Practice and procedure – “Unless” order – Relief from sanctions – Defendant to money claim failing to comply with directions as to date for service of pre-trial checklist – “Unless” order made requiring compliance by revised date – Defence struck out for non-compliance with “unless” order – Judgment in default of defence granted to claimant – Application for relief from sanctions by reinstatement of defence – CPR 3.9 – Whether appropriate to grant relief – Whether original breach to be taken into account in assessing seriousness of non-compliance with “unless” order – Appeal dismissed
In February 2013, the claimant issued a claim against the defendant in the High Court to recover £200,000 said to be owed as payment for the supply of electricity. The defendant denied liability. In October 2013, following unsuccessful settlement negotiations, the action was transferred to the county court. In November 2013, the court issued various directions, including an order that the parties complete and return pre-trial checklist (PTC), as required by CPR 29.6, by a date in early February 2014. In January 2014, the court sent a standard form PTC to each parties with a notice reminding them of the date by which it had to be returned. The claimant returned the completed form by the required date but the defendant did not.
The court made an “unless” order, specifying another date for the filing of the defendant’s PTC, failing which its defence would automatically be struck out for non-compliance with court orders. The defendant eventually filed a PTC, which, however, was 18 days late by reference to the original order and two days late by reference to the “unless” order. The claimant obtained judgment in default of defence in the sum £211,388, including interest.
In late March 2014, the defendant applied for relief from sanctions pursuant to CPR 3.9, seeking to have its defence reinstated, although it omitted to apply to set aside the default judgment. The application was allowed in the county court after the judge found, applying the principles in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2014] 1 WLR 795, that the default was trivial and that there was a good reason for the non-compliance, which had occurred in part because the defendant’s solicitor was taking time off work to deal with his wife’s health issues and had entrusted the litigation to a trainee solicitor.
That decision was overturned by a High Court judge, who found that the breach was serious and significant and there was no good reason for it. The defendant appealed. An issue arose as to whether, in assessing the seriousness of non-compliance with an “unless” order, the court should have regard to original breach which had given rise to that order.
Held: The claim/appeal was allowed/dismissed.
When considering an application for relief from sanctions under CPR 3.9, the court should approach the matter in three stages; at the first stage, it should assess the seriousness or significance of the breach; at the second, it should determine whether there was good reason for the breach; and, if the breach was serious or significant and there was no good reason for it, then it should consider the third stage, which involved considering all the circumstances of the case, assigning particular weight to factors (a) and (b) set out in CPR 3.9, namely the need to enforce compliance with rules, practice directions and orders and the need for litigation to be conducted efficiently and at proportionate cost, and dealing justly with the application: Mitchell and Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926 applied.
At the first stage, when considering the seriousness of the breach, the court should ignore other unrelated, historic breaches and should assess only the breach in respect of which relief was sought; it should not find that the breach, although trivial, became serious as the “last straw” when set against a history of earlier failures: Denton applied.
However, an “unless” order did not stand on its own but would usually only be made against a party who was already in breach; the “unless” order gave additional time for compliance with the original obligation and specified an automatic sanction in default of compliance. Accordingly, a party who failed to comply with an “unless” order was normally in breach of an original order or rule as well. That being so, when assessing the seriousness and significance of a breach of an “unless” order the court had to look at the underlying breach. The breach to be assessed was the failure to carry out the obligation which was both imposed by the original order or rule and extended by the “unless” order. The court had to look at what the applicant for relief had failed to do in the first place, when assessing its failure to take advantage of the second chance which it was given by the “unless” order.
The very fact that an applicant had failed to comply with an “unless” order was a pointer towards seriousness and significance. It meant that the applicant was in breach of two successive obligations to do the same thing and also that the court had underlined the importance of doing that thing by specifying an automatic sanction in default. That being said, not every breach of an unless order was serious or significant.
The breach in the instant case could not be classified as anything other than serious and significant. The defendant’s solicitor had three months to comply with the original order as to PTC forms given in November 2013, but had not done so. It had not filed a PTC until two days after the expiry of the “unless” order. Nor was there a good reason for the non-compliance. The health problems of the solicitor with conduct of the case had been known for many months, and, given that he worked for a firm of significant size, that firm should have provided appropriate cover for his cases; it should also have provided appropriate supervision for the trainee solicitor dealing with the matter.
Had the defendant applied promptly for relief from sanctions, the court might nonetheless have been inclined to grant it at the third stage, since, as at late February 2014, the late filing of the PTC had not had any adverse impact on the smooth conduct of the action and CPR 3.9 did not require that a part be debarred a party from defending a £200,000 claim in those circumstances. However, the defendant had not made its application promptly and that was the critical factor which, when the delay was added to all the other factors, had the effect of substantially disrupting the progress of the action. Giving weight to factors (a) and (b) in CPR 3.9, the only conclusion that the court could reach at the third stage was that the application for relief should be refused.
Louis Weston (instructed by Bower & Bailey LLP, of Oxford) appeared for the appellant; Malcolm Birdling (instructed by Moon Beever) appeared for the respondent.
Sally Dobson, barrister
Click here to read a transcript of Oak Cash & Carry Ltd v British Gas Trading Ltd
