Supreme Court agrees that applicants must demonstrate a
"material change of circumstances" in order for relief
from sanctions to be granted following a previous refusal of
Thevarajah v Riordan & Ors (2015)
In a rare judgment by the Supreme Court on when courts are
entitled to refuse second applications for relief from court
sanctions, it clarified that applicants must demonstrate that there
has been a material change of circumstances (such as
inheritance/liquidation) following the first refusal of relief, in
order to succeed on the second application. Merely complying with
an unless order, (non-compliance with which led to the first
application for relief), is not sufficient to amount to such a
material change in circumstances.
The appellants, Mr John Riordan & Others entered into a
contract with the respondent businessman Mr Thavatheva Thevarajah,
who issued proceedings seeking specific performance of the
contract. He obtained a freezing order which required Riordan &
Ors to provide disclosure relating to their assets, They failed to
comply and the judge made an "unless" order, providing
that they would be debarred from defending the claim if they did
not provide disclosure by a specified date. They did not do so and
the judge debarred them from defending the claim and dismissed
their application for relief from sanctions. Some two months later,
Riordan & Ors made a second application for relief from
sanctions, the day before the trial was due to start. Their
application was accompanied by a lengthy affidavit, purporting to
provide full disclosure. The deputy judge discharged the debarring
order. However, the Court of Appeal restored the debarring order,
holding that because the first application had already been
refused, rule 3.1(7) of the Civil Procedure Rules applied and the
deputy judge therefore could not accede to the second application
unless there had been "a material change of
circumstances", which there had not been.
Agreeing with the Court of Appeal and dismissing the appeal, the
Supreme Court held that CPR r.3.1(7) applied to the second
application for relief from sanctions, requiring Riordan & Ors
to show that there had been a material change of circumstances
since the first relief application. The deputy judge had been
effectively asked to "vary or revoke" the debarring
order. Even if r.3.1(7) did not apply, as a matter of ordinary
principle it was not normally open to a party to ask for relief
which effectively required an interlocutory order to be varied or
rescinded unless there had been a material change of
Where a party was subject to a debarring order for failing to
comply with an unless order and relief from sanctions was refused
at a time when he was still in default, the mere fact that he
belatedly complied with the unless order could not amount to a
material change of circumstances entitling him to make a second
application for relief from sanctions.
The Supreme Court noted that that did not mean that late
compliance could never give rise to a successful second
application. The Supreme Court gave the following examples:
"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."
Here, the Supreme Court found that the subsequent compliance
with the unless order was not accompanied by any explanation which
could possibly have justified a court concluding that there had
been a material change of circumstances since the first hearing.
There was also force in the Court of Appeal's view that Riordan
& Ors had difficulty succeeding on their second relief
application because of their delay in making it and the lack of any
satisfactory explanation for that delay.
In the recent decision in Joyce Whitfield v Revenue & Customs Commissioners  UKFTT 685 (TC) the Tribunal considered that inflexible and disproportionate behaviour by a party's legal representative...
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