Court of Appeal clarifies when a party in breach of a court rule or order must apply for relief from sanctions

The Court of Appeal has found that a claimant did not need relief from sanctions under CPR 3.9 where it made a late application for permission to rely on additional expert evidence. This contrasts with the position for witnesses of fact, where the rules contain an express sanction for failing to serve a witness statement on time, and therefore relief from sanctions is required if a party wants to call a witness whose statement was served late: Yess (A) Electrical Ltd v Warren [2024] EWCA Civ 14.

In a number of cases, the courts have held that sanctions should be implied for breach of certain court rules and orders where there is no express sanction, so that parties in breach must apply for relief from sanctions under CPR 3.9 and the three-stage test set out in Denton (outlined here) applies. It has, however, been far from clear how far this principle extends, and when the court will (or will not) imply a sanction where a rule or court order is silent. The Court of Appeal’s judgment in this case is therefore welcome in suggesting that the courts will be hesitant to expand the principle beyond the two examples identified in the case law to date, namely the failure to file a notice of appeal or a respondent’s notice on time.

Nonetheless, the decision makes it clear that, even where there is no need for relief from sanctions, the court will still exercise its case management powers to further the overriding objective of dealing with cases justly and at proportionate cost. This includes an emphasis on compliance and the need to conduct litigation efficiently, which means the courts have become less tolerant of delays than previously. Parties should therefore be mindful of the risks of seeking late permission to take a step in the proceedings regardless of whether the application is one to which the relief from sanctions regime applies. Continue reading

Late amendments to statements of case: helpful guidance from the Court of Appeal

A recent Court of Appeal decision clarifies how the court should exercise its discretion in considering an application to amend that is brought late, but not very late in the sense that the amendment would cause loss of the trial date: CNM Estates (Tolworth Tower) Ltd v Carvill-Biggs [2023] EWCA Civ 480.

The decision emphasises that, so long as the proposed amended case has a real prospect of success, the perceived strength or weakness of the case should not be taken into account in balancing the respective interests of the applicant and other parties and litigants more generally. The court should not conduct a mini-trial. In practice, however, it may not always be clear to a court whether a claim has overcome the “real prospect of success” hurdle, as illustrated by the dissenting judgment in this case.

The Court of Appeal also had to consider whether the claimant was in breach of an “unless order” and therefore required relief from sanctions to proceed with its case. The decision illustrates the importance of precise drafting in a court order, and particularly an unless order, to ensure that it is clear whether a party has failed to comply with it. Continue reading

Court of Appeal decision highlights dangers of filing claim form electronically on final day for service

The Court of Appeal has held that service of unsealed claim forms did not amount to effective service, and has refused to validate service under CPR 3.10, which allows the court to remedy errors of procedure: Ideal Shopping Direct Limited v Mastercard Incorporated and Visa Europe Limited [2022] EWCA Civ 14.

A claim form filed electronically under the Electronic Working Pilot (which is compulsory for represented parties in a number of courts, including the Business and Property Courts) is not sealed until the document is accepted by the court, and that may not be until the next day or later. A claimant with a deadline for service on the day of filing may therefore be unable to serve a sealed copy of the claim form that day. As the court has held that serving an unsealed claim form is not sufficient, a claimant in that position may find that no effective service can take place.

A claimant who is coming up against a deadline for service should therefore file electronically in sufficient time to allow for any delay before the claim form is sealed. If this will not be possible, the claimant should seek an extension of time from the defendant or, failing that, the court. Continue reading

High Court finds defendant submitted to the jurisdiction by applying for extension of time to serve defence

The High Court has held that a defendant submitted to the jurisdiction of the English court by applying for an extension of time for service of a defence, in circumstances where it had indicated an intention to defend the proceedings in an acknowledgement of service and had not reserved its rights to challenge jurisdiction: Aelf MSN 242, LLC (a Puerto Rico limited liability company) v De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways [2021] EWHC 3482 (Comm).

Recent cases have tended to find that there has been no submission, even where defendants have taken part in some way in proceedings (see for example our posts here and here), but this case is a reminder that the court may decide there has been a submission if an unequivocal step has been taken which cannot be interpreted as consistent with a challenge to the jurisdiction, particularly where there has been no reservation of rights.

The decision underlines the importance of reserving the right to challenge jurisdiction and taking no steps in the proceedings whenever a challenge is being considered, whether that challenge will be on the basis that the court has no jurisdiction under conflict of laws rules (or should not exercise any jurisdiction it has) or, as in this case, on the basis that proceedings have not been served correctly. Continue reading

Court of Appeal refuses extension of time to plead dates of damage in claims arising out of oil spill, meaning some 28,000 claims cannot proceed

The Court of Appeal has dismissed an appeal against a High Court decision refusing to grant the claimants further time to serve “date of damage pleadings” identifying when they say their cause of action accrued. The result is that the vast majority of the claims in the action, arising out of a 2011 oil spill off the coast of Nigeria, will not be able to proceed: Jalla v Shell International Trading [2021] EWCA Civ 1559.

The decision illustrates the dangers of waiting until the final day for complying with a deadline before applying for an extension of time, particularly where the deadline relates to an essential step in the case. In such circumstances, while the court will will take into account the consequences of refusing the application in deciding whether to exercise its discretion to extend time, the fact that those consequences may be draconian will not in itself guarantee a positive outcome to the application.

The decision is also of interest for the view that the court should apply, by analogy, the rigorous approach the courts adopt in considering whether to grant a party relief from sanctions, ie the three-stage test set out in Denton v TH White Ltd [2014] EWCA Civ 906 (considered here) as to (i) whether the failure to comply with the deadline was serious or significant, (ii) whether there was a good reason for it, and (iii) whether in all the circumstances it is appropriate to grant relief, bearing in mind the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance with court rules and orders.

Previous case law had shown that the courts will generally adopt that approach where a party applies for a retrospective extension of a deadline that has already expired. This shows that the same approach may be adopted, in some circumstances, even where the application is made in time. Continue reading

High Court refuses to validate defective service where claim form sent to wrong email address

The High Court has held that there was no good reason to validate service retrospectively, or extend time for service, where the claimant’s solicitors had purported to serve the claim form by emailing an unsealed copy to the correct address but the sealed copy to incorrect addresses: R. (on the application of The Good Law Project) v Secretary of State for Health and Social Care [2021] EWHC 1782 (TCC).

The defendant had agreed to accept service by email to a specified email address. The claimant had sent a copy of the unsealed claim form to that address shortly before it was issued, but subsequently sent the sealed claim form only to the email addresses of the individuals dealing with the matter.

The court held that it had no power to order that sending the unsealed document constituted valid service, using its powers to rectify procedural irregularities. It also found that there was no good reason to hold that sending the sealed claim form to the other email addresses should be authorised as an alternative method of service, or to grant a retrospective extension of time for service.

The decision highlights the strict approach the court takes to the rules governing service of the claim form. The need for a “bright line rule” identifying the exact point at which service takes place means that the court will not necessarily exercise its power to validate irregular service simply because it can be shown that the actions taken did bring the contents of the claim to the defendant’s attention.

The outcome can be contrasted with another recent case where a document served by email was sent to the wrong email address – but in that case was instantaneously auto-forwarded to the right address (Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] EWHC 1205 (QB)). The court held that that was invalid service but was prepared to validate service retrospectively. However, the document in that case was a notice of commencement of detailed assessment proceedings rather than a claim form, and the court approached the application on the basis that “the particular considerations engaged by applications relating to the service of originating process” did not apply.

At a time when it is becoming increasingly common for defendants to agree to accept service by email, the Good Law Project decision is a reminder that the apparent informality of that mode of communication should not distract from the fact that it is still crucial to comply strictly with the rules, including which email address to use.

The decision is subject to an appeal to the Court of Appeal, which is due to be heard by the end of October 2022. Continue reading

High Court refuses to admit late witness evidence, applying principles for applications for relief from sanctions

In a recent decision, the High Court held that an application to admit witness evidence which had been filed and served late should be treated like an application for relief from sanctions under CPR 3.9: Wolf Rock (Cornwall) Ltd v Langhelle [2020] EWHC 2500 (Ch).

The courts have previously implied sanctions into various rules and orders which contain no express sanction. In such cases, applications for relief from the consequences of a failure to comply with the relevant rule or order are subject to the provisions of CPR 3.9 and the relatively strict approach set down by the Denton/Mitchell principles (outlined here).

In the present case, the court held that the ”obvious inference” in relation to an order that evidence should be filed and served by a certain time was that evidence filed and served late would not be admitted, except with the permission of the court. As such, although the order contained no express sanction, the consequence of non-compliance was the same as if there had been a sanction (ie that late evidence would not be admitted). As a result, there were good policy reasons for treating the application to admit the late evidence in the same way as any other application for relief from sanctions.

This decision follows similar decisions by the Court of Appeal in relation to late applications for an extension of time for the filing of an appellant’s notice (Sayers v Clarke Walker [2002] EWCA Civ 645) and for the filing of a respondent’s notice (Altomart Ltd v Salford Estates (No 2) Ltd [2015] 1 WLR 1825, which we considered here).

The decision is of particular interest in suggesting that the courts may imply a sanction, for policy reasons, even where it cannot be said that the unexpressed intention of the rule-maker or judge was to impose a sanction for breach – essentially, the judgment suggests, a sanction may be implied where the courts consider the consequence of non-compliance to equivalent to an express sanction. However, there remains a lack of clarity as to exactly when that will be the case. Continue reading

Split trials, supplemental statements and the need for relief from sanctions

The judgment from the pre-trial review in the long-running Tesco Litigation (a securities class action) has illustrated the need for clarity as to the issues to be dealt with, and the evidence needed, in each stage of a split trial, as well as the need for relief from sanctions where a party seeks to serve supplemental statements after the deadline for exchange of witness evidence has passed: Manning & Napier Fund, Inc & Anor v Tesco Plc [2020] EWHC 2106 (Ch).

In this case, the claimants only belatedly appreciated that issues of reliance and causation relating to their lost profits claim were to be dealt with in the first trial in the action, and accordingly sought to serve supplemental witness statements addressing those issues long after the deadline for exchange of witness evidence had passed. As a result, the court said, the claimants had to satisfy the requirements for the grant of relief from sanctions, which the court described as “a considerable hurdle to surmount so late in the day”.

The case serves as a reminder that, where a party seeks retrospective permission to file witness evidence out of time, the courts will apply the same rigorous approach as they do to an application for relief from sanctions – applying R (Hysaj) v Secretary of State for the Home Department [2015] 1 WLR 2472 (considered here) and the three-stage approach to application for relief from sanctions established in Denton v TH White Ltd [2014] 1 WLR 3926 (considered here).

In this case, the court considered the breach to be serious and significant, and while the error was “readily understandable” it did not amount to a good reason for the breach. Overall, and despite the court’s reluctance to make an order which could deprive the claimants of the chance to obtain full recovery, the court held that the application for relief from sanctions should be refused (and therefore the supplemental evidence not admitted) unless the claimants provided sufficient disclosure in support of the claim by 14 August and the resulting extra work for Tesco in processing the disclosure was fairly and proportionately manageable, bearing in mind the need to prepare for trial.

For more information on the case, and in particular the implications of decisions relating to split trials in securities class actions, see this post on our Banking Litigation Notes blog.

 

Recent decision suggests sanctions should only rarely be implied into court rules and orders where not expressly stated

In a recent decision, the Chief Master found that an order requiring a defendant to make any application for strike out by a certain time did not contain an implied sanction. Therefore, the defendant’s retrospective application for an extension of time did not fall to be decided under the strict regime which applies to applications for relief from sanctions: Djurberg v London Borough of Richmond [2019] EWHC 3342 (Ch).

The courts have previously held that sanctions should be implied into certain court rules and orders which do not contain express sanctions – for example where a party sought to file a notice of appeal or respondent’s notice after the relevant deadline had passed (see our blog posts here and here). This has meant that parties in breach of these rules and orders have had to apply for relief from sanctions under CPR 3.9, and the three-stage test established in Denton v TH White Ltd [2014] EWCA Civ 906 (outlined here) has applied. What has been less than clear, however, is how far this principle extends, and when the court will (or will not) imply a sanction into a rule or court order which is silent on the point.

In the present case, in declining to imply a sanction, the Chief Master commented that, in general, sanctions should not be implied unless it is obvious that a sanction was intended. This may provide some comfort to litigants as it suggests that the courts are likely to exercise restraint in implying sanctions for breach of rules and court orders. However, given the continued lack of a clear test as to when a sanction may be implied, this remains an obvious area of risk.

Alex O’Connell-Danes, an associate in the disputes team, considers the decision further below. Continue reading

Inadequate explanation, no relief: A reminder of the potential tough consequences of failing to comply with a court order

The High Court has refused an application for relief from sanctions in relation to a failure to comply with an unless order for the payment of costs arising from a failed interlocutory application: Consult II SRO v Shire Warwick Lewis Capital Ltd [2019] EWHC 286 (Comm).

In refusing to provide relief from sanctions, the court has provided a timely reminder of the need for a party seeking relief to provide detailed and cogent evidence as to why the relevant failure has occurred. Where the breach is a failure to pay a costs order, and the applicant seeks to rely on an inability to pay, the court will expect full and frank disclosure of the applicant’s financial position, including the prospects of raising the necessary funds.

It is worth noting in particular the court’s comment that the standard of evidence required to explain a failure to comply, on an application for relief from sanctions, should be no lower than the standard expected when the court decides whether to impose a sanction in the first place.

Alex Sharples, a senior associate in our disputes team, outlines the decision below. Continue reading