The ECRO Application was made within insolvency proceedings commenced by the Respondent to set aside a statutory demand served on him by the Applicant. It also concerned related proceedings in the County Court at Central London involving the same parties.
Dawn had recently defeated an application by the Respondent within the insolvency proceedings, to commit to prison the directors of the Applicant company, together with two partners from the solicitors’ firm acting for the Applicant (the “Committal Application”)  EWHC 765 (Ch). You can read our previous coverage of the case here.
The ECRO Application was heard before Mr Justice Zacaroli. Following extensive submissions by both parties, the learned Judge concluded that the Respondent had made seven applications during the period September 2019 to May 2020 that were ‘totally without merit’.
Three of the seven applications had been certified as such by the relevant judge, including the Committal Application. In addition, Mr Justice Zacaroli accepted the court could conclude that four other applications were also totally without merit, albeit they had not been so certified [Ghassemian Hamila Sartipy v Tigris Industries Inc  EWCA Civ 225].
The learned Judge took account of the following matters, in considering whether this amounted to ‘persistence’, as required by paragraph 3.1 of PD 3C:
- The relatively small timescale within which the seven applications were made.
- These applications included repeated attempts to re-open both the question whether the statutory demands should be set aside and the question whether the Applicant should have permission to amend its defence.
- There had been four separate occasions when the Respondent had sought to commit directors of the Applicant and/or its solicitors to prison.
The learned Judge confirmed that it was also appropriate to take into account the further requests for relief made by the Respondent, in his evidence and skeleton argument.
Mr Justice Zacaroli rejected all five reasons provided by the Respondent as to why the court should not make an ECRO, including the following:
- Persistence should be measured as a percentage of the overall applications which had been made. This was not the correct approach.
- As the Application had been issued within the insolvency proceedings, the court could only able to take into account applications made within those proceedings. The Judge confirmed that there was nothing in the language of the PD to suggest this and referred to the extensive nature of an ECRO.
- An ECRO would serve no purpose since the County Court proceedings had already been docketed to a Circuit Judge and all correspondence in relation to those proceedings was to be sent to her. The Judge confirmed this was not the same as the supervision carried out by the ECRO.
In considering the seven instances of applications that were totally without merit as a whole, Mr Justice Zacaroli confirmed that he was satisfied they demonstrated a degree of persistence which justified the make of an ECRO (covering the High Court and the County Courts).