Business Law: Victoria Spellman on why it’s best to do as a court directs
- Credit: Archant
Most cases settle before anyone needs to set foot in a court room and there are a lot of things that need to be done before that “day in court”. If the court directs you to do something then expect to be sanctioned if you simply ignore the direction.
The Civil Procedure Rules (CPR) set out how litigants should behave. The CPR was reformed last year to provide access to justice but at proportionate cost. As a result the courts take a tougher approach to breaches of the CPR, missed deadlines and wasted time and money. The case of Thevarajah v Riordan & Ors is an example of this more robust approach.
In Thevarajah, a businessman claimed to have paid £1.5million for the shares in a company which operated a public house and spent £600,000 on the pub as the company’s 50% shareholder and sole director. He believed the other 50% of the shares would be sold to him. That deal was not properly recorded in writing. The “sellers” reappointed themselves as the company’s directors, increased the purchase price and refused to complete the sale. He sued for approximately £2m.
In managing the case, the High Court directed the defendants to disclose their assets and liabilities. The defendants ignored this direction and the resulting sanction was that their defence and counter-claim was struck out. In other words, they could not defend claim and were bound to fail.
After a delay, the defendants applied for relief from this devastating sanction and, two days before the case was due to be tried, their application was granted.
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The claimant successfully appealed this decision. The Court of Appeal found that the respondent’s application for relief from sanction was an abuse of process because it was like trying to appeal against the original order for disclosure (against which there was no right of appeal) plus there had been a substantial delay in the respondents seeking relief.
The Court of Appeal said the lower court had paid insufficient attention to the respondents’ delay and the matter had taken up a disproportionate amount of court time and said that the lower court’s approach did not reflect the robustness now required by the reformed CPR.
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If you receive any court papers, please take early advice to avoid harming your case.
: : Victoria Spellman is dispute resolution partner at Gotelee Solicitors.