In The Financial Conduct Authority v Da Vinci Invest Ltd & Ors [2017] EWHC 2220 (Ch) Mr Justice Snowden rejected a defendant’s application for relief from sanctions for breach of a peremptory order. It is unusual in that the court considered the underlying merits of the application in some detail. The application involved a contention that a defendant was unaware that solicitors had been acting on his behalf and knew nothing about the action.

The only other substantive point made by Mr. Pornye was that he had been working in a holiday resort outside Budapest over the summer months and had not been able to attend to the case. I do not think that this excuses Mr. Pornye’s failure to comply with orders that should have been attended to before the summer started. “


The claimant brought proceedings against several defendants. The defendant, Mr Pornye,  had solicitors who said they were acting on his behalf,  solicitors came off record, and judgment was entered after a trial at which he did not attend.

Subsequently Mr Pornye applied to set aside the judgment. He asserted that the solicitors who had represented him did so without authority and he had no knowledge of the matter.  During the course of the application the judge made peremptory orders that he provide documents  in support of the application. He did not comply with the order. After time for compliance was past he applied to vary it.


The law
    1. The effect of failure to comply with an unless order is that the sanction prescribed by the order takes effect automatically as a result of the failure to comply with its terms: see per Lord Justice Moore-Bick in Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463.
    2. In this case, it is clear that Mr. Pornye did not comply with the terms of the Unless Order by the date set out within it, namely 10 May 2016. Accordingly, and as very clearly stated by the terms of the Unless Order, the result was that Mr. Pornye’s Set Aside Application was automatically dismissed on 10 May 2016.
    3. Nor did Mr. Pornye validly issue and serve an application to vary the terms of the Unless Order, either by the original deadline under the order (10 May 2016), or by the extended deadline of 10 June 2016 which I set out in my order of 20 May 2016. The consequence is that although Mr. Pornye’s application of 4 August 2016 was framed in terms of an application to vary the terms of the Unless Order, by the time it was issued, it ought to have been framed as an application for relief from sanctions under CPR 3.8(1). However (and rightly) none of the other parties took this technical point, and I am prepared to treat the application of 4 August 2016 as an application for relief from sanctions.
    4. CPR Rule 3.9 provides:
“(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.”
    1. Guidance on the application of Rule 3.9 was given in Mitchell v News Group Newspapers [2013] EWCA Civ 1537 and restated in Denton v TH White [2014] EWCA Civ 906. In paragraph 24 of Denton, the Court of Appeal indicated,
“A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’ which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate ‘all the circumstances of the case, so as to enable [the court] to deal justly with the application including [the need (a) for litigation to be conducted efficiently and at proportionate cost and (b) to enforce compliance with rules, practice directions and orders].'”
The first stage: the seriousness and significance of the breach
    1. It is, I think, clear that Mr. Pornye’s failure to comply with the Unless Order was both serious and significant. The original order of 10 February 2016 set out detailed provisions designed to bring Mr. Pornye’s Set Aside Application to a speedy trial. That procedure necessarily commenced with Mr. Pornye being obliged to set out his case in support of his application to set aside the Judgment that had, on the face of it, been regularly entered against him. It also required Mr. Pornye to indicate the documents upon which he was relying, and to provide original samples of his signature for handwriting analysis. These documents were essential for the future conduct of the Set Aside Application because they were the documents upon which Mr. Pornye based the allegations in his witness statement that it was not him but someone connected with the Da Vinci companies that had been using the address; that he did not have any, or any formal notice of the proceedings against him; and that his signature had been forged on the Defence and witness statement by someone else. The failure by Mr. Pornye to comply fully with the February Order, which followed a hearing at which he had been present and which he plainly understood, and the Unless Order which had been translated into Hungarian for him, meant that his own Set Aside Application could not progress.
    2. Moreover, as Jackson LJ indicated in British Gas Trading v Oak Cash and Carry [2016] 1 WLR 4530 at paragraph 41,
“The very fact that X has failed to comply with an “unless” order (as opposed to an “ordinary” order) is undoubtedly a pointer towards seriousness and significance. This is for two reasons. First, X is in breach of two successive obligations to do the same thing. Secondly, the court has underlined the importance of doing that thing by specifying an automatic sanction in default (in this case the draconian sanction of strike out).”
    1. Although Jackson LJ went on (at paragraph 42) to accept that not every breach of an “unless” order is serious and significant (giving as an example the filing of a costs budget 45 minute late), the instant case is not such a case. Mr. Pornye had still not complied with the requirements of the Unless Order by the time of the hearing in October 2016.
The second stage: the reasons for the breach
    1. Apart from the assertion that he needed, and was entitled by Article 6 of the European Convention on Human Rights to, a translation of all of the trial documents into Hungarian, neither Mr. Pornye’s application of 4 August 2016 nor his written or oral submissions specifically explained why he failed to comply with the February order or the Unless Order. Mr. Pornye’s written submissions largely repeated his denial of having been engaged in market abuse, or having been formally served with the FCA proceedings, or having instructed Bivonas or having signed the Defence or witness statement in those proceedings.
    2. In his oral submissions, Mr. Pornye focussed on criticising the conduct of the FCA and Bivonas. The theme of his oral submissions was that he felt that the burden had been wrongly placed upon him to do things, that he had been the victim of what he described as “bogus evidence”, and that it should be enough that he had raised the issue of the lack of service and representation by Bivonas. Mr. Pornye submitted that once he had raised the question, it should be for the FCA to prove that he had been served in the main action, and/or that the burden should be on Bivonas to prove that he had instructed them, but that neither body had produced any relevant documents and they had not answered the questions that he had asked of them in correspondence.
    3. In relation to the question of translation of the documents in the trial bundle into Hungarian, Mr. Pornye referred to Article 6 of the European Convention on Human Rights. That Article is headed “Right to a Fair Trial” and provides (in relevant part),
“1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law….
3. Everyone charged with a criminal offence has the following minimum rights:
(a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him;
(e) to have the free assistance of an interpreter if he cannot understand or speak the language used in court.”
    1. In my reasons for making the order of 20 May 2016 to which I have referred above, I made the point that the current proceedings are not the determination of a criminal charge against Mr. Pornye so as to engage Article 6(3) at all. They are an application by Mr. Pornye to set aside a civil judgment against him.
    2. Moreover, even in relation to a criminal charge, a defendant has no right to a translation of all the documents in the case. In Hermi v Italy (2008) 46 EHRR 46, the ECHR decided that even in a criminal case, Article 6(3)(e) of the European Convention on Human Rights did not require translation of all items of written evidence or documents in a case. At paragraph 70, the European Court of Human Rights observed,
“70. However, para.3(e) does not go so far as to require a written translation of all items of written evidence or official documents in the procedure. In that connection, it should be noted that the text of the relevant provisions refers to an “interpreter”, not a “translator”. This suggests that oral linguistic assistance may satisfy the requirements of the Convention. The fact remains, however, that the interpretation assistance provided should be such as to enable the defendant to have knowledge of the case against him and to defend himself, notably by being able to put before the court his version of the events….”
    1. Applying this to the instant case, whatever the position might be at a later stage of the application or even if there were to be a retrial of the FCA’s claim, at the current moment Mr. Pornye is not facing a case (still less a criminal charge) against him. It is Mr. Pornye who has brought the Set Aside Application and asserted that he did not instruct Bivonas to represent him. As I indicated in the reasons for my order of 20 May 2016, until he unilaterally took the decision to start communicating in Hungarian and to demand translations of documents, Mr. Pornye was able to produce documents and communicate effectively with the Court and the other parties in written English, and he appeared at the hearing in February 2016 with his own choice of interpreter.
    2. Moreover, what the Unless Order required Mr. Pornye to do was simply to identify the basis for the assertions which he had already made in his own evidence in support of his own Set-Aside Application and to produce his own original documents bearing his signature. In my judgment, Mr. Pornye was perfectly capable of doing all of that without having a translation of all of the other documents and materials in the trial bundle and there was no breach of his Article 6 rights in requiring him to do so.
    3. I also do not think that Mr. Pornye gave me any other good reasons for his failure to comply with the Unless Order. The various questions which he raised of where the burden of proof might lie, and the substantive merits of the Set Aside Application, plainly could not be determined in his favour summarily. Rather, the process to be followed had been determined at a hearing in February 2016 in which Mr. Pornye participated fully, and was set out in an order which he did not appeal, and with which he complied in part. Mr. Pornye did not suggest that he did not understand what was required of him, and as I have said, the Unless Order was in any event served upon him in Hungarian. That being so, it was simply not open to Mr. Poryne unilaterally to seek to change direction and to pick and choose which parts of the orders he should comply with.
    4. The only other substantive point made by Mr. Pornye was that he had been working in a holiday resort outside Budapest over the summer months and had not been able to attend to the case. I do not think that this excuses Mr. Pornye’s failure to comply with orders that should have been attended to before the summer started. The requirements of the orders were not onerous and were essential to enable the Set Aside Application to be progressed efficiently.
The third stage: dealing justly with the application
    1. In Denton at paragraphs 31-45, the Court of Appeal indicated how the court should approach the third stage – namely considering how to deal justly with the application for relief from sanctions. From that explanation, I emphasise the following:
“34. Factor (a) [in CPR 3.9(1)] makes it clear that the court must consider the effect of the breach in every case. If the breach has prevented the court or the parties from conducting the litigation (or other litigation) efficiently and at proportionate cost, that will be a factor weighing in favour of refusing relief. Factor (b) emphasises the importance of complying with rules, practice directions and orders. This aspect received insufficient attention in the past. The court must always bear in mind the need for compliance with rules, practice directions and orders, because the old lax culture of non-compliance is no longer tolerated.
35. Thus, the court must, in considering all the circumstances of the case so as to enable it to deal with the application justly, give particular weight to these two important factors. In doing so, it will take account of the seriousness and significance of the breach (which has been assessed at the first stage) and any explanation (which has been considered at the second stage). The more serious or significant the breach the less likely it is that relief will be granted unless there is a good reason for it. Where there is a good reason for a serious or significant breach, relief is likely to be granted. Where the breach is not serious or significant, relief is also likely to be granted.
36. But it is always necessary to have regard to all the circumstances of the case. The factors that are relevant will vary from case to case. As has been pointed out in some of the authorities that have followed the Mitchell case [2014] 1 WLR 795, the promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances. Likewise, other past or current breaches of the rules, practice directions and court orders by the parties may also be taken into account as a relevant circumstance.
44. We should also make clear that the culture of compliance that the new rules are intended to promote requires that judges ensure that the directions that they give are realistic and achievable. It is no use imposing a tight timetable that can be seen at the outset to be unattainable. The court must have regard to the realities of litigation in making orders in the first place. Judges should also have in mind, when making directions, where the Rules provide for automatic sanctions in the case of default. Likewise, the parties should be aware of these consequences when they are agreeing directions. “Unless” orders should be reserved for situations in which they are truly required: these are usually so as to enable the litigation to proceed efficiently and at proportionate cost.”
    1. Applying those points the following factors seem to me to be relevant. First, Mr. Pornye’s failure to comply with the order from February and the Unless Order have prevented the Set Aside Application from being proceeded with efficiently in accordance with the directions given in February, or at proportionate cost. It is also the case (as set out in paragraphs 17, 24 and 35 above) that Mr. Pornye did not comply with other orders and directions from the court.
    2. What the justice of the case requires must also take into account Mr. Pornye’s prospects for success on his Set Aside Application under CPR 39.3. In that regard it is to be noted that CPR 39.3(5) gives the court hearing the application a discretion as to whether to grant the application and provides that it should only do so if, inter alia, the applicant acted promptly when he found out that the court had exercised its power to strike out his defence or to make an order against him, and that he had a good reason for not attending the trial.
    3. In the instant case the consideration of these factors calls attention to a number of statements that Mr. Pornye made to the court and to the other parties about his supposed ignorance of the proceedings against him and the circumstances in which Bivonas came to believe that they were acting for him. Those statements were patently untrue. There is also some revealing evidence adduced by Bivonas that shows that Mr. Pornye was in fact well aware of the proceedings throughout, and that he chose voluntarily not to attend the trial or even to protest that it was taking place in his absence.
    4. As to the untrue statements, I have set out in paragraph 8 above how Mr. Pornye had been notified by Bivonas by email and couriered letter of the imminent trial of the FCA’s claim in April 2015. Mr. Pornye was forced to acknowledge that this was indeed the case in paragraph (a) of his witness statement of 7 March 2016 to which I have referred at paragraph 23 above. However, in his initial correspondence by email with the FCA in September 2015 (set out in paragraphs 12 and 13 above) Mr. Pornye feigned ignorance of who Bivonas were, and in both the unsigned document sent to me on 5 November 2015 (paragraph 15 above) and the signed version of the document that accompanied his Set Aside Application on 9 December 2015 (paragraph 17 above) Mr. Pornye falsely claimed that he was unaware of the proceedings against him by the FCA until he saw a press article in Hungary after the Judgment had been handed down in August 2015, and that he had never heard of Bivonas before that.
    5. Further, in Mr. Pornye’s email to the FCA in September 2015 to which I referred in paragraph 13 above, and in paragraph 7 of the letter to me sent on 5 November 2015 to which I referred in paragraph 15 above, Mr. Pornye clearly sought to suggest that he had provided Mr. Banya with his personal ID documents on 27 January 2012 and that Mr. Banya had then dishonestly misused those documents. But from documents produced by Bivonas and exhibited to a witness statement of its solicitor on 6 April 2016, it is clear that Bivonas were in fact provided with copies of Mr. Pornye’s identity card by Mr. Banya on 8 December 2011, together with confirmation (from Mr. Banya) that he had sent a copy of Bivonas’ terms and conditions to Mr. Pornye and that Mr. Pornye was content that Bivonas should take instructions from Mr. Banya on behalf of all of the three individuals. Mr. Pornye has not sought to explain how (other than with his consent) Mr. Banya had obtained a copy of his identity card in December 2011.
    6. Indeed, from transcripts of Skype messages and text messages which Bivonas obtained from Mr. Banya and which they exhibited (with translations) to the evidence filed in February 2016, it appears that Mr. Banya and Mr. Pornye were in regular contact concerning the FCA proceedings from shortly after the start of those proceedings in July 2011, and that this was so even though the FCA did not seek to join Mr. Pornye as a defendant to the proceedings until about the end of August 2011.
    7. In particular, on 1 September 2011 Mr. Pornye sent Mr. Banya a link to an article on the FTAdviser website reporting the outcome of a hearing that had taken place before Mr. Justice Newey the previous day, 31 August 2011. At that hearing, Mr. Justice Newey had continued freezing orders against the corporate defendants and had granted injunctions against each of the corporate defendants, Mr. Banya and Mr. Brad, prohibiting them from continuing to engage in market abuse. In his Skype message concerning the FTAdviser report, Mr. Pornye commented to Mr. Banya,
“It’s not a small website we’ve been featured on.”.
    1. Later the same day, Mr. Pornye sent a further message, asking whether Mr. Banya had read “the BBC article”. That was a reference to an article that had appeared on the BBC News Business website under the heading, “FSA blocks Hungarians from ‘share price manipulation'”. The BBC article reported the outcome of the hearing before Mr. Justice Newey in the following terms,
“The FSA has taken out a High Court injunction to stop an alleged share price scam.
The markets regulator said it had taken action against three Hungarian and Swiss residents, and the Swiss and Seychelles-based companies they used.
Szabolcs Banya, Tamas Pornye and Gyorgy Brad are suspected of making £1m profit via “layering” – placing bogus orders to artificially raise or lower prices.
The injunction freezes their assets and blocks them from market manipulation.”
    1. This was the first indication that the FCA was seeking to join Mr. Pornye to the proceedings, and prompted Mr. Pornye to ask Mr. Banya,
“What do you think will happen? It looks very bad. Up till now I thought I was at least safe.”
    1. Subsequently, the Skype messages show Mr. Pornye discussing the case further with Mr. Banya in early April 2012, including a discussion as to whether the traders should take their case to the ECHR in Strasbourg to deny the FCA what the traders perceived as “home court” advantage.
    2. As the trial of the claim neared, on 17 April 2015 Mr. Banya sent an email to the email address attaching the statement of means provided by the FCA. Mr. Pornye replied that he did not see the point of completing it, and on 22 April 2015 Mr. Pornye sent Mr. Banya a text message stating,
“I’m sorry but I won’t fill it out. You can tell them I’m having medical treatment, which could even be true. Sorry, but I don’t want to deal with this anymore. Don’t call me.”
    1. I have also set out above the content of the communications from Bivonas to Mr. Pornye on 24 April 2015 reminding him of the imminent trial and urging him to engage with the process, which Mr. Pornye chose to ignore.
    2. Mr. Pornye’s written submissions and evidence for the hearing before me simply ignored these documents which had been exhibited in evidence by Bivonas. When I asked Mr. Pornye at the hearing whether he had any explanation for these documents, his response was simply to suggest – without explanation – that they might have been falsified. I cannot see any basis for that suggestion. The documents are entirely consistent with the other documents and events in the case and with Mr. Pornye’s lack of response to the email and letter which he received from Bivonas in April 2015. I also cannot see (and Mr. Pornye did not suggest) why it would have been in Mr. Banya’s interests to falsify such documents to incriminate Mr. Pornye in 2015 or 2016 after he – Mr. Banya – had already been found to have committed market abuse and had been subjected to a penalty.
    3. The inescapable conclusions that I draw from these matters is that far from having had no involvement with Mr. Banya and Mr. Brad, and far from having been ignorant of the proceedings taken against him by the FCA, Mr. Pornye was both involved with Mr. Banya and Mr. Brad and very well aware of the proceedings that had been taken against them from the very start in 2011. Mr. Pornye’s reaction to being mentioned in the media coverage of the injunction hearing before Mr. Justice Newey on 31 August 2011 is particularly telling. Far from being unaware what the proceedings were about or being at a loss to understand why he had become involved, Mr. Pornye’s reaction was to ask Mr. Banya what he thought would happen, to express the opinion that it looked “very bad”, and to indicate his disappointment that the FCA were now proceeding against him, because up until that date he had thought he was “safe”.
    4. Moreover, and crucially, it is perfectly clear from the documents which Mr. Pornye accepts that he received from Bivonas dated 24 April 2015, that Mr. Pornye was well aware that the trial of the FCA’s claim against him was due to begin in a couple of weeks’ time and that it was important that he should engage with the process urgently. The reaction of an innocent man who had not been aware of the proceedings at that stage would surely have been to contact Bivonas or the FCA, to proclaim his innocence, and to indicate his surprise and concern that preparatory steps to trial had been taken without his consent or approval. Had that been done, the trial would almost invariably have been adjourned to enable the position to be investigated and, if it transpired that Mr. Pornye had indeed been in the dark about the proceedings, for Mr. Pornye to have adequate time to instruct new lawyers and to prepare his case.
    5. Mr. Pornye’s response, however, was quite the opposite. He expressed no surprise at the imminent trial or as to the involvement of Bivonas ostensibly on his behalf, he deliberately chose to do nothing, and he permitted the trial to proceed in his absence in circumstances in which he must have been aware that very considerable time and expense would thereby be incurred by the FCA. Finally, Mr. Pornye was notified in late May 2015 by Bivonas that his Defence had been struck out and that the trial had taken place in his absence, but he still chose to do nothing or raise any issue before I delivered my reserved Judgment some three months later.
    6. In those circumstances, and bearing in mind that the court has a discretion whether or not to set aside the judgment against Mr. Pornye, I cannot conceive that Mr. Pornye’s Set Aside Application could have any realistic prospect of success. Even if Mr. Pornye had not given express authority to Bivonas to accept service on his behalf or to represent him, he was plainly well aware of the FCA proceedings and of the fact that Bivonas were purporting to act for all of the traders in relation to those proceedings, and he expressed no surprise at this state of affairs when contacted by Bivonas in April 2015. In particular, Mr. Pornye did nothing to contradict the fact that Bivonas were purporting to act for him, or to dispute any of the steps that had ostensibly been taken on his behalf. Instead he stood by and opted not to make any effort to present his own version of events whilst the trial of the FCA’s allegations took place in May 2015 and whilst I was considering my reserved Judgment.
    7. Given this manifest lack of merit in his underlying Set Aside Application, I do not see how it can be unjust to refuse Mr. Pornye relief from sanctions.
  1. Accordingly, I dismiss Mr. Pornye’s application of 4 August 2016.