PREVENTING DEFENDANT FROM DEFENDING DAMAGES IS AN APPROPRIATE MEANS OF ENFORCING PEREMPTORY ORDERS: COURT OF APPEAL DECISION

 Workman -v- Forrester [2017] EWCA Civ 73 is an important example of the courts using peremptory orders in an attempt to secure compliance.  The Court of Appeal upheld a decision to make a peremptory order that allowed the claimants to enter judgment for their full claim if the defendant did not comply with an order for disclosure.

KEY POINTS

  • A District Judge had not erred in making a peremptory order that meant if the defendant did not give disclosure of  his assets the claimants could enter judgment for their full claim.
  • The order, and the judgment, were not wrongly made and were not set aside.

THE CASE

The claimants were the executors and dependants of the defendant’s former wife. The defendant had been convicted of her murder.  The action included a claim for damages for the sums that would have been paid in the matrimonial proceedings had the defendant not murdered his wife.

  • The claimants obtained a regular default judgment.
  • The claimants issued an application for a freezing order which included an order for disclosure of the defendant’s assets.
  • The defendant did not comply  with the order for disclosure of assets.
  • The claimants sought a peremptory order that, in default of compliance, the be entitled to enter judgment for the full amount claimed. This order was granted by District Judge Anson at a Case Management Conference that the defendant did not attend.

THE ORDER

The order was made in the following terms:-

“Unless the Defendant complies with paragraphs 8(1) and 9 of the Order dated 26th January 2012 by 4.00 p.m. on 11th January 2013, the Defendant be debarred form defending the quantum of the Claimants’ claims and judgment be entered in the sum of £1,503,579.50 plus interest, together with costs”.

THE DEFENDANT’S RESPONSE

The defendant did not comply and the claimants entered judgment.  The defendant’s subsequent applications to set aside judgment were dismissed. The defendant appealed to the Court of Appeal.

WAS THE DISTRICT JUDGE ENTITLED TO MAKE THE PEREMPTORY ORDER IN THE WAY HE DID

The Court of Appeal refused the claimant’s appeal.  It was open to the District Judge to make the order he did.
    1. It seems to me that Mr Killalea QC (with whom Mr Edwards again appeared for the Respondents) was correct to say that District Judge Anson was clearly aware of the normal procedure for the assessment of damages following a default judgment for damages to be assessed; he gave directions for that process to be followed in the event that the Appellant complied with the orders for disclosure of assets within the further time permitted by his order for compliance with the disclosure of assets order. He was persuaded, however, that the Appellant’s long-standing default in complying with the disclosure orders required marking by an “unless order” with the sanction of a further judgment for a specific sum in the case of non-compliance.
    2. Obviously, as it seems to me, the District Judge could have made an alternative form of “unless order” providing that, in the event of continued default, the Appellant should be debarred from defending the damages assessment, but leaving it to the Respondents still to prove their quantum claim by evidence and by submissions to the court as to their entitlement in law to the various heads of damage claimed. He did not take that course. I do not think that he erred in principle in not doing so.
    3. There had been a persistent failure by the Appellant to comply with the disclosure order. That was an order that was relevant not simply to the policing of the freezing order, but also to the live issue as to the quantification of the Respondents’ claim. It was known that an important part of that claim was novel in seeking to recover for the Deceased’s estate compensation by reference to what might have been expected to be recovered in the divorce proceedings, but there had been judgment on liability, giving rise to the potential need to quantify the loss. The Appellant’s flagrant contempt in failing to comply with the court’s order had the potential to frustrate the damages assessment and could not be ignored.
    4. At the time of the making of the “unless order” the District Judge was referred to JSC BTA Bank v Ablyasov (No. 8) [2013] 1 WLR 1331. In that well-known case, the defendant had been ordered to surrender to the tipstaff to meet a custodial sentence imposed upon him for contempt of court in failing properly to disclose his assets under the terms of a freezing order. The court had further ordered that in default of surrendering as directed and properly disclosing his assets he would be debarred from defending the claims brought against him and his defences would be struck out with liberty to the claimant to enter judgment against him. This court upheld the order made in the face of a challenge to the jurisdiction to make it. Mr Killalea referred us to paragraphs 168 to 171 of the judgment of Rix LJ in this case (which it is not necessary to quote again here) as showing clearly that the court had jurisdiction to make an “unless order” of the character made in this case.
    5. I think it is clear that the court in this case did have jurisdiction to make the “unless order” in the form that it did. Miss McQuail submitted that the order in the Ablyasov case did not go so far as to make an order for the entry of judgment for a specific sum in the event of default. That, of course, is true. She argued that the District Judge had been entitled to go no further than debarring the Appellant from defending the claim, but still requiring the Respondents’ to prove and establish their various heads of loss.
    6. I consider that the court’s jurisdiction is not limited in the manner that Miss McQuail contended. It was clearly open to the District Judge, in my judgment, to make an “unless order” in some form, given the Appellant’s long-standing failure to comply with the order of Swift J. While he could have made an order of the more limited character that I have described, I do not see that he lacked jurisdiction to make the order that he did. There is nothing in the rules, or in the decided cases, to limit the power to specify the consequences of failure to comply with an “unless order” which prevents the making of an order in the terms of the order made here. Precisely how the District Judge sought to achieve compliance by the Appellant with the court’s order was a matter for his discretion.
    7. While it is clear that a judgment for damages to be assessed in the ordinary course requires the claimant to prove his damage and that there are procedural provisions to enable that process to be carried through, that does not mean that a defendant may not be deprived of the benefit of that process if he chooses to conduct himself, as this Appellant did, in a manner calculated to frustrate the conduct of the proceedings to his own advantage. As Mr Killalea submitted, the District Judge made provision for the process of assessment to be conducted, but he required compliance first with the long-ignored disclosure order made by Swift J. In my judgment, he was entitled to make that order.
    8. I would add that, in support of his argument that the “unless order” was properly made, Mr Killalea argued that the Respondents would have been entitled in February 2012 to apply for judgment in default of acknowledgment of service in the sum of £1.5 million and for the sum specified for funeral expenses instead of judgment for a sum to be assessed. For this purpose, he submitted that the claim here was for a “specified sum” within the meaning of CPR 12.4(1)(a). He took us to the Particulars of Claim in which the prayer included claims for £1.5 million and an identified sum for funeral expenses, with reference to claims for those sums in various parts of the body of the pleading. He took us also to the commentary upon the rule in the White Book which reads as follows:
“a specified amount of money”
The former term “liquidated sum” is replaced by “specified amount of money”. Default judgement can be entered for the specified sum, plus interest pursuant to r.12.6, plus fixed costs pursuant to r.45.4. However, it is important to note that “a specified sum of money” is wider than the old term “liquidated sum”. Clearly it covers a case where the claim is for a debt. However, it appears that “a specified amount of money” covers any case where the claimant puts a figure on the amount of their claim whether it is debt, damages or any other sum. If the claimant chooses to put a value on their claim in a specified sum, the claimant can request a default judgment in that sum (plus interest if claimed: see r.12.6) and fixed costs (see r.45.4). The term “specified amount of money” is used not only in r.12.4 but throughout the CPR, see, e.g. r.26.2 on automatic transfer. Claiming a specified amount of money will cause the rules for automatic transfer to the defendant’s home court to apply if the claim is defended. This change in practice accords with the system in Commonwealth countries where the law is based on Roman-Dutch principles.”
  1. Miss McQuail argued that the term “specified sum of money” is merely a modernisation of language, avoiding the more legalistic expression “liquidated sum” and that no change in the law is to be derived from such “updating” of language. She also asked us to note that the Claim Form itself identified the “Amount claimed” as “TBA”.
  2. No authority is quoted for the editors’ interesting commentary in the White Book passage which I have quoted and, as this point clearly was not in the minds of any of the judges who have considered the case to date, I propose to say no more about it, save to record the submissions made.
  3. The grant of permission to appeal by Lewison LJ was limited to the question “whether DJ Anson was entitled by his unless order of 21 December 2012 to order that in default of compliance judgment be entered for a quantified sum in relation to a claim for unliquidated damages without having heard evidence of loss…On the basis that ground 6 is limited to the point I have identified, I grant permission to appeal on that ground…”. In the light of this strictly confined ground of appeal, I consider that what I have said above is sufficient for the purposes of deciding the appeal. I find that the judge was entitled to make the order that he did and it is not strictly necessary to enquire whether he was correct to exercise his discretion to do so. However, as I have already said, I do not think that the judge erred in principle in making the “unless order” in exercise of the discretion which I consider that he had. It would only be if such an error could be demonstrated that this court would interfere with the exercise of a discretionary power.
  4. I do not ignore Miss McQuail’s point that some of the heads of damage claimed were admittedly novel. That was always acknowledged by the Respondents and was known to the court. However, they had made it clear that they wanted to argue for a development of the law in this area. In the absence of an application to strike out any parts of the claim they were entitled to endeavour to do so and, when the matter came before District Judge Anson in December 2012, they had the benefit of the view expressed by Swift J, at the hearing of the application for the freezing order, in the face of the acknowledgment of the difficulties in the matter, that the claim was properly arguable. The Appellant had every opportunity to argue out the legal issues arising. He chose instead to ignore the court’s orders and to frustrate the proper conduct of the proceedings. He was given by District Judge Anson a final opportunity to comply and to avail himself of the normal procedures for challenging alleged losses, but he chose not to take it.
  5. Following upon her arguments upon the court’s jurisdiction to make the unless order in the present form, Miss McQuail submitted that the judge’s error on that point constituted a “fundamental procedural error” which would entitle the court to set the order aside pursuant to CPR 3.1(7): see Edwards v Golding [2007] EWCA Civ 416, without the necessity for the Appellant to apply for permission to appeal out of time. As can be seen, I do not consider that there was any procedural error in this case, let alone a fundamental one, that could trigger the jurisdiction under that rule.