A DEFENDANT CANNOT SIMPLY SEEK TO SET ASIDE THE CONSEQUENCES OF A DEBARRING ORDER: AN APPLICATION SOUNDLY REFUSED
In Al Saud v Gibbs [2024] EWHC 123 (Comm) Mr Justice Calver refused a defendant’s application to set aside a debarring order so that they could be involved in the trial of the action. The judgment contains important observations on the nature of a peremptory order and the practical consequences for a party debarred from taking part in the trial.
“The debarring order is not only an important method of ensuring that the court’s case management orders are respected, but it is also of important practical effect as the facts of this case show. Allowing the Defendant in this case to have a limited form of participation at trial by defending both the merits of the claim and quantum of liability, would be unfair to the Claimant. It would allow the Defendant to participate in the trial despite his refusal to comply with court orders concerning disclosure in a case where disclosure is central to the claim.”
THE CASE
In July 2023 the court made a peremptory order stating that unless the defendant made payment in accordance with court orders and also comply with a disclosure order then they would be debarred from defending the proceedings. An application for permission the order was refused.
THE NATURE OF A DEBARRING ORDER
“Any application by the Defendant for permission to participate at trial notwithstanding being debarred from defending these proceedings must be issued and served, together with any evidence to be relied on in support, by 4.30 pm on Wednesday 10 January 2024.” This order was no doubt made by Baker J because the Judge who hears the trial has a residual but narrow discretion to permit a debarred party to take some limited part in the trial.
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- The Judge’s order gives rise to the need to give some consideration to the effect of a debarring order of the type made in the present case. The law was summarised by Mr Edwin Johnson QC, as he then was, in Times Travel v Pakistan International Airline Group [2019] EWHC 3732 (Ch) at paragraph 55 in a passage that was cited with approval by the Court of Appeal in Hirachand v Hirachand [2021] EWCA Civ 1498, in which King LJ, at paragraph 37 of her judgment, described what Mr Johnson had to say as representing the proper approach in such a case. It has also subsequently been applied by Steyn J in Kim v Lee [2021] EWHC 231 QB at paragraph 25.
i) When determining the effect of a debarring order the court should first consider the terms of the order. What does the order state the relevant party is debarred from doing? The wording of the “unless order” in this case is clear: the effect is to debar the Defendant from defending the proceedings at all. As the CPR makes clear at 29.9.2, citing Michael v Phillips [2017] EWHC 1084 (QB): “Subject of course to its precise terms, a debarring order extinguishes any right the debarred defendant would otherwise have to participate in any way in the determination of all the issues which fall for determination at that trial“.
ii) If an order debars a defendant from defending the proceedings (like the one here), at the trial the defendant should not be permitted to adduce evidence, cross-examine the claimant’s witnesses, or make submissions in defence of the claim.
iii) Moreover, the defendant will usually be prevented not just from advancing a positive case, but also from making any submissions that challenge the claimant’s case. In Michael v Phillips, Soole J at [19] rejected a submission to the contrary by counsel for the defendant:
“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 cross-examination 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”.
iv) The prohibition on making submissions (and cross-examining) applies to issues of quantum just as it does to issues of liability. See again Soole J in Michael v Phillips [2017] EWHC 1084 (QB) at [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”.
v) There appears to be a narrow, residual discretion or trial management power to permit a debarred defendant to take some part in the relevant proceedings. For example, if a debarred defendant considers that a judge is proposing to grant excessive relief based on a misunderstanding of the scope of the claim, the defendant may seek and potentially be granted permission to make submissions on the limited issue of the extent of the pleaded claim; similarly a debarred defendant should normally be able to address the court on the form of order to be made after the substantive decision on the trial has been made, and on the costs of the proceedings.
vi) The court may also have regard to the nature of the pleaded defence of the debarred defendant for the purposes of understanding the nature and extent of the relevant claim. Indeed, to adopt the phrase adopted by Tomlinson LJ in the second decision of the Court of Appeal in Thevarajah , “The relevant defence may have left a lasting legacy on the statements of case as a whole”.
vii) But in exercising this narrow power, the court should have regard to the importance of ensuring that a debarring order, which is an important sanction available to the court in the exercise of its case management powers, and an important method of ensuring that the court’s case management orders are respected, means what it says and is not undermined by permitting the defendant to escape its effect by purporting to make supposedly “clarificatory” submissions.
viii) Of course, where a defendant is not permitted to participate in the trial, by reason of an order debarring him from defending a claim, the claimant does not automatically win by default. At the trial, the claimant must satisfy the court that he is entitled to the relief sought. In this case is remains for the Claimant to prove her claim and her entitlement to the damages sought.
- The debarring order is not only an important method of ensuring that the court’s case management orders are respected, but it is also of important practical effect as the facts of this case show. Allowing the Defendant in this case to have a limited form of participation at trial by defending both the merits of the claim and quantum of liability, would be unfair to the Claimant. It would allow the Defendant to participate in the trial despite his refusal to comply with court orders concerning disclosure in a case where disclosure is central to the claim. It would allow him to make assertions with impunity as to what happened to the Claimant’s assets (which is what the Defendant wishes to happen in this case: see for example paragraphs 9, 15 of his 10th witness statement and paragraphs 26-29; 31-32; 35-37 of his so-called “Statement of Facts” dated 13 July 2023), knowing that those assertions cannot be tested against the contemporaneous documents because he has failed to comply with the court’s orders as to disclosure.
THE DEFENDANT’S APPLICATION IN THE CURRENT CASE
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- he Defendant has not sought the court’s permission to address it at trial in relation to narrow, discrete points. Instead he has sought permission to defend the claim on the merits, both as to liability and quantum. That is impermissible by reason of the debarring order. The Defendant did not seek permission to appeal against the debarring order and it is not open to him now to invite this court to overturn or disregard it.
- In any event, the tenth witness statement of the Defendant which he has made supposedly in support of his application does not support it. Instead, by this witness statement the Defendant seeks to argue his case on the merits concerning the 2018 Settlement Agreement (including at paragraphs 5,6,8-9, 12, 14-18 in respect of issues which have already been determined against him by HH Judge Pelling KC). He seeks to reargue and repeat his reasons why a debarring order should not have been made, which have already been rejected by Dias J, namely his supposed impecuniosity [paragraphs 22-23; 25.3 and 25.4; 26-28]; the supposed late fixing with lack of notice of the debarring hearing [paragraphs 23-24]; the supposed “extensive disclosure” which he said he had already made and that he had nothing further to disclose [paragraph 25]. He again seeks to argue irrelevant points which are not in issue in these proceedings and once again includes material in his exhibit to his statement which has already been struck out by Cockerill J on 21 January 2022 (such as para 44.12 – 44.14 of item 8 of his exhibit). Finally, as he did before Dias J, he again makes serious and unfounded allegations against professional and experienced solicitors acting for the Claimant.
THE APPLICATION IN THE CURRENT CASE
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- Subsequent to the hearing before Dias J, in the Chancery enforcement proceedings to which I have referred before Deputy Master Linwood, the Defendant again maintained that he was impecunious. He also sought to reconcile his excuses for his failure to give disclosure with the fact that he admitted corresponding with third parties on his Gmail account. The Deputy Master rejected the Defendant’s account as wholly untruthful, stating as follows in his judgment:
“Mr Gibbs gave his evidence with bluster, swagger and confidence. However, I could
not believe much of what he told me was true. He was also at times evasive and prone
to exaggeration or manipulation. I set out some examples below [… one such example:]
Under cross-examination Mr Gibbs admitted corresponding with third parties via his
Gmail account. He tried to excuse this by saying he managed it occasionally by deleting
large amounts of data to free up space to enable it to be usable again. His witness
statement, in which he confirmed is true on oath, was therefore untrue.” [at 40-42]
And:
“Of especial importance in his [the Defendant’s] attempts to mislead the court is over
the movement of cash and assets. I have mentioned the payments to and from Mrs Gibbs’
account, but substantial funds were received by him following the JPR investment share
sale, the purchase of shares in Hub Flow, albeit he says for a third party he did not wish
to name, the sale for Euros 675,000 of a property in Montenegro, which I am satisfied
he attempted conceal from the claimant, and also his failure to disclose further receipt
of £700,000 following his sale of his shares in Gibbs Gillespie.” [at 50]
And finally, in relation to the Defendant’s non-payment of the costs
orders in these proceedings which are also the subject of the Debarring Order that:
“[…] Mr Gibbs says he wishes to pay but provides a litany of excuses as to why he has
not been able to. It is remarkable that, notwithstanding all the assets listed in his
disclosure at the time of the worldwide freezing order and disposal of certain assets,
not a penny has been paid. … This, therefore, is a simple refusal to pay the claimant.
It is a serious and contumacious default which is over one year old.” [81-82]
