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  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  EWCA Civ 645) and for the filing of a respondent’s notice (Altomart Ltd v Salford Estates (No 2) Ltd  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
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  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  1 WLR 2472 (considered here) and the three-stage approach to application for relief from sanctions established in Denton v TH White Ltd  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.
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  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  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
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  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
In a recent decision, the High Court has considered the proper approach to be taken in a second action where a previous action bringing the same claim has been struck out for failure to comply with an unless order: Davies v Carillion Energy Services Ltd  EWHC 3206 (QB).
In summary, where the first action was struck out as an abuse of process, or the conduct of the first action was otherwise inexcusable, the second action will be struck out as an abuse save in “very unusual circumstances”. Where the first action was struck out for a single failure to comply with an unless order, the claimant will not necessarily be debarred from pursuing a second action, even if the claimant failed to apply for relief from sanctions in the first action – though that may be relevant in considering whether the conduct of the first action was inexcusable.
Each case will turn on its facts. In this case, the court’s decision appears to have been influenced by some doubt regarding the basis on which the first action was struck out and the fact that the claimant was a litigant in person. Although the court accepted that being a litigant in person did not excuse failures to comply with the CPR or court orders, it was appropriate to make some allowance for lack of familiarity with the detailed rules, in this case relating to pleading. Continue reading
The High Court has penalised a claimant in costs for requiring the defendant to apply for relief from sanctions, where the defendant had relied on a letter from the court which (arguably) set out the wrong date for filing costs budgets: Freeborn v Marcal  EWHC 3046 (TCC).
The court emphasised that, following the court’s tougher approach to granting relief from sanctions established in Mitchell and Denton (as outlined here), it is extremely important for parties to ensure that they comply with the CPR. However, parties should not abuse this tougher approach. Parties need to consider whether it is proportionate and appropriate to require their opponent to make an application for relief from sanctions, or to oppose that application, in all the circumstances of the case.
This judgment is consistent with the warning in Denton that the courts are willing to penalise parties who try to hold their opponents to what the court sees as an overly strict approach to compliance with rules and court orders, and illustrates the fine balance litigating parties need to strike.
Laura Askew, an associate in our disputes team, outlines the decision below. Continue reading
Recent months have seen a number of decisions in which the English courts, both at first instance and on appeal, have re-emphasised the message that those who fail to comply with procedural rules should expect little sympathy, at least where they fail to take prompt steps to put matters right.
Over the past few years the courts have backed off from the excessively draconian approach seen immediately following the high-profile Mitchell decision in November 2013. This more measured approach was prompted in particular by the Court of Appeal's decision in Denton in July 2014 (considered here) which "clarified" the Mitchell guidelines.
However, since Denton we have continued to see cases which illustrate that the courts remain willing to take tough decisions against those who flout the rules. The decisions outlined below are consistent with that trend, and arguably mark an uptick in the frequency with which such decisions are being made in a wide variety of contexts. The obvious overall messages for litigating parties are:
- ensure compliance with rules and orders so far as possible;
- make an early application for more time where it appears a deadline cannot be met; and
- apply promptly for relief from any applicable sanction where things have gone wrong.
Lord Justice Jackson has delivered the leading judgment dismissing an appeal against imposition of the so-called "Mitchell" sanction where a party failed to file a costs budget when required to do so, so that he was treated as having filed a budget limited to court fees: Jamadar v Bradford Teaching Hospitals NHS Foundation Trust  EWCA Civ 1001.
Over the past couple of years the court's approach to procedural failings has eased off from the overly draconian approach taken in the aftermath of the high-profile Mitchell decision in November 2013, in particular in light of the Court of Appeal's "clarification" of the Mitchell guidance in its Denton decision in July 2014 (see post). There are fewer cases these days in which parties even attempt to take their opponents to task for minor breaches – in part because heavy costs sanctions may be imposed on those who seek to take unreasonable advantage of an opponent’s breach.
However, it is by no means plain sailing for those who fail to comply with court rules and orders. The present decision highlights the continued scope for tough decisions, and the appeal courts' reluctance to interfere with a lower court's decision in this area; here, Jackson LJ commented that other judges might have taken a more lenient view, but the judge made no error of principle and it was a decision he was entitled to reach within the ambit of his discretion.
The decision also acts as a reminder that costs budgets must be filed in time or a party risks facing serious restrictions on its recoverable costs. If in doubt as to whether a budget is required, the safe course is to assume that it is.
In case we were all in danger of thinking the courts' approach to breaches of rules and court orders had relaxed nearly to pre-Jackson levels of tolerance, two very recent Court of Appeal decisions act as a bit of a wake-up call. As these decisions show, there is clearly continuing scope for tough decisions against those who fail to comply, particularly where they do not make a prompt application for relief from sanction. The lesson for litigating parties is obvious.
In British Gas Trading Ltd v Oak Cash & Carry Ltd  EWCA Civ 153, the court dismissed a defendant's appeal against the strike-out of its defence resulting from a two-day delay in filing a listing questionnaire pursuant to an unless order. That means a default judgment entered against the defendant for some £200,000 will stand.
Significantly, Lord Justice Jackson (who gave the leading judgment) suggested that a prompt application for relief from sanctions would have been granted; however, the delay in applying for relief had led to substantial disruption in the progress of the action, in particular the loss of the trial date, and so it was not appropriate to grant relief.
In Gentry v Miller  EWCA Civ 141, the Court of Appeal held that the lower courts should have refused to set aside default judgment, where the defendant had delayed in making the application, despite evidence that the claim may have been fraudulent. This decision also highlights the fact that the Denton test for relief from sanctions (outlined here) applies equally to an application to set aside default judgment for failure to file an acknowledgement of service or defence.
The two decisions are considered in more detail below.
The Supreme Court has upheld the Court of Appeal’s decision overturning the grant of a second application for relief from sanctions for failure to comply with an unless order: Thevarajah v Riordan  UKSC 78 (and see our blog post on the Court of Appeal’s decision).
The second application for relief was, in substance, an application under CPR 3.1(7) to vary or set aside the previous order refusing relief. Therefore, applying established principles, it should not have been granted unless there had been a material change of circumstance since the previous order was made.
Interestingly, the Supreme Court commented that, even if CPR 3.1(7) did not apply, it would not normally be open to a party to ask for relief from sanction which required a previous interlocutory order to be varied or set aside unless there had been a material change of circumstance since the order was made. The impact of the Supreme Court’s decision may therefore extend more widely than to second applications for relief from sanctions.
In terms of what might amount to a material change of circumstance, the decision confirms that the mere fact an order has been complied with, albeit late, will not ordinarily be sufficient. However, the court did not rule out the possibility, particularly where late compliance is accompanied by an explanation as to why the party could only comply belatedly.