Eleventh hour adjournment applications

The substantive claim was pursued by members of the BHS group and its liquidators, following the collapse of the BHS group of companies. The application reported on by CYK and LexisNexis was to adjourn the trial of Mr Chappell. It raised interesting questions concerning how a court should approach an adjournment application made after a trial has begun, and the challenges that such applications present where an adjournment could have considerable consequences for other defendants.

The claim was brought against Mr Chappell and several other former directors for misfeasance and wrongful trading contrary to sections 212 and 214 of the Insolvency Act 1986. When the joint liquidators issued their Application Notice against Mr Chappell and other former directors under the Act on 11 December 2020, Mr Chappell was serving a sentence of imprisonment for HMRC offences.

The adjournment application

The trial began on 3 November 2023, with a six week time estimate.

Mr Chappell’s adjournment application was heard on 10 November 2023.

Appearing before Mr Justice Leech in the High Court, I argued that the trial of Mr Chappell ought to be adjourned as Mr Chappell’s circumstances had impeded him from preparing properly for it and would also prevent him from properly participating in it, giving rise to the risk of an unfair trial for him.

Mr Chappell was only released from prison on licence on 3 November 2023, the day that the trial against him began. Having been diagnosed with prostate cancer whilst in prison, Mr Chappell also had several appointments with specialists scheduled in November and December 2023 for the purposes of treatment.

Mr Chappell’s application was unusual for reason that:

• It sought only to adjourn the action against Mr Chappell, and not his co-defendants;
• If it succeeded, the Court would have to consider whether to sever the claims against Mr Chappell or to adjourn the trial for all;
• Mr Chappell’s co-defendants opposed any adjournment of the trial as against them, but did not oppose Mr Chappell’s application;
• The application was made and heard after the trial began, by which time Counsel for the liquidators as well as for the second and third respondents had made their opening statements, and Mr Justice Leech had heard the evidence in chief of one of the witnesses;
• Mr Chappell’s two previous requests for an adjournment had been denied.

The Application was opposed by the joint liquidators. Their Counsel sought to argue that the adjournment should be refused owing to a purported delay by Mr Chappell in making it, and also on the basis that Mr Chappell’s Points of Defence allegedly did not answer to the description of such and that Mr Chappell was therefore debarred from defending the claims made against him.

Mr Justice Leech was strongly opposed at the hearing to the suggestion that he should sever the proceedings against Mr Chappell due to concerns about the use of Court time and, more importantly, because any second trial would have to take place before a different judge and there was therefore a risk of inconsistent findings which would be contrary to the proper administration of justice.

The Court’s analysis

Relying on the authorities advanced at the hearing, including Fitzroy Robinson Ltd v Mentmore Towers Ltd (No 2) (2009) 128 Con LR 91, the Judge assessed Mr Chappell’s adjournment application by considering:

1. The parties’ conduct and the reason for the delays to Mr Chappell’s application and preparations for trial;
2. The extent to which the consequences of those delays can be overcome;
3. The extent to which a fair trial is jeopardised by the delays;
4. Specific matters affecting the trial (such as illness);
5. The consequences of an adjournment for the parties and the court.

When handing down judgment, having indicated that he would only have been prepared to grant a short adjournment of a week or two to enable Mr Chappell to get up to speed before continuing with the present trial, Mr Justice Leech agreed to grant Mr Chappell a longer adjournment and to sever the trial against him. On the issue of severing the trial, the Judge was satisfied that it was ultimately more convenient to sever the claims against Mr Chappell as:

1. The prejudice to the other parties if the present trial was adjourned was very significant;
2. There is a possibility the joint liquidators will not pursue the claims against Mr Chappell for commercial reasons, and if they do then it remains open to them to apply for summary judgment or to strike out Mr Chappell’s defence;
3. If Mr Chappell had not applied for an adjournment but had simply declined to participate in the trial, it would have been open to him to apply to set aside any judgment under CPR Part 39.3(5) anyway, albeit the burden of persuading the Court to set aside judgment would have been heavy.

Practical points arising from the matter

Mr Chappell’s application was highly unusual and fact specific. Nonetheless, several practical points arise from it, including that:

• Where an adjournment application flows from a party’s imprisonment, the nature and circumstances of such may be relevant to the merits of the application, although adjournment due to imprisonment will not be automatic. In Mr Justice Leech’s judgment, it was practically impossible for Mr Chappell to defend the proceedings whilst he was in prison [48];
• Imprisonment may be a relevant consideration when a party is facing sanctions for a failure to comply with the Civil Procedure Rules. In the instant matter, Counsel for the joint liquidators attempted to argue that Mr Chappell’s Points of Defence was not compliant with the “Contents of defence” requirements of CPR Part 16.5 and that Mr Chappell should therefore be debarred from defending the claims against him. However, Mr Justice Leech was of the opinion that “It would be very onerous indeed to impose a condition on a litigant in person that they are required not only to serve a statement of a case but also to comply with all of the requirements or rules of pleading in doing so” when it was known to the court when it made the unless order for Mr Chappell to file and serve a Points of Defence that Mr Chappell was in prison and that he was not legally represented [65]. Moreover, rule 16.5 prescribes its own remedy for a failure to comply with the rules of pleading, and does not prescribe that a defendant should be debarred from defending;
• The conduct of the parties will be relevant to questions regarding the ability of an imprisoned party to prepare for or participate in a trial. In the instant matter, the joint liquidators were criticised for failing to provide electronic disclosure to those seeking it on behalf of Mr Chappell while he was in prison [47];
• Medical evidence will be carefully scrutinised by the court, and the observations in Levy v Ellis-Carr [2012] EWHC 63 should be heeded by applicants accordingly [24]. Mr Justice Leech noted at para [27] of his judgment, referring to Fox v Graham Group Ltd, The Times, 3 August 2001 (Neuberger J), that there may be reasonable accommodations that can be made to enable effective participation of a litigant in a hearing;
• The costs consequences of an adjournment may be a very strong reason for granting no more than a brief adjournment [54], if an adjournment is contemplated by the Court. However, those same consequences may also justify that the aspects of a trial for which an adjournment is sought are severed and dealt with another time;
• When it comes to the question of severing a trial, the court has the power to divide proceedings. The test stated by the editors of the Supreme Court Practice (2023 ed) Vol 1 to do so, which Mr Justice Leech applied, is if their joinder into a single proceeding will lead to inconvenience [60];
• Concerns regarding a party’s ECHR Article 6 right to a fair trial may be relevant when considering an adjournment application, although given the Court’s findings in the instant matter it was unnecessary for it to consider the point separately [58].

Two further points of general application that arise from the matter, which are fairly obvious but are nonetheless important, are that:

• Applications should be made promptly and on the basis of sound reasoning. In the instant matter, Mr Justice Leech was satisfied that Mr Chappell’s application was not tactical and aimed to derail the trial [48], despite submissions on behalf of the joint liquidators’ that Mr Chappell’s conduct was “studied or tactical helplessness”;
• Parties should be careful not to waive their right to appear at trial, unlike the defendant in JSC BTA Bank v Ablyazov (No 9) [2013] 1 WLR 1845. Mr Justice Leech noted that Mr Chappell had consistently maintained that he wished to attend and to be heard [58].

The full text of the judgment is available on BAILII.

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Mr Joseph Curl KC and Mr Ryan Perkins (instructed by Jones Day) appeared on behalf of the Applicants.

Mr Paul Schwartfeger (instructed by New Media Law LLP) appeared on behalf of the First Respondent.

Ms Lexa Hilliard KC and Ms Rachael Earle (instructed by Bark & Co) appeared on behalf of the Second Respondent.

Mr Daniel Lightman KC, Ms Charlotte Beynon and Mr Tim Benham-Mirando (instructed by Olephant Solicitors) appeared on behalf of the Third Respondent.