MITCHELL CONSIDERED BY THE COURT OF APPEAL FOR A THIRD TIME: ANOTHER TWIST IN THE THEVARAJAH TALE

In the case heard today of Thevarajah –v- Riordan [2014] EWCA Civ 15the Court of Appeal reiterated the rigorous nature of the Mitchell test.  Here we look at that decision in detail and the trenchant observations made by the Court.

THE THEVARAJAH CASE

This case has been considered on this blog before.

1. Firstly when the original application for relief from sanctions was considered and refused http://civillitigationbrief.wordpress.com/2013/08/13/relief-from-sanctions-a-case-where-relief-was-refused/

2. When a second application for relief from sanctions was granted by a different judge, see http://civillitigationbrief.wordpress.com/2013/10/15/412/ and http://civillitigationbrief.wordpress.com/2013/10/22/thevarajah-v-riordan-now-fully-reported-second-bite-of-cherry-in-relation-to-relief-from-sanctions

The case related to a failure to comply with an unless order for disclosure.   At a hearing for relief from sanctions the defendants’ application for relief from sanctions was refused.  However at a later hearing, using four of the five days allocated for the trial of the action, a different judge allowed the application. The hearing at the Court of Appeal was an appeal by the claimant against relief from sanctions being granted.

THE APPEAL HEARING

The Court of Appeal allowed the appeal. There were a number of reasons.

1. APPLYING TIBBLES

The Court held that the “Tibbles” criteria for a setting aside an original order applied when a second application was made under CPR 3.9. In brief these criteria are summarised in the judgment of : Patten J in Lloyds Investment (Scandinavia) Ltd v Christen Ager-Hanssen [2003] EWHC 1740 (Ch):

“Although this is not intended to be an exhaustive definition of the circumstances in which the power under CPR 3.1(7) is exercisable, it seems to me that, for the High Court to revisit one of its earlier orders, the applicant must either show some material change of circumstances or that the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position.”

The defendants’ application in the current case did not come anywhere near satisfying these criteria.

2.   LATE COMPLIANCE WITH AN ORDER DOES NOT REPRESENT A MATERIAL CHANGE OF CIRCUMSTANCES.

The Court made it clear that the fact that a party had complied with an order after the relevant date did not represent a material change in circumstances.

Whether the respondents had in fact complied with the disclosure requirements in the unless order was a matter of dispute before us, but there is no need to examine that issue.  Even if the required disclosure had been made at last, some three months after the date for compliance under the unless order itself and almost two months after the date of Hildyard J’s refusal of relief from sanction for non-compliance, it could not in our view amount to a material change of circumstances for the purposes of an application under CPR 3.1(7).  It could not alter the fact of non-compliance with the unless order or amount to a good reason for that non-compliance, nor would it undermine the reasoning that led Hildyard J to refuse relief from sanction.  There was nothing here by way of material change of circumstances, and there was no other basis for an application under CPR 3.1(7) to vary or revoke Hildyard J’s order.”

3.            FAILURE TO APPLY RIGOROUS CRITERIA

The Court went on to consider the judgment granting relief from sanctions as a whole.  It held that an incorrect test was applied.

“First, we think it plain that, even if he had been entitled to give fresh consideration to the question of relief from sanction, his general approach to the application of CPR 3.9 in its present form was wrong in principle.  It lacked the robustness called for by the guidance subsequently given by this court in Mitchell and gave insufficient consideration to the need (a) for litigation to be conducted efficiently and at proportionate cost, and (b) to enforce compliance with rules, practice directions and orders, considerations which “should now be regarded as of paramount importance and be given great weight” (Mitchell para 36).  It also failed to take as its starting point that the sanction in the unless order, which had not itself been the subject of appeal or an application under CPR 3.1(7) for variation or revocation, had been properly imposed and complied with the overriding objective (Mitchell para 45).  Whilst referring to the first instance judgment which was upheld in Mitchell and to the observations of the Master of the Rolls in the 18th Jackson Implementation Lecture which were endorsed in Mitchell, the deputy judge does not appear to have been guided by them.  Instead, he appears to have placed weight on principles derived from Rayyan al Iraq Co Ltd v Trans Victory Marine Inc and Ian Wyche v Care Force Group Plc (see para 13 above), first instance decisions which were subject to critical comment at paras 47-51 of Mitchell.  There is more generally a striking contrast between the deputy judge’s approach and that of Hildyard J in his judgment of 9 August.  The approach of Hildyard J sits well with the guidance in Mitchell.”

4.            APPLICATION MADE LATE

                The timing of the second application was a highly significant factor.

“Secondly, the deputy judge paid insufficient attention to the fact that the second application had not been made promptly but came almost two months after Hildyard J had refused relief and just two days before the trial was due to start.  The importance of promptness in relation to applications under CPR 3.1(7) was underlined in Tibbles (see para 26 above).  It was emphasised in Mitchell in relation to applications under CPR 3.9 (see, for example, paras 40 and 46 of the Mitchell judgment); and the judgment of this court in Durrant v Chief Constable of Avon & Somerset Constabulary [2013] EWCA Civ 1624, at paras 49-51, placed particular weight on the failure to make a prompt application under CPR 3.9 in concluding that relief from sanction should be refused.  The deputy judge was wrong to regard the respondents’ delay in making the second application as of no significance (see para 18 above).  Further, his approach was all the more surprising given that a speedy trial had previously been ordered.”

 5.            USE OF COURT RESOURCES

The court was critical of the amount of time that the application took (4 of 5 days of the trial window).               

“Thirdly, the deputy judge allowed the hearing of the application for relief from sanction to take up a disproportionate amount of court time (see para 10 above), with the result that the trial date would have been lost even if the application had been refused.  We are sceptical of the view he expressed that the case was not ready for trial by reason of the appellant’s own failure to comply with earlier directions; but even if that view was correct, it did not justify the taking up of so much time on an application (let alone a second application) for relief from sanction.

 6.            DIFFICULTY IN ASSESSING THE DEFENDANTS’ ROLE IN PROCEEDINGS

 One factor that had persuaded the judge at first instance to give relief was the difficulty in assessing the role that the defendants could play if  they were debarred from defending.

 “…we are troubled by the deputy judge’s observation that even if the respondents remained debarred from defending the claim they would be “entitled at trial to require the Claimant to prove his claim, to cross-examine and make submissions” (see para 16 above).  The cases to which he referred in that connection, namely Culla Park Ltd v Richards [2007] EWHC 1687 and JSC BTA Bank v Ablyazov (No. 8) [2013] 1 WLR 1331, do not appear to us necessarily to support so sweeping a proposition.  This issue, however, will be a matter for decision by the judge who hears the trial; and, having put down a marker in relation to it, we think it better to say no more on the subject at this stage.” 

OVERVIEW

In summary:

  • A second application under CPR 3.9 is subject to the “Tibbles” criteria.
  • CPR 3.9 should have been applied more rigorously.
  • The timing of an application is important.
  • The fact that there may be difficulties in identifying the role a defendant can play if the defence is struck out does not appear to be a relevant factor when considering a CPR 3.9 application.

RELATED POSTS

Links to the earlier discussions of the case are in the text.  Two matters of relevance are:

FINDING THE CASE

The case is at http://www.bailii.org/ew/cases/EWCA/Civ/2014/15.html