Elo Trustees Ltd v Bonhams 1793 Ltd & Anor

Factual and Procedural Background

The Appellant ("ETL") appealed an order by Judge Bagot QC dated 29 July 2022, which dismissed two applications by ETL made in May 2022. The first application sought relief from sanctions imposed by an earlier order ("the Foxton Order") dated 13 April 2022. The second application sought to set aside another order ("the McGowan Order") dated 5 May 2022. It was agreed that the second application depended entirely on the outcome of the first, making the sole issue whether ETL should be granted relief from sanctions.

Prior to these events, in 2016, a loan agreement was entered into between an individual ("Mr Elo") and the Second Defendant ("HNW"). Disputes led to a settlement in 2019, but proceedings for non-payment were initiated by HNW in 2020, resulting in a default judgment. A writ of control was issued to seize assets, including eight unique cars ("the Cars"), which were taken into possession by Marston, an enforcement entity.

Mr Elo applied to set aside the default judgment and for a stay of execution, but these applications were dismissed. The Cars were scheduled for auction by the First Defendant ("Bonhams"). ETL, a company controlled by Mr Elo, contended ownership of the Cars and filed an application to stay execution and have the Cars returned. This application was not issued or heard promptly.

Following various court orders and refusals of permission to appeal by Mr Elo, ETL applied ex parte for an injunction to stop Bonhams from auctioning the Cars; this was refused for lack of notice. ETL renewed the application on informal notice, leading to the Foxton Order granting an injunction and imposing strict procedural deadlines on ETL to issue a claim form, serve it, and file evidence. Failure to comply would result in sanctions including debarment from relying on evidence of title and declarations favoring the Defendants.

ETL failed to comply with the Foxton Order deadlines: the claim form was issued late, served late and improperly, and evidence was served late and not on all Defendants. ETL applied for relief from sanctions without notifying the Defendants initially. Bonhams applied for confirmation of sanctions, resulting in the McGowan Order. ETL later applied to set aside the McGowan Order. The appeal concerns whether relief from sanctions should be granted.

Legal Issues Presented

1. Whether ETL should be granted relief from sanctions imposed for non-compliance with the Foxton Order.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court applied the Denton three-stage test to ETL's failure to comply with the Foxton Order deadlines. At stage one, the court found the breaches were serious and significant because the orders were peremptory with clear, tight deadlines and the delays were measured in days, not hours, disrupting the court's timetable.

At stage two, the court found no good reason for ETL's defaults. The delay in issuing the claim form was partly due to ETL's failure to anticipate court queries about the unusual name of the signatory and incorrect fee details. ETL also failed to chase the court or seek extensions or consent from the Defendants for late service. The court rejected the argument that the delay was due to the court's delay in issuing the claim form, emphasizing ETL's responsibility to manage the process prudently.

Regarding service of evidence, the court noted that ETL had sufficient time and prior evidence available, yet failed to serve it timely or seek extensions. The only reason identified, the signatory's residence in a different time zone, was not accepted as a good reason. ETL also failed to notify Defendants promptly of its application for relief from sanctions, resulting in the Defendants applying for sanctions without knowledge of ETL's application.

At stage three, the court emphasized the importance of strict compliance with peremptory orders and found ETL's approach reckless and relaxed. The court noted the prejudice to Defendants and the additional costs incurred. The court concluded that the sanctions were proportionate and that relief should be refused.

On appeal, the court found no material error in the judge's reasoning. The judge's findings on seriousness, lack of good reason, and promptness were upheld. Minor errors, such as reliance on failure to effect personal service of the claim form, did not undermine the overall conclusion. The appeal was dismissed.

Holding and Implications

The appeal was DISMISSED.

The court upheld the refusal of relief from sanctions against ETL for non-compliance with the Foxton Order. The direct effect is that ETL remains subject to the sanctions imposed, including debarment from relying on evidence of title and the ability of the Defendants to dispose of the Cars. No new legal precedent was established, and the decision reinforces the strict approach courts take towards compliance with peremptory orders and procedural deadlines.