FCA v Papadimitrakopoulos & Anor

MRS JUSTICE JOANNA SMITH:

1. This is an application to adjourn a strike out application issued by the First Defendant in November 2021 in respect of a claim brought against him by the Claimant (“the FCA”).

2. The background to the application is as follows: The FCA, issued a claim form against the First Defendant in December 2019 alleging various breaches of the Financial Services and Markets Act 2000 and/or the Financial Services Act 2012, including market abuse, false or misleading statements and dishonest concealment of information, between 2011 and 2015.

3. The First Defendant was at all material times the CEO of Globo Plc, a technology company. Globo Plc entered administration in November 2015. The FCA’s claim is also brought against the Second Defendant who is not involved in this application. The First Defendant has not yet served a Defence, and I understand there to have been significant delays in the progress of the action caused by reason of difficulties encountered with foreign service.

4. The strike out application alleges that the claim is an abuse of process pursuant to CPR 3.4(2)(b), and it is supported by a witness statement from Miss Hannah Raphael dated 15 November 2021. Miss Raphael’s statement explains that a witness statement relied upon by the FCA in seeking permission to serve the proceedings out of the jurisdiction, namely the first witness statement of Mr Anthony Williams dated 31 October 2019, makes clear the existence of a criminal investigation by the FCA, the fact that requests for Mutual Legal Assistance (or “MLA”) have been made in other jurisdictions in respect of those criminal investigations and that the FCA is seeking to deploy and use material gathered in this way for the purposes of its civil claim.

5. Miss Raphael’s statement says that, absent consent for the collateral use of material obtained through MLA, the civil claim is an abuse because it involves a breach of section 9(2) of the Crime (International Co-Operation) Act 2003 (“the 2003 Act”), which provides that evidence obtained from other countries in respect of criminal proceedings and criminal investigations via MLA “may not without the consent of the appropriate overseas authority be used for any purpose other than that specified in the request”.

6. By a third witness statement served by Mr Williams on 24 May 2022 (“Williams 3”), the FCA opposed the strike out application on the grounds that it has not used MLA material to bring civil proceedings. The First Defendant says that Williams 3 has referred to documents, including legal advice, which the FCA must now disclose.

7. In circumstances where the FCA has refused disclosure, the First Defendant issued an application on 24 June 2022 seeking first, the adjournment of the strike out application listed to be heard between the 19th and 21 July 2022 and second, disclosure of the documents mentioned in Williams

3.

8. The matter now comes before me in the interim applications list at the behest of Chief ICC Judge Briggs to deal only with the application to adjourn the strike out application although, on reflection, as I remarked to the parties during the course of the hearing, it might possibly have been better if I had been asked to deal with the disclosure application.

9. The First Defendant says that an adjournment is necessary because it is clear from Williams 3 that documents have not been disclosed which are required to ensure a fair hearing of the strike out application. He says that the disclosure application is plainly arguable, which I accept, and that it needs to be resolved prior to the hearing of the strike out application.

10. Mr Power, acting on behalf of the First Defendant, made three main points before me in support of the application to adjourn the strike out application.

11. First, that hearing the disclosure application and the strike out application together (as appears to have been contemplated) is, in his submission, unworkable. He identifies the fact that the strike out is listed for a day, that the disclosure application is complex and will take, in his submission, at least half a day, and that (assuming the disclosure application is dealt with first) there will then be insufficient time to deal with the strike out application. Mr Power makes the point that the documents sought are plainly relevant to the strike out application because they are relied upon in the witness statement opposing that application. He says that the court must “grasp the nettle” and hear the disclosure application first and he contends that is the only workable way to proceed.

12. Second, Mr Power says that it would be unfair to the First Defendant for the strike out and disclosure applications to be heard together. In particular, he says it would be unfair to rush the strike out application to court for a hearing with insufficient time to deal with it. He says that the FCA’s suggestion that the Judge at the hearing of both applications could decide how to address the issues, creates confusion and unfairness. He suggests that the FCA is seeking to curtail a proper consideration of the issues arising on the strike out application. He also submits that it would be unfair for the Judge at the strike out application not to have sight of potentially relevant documents.

13. Third, Mr Power submits that there will be a waste of resources if the strike out is not adjourned now, the reason being that otherwise the parties and the court will have to prepare for a contested hearing of both applications. Mr Power accepts that the Judge on the hearing of the disclosure application will need to have an understanding of the issues arising in the strike out application, but he says that, nevertheless, listing both applications to be heard together is likely to waste resources. Having regard to the test in CPR 3.1(b), Mr Power says that hearing the applications together would not be consistent with the overriding objective.

14. Mr George QC, for the FCA, makes the following main points in response.

15. First, he says that there has been a significant delay since the strike out application was issued and that adjournment of the strike out application will only create further delay in these proceedings.

16. Second, he points out that for the purposes of the strike out application, there is a very narrow issue of statutory construction between the parties in respect of which the disclosure sought is unlikely to be relevant. That issue of statutory construction focusses on the issue of the “use” of MLA documents and, more particularly, what is meant by the word “use” in the context of section 9(2) of the 2003 Act.

17. Mr George does not say that disclosure should be dealt with first at the hearing of both applications, and nor does he say that it should not be dealt with at all, but he suggests that the Judge at the hearing of both applications should be left to consider the competing issues and submissions of statutory construction, always bearing in mind the existence of the disclosure application, and that it would only be if the Judge thinks that the disclosure goes to the issues in the strike out application that he or she would need to make any order on the disclosure application.

18. In the course of submitting that the test for disclosure is now set out in the Disclosure Pilot at paragraph 21 of PD51U, and that disclosure of a document mentioned in a statement will only be ordered if the court is satisfied it is “reasonable and proportionate” to make the order, Mr George referred me to the decision of his Honour Judge Pelling QC in Michael Wilson and Partners Limited v Emmott [2022] EWHC 730 (Comm). At [11] the learned judge observed that, in the context of a strike out application, the assessment of reasonableness and proportionality may require a more focused and acute consideration than would otherwise be appropriate.

19. Third, Mr George submits that the First Defendant’s case on the strike out application has changed since it was first issued. He submits that there is no suggestion in the original statement of Miss Raphael that disclosure of any MLA documents is required in order to support the strike out application. He says that there is nothing in Miss Raphael’s statement about the need for information barriers, a point only now relied upon by Mr Power in his skeleton argument and submissions at this hearing in connection with the argument on statutory construction.

20. Fourth, Mr George submits that the disclosure application concerns an unfocussed collection of requests, all triggered by alleged references to documents in Williams

3. Mr George took me through the six requests for disclosure that are made by the First Defendant, submitting that many, or all, of them could not be said to be relevant to the strike out application, or that they could only be relevant on a very narrow basis.

21. Fifth, Mr George says that there would not be a vast saving of time and cost by reason of adjourning the matter. He says that the two applications are inextricably linked, that the parties will have to do work on the strike out application in any event in order to prepare for the disclosure application. He also points out that if I were to vacate the hearing of the strike out application, there is a real risk that the disclosure application will be dismissed and the strike out will have been adjourned needlessly.

22. It was common ground that the legal principles to be applied on this application for an adjournment appear in CPR 3.1(b) which provides a wide discretion to the court to adjourn or bring forward a hearing. In determining whether to grant an adjournment the court must have regard to the overriding objective. This means that the court should have regard, inter alia, to the need (1) to save expense; (2) to deal with the case in a way which is proportionate to its importance, value, and complexity; (3) to ensure that the case is dealt with expeditiously and fairly; and (4) to allocate to it an appropriate share of the court’s resources.

23. I have not found this a straightforward application and both sides have argued the position persuasively, but on balance, having regard to the overriding objective and CPR 3.1(b), I have decided that I am going to adjourn the strike out application. My reasons are as follows: (1) I cannot decide the merits of the disclosure application today, but on its face I accept that there is plainly potential for the documents sought to be relevant to the strike out application. As Mr Power said in his submissions, they are not necessary for the purposes of the strike out application but they may well strengthen his client’s position; (2) The fact that the documents have potential to be relevant was illustrated, in my judgment, by a discussion that occurred during the course of submissions as to the possibility that the narrow question of statutory construction identified by Mr George could be dealt with as a preliminary issue. It became clear that it was common ground that any such preliminary issue would not resolve the strike out application, and that there would remain issues around, for example, whether the FCA’s conduct has in fact amounted to an abuse. I consider that the documents sought by the First Defendant may well be relevant to that question; (3) As a matter of case management, I am not attracted to the idea that the court will be left in a position where it has two applications before it which could not both be heard in the allotted time, and where one of those applications might impact on the efficacy of hearing the other. If the Judge were to decide (on Mr George’s proposed approach) that disclosure was likely to be relevant and should be provided, the strike out application would have to be adjourned in any event. Far better in my judgment from the point of view of resources to understand the issue that must be dealt with by the court at the hearing next week and to have the time in which to deal with it; (4) I accept that the consequence of my decision will be to delay yet further the hearing of the strike out application. However, I consider it to be in the interests of justice to do so. This is a substantial, complex and serious case and the issue at stake in the strike out application (if it is pursued) may end up in the Court of Appeal or beyond. In the circumstances I consider it to be proportionate and reasonable to ensure that an application for disclosure which may result in relevant evidence being available to the court at the hearing of the strike out application be heard first. I note that this appears originally to have been a stance adopted by the FCA also, as is apparent from paragraph 3 of written submissions made to the court on 30 June 2022. (5) Whilst I also accept that the consequences of my decision might be to increase expense, I consider this point to be marginal given the potential for the Judge on hearing both applications together to adjourn the strike out application in any event. (6) It is true that the Judge hearing the disclosure application will need to understand the nature of the strike out application, but I do not regard the fact that there is obvious linkage between the two applications to detract from the need to ensure sensible and efficient case management. I also do not consider that my decision in any way cuts across that of his Honour Judge Pelling QC in Wilson v Emmott. The extra focus required in considering disclosure where there is a strike out application on foot can be applied by the Judge at the hearing of the disclosure application. (7) Finally, insofar as Mr George submits that the First Defendant’s strike out application has changed, and that it did not originally require disclosure, I accept Mr Power’s submission that the First Defendant is not in a position to know what course the FCA took in preparing for the civil proceedings, and that the witness statement of Miss Raphael, whilst suggesting that there has been specific deployment of MLA material, also refers to “use” of that material in more general terms. Given the content of Williams 3, it is unsurprising that the emphasis has changed and in my judgment this point does not affect the exercise of my discretion in making this purely case management decision.

24. For all those reasons, the disclosure application will be heard next week with a time estimate of one day. The strike out application will be re-listed, also with a time estimate of one day. ————— This transcript has been approved by the Judge