SUPREME SANCTIONS IN THE SUPREME COURT: NO SECOND BITE OF THE CHERRY
The judgment of the Supreme Court in Thevarajah -v- Riordan  UKSC 78 has been long anticipated since it related to the law relating to sanctions. In fact it is a decision in relation to a very narrow issues. The law relating to sanctions, and CPR 3.9 in particular, was not considered. The only speech in the case was given by Lord Neuberger.
“…where a party is subject to a debarring order for failing to comply with an “unless” order to do something within a specified period and relief from sanctions is refused at a time when he is still in default, the mere fact that he then complies with the “unless” order (albeit late) cannot amount to a material change of circumstances entitling him to make a second application for relief from sanctions.”
- If an earlier judicial decision is to be set aside there must be a material change in circumstances.
- The fact that a party had, subsequently, complied with a peremptory order would not (normally) constitute a material change in circumstances.
- This case emphasises the importance of compliance with peremptory orders. Relief is hard to obtain and there will rarely be a second opportunity to apply for relief.
- The claimants (the respondents to the appeal in the Supreme Court) obtained an unless order in relation to disclosure.
- The defendant did not comply an an application for relief from sanctions was made. That application was refused.
- The defendant made another application at the trial of the action on the grounds that they had, subsequently, complied. After a lengthy hearing (four days) that application for relief from sanctions was allowed.
- The claimants appealed to the Court of Appeal. That Court allowed the appeal and held that relief from sanctions should not have been granted.
- The defendant appealed to the Supreme Court.
“A MATERIAL CHANGE IN CIRCUMSTANCES”
The primary issue was whether there was a “material change in circumstances” that justified the second judge (effectively) overturning the original decision to refuse relief from sanctions.
THE NEED FOR A CHANGE IN CIRCUMSTANCES
The Supreme Court held that it was a long-established principle that when an issue had been decided
“it appears to me that, as a matter of ordinary principle, when a court has made an interlocutory order, it is not normally open to a party subsequently to ask for relief which effectively requires that order to be varied or rescinded, save if there has been a material change in circumstances since the order was made.
As was observed by Buckley LJ in Chanel Ltd v FW Woolworth & Co Ltd  1 WLR 485, 492-493:
“Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter.”
LATE COMPLIANCE WITH A PEREMPTORY ORDER CANNOT CONSTITUTE A MATERIAL CHANGE IN CIRCUMSTANCES
“That brings me to the second point made by the appellants, namely that the Court of Appeal were wrong to hold that their subsequent alleged compliance with the “unless” order was not a material change of circumstances. In my view, that point must also be rejected, and that is for two reasons.
21. The first reason is that, where a party is subject to a debarring order for failing to comply with an “unless” order to do something within a specified period and relief from sanctions is refused at a time when he is still in default, the mere fact that he then complies with the “unless” order (albeit late) cannot amount to a material change of circumstances entitling him to make a second application for relief from sanctions. By refusing the party’s first application for relief from sanctions, the court would have effectively been saying that it was now too late for that party to comply Page 8 with the “unless” order and obtain relief from sanctions. So, if the court on a second application for relief from sanctions granted the relief sought simply because the “unless” order had been complied with late, its reasoning would ex hypothesi be inconsistent with the reasoning of the court which heard and determined the first application for relief.
22. Of course, that does not mean that late compliance, subsequent to a first unsuccessful application for relief from sanctions, cannot give rise to a successful second application for relief from sanctions. If, say, the “unless” order required a person or company to pay a sum of money, and the court subsequently refused relief from sanctions when the money remained unpaid, the payment of the money thereafter might be capable of constituting a material change of circumstances, provided that it was accompanied by other facts. For instance, if the late payment was explained by the individual having inherited a sum of money subsequent to the hearing of the first application which enabled him to pay; or if the company had gone into liquidation since the hearing of the first application and, unlike the directors, the liquidator was now able to raise money. These are merely possible examples, and I am far from saying that such events would always constitute a material change of circumstances, or, even if they did, that they would justify a second application for relief from sanctions.
23. In this case, such subsequent compliance with the “unless” order which did occur after the hearing before Hildyard J was not accompanied by any explanation which could possibly have justified a court concluding that there had been a material change of circumstances since that hearing. Accordingly, the Deputy Judge simply had no grounds to justify his entertaining the second relief application on its merits.
24. Quite apart from this, it seems to me that the Deputy Judge was not entitled to hold that the appellants had complied with the terms of the “unless” order, or that any breach of that order was de minimis, as he did. Hildyard J had found that the appellants should have disclosed the HSBC bank statements for the Company and that their failure to do so “cannot be dismissed as de minimis”. In those circumstances, it was simply inappropriate for the Deputy Judge to reach a different conclusion on essentially the same facts. (Indeed, that is a very good illustration of why it would only have been open to the Deputy Judge to consider the second relief application on its merits if there had been a material change of circumstances. He could not simply revisit the same issues as had already been considered by another judge and reach a different conclusion.)
25. Further, it was not appropriate for the Deputy Judge to conclude that the appellants’ former solicitors were partly to blame for any failure on their part to comply with the “unless” order. The contention that the appellants’ former solicitors were responsible for some of the breaches of the “unless” order was based on very Page 9 slight evidence indeed – a mere statement to that effect in a witness statement and two emails each of three or four lines, one of which was plainly incomplete. That was quite insufficient to justify the finding that the former solicitors were to blame.
DELAY IN MAKING THE APPLICATION
26. The Court of Appeal also considered that the appellants should have been in difficulties on the second relief application because of the delay. Given that they made that application eight weeks after Hildyard J made his order and one day before the trial was due to begin, without any satisfactory explanation for the delay or last minute nature of the application (except for a change of solicitors), I see considerable force in that view.
You can follow the whole tale of this application on this blog.
- Relief from sanctions: a case where relief was refused (the inital refusal).
- Relief from sanctions granted second time around (the hearing where relief from sanctions was granted).
- Another twist in the Thevarajah tale (the decision in the Court of Appeal).