2024i10, Wednesday: A (dis)order for examination.

[Note: this was published on our Chambers website last week. But since it was me who wrote it, it also belongs here. Apologies to those who've therefore been exposed to it twice.]

Civil courts can do lots of things. They decide whether a deal is really a deal. They tell people which parent they get to live with. They decide if someone’s been discriminated against, or wrongly kicked out of their job. Or if a public body has done its job right.

Mostly, though, they decide who owes whom - and how much. And when a court has decided someone owes you, you’re going to want them to pay up.

No surprise, then, that a sizeable chunk of the Civil Procedure Rules deals with how - if you’re a judgment creditor - you go about getting your money.

A lot of these provisions (found primarily in Parts 70 to 75) are highly prescriptive, and highly mechanical. There is discretion to be applied; justice is not an autonomic process, and every situation is different. But once a judgment debt exists, understandably - and arguably rightly - the primary focus is on how it should be paid off. Not whether.

As I’ve said, though, justice still needs to be done. The rules acknowledge that just because you’re a judgment debtor, that doesn’t mean you can be treated unfairly. Thus the prescriptive nature of many of these rules: the steps that must be taken by the creditor are designed to ensure fairness to the debtor, and a failure to take those steps properly or at all means a judgment creditor may have to go back to square one.

One such process is in Part 71, which is designed to surface the reality of a delinquent judgment debtor’s ability to pay. A creditor can ask for an order (an “examination order”) requiring the debtor to turn up to court at a specific date and time, and provide documentary evidence as to their means. A deliberate failure to turn up, or a refusal honestly to provide the information required, can be a contempt of court. And like other contempts of court, the result can be a committal to prison - albeit, invariably, with a “suspensory condition” giving the debtor a second chance to do the right thing and avoid the punishment.

Such orders are made every day, in courts all across England and Wales. It’s very rare that the contempt order is activated. Mostly, the debtor co-operates second time around.

But sometimes they don’t. Sometimes the order kicks in. Sometimes a warrant for their arrest and subsequent imprisonment is issued.

And sometimes the whole process goes off the rails.

Personal service: an “essential building block”

The case of Westrop v Harrath, in which I was fortunate enough to represent the successful appellant, Sam Westrop, is a good example.

The Court of Appeal heard Mr Westrop’s appeal on 19 December 2023 and - having indicated at the hearing that the appeal would be allowed - handed down judgment on 22 December. The judgment ([2023] EWCA Civ 1566) is an important one: as the Court made clear, there is a dearth of authority on Part 71, leaving both parties and courts in a state of ambiguity about how the detailed process needs to be followed - and what should (or indeed can) be done when it isn't. That is no longer the case, thanks to the judgment of Coulson LJ (with whom Lewison and Moylan LJJ agreed).

Mr Westrop, it should be admitted, owes Mohamed Ali Harrath a lot of money. He lost a defamation claim brought by Mr Harrath in 2016, and in early 2017 was found to be liable for more than £200,000 in damages and costs. (The exact sum owed is disputed; the fact of the judgment debt is not.) In early 2023, Mr Harrath decided to to use Part 71 to find out what resources Mr Westrop had, and two examination orders were made. Mr Harrath posted both the orders to an address in Shropshire owned by a relative of Mr Westrop’s. (Mr Westrop’s position is that he has never lived at that address, and moved permanently to the USA in late 2015; and that he never in fact received either of the orders.) At the second date appointed, following Mr Westrop’s failure to appear, the matter was passed to the High Court and on 11 August 2023 Lane J found Mr Westrop to be in contempt, committing him to jail for 21 days.

Upon hearing this news on 13 August - which elicited understandable surprise, not to say shock, since he hadn't even known of the orders till then - Mr Westrop engaged Marc Livingston of Janes Solicitors (one of the leading London law firms dealing with contempt matters) to help him appeal the contempt order, and Marc got me on board as counsel. The appeal wasn't entirely straightforward, not least because the contempt order's wording suggested that it was made after a hearing on 11 August at which Mr Harrath had appeared, and Mr Harrath hotly - and as it turned out entirely accurately - insisted he had done no such thing. It took more than a month to work out firstly that the order had been made without a hearing, and secondly just what papers had been before Lane J when he made the order (a process described pithily by Coulson LJ as having to “rootle around in documents… of necessity in the hands of others, in an attempt to work out on what material that order was based”). Only once all that had been established could our grounds of appeal be perfected.

Getting those papers turned out to be critical, because on examining them it was evident that not only had there been no personal service on Mr Westrop, but that none had been attempted by Mr Harrath; and thus that no affidavit of service was or could have been before Lane J when he made the contempt order.

Why was this critical? Because, as I submitted to the Court of Appeal, Part 71 works as a conveyor belt delivering a recalcitrant debtor who deliberately declines to co-operate to a finding of contempt - but it does so only if the proper procedural steps are followed. Foremost among these is the requirement in CPR r.71.3(1) for the examination order to be personally served on the debtor. That requirement's importance is underlined by the duty in r.71.5(1) on the creditor to provide the Court with a sworn affidavit (not just a certificate signed under a statement of truth) from the person who served the order explaining how and when service was achieved; and perhaps most importantly, by the condition in r.71.8(2) which permits a judge to whom an apparently recalcitrant debtor has been referred to find them in contempt only if the creditor has complied with r.71.5 and provided the affidavit.

Even more fundamentally, as Coulson LJ noted in paragraph 29 of his judgment, only a “person served with an order issued under [r.71.2]” is subject to the requirement in such an order to appear. Without personal service, or express permission from the court for alternative service at the time the order is made (as Coulson LJ put it at paragraph 28, this “cannot be retro-fitted after the event”), the order does not bite; and the requirement to appear does not activate.

This is perhaps the most immediately important point for creditors who want to make use of the Part 71 procedure. As Coulson LJ made clear also in paragraph 29, personal service is not “merely a technical requirement or some sort of meaningless tick-box process”. It is essential: because the debtor is facing possible committal it is “vital that they know, and the court is satisfied that they know, that their attendance at court is required on the date identified".

And just as essential is the affidavit of service. Not only does the lack of any such affidavit leave the Court without evidence on which it can safely find a deliberate refusal by the debtor to turn up (and the few authorities which do deal with Part 71 - in particular Broomleigh Housing Association Ltd v Okonkwo [2010] EWCA Civ 1113 - agree that deliberate refusal is what is required for contempt to be found). More fundamentally, as we argued and as the Court agreed, without an affidavit a court simply has no power under r.71.8(2) to make a contempt finding at all.

As Coulson LJ put it at paragraph 35, personal service and an affidavit proving it put in place the “essential building blocks” for a finding of contempt under r.71.8(2). Without them, such a finding is without foundation; as, said the Court of Appeal, was the case here.

Other essential procedural protections

If this was all the Court found, this judgment would still have provided a long-needed and useful clarification of how Part 71 is meant to work - and how, per Coulson LJ at paragraph 57, it “fairly balances the rights of the judgment creditor and the judgment debtor” so long (and only so long) as the former “complies with the detailed rules”.

However, the Court went further. It declined to rule on several other grounds of appeal under which we had sought to argue both that there were fundamental factual errors in Lane J’s decision and that in principle r.71.8 did not have extra-territorial jurisdiction, since these were not necessary to determine the matter. But three further grounds were of interest to the Court, and it found for Mr Westrop on one of them in full and one in part.

The one that failed was based on the misleading wording (so we submitted, and again so the Court agreed) of the contempt order, suggesting as it did that there had been a hearing when there had not. This was not enough in itself to justify allowing the appeal. But we also pointed out that when a court makes an order of its own volition without a hearing, r.3.3(5) requires such an order expressly to state that any party can apply to have it varied or set aside - not just to indicate the right to appeal it. We suggested this was just such an order and was enough for the appeal to succeed; and the Court of Appeal said so too.

As to the partial success, we had sought to argue that the explanations which potential contemnors must by right receive when a contempt summons is issued under Part 81 of the CPR (in particular under r.81.4) should apply to Part 71 as well. Coulson LJ concluded that they generally were, so long as the detailed provisions of Part 71 were complied with. But he agreed with us - and with Baz v Singapore Airlines, a Court of Appeal decision of 2017 which he described as “important” and quoted extensively, but is not only unreported but does not have a neutral citation number (the judgment is available to Westlaw subscribers, and is mentioned briefly at paragraph 71.8.1 of the White Book) - that the right to legal aid, and to be told of that right, was too significant to be overlooked.

The Court of Appeal therefore also found that any suspended committal order made under r.71.8 without a further hearing would be incomplete unless it included the following:

• A list of the documents considered by the judge in deciding that the failure to appear was intentional;
• A clear statement as to the right to apply to set aside, vary or stay the order under r.3.3(5); and
• A clear statement of the right of the judgment debtor to be legally represented (and to apply for legal aid) at the return date of the order.

Conclusion

As should be clear, Part 71 is an essentially mechanical process. But like any mechanism, it only works if all its parts are properly in place - and functioning as they should.

The Court of Appeal has now made clear what those essential elements are: both as to what a judgment creditor must do, and what judges faced with a contempt decision following a debtor’s failure to appear should look for - and make clear in any order. Read with Okonkwo and Baz in particular, this judgment means that the possibility of injustice in this process should now be substantially reduced.