As England enters its twelfth week of lockdown, we continue to see the impact of COVID-19 on jurisprudence. Recent Bulletins have covered the significant effect of COVID-19 on statute and case law. This week we are reminded that, even if a litigant has evidence of self-isolating due to COVID-19 in accordance with government guidelines, that is not (necessarily) the end of the story and the Court may still consider the substantive issues.
We are also reminded that the Court of Appeal, and indeed all levels of the judiciary, continue to hear cases and hand down significant judgments: our legal system marches on.
In this week’s Bulletin:
Alice Hawker considers recent case law concerning non-attendance whilst self-isolating; and
Barnaby Hope discusses recent Court of Appeal authority on pleading dishonesty.
Selborne Chambers remains open during this time. If you have any queries or requests in respect virtual meetings or instructing us during this time, please do not hesitate to contact a member of the clerking team on +44 (0)20 7420 9500.
Mark Warwick QC
Is non-attendance due to COVID-19 a good reason?
On 4 June 2020, Swift J sitting in the Queen’s Bench Division (Admin) heard the case of Agba v Luton Borough Council. Luton Borough Council (‘Luton BC’) had obtained liability orders against the applicant (‘X’) in respect of council tax and a bankruptcy order was made against X.
X applied to set aside the liability order, which was dismissed on the basis that she did not have standing as a bankrupt. X obtained a magistrates court order to state a case to the High Court for an appeal on the issue of her standing, however X did not attend the hearing on 19 March 2020 due to illness. X stated that she had been advised to self-isolate under COVID-19 guidelines. The Court heard the appeal in her absence and dismissed it.
Three questions arose: (1) whether X had acted promptly to set aside the order; (2) whether X had a good reason for not attending; (3) whether, if the order was set aside, she would have a reasonable prospect of success at a restored hearing. X had acted promptly.
Did X have a good reason for not attending? Luton BC argued that X could have instructed a lawyer to represent her at the hearing. However, the Court held that X had a good reason for non-attendance given the serious threat to health presented by COVID-19 at the time of the hearing. Although there was a theoretical possibility that X could have acted sooner to instruct a lawyer, there was a significant level of uncertainty as to how to act in mid-March 2020 and the test was not whether attendance was impossible.
On the facts of the case, X failed at the third question. The question of whether X had standing as a bankrupt to challenge liability orders was a pure question of law that had been correctly answered in the negative by the judge.
Points to consider in practice
If you are faced by an application to adjourn due to COVID-19, it would be worth considering:
- What evidence has the party produced to support their assertion that they have contracted COVID-19? The Court may be wary of bare assertions.
- If you are opposing an application for an adjournment, consider ways in which the Court can still proceed. Parties who are self-isolating may still be able to sign in for remote hearings.
- If the hearing is in person, the Court may be critical of a litigant who says that they cannot attend due to illness but decides not to instruct legal representatives, given the clearer and more stringent guidelines since mid-March 2020.
- Even if the party produces good evidence of COVID-19 and cannot attend either personally or by a representative, Agba v Luton Borough Council is a good example of a Court taking a robust and proportionate approach based on the litigant’s prospects of success.
What are the requirements for pleading dishonesty?
On 5 June 2020, the Court of Appeal (Arnold, Patten and David Richards LJJ) handed down judgment in Sofer v Swissindependent Trustees SA [2020] EWCA Civ 699. The lead judgment was given by Arnold LJ. It was an appeal against the striking out of C’s claim by HHJ Paul Matthews (sitting as a High Court Judge). This note concentrates on the Court’s guidance as to the pleading of dishonesty in statements of case.
Background
C was the son of a wealthy man (Hyman Sofer), who set up a number of complex trusts. D was trustee of the trusts. The trusts were set up by Hyman Sofer to benefit C and Mr Sofer’s daughter, Tamara.
It was common ground that, due to a trustee exoneration clause in the relevant trusts, C was required to establish a dishonest breach of trust in relation to transfers made by D to Hyman Sofer out of the trusts during his lifetime, which C said were, in brief terms, wrongly made and in contravention of the terms of the trusts.
D applied to strike out the Particulars of Claim on the basis that they disclosed no reasonable cause of action; C cross applied for permission to rely upon Amended Particulars of Claim, which, contrary to the original set, did expressly plead dishonestly.
At first instance, HHJ Matthews struck out the Claim and granted reverse summary judgment on the facts. Of relevance to this article, (Judge) held that dishonestly was not adequately pleaded in the draft APoC.
Decision
Arnold LJ set out the relevant principles in relation to pleading dishonesty and also statements of case generally:
“23 More important for the purposes of this appeal are the principles governing the pleading of dishonesty. There was little dispute as to these before either the Judge or us. They were summarised, in my judgment accurately, by counsel for the Claimant as follows:
- Fraud or dishonesty must be specifically alleged and sufficiently particularised, and will not be sufficiently particularised if the facts alleged are consistent with innocence: Three Rivers District Council v Governor and Company of the Bank of England (No.3) [2003] 2 AC 1.
- Dishonesty can be inferred from primary facts, provided that those primary facts are themselves pleaded. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be pleaded: Three Rivers at [186] (Lord Millett).
- The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence: JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm)at [20]-[23] (Flaux J, as he then was).
- Particulars of dishonesty must be read as a whole and in context: Walker v Stones [2001] QB 902 at 944B (Sir Christopher Slade).
24 To these principles there should be added the following general points about particulars
- The purpose of giving particulars is to allow the defendant to know the case he has to meet: Three Rivers at [185]-[186]; McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775at 793B (Lord Woolf MR).
- When giving particulars, no more than a concise statement of the facts relied upon is required: McPhilemy at 793B.
- Unless there is some obvious purpose to be served by fighting over the precise terms of a pleading, contests over their terms are to be discouraged: McPhilemy at 793D.”
Helpfully, at §32, Arnold LJ also commented that “where an allegation of dishonesty is made against a body corporate, it is necessary to plead the relevant state of knowledge of that body at the relevant time. I do not accept, however, that a mere failure to identify at the outset the directors, officers or employees who had that knowledge means that such an allegation is liable to be struck out without further ado. Clearly such particulars should be given as soon as is feasible, and there may be situations in which the claimant’s unwillingness or inability to give such particulars when requested to do so justifies striking out; but that is another matter.”
Whilst the Court was somewhat critical of the form of the proposed ApoC, it held that it did sufficiently set out the particulars to support a claim of dishonesty in accordance with Fattal v Wallbrook Trustees (Jersey ) Ltd [2010] EWHC 2767 (Ch) at [81]. As such, permission was given to amend in accordance with Arnold LJ’s view at §18 that if the proposed pleading “…sets out a non-strikable claim the Claimant should be given permission to make the necessary amendments.”
Aside from this ruling, the Court then reversed the Judge’s decision on summary judgment. This makes interesting reading in relation to estoppel but is a fact-specific analysis.
Discussion
It is relatively rare to get helpful guidance on pleading statements of case from the Court of Appeal. Practitioners often face a tortuous decision between risking leaving something out, or over-pleading and being criticised for doing so (the Court of Appeal has not shied away from this in recent years).
The Sofer decision therefore provides comfort to those pleading dishonesty. Provided the guidance at §23 and 24 is adhered to, it is likely that criticisms of the pleading for lack of detail can be overcome, which is a welcome outcome given that pleading dishonesty often relies upon inference.
Lastly, the general guidance at §24, particularly (b), is very helpful. The “less is more” approach is to be welcomed, as tempting as it might be to include everything that conceivably might be relevant.