Judge warns of dangers of overloading interim applications

03/11/2008

The Court was due to hear the Claimants' application for summary judgment relating to an unpaid debt as well as the Defendants' application to set aside a world-wide freezing order obtained against them. The hearing was listed for three days and was during the Court's summer vacation.

The Claimants (sugar brokers) liquidated the positions of the Defendant (sugar traders), following the Defendants' failure to meet certain margin calls which had been made. A meeting was arranged between the brokers and dealers on 17 January 2008 - the day the margin calls were not met - at which it was agreed that the brokers would not unilaterally wind up those positions. Rather, they were to wait until a meeting scheduled for 18 January 2008, at which the possibility of a resolution could be explored. In the morning of 18 January 2008, and prior to the meeting scheduled for that day, the Claimants wound up the Defendants' positions in accordance with the customer agreement. The Claimants maintained that the Defendants owed the sum of over $22 million by March 2008 and in April 2008 obtained a freezing order (varied in May 2008) against the Defendant sin respect of those sums.

The Claimants' application for summary judgment or an interim payment in relation to the sums allegedly owed was, for practical purposes, listed to be heard at the same time as the Defendants' application to remove the world-wide freezing order. However the summary judgment application alone raised 21 issues, and the agreed list of pre-reading for the Judge was over 800 pages long. The Judge was neither able to complete the pre-reading nor hear many of the issues in the three days allocated for the application. Indeed the Judge was only able to dispose of two of the issues.

It was held that a binding oral agreement had been reached on 17 January 2008, which precluded any of the brokers, including the Claimants, from unilaterally liquidating the Defendants positions prior to the hearing on 18 January. The Claimants' application for summary judgment was dismissed on the basis that it had acted in breach of that agreement.

The Judge was not able to hear any submissions relating to the freezing order, and roundly criticised the parties - without pointing his finger at anyone in particular - for the excessive volume of material that was produced to be dealt with at the hearing. He was not able to properly comprehend all of the factual and legal issues in the time given for pre-reading, nor was it possible hear submissions on anything close to all the listed issues. He stated that "the moral of this procedural foul-up is that the parties must make sure that they do not overload hearings". He was unimpressed by the attempt to cram a huge number of issues into a relatively small application hearing and held that it stifled, rather than aided, the Court's ability to resolve the matters before it.

Further, and the Judge expressed concern that the lawyers involved in preparing the application had worked unduly hard, compromising both their own health and the quality of their work. He states: "I am sure that lawyers worked absurd hours in a vain attempt to try to do it, but that can hardly have increased the quality of their work." And further: "the hours worked in this case must have involved serious risks to the health and safety of those involved on both sides".

As well as the Judge's ruling in relation to the binding nature of the oral agreement between the brokers and the traders, practioners should be mindful not to overload interim applications, particularly with complex legal and factual issues.

[i](ED and F Commodity Advisers Limited and anor v. Fluxo-Cane Overseas Limited and anor [2008] ALLER (D) 99 (Sep))

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