purported sort of evidence does not in any view amount to a proper defence of the claim being made and it seems quite proper that the Defence in his absence should be struck out.”

22. Mr Pritchard then opened the case briefly and referred to certain documents. He then turned to the question of quantum in relation to which he submitted as follows:

“to cut a long story short… We have during the lunch interval been able to come up with a figure which we think would be an appropriate figure which we would invite the court to award as damages and that is based on the clients who we see most strongly from the bundle [the appellant] had dealings with and as a result either their business has been lost entirely by the [respondents] or the companies are no longer engaging as they would normally do with the [respondents] and there are strong suspicions that the business will be lost…

So ultimately that is the figure we are going to ask you to award and it comes really as a compensation for breach of contract.”

Having emphasised the speculative nature of the quantification exercise, Mr Pritchard came up with a figure of £290,000 to reflect the loss of business which he claimed that the respondents had actually suffered as a result of the appellant’s breach of contract. He took the judge through each figure making up that total, allegedly giving credit for business which might not have been lost; see e.g. pages 21-22 of the trial transcript.

23. Mr Pritchard then called two witnesses who simply confirmed the truth of their witness statements. He then referred to two other witness statements, also relied on by the respondents. He then addressed the costs of the proceedings claiming a figure in the region of £65,000, incurred as of that date, together with additional future costs. The judge asked counsel to provide a draft of the proposed orders he was seeking and a schedule of costs. He then reserved his judgment until Friday 27 February 2015. Since the defence had been struck out, there was no consideration of any of the points raised by the appellant, let alone of the 11 witness statements which he had sought to adduce into evidence and which were critical in relation to the issue as to whether his breaches of duty had actually resulted in any loss of business.

24. On 27 February 2015 HHJ Simon Brown QC handed down judgment. The judgment records that, in the absence of the appellant at trial, and upon the application of the respondents, the defence was struck out pursuant to CPR 39.3 and the trial proceeded with “live” evidence. The judge then went on to find that the appellant was in breach of contract and in breach of his fiduciary duties. In relation to quantum, the judge awarded compensatory damages in the sum of £290,009. He said at paras 38 – 43:

“38. The best evidence available emanates from the known activities of the Defendants on the USB memory stick and of Mr Sharp, the Finance Director and a Chartered Accountant of the Claimants in his second witness statement dated 9th February 2015 and the attached confidential spreadsheet.

39. Mr Sharp’s second witness statement explains that since December 2013 the Claimants have lost customers that represent revenue of about £2.7 million (£1 million profit).

40. In opening however, Counsel for the Claimants restricted their claim to those contracts where there is strong evidence from the memory sticks that Mr Solanki interfered with at least the following clients and so probably caused their loss of accounts:

Zebra Technologies Europe Limited (£124,795 lost gross profit)

J Coffey (£24,124 lost gross profit)

Kevin Cash (£12,575 lost gross profit)

John Shepherd (£4,442)

Pertemps People Development Grp (£56,394)

Bethmar Limited (£19, 357)

In addition, the Claimants have lost business with 4C and EvoEnergy because Mr Solanki diverted (or attempted to divert) that business away from Intercity:

4C (£23,950 lost gross profit)

EvoEnergy (£24,372 lost gross profit

41. I accept Mr Sharp’s evidence. In my judgment, there is clear evidence of unlawful interference with these customers by Mr Solanki that has probably caused the loss of these accounts. Accordingly, there will be judgment for the claimant for compensatory damages in the sum of £290,009.

42. The breaches of the Claimants’ database rights have been very serious in this case. Their confidential records were furtively ransacked by their employee for his own gain whilst he was still employed by them with a considerable annual remuneration of around £100,000. SMEs whose existence, (and the livelihood of their employees,) that depends on precious and hard worked for customer information, requires deterrent legal protection from such nefarious conduct. ESI is easily manipulated but, unlike paper, not easily eradicated. The Claimants do not seek additional damages in this case, but, if they had, then the court would have been minded to award a further 10% to the compensatory award given.

43. The total award of damages is £290,009.”

25. He then went on summarily to assess costs on an indemnity basis in the sum of £68,959.25 (para 53 of the judgment).

26. On 9 March 2015, the appellant applied to set aside the judgment handed down on 27 February 2015 pursuant to CPR 39.3(5); to adduce further new evidence in the form of the additional 11 witness statements upon which he had previously sought to rely, as well as 3 new statements in the form of letters obtained post-judgment; and for a new trial and a stay of execution in the meantime. The 3 new statements were from employees of certain of the clients specifically referred to in paragraph 40 of the judgment. They consisted of:

i) a statement dated 6 March 2015 from Stephen King, the CEO of Pertemps People Development Group, who stated that the information relating to his company at paragraph 40 of the judgment was ‘erroneous’ and that he still had a live account with the respondents;

ii) a statement dated 6 March 2015 from Helen Aitchison, an employee of John Shepherd, which responded to paragraphs 39-41 of the judgment, and denied that the appellant was responsible for the alleged loss of the mobile account which still remained with the respondents; she offered to supply a copy of the billing statements from the respondents ‘… as they clearly evidence our account remains with them.’;

iii) a statement dated 9 March 2015 from Alan Barrett, an employee of BethMar Ltd, which also responded to paragraph 40 of the judgment; he expressed concern about its conclusions and reiterated the fact that he had provided a sworn affidavit already confirming that the appellant had not interfered with his mobile and other accounts with the respondents; he criticised the judgment as being ‘clearly fallacious…’ on the grounds that his company’s account remained with the respondents and the former was being billed by the latter for mobile and hosted services each month; he also offered to provide copies of invoices.

27. On 11 March 2015 HHJ Simon Brown QC refused the application to set aside his judgment dated 27 February 2015 pursuant to CPR 39.3(5) and also the application to adduce new evidence in the form of the relevant witness statements. He did so on the papers and no reasons were provided by the judge as to why the application was refused.

28. It is not necessary to set out the subsequent procedural history in any detail (which includes charging order and bankruptcy proceedings), save to say that, in relation to the contempt sanctions hearing:

i) on 13 April 2015, the appellant applied to vacate and stay the contempt sanctions hearing listed for 23 April 2015 on the grounds of his application for permission to appeal the judgment to this court, his ongoing medical condition and his “poor financial circumstances” which he said prevented his travelling from Leicester to Birmingham;

ii) on 16 April 2015, HHJ Simon Brown QC refused that application;

iii) on 22 April 2015, the appellant requested the vacation of the sanctions hearing on the grounds that his father had died that day;

iv) on 23 April 2015, the first hearing of the sanctions hearing was adjourned to 15 June 2015 at the Royal Courts of Justice in London, as the appellant was unable to attend because his father had died the day before; the court ordered that the appellant should produce documents relating to his means for the purposes of considering what sanction to impose for his admitted contempt;

v) on 2 June 2015, the appellant complied with the order and provided the relevant documents to the respondents’ solicitors;

vi) on 15 June 2015, the second hearing of the sanctions hearing took place at the RCJ in London before HHJ Simon Brown QC; he fined the appellant £2,500 and awarded the respondents their costs of the contempt applications assessed in the sum of £69,933.72 stated to be “in accordance with the order dated 13 February 2015”, and £13,650 costs assessed in respect of the hearing on 15 June 2013,

The adjournment appeal and the set aside appeal

29. I can deal with these two grounds together because, although they do not raise precisely the same issues, the relevant points and chronology overlap, and if, either appeal was successful, there would have to be a new trial.

Grounds of appeal – adjournment appeal and set aside appeal

30. In summary, the appellant’s grounds of appeal in respect of the adjournment appeal and the set aside appeal were as follows:

i) under the adjournment appeal the grounds were that the judge had erred in principle by dismissing the appellant’s application dated 24 February 2015 and in so doing the appellant’s Article 6 ECHR rights were breached in that:

a) he was not afforded a fair trial

b) he was prevented from calling witnesses of fact to rebut the allegations made against him;

c) he was not afforded adequate time and facilities for the preparation of his defence; and

d) he was prevented from having legal representation at his trial. (This last ground was not pursued on the appeal.)

ii) Under the set aside appeal the grounds were that, in all the circumstances, both at the time of the trial itself, and as at the date of the set-aside application, and as a matter of principle, the judge was wrong in refusing to set aside (in whole or in part) the judgment under CPR rule 39.3 (5). The appeal was not confined to new evidence being adduced after judgment (in respect of which the appellant accepted that the principles set out in Ladd v Marshall applied – as considered by Hale LJ in Hertfordshire Investments Ltd v Bubb [2000] 1 WLR 2318, at 2324 and 2125).

The respondents’ notices

31. The respondents filed notices of appeal purporting to support the various orders and judgment of the judge on additional grounds. In fact, the grounds were essentially those upon which the judge had actually relied.

Discussion and determination – adjournment appeal and the set aside appeal

Legal Principles

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

33. For example, in Teinaz v London Borough of Wandsworth [2002] IRLR 721 CA Peter Gibson LJ gave the following guidance[1]:

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

…

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

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

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

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

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

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

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

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

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

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

“Failure to attend the trial”

39.3

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

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

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

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

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

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

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

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

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

(b) had a good reason for not attending the trial; and

(c) has a reasonable prospect of success at the trial.”

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

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

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

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

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

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

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

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

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

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

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

Conclusion on the good reason for not attending trial issue

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

i) which the appellant had served prior to trial, in accordance with the trial timetable (this consisted of some 15 statements from clients or alleged existing or past clients of the respondents);

ii) for which the appellant had applied for permission prior to trial on 11 February 2015 to serve and had actually provided to the respondents on 9 February 2015 (this consisted of some 11 statements from clients or alleged existing or past clients of the respondents); and

iii) which the appellant obtained after the trial and sought to adduce in support of his application to set aside judgment and subsequently sought to use in support of his appeal (this consisted of some 3 statements from clients or alleged existing clients of the respondents referred to in the application to set aside dated 9 March 2015 and a further two dated 11 June 2015 and 15 September 2015);

his defence on causation and quantum (and perhaps also liability) had at least a reasonable, if not a better, prospect of success.

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

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

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

Disposition

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

The costs appeal

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Disposition

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

Lord Justice Singh:

72. I agree.

_________

[1] All bolded text in this judgment is my emphasis.

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