DEBARRED PARTY CANNOT CROSS-EXAMINE AT TRIAL: WHAT ROLE CAN A DEBARRED PARTY PLAY AT TRIAL?

In Kliers v Schmerler & Anor [2018] EWHC 1350 (Ch) Mr M H Rosen QC (sitting as a  Deputy High Court Judge) refused the defendant’s application that it be allowed to cross-examine the claimant even after it had been debarred from defending.    The judgment, in part, appears to be inconsistent with the earlier High Court decision in  Michael -v- Phillips [2017] EWHC 1084 (QB) where the same principles were reviewed and where it was held that a debarred party could not play any part at all in proceedings.

THE CASE

The claimant brought an action for a declaration in relation to the family home.  During the course of the proceedings the defendant was debarred from defending.  The defendant attended at trial by solicitor and sought permission to cross-examine the claimant.

THE JUDGMENT ON THIS ISSUE

    1. The usual consequences of such a debarring order have been the subject of debate at the outset of the trial this morning. Mr Kramer, having lodged a skeleton argument and made oral submissions today, relies on various first instance decisions – first, Culla Park & Ors v Richards & Ors [2007] EWHC 1687 (QB), in which Eady J held that in a case for defamation and falsehood, even though some defences had been struck out it seemed to him that the defendants would be entitled to test the case in relation to questions of aggravated and similar damages and questions of malice.
    2. Secondly, in Hopton v Miller [2010] EWHC 2232 (Ch) HHJ Behrens dealt with a case in which a defendant was debarred from defending as a consequence of failing to give disclosure, and referred to the fact that the judge hearing the relief application had made it clear in his order that the defendant would be entitled to cross-examine the claimant and make submissions although not to present a positive case.
    3. Thirdly, in Masood & Ors v Zahoor [2016] EWHC 237 (Ch), Peter Smith J referred to his own decision in Rubin & Anor v Parsons & Ors [2008] EWHC 1034 (Ch) to the effect that it is a normal consequence when a court strikes out a defence and lists the hearing so that the claimant can prove his case, that the defendant has a right to challenge a case without calling any evidence itself or himself, the judge in that case saying that was a normal consequence of striking out a defence.
    4. There are other decisions recently considering similar questions (a) on the part of the Court of Appeal, twice, in Thevarajah v Riordan & Ors [2014] EWCA Civ 14, para. 38, [2015] EWCA Civ 41 at paras. 25 and 33 (b) in Apex Global Management & Anor v FI Call Limited & Ors [2015] EWHC 3269 (Ch) at para.37, a decision of Hildyard J, and (c) Hall & Anor v Elia & Anor [2016] EWHC 1697 (Ch) at 15 to 26, in which Proudman J summarised the various cases, including Thevarajah.
    5. Those cases suggest that there may be no general principle whereby a defendant whose defence has been struck out, still less one which has been consequentially debarred from defending, has the absolute right to test the claimant’s case in cross- examination and to make further submissions in every case.
    6. In para 33 of the second decision of the Court of Appeal in the Thevarajah case, two deputy judges’ management of that issue were considered. The Court of Appeal drew attention to the extent to which a defence could still be adduced at the trial by the Claimant as indicating the ambit of the disp ute.
    7. In para 70 of Apex, Hildyard J drew attention to the fact-specific range of options available to the trial judge. He said that on the basis of the Thevarajah decisions:

“. . . the debarred party’s pleadings may and usually should be taken into account for the purposes of defining and confining the ambit of the real dispute; and, for example, admissions may be taken as rendering proof of the admitted matters unnecessary. However, that is not to say that the proceeding party is entitled to seek adjudication of the debarred party’s case: only to

adjudication of its own case, and only then insofar as the court considers requisite in order to determine whether to grant relief and in what terms.”

    1. Mr Kramer submits that those decisions do not decide the instant question of whether or not a debarred party is entitled to cross-examine and make further submissions as part of the process considering whether or not the claimant has proved his, her or its case as against debarred defendants.
    2. Be that as it may, however, I have regard to Proudman J’s review in Hall when in particular, she considered the course of the Thevarajah case in which a Deputy Judge had observed that the debarred party would be entitled at trial to require the claimant to prove his claim and make submissions. It did not appear to the Court of Appeal in the first Thevarajah decision that Culla Park & Ors v Richards & Ors necessarily supported so sweeping a proposition; and it stated that the issue in that case was a matter for decision for the judge hearing the trial, and “put down a marker” (not further defined) in relation to that.
    3. In the subsequent Court of Appeal judgment in Thevarajah, the judgment of Tomlinson LJ (with whom the other judges agreed including, significantly, Richards LJ, who had been in both appeals) appears to support the submission that the debarred party was not in a position to contest anything that the claimant said and was not entitled to participate. I read this, as did Proudman J, as suggesting that there is no absolute rule that the debarred party is still entitled to participate by cross-examination and submissions without being able to put forward any positive case.
    4. Proudman J also referred to the Supreme Court’s judgment of the Thevarajah case (which has not been put before me), referring to Lord Neuberger’s comment to the effect that but for a feeling of grievance for the appellants he would have simply have said that the appeal should be dismissed for the reasons given by the Court of Appeal, and the Supreme Court’s decision that relief from sanctions should not be given without a change of circumstance.
    5. As for the submission made in Hall (as before me) that the Court of Appeal decisions Thevarajah were obiter. Proudman J said that:

“. . . if the Supreme Court had disagreed I would have expected them to say so. Moreover, although the remarks were obiter in the sense that they did not form part of the decision on the [first appeal in Thevarajah] the Court of Appeal did ‘put down a marker’ in relation to them and I would be foolish to ignore what they said. Indeed it would be a brave puisne judge who would ignore such a marker. I would always start from the proposition that the Court of Appeal is more likely to be right than I am.”

    1. It might be said that this approach might be all the more powerful and prudent in the case of a mere Deputy High Court Judge such as myself. In any event Proudman J concluded that Mrs Elia was, debarred from disputing any of the claims in the proceedings and whilst that did not prevent her from pointing out manifest errors, but no such errors were pointed out.
Application of the law in this case
    1. Whilst in Hall Proudman J mentioned occasions when counsel had declined to make submissions orders on behalf of clients whom had been debarred, in this case I have entertained Mordechai’s submission so far, among other things in order to consider the just and expeditious course that this trial should properly now take.
      1. Taking all the cases cited on board, the present Deputy Judge considers that at trial, the Court has some residual discretion to hear a debarred defendant and whether a debarred party, in this case Mordecai, might nonetheless be allowed to cross-examine and to make final submissions.
    2. It seems to me that these rights, whilst manifestly important in our system of justice, are not absolutely lost or retained when a defendant is debarred from defending, unless the court makes this explicit. Absent a previous order to that effect, the trial judge can decide under his or her case management powe rs (but still of course having regard to the overriding objective) to do what is just and exped ient as regard the need and justification for cross-examination and further submissions in the particular case.
    3. In some types of dispute – I have in mind, for example, wills and probate disputes, where the court’s function is not merely adversarial but also has an historical basis in inquisitorial proceedings – that might be appropriate. However the present case is extremely adversarial and the effect of the court’s previous orders should not be minimised. I also bear in mind the overriding objectives by way of fairness and justice between the parties having regard to the resources of the court and the interests of the public at large, including other litigants.
Grounds and scope of cross-examination
    1. Mr Kramer’s submission is that in this case it is appropriate to allow cross- examination (and more submissions thereafter) for two main reasons. First, because he says there are inconsistencies in the case put forward by the claimant in her particulars of claim/reply to Mordechai’s defence and her various witness statements, including the position as it was put first before the court when she obtained a freezing order in relation to the property on 27 April 2015.
    2. Secondly, he says that her case and evidence throws up questions of illegality, in particular, a case that the reason why money was put into the names of other people and the property was brought in the name of her brother rather than herself and her husband (albeit that it was their matrimonial home and they provided the funds) was for the purposes of deceiving a mortgage company, the Bank of Scotland, and also to enable an assured shorthold tenancy to be documented, which would enable housing benefits to be obtained.
    3. Mr Kramer also suggests that the evidence gives rise to a ques tion of illegality as to the way in which Mr and Mrs Kliers obtained moneys in cash or through charitable contributions, thus not having to treat them as income for the purposes of tax. What is said is that possible question of illegality is one which the court should consider, albeit that it was not put forward in the first defendant’s defence and, in any event, he is debarred from putting forward any positive defence.
The need to cross-examine
    1. I have carefully considered those submissions in writing a =nd orally, and in my judgment they do not justify the court – if I have any discretion – allowing cross- examination or possibly – and I say this provisionally – yet further submissions, on behalf of Mordechai, unless specifically invited.
    2. In this case the question of illegality arises on the claimant’s own case. She has gone into those aspects in some very considerable detail and I am concerned that they should be addressed but that is because they are apparent as issues to the court, and the extent to which I will require assistance as regards the law on that from Mr Schmerler, or on his behalf, is very doubtful indeed. But I do not rule out that possibility later, when we get to that stage.
    3. So far as cross-examination is concerned, although Mr Kramer came to trial on behalf of Mordechai submitting that he should be allowed to cross-examine, he struggled to tell me what questions, it was necessary for him to put. The alleged inconsistencies which he pointed to eventually, after some searching of his notes, and a little bit of time allowed for him to retire from court to go back over them, were thin in the extreme. That may not be wholly surprising in the context of this case as a whole where hostility to Mrs Kliers’ case is more obvious rather than due process on Mordechai’s side.
    4. Mrs Kliers has said throughout that she acted under the influence of a patriarchal body which included not only her own close relatives, by which I mean her father and others, but also her community leaders, and that her husband may well have been similarly influenced.
    5. In my judgment it is possible that the process of this trial in terms of an alleged need to cross-examine on matters which are very well documented on Mrs Kliers’ side, and will be investigated if necessary by me in the course of her evidence (and undocumented at trial on the other side who has been debarred more than once) is being used to harass and intimidate Mrs Kliers in the stand that she has taken – namely, that despite her participating in these transactions the disgraceful illegality which lay behind them from the community leaders and her patriarchal superiors in that community were concerned, was as a result of their undue influence – rather than achieve justice.
    6. The extent to which that features in terms of appropriate relief if she satisfies the court as regards the facts founding her claim that Mordechai was a mere nominee, and that as between her and Mr Kliers she holds beneficially in proportion 75:25 per cent are matters yet to be determined.
    7. For similar reasons I doubt very much that on behalf of Mordechai further submissions as to the effect of such gross illegality alle ged by Mrs Kliers to have been effectively forced upon her will in practice or should be a major foundation of the court’s reasoning in a case in which both defendants have been debarred. But I have Mr Kramer’s written submissions and can ask him to clarify or expand if it will assist after the evidence.
Conclusions
  1. In short, no sufficient reason has been advanced to me as regards the application to cross-examine and make further, later submissions. I have not been told of any basis for cross-examination which would justify that course, and if there were such, it should have been properly prepared The submissions which I already have, appear to me very likely to be the full extent of what more Mordechai would properly be allowed to say, but I will revisit that question after I have heard the evidence.
  2. The court must be astute to ensure fairness between the parties. This is, I hope, an unusual case where, in my judgment, fairness does not justify the further steps which Mordechai apparently wishes to take in order to advance the exposure of the disgrace which it appears his community is opening itself up to. I decline to allow the processes of the court to be used when, in my judgment, that is a very real danger in the course which Mr Kramer has advocated.
  3. Having said all that, I am going to guard and caution myself that this reaction is based only on what Mrs Kliers has said. The defendants are not here except through Mr Kramer’s submissions. How they would, if they were here, be dealing with these issues, especially in the absence of their disclosure and cross-0examination, how they would be able to explain the position which has been adopted as regards the illegality said to be rampant in this particular community, I do not wish to speculate on.
  4. This is a one-sided trial because Mr Kliers has chosen to take no part and Mordechai has declined, despite so many opportunities, to comply with the court’s processes in support of his purported case that he provided the funds for and was the beneficial owner for the property, and that the agreement and funding alleged by Mrs Kliers is not the truth. If Mordechai genuinely wished to advance that case in order to provide a foundation for cross-examination and put these matters in issue in a realistic way. against Mrs Kliers’ extensive and well documented evidence in support of that case, he had every opportunity to do so.
  5. I am not prepared to down-play Mordechai’s breach of orders and the debarring of his defence to enable empty, one-sided cross-examination of Mrs Kliers which cannot, in my view, assist in achieving a just outcome. For those reasons I decline to make the directions which Mr Kramer has sought. His solicitor is, of course, more than welcome to remain and, if I consider it necessary and appropriate, to assist further when we get to final submissions.

 

COMPARE THIS TO AN EARLIER DECISION NOT MENTIONED IN THE JUDGMENT: MICHAEL -v- PHILLIPS

The judgment makes no reference to the judgment of Mr Justice Soole in Michael -v- Phillips [2017] EWHC 1984 (QB). In that case the court’s view was that the party that was struck out could play no part in the trial process at all.

THE CASE

The claimants brought an action alleging breach of management agreements in relation to the running of a taxi firm. The defendant had failed to preserve documents in accordance with a court order.  As a result the defence was struck out.  (See the earlier post on the case).

THE SUBSEQUENT CMC

At a CMC following the strike out the claimant applied to amend the pleadings. This was opposed by the defendant.  The judge allowed the amendments stating that the defendants could not be in any better position because their defence was struck out.

WHAT ROLE COULD THE DEFENDANT PLAY AT TRIAL?

The judge considered the authorities on the subject. He rejected the idea that the defendant could attempt to dispute damages,

19. In my judgment, there is no good reason to draw a distinction between issues of liability and quantum. The order debars the first and second defendants from defending the claim. A claim involves issues of both liability and quantum. I can see no principled distinction between the two. In some cases the issues of liability may be relatively straightforward whereas the issues of quantum are extremely complicated. It would not make sense if, notwithstanding a debarring order the defendant was nonetheless able to participate in what was really the meat of the claim. Nor can the matter be dealt with by the more limited form of involvement that Mr Beresford proposes. Challenges to the cogency of factual and expert witnesses by crossexamination and submission are a major participation in the trial and would be contrary to what the court has decided should not happen. There would be great difficulties for the trial judge in determining where the boundaries lay between such questions and submissions and putting forward an alternative case.
20. The authorities do not provide support for any such distinction. From the limited available extracts of Sales’s J judgment it is not clear how the distinction arose in that particular case. There is nothing in the Court of Appeal decisions to support a general distinction.
 21. The Apex trial is an example of where a debarring order meant what it said and precluded participation in both liability and quantum. As to Rubin the judge’s remarks, “but they have a right in my view to require the Petitioners to prove their case”, were saying no more than that. Where defendants are debarred from defending, the claimants must still prove their case to the satisfaction of the court. The only exception is in those circumstances where default judgment is permitted. That is not this case.
22. My conclusion is that the first defendant should not be permitted to participate in the trial on either liability or quantum. In the light of the concession by Mr Hornett, I think it right to limit that order to the trial and not to extend it to any subsequent accounts and enquiries. The trial judge can then decide what is the best way forward if he or she decides that further accounts or enquiries are necessary.
23. As to costs, in principle I consider that these are part of the ‘claim’, as exemplified by paragraph 12 of the prayer for relief. However, Mr Hornett made it clear that the claimants were willing to place costs in a different category. On the basis of that sensible and pragmatic concession, I would exclude the issues of costs from the terms of the order.!

THE RESULT

The defendant, understandably, decided not to attend the trial on damages. It is notable that the claimant did not get everything they sought (but did recover substantial damages).  The judgment is not available on BAILLI but is on Lawtel. It contains a comprehensive review of the authorities.