UK Supreme Court: merits generally irrelevant to enforcement of case management directions

In a judgment given yesterday (26 November) the majority of the Supreme Court has expressed the view that the strength of a party's case on the merits is generally irrelevant to enforcement of the court's case management directions, save perhaps where the case is strong enough to obtain summary judgment: HRH Prince Abdulaziz Bin Mishal Bin Abdulaziz al Saud v Apex Global Management Ltd and another [2014] UKSC 64.

In this case the Court dismissed an appeal against decisions striking out a Saudi prince's defence to a US$6 million claim for refusing to comply with an order that he personally sign a statement of truth in a disclosure statement. The Court rejected the Prince's argument that preventing him from challenging the claim was a disproportionate sanction for his non-compliance, and that the alleged strength of his claim should be taken into account in determining the appropriate sanction.

The decision is interesting as a rare foray by the Supreme Court into the territory of case management decisions, though the Court was careful to point out that issues of case management and the application of the Civil Procedure Rules are primarily a matter for the Court of Appeal. In particular, the Court stated that nothing in its judgment was intended to impinge on the decisions or reasoning of the Court of Appeal in the Mitchell or Denton cases (see post).

Although the Court of Appeal's decision in Denton marked a retreat from the post-Mitchell extremes, resulting in a less draconian approach to enforcement of court rules and orders, Denton continued to emphasise the need for strict compliance, pointing out that there was to be no return to the “traditional approach of giving pre-eminence to the need to decide the claim on the merits” . The Supreme Court's decision in the present case may be seen as reinforcing that approach.

The decision is also of interest for the Supreme Court's view (in agreement with the High Court and the Court of Appeal) that a disclosure statement must normally be signed personally by a party to the action, though the court can permit a departure from that approach.

Background

The underlying dispute arose out of a joint venture between two companies, one of which was owned in part by Prince Abdulaziz, a member of the Saudi royal family. Petitions were brought by each of the companies against one another and against their respective shareholders. The claim against the Prince included a claim for approximately US$6 million plus interest, which was said to be owed by him. The Prince denied the claim on the ground that the sum had already been paid.

Various case management directions were made by Vos J, including that the parties should "file and serve a statement, certified by a Statement of Truth signed by them personally in the case of individuals and by an officer of the company in the case of the two companies" which identified the location and details of various electronic devices and e-mail accounts to which they had access. Prince Abdulaziz failed to comply and an "unless order" was made giving him nine days to comply or his defence would be struck out and judgment entered against him. The failure continued and judgment in default was entered.

The Prince applied to vary the order to permit his solicitor to confirm on oath, on his behalf, that he had given full disclosure and also applied for relief from sanctions. These applications were rejected and the Court of Appeal dismissed the Prince's appeals. He was given permission to appeal to the Supreme Court on the basis that he paid US$6 million (plus interest) to his solicitors to abide the order of the court.

Decision

The Supreme Court dismissed the appeal by a majority of four to one (Lord Clarke dissenting). Lord Neuberger gave the judgment of the majority, saying the lower court's decisions could not be faulted.

The Court agreed with the view taken by Vos J and the Court of Appeal that a direction requiring personal signing of disclosure statements reflected the normal practice. Lord Neuberger noted that the fact that both Vos J and the Court of Appeal considered that it was the usual order to make rendered it very hard for the Supreme Court to take a different view, but he was inclined to the same view. (It is worth noting that at paragraph 44 of the Court of Appeal's judgment, referred to by Lord Neuberger on this point, Arden LJ commented that no doubt it is common in practice for solicitors or other agents to sign disclosure statements in cases where, unlike the present case, no specific order has been made and there is not likely to be any dispute about the integrity of the disclosure.)

In any event, the question was not whether it was normal practice, but whether it was a direction which Vos J could properly have given. The ground on which the court was invited not to require personal signature by Prince Abdulaziz was that there was a Saudi Arabian protocol that members of the royal family should not become personally involved in any way in litigation. Vos J was sceptical as to the existence and applicability of this protocol, and the Supreme Court said that was unsurprising for a number of reasons. Given the very serious and bitterly disputed allegations, the doubts as to the alleged protocol and the fact that all other parties were being required to sign disclosure statements personally, Vos J's decision was "well within the generous margin accorded to case management decisions of first instance judges". The subsequent decisions refusing to vary Vos J's order and refusing relief from sanctions were, the Court said, similarly unassailable.

The Supreme Court also rejected the Prince's challenge to the lower court's decisions based on: general disproportionality; the strength of the Prince's case; and the fact that there would be a trial in any event.

Although there was "attraction" in the contention that preventing the Prince from defending a US$6 million claim was a disproportionate sanction where he appeared to have a substantive defence, that contention did not stand up on analysis. Lord Neuberger said:

"The importance of litigants obeying orders of court is self-evident. Once a court order is disobeyed, the imposition of a sanction is almost always inevitable if court orders are to continue to enjoy the respect which they ought to have. And, if persistence in the disobedience would lead to an unfair trial, it seems, at least in the absence of special circumstances, hard to quarrel with a sanction which prevents the party in breach from presenting (in the case of a claimant) or resisting (in the case of a defendant) the claim. And, if the disobedience continues notwithstanding the imposition of a sanction, the enforcement of the sanction is almost inevitable, essentially for the same reasons."

Here there were no special factors which would lead to a different conclusion. It was difficult, the Court said, to have sympathy with a litigant who had failed to comply with an unless order when the original order was in standard terms, the litigant had been given every opportunity to comply, he had failed to give a convincing explanation for the failure, and it was he who had (through a company of which he is a major shareholder) invoked the jurisdiction of the court in the first place.

The Court also rejected the Prince's contention that the strength of his case meant he should be permitted to defend the claim. The strength of a party's case on the ultimate merits of the proceedings is, the Court said, generally irrelevant when it comes to case management issues of this sort, save perhaps where the case is so strong as to entitle the party to summary judgment.

The Court recognised that, since the trial would go ahead between the remaining parties, the issue of whether the US$6 million had been paid might well be raised at the trial, and could be determined. However, it was inherent in entering default judgment against a defendant that the claimants would obtain judgment for relief to which it might subsequently be shown they were not entitled.