CHANGING THE TRIAL DATE : A CASE IN POINT: MITCHELL REMAINS A "TOP BRAND"

Ever since the introduction of the Woolf reforms the trial date has been viewed as fairly sacrosanct. Once set it is hard to change without a good reason. This position has probably hardened as a result of Mitchell.  The issue was considered on the 8th May 2014 by Judge Simon Barker QC (sitting as a judge of the High Court) in Top Brands Ltd -v-Sharma [2014] EWHC 1454 (Ch).

THE ISSUES IN TOP BRANDS

The Respondent (“R”) in an action against a liquidator issued a number of applications a fortnight before the date of the substantive application.  The applications made included an application to adjourn the trial date.

THE JUDGE’S CONSIDERATION OF THE PROCEDURAL ISSUE

  1. Mr Morgan starts with the unchallengeable propositions that the adjournment of a trial is an order of last resort, CPR 29PD.7 at paragraph 7.4(6), and that any such application must be considered in the light of the overriding objective which is to enable the court to deal with cases justly and at proportionate cost, CPR 1.1(1). Having regard to CPR 1.1(2), matters engaged here include : expeditious and fair disposition of the case; allotment of appropriate share of the court’s resources in the context of the general caseload; enforcing compliance with rules, practice directions and orders; and, albeit of lesser significance in this case, saving expense. Having regard to these matters, the only point in R’s favour is that a combined hearing of the s.212 application and the fraud issue – as a challenge to the Consent Order, a challenge to As’ status as creditors, and a defence in the s.212 application – is that there would probably be some overall saving of expense and time at trial; however, the savings may well not be material.
  1. R has issued her proceedings challenging the Consent Order on the ground of fraudulent misrepresentation. She wishes to, but has not yet, applied to withdraw the admissions in her Points of Defence in the s.212 application nor has she applied to amend her Points of Defence to plead a positive case in fraudulent misrepresentation against As.
  1. In relation to withdrawal of an admission, Mr Morgan refers to procedural rule requiring the court’s permission before withdrawal, CPR 14.1(5), to the notes at paragraph 14.1.8 following, and to the practice direction 14PD.7 at paragraph 7.1. Mr Morgan’s submissions include that (a) this is not a case where new evidence has come to light which was not available at the time; (b) in terms of conduct, R has only herself to blame if, as a result of the way she conducted MML’s liquidation, she failed to appreciate that a VAT fraud had been perpetrated and failed to analyse its scope (which Mr Morgan submits does not involve As), moreover the admission the subject of the Consent Order was made after taking legal advice; (c) if the admission is withdrawn, there will be considerable prejudice to As : they will be put to considerable expense in gathering evidence, their potential recovery will be delayed, and R’s means to fund such recovery will be depleted and may be exhausted; (d) there will be no prejudice to R by holding her to the admission because she is only being asked to account for her own misfeasance and the current liquidator, Mr Ward, is being spared the time and expense of making a s.212 application, equally, if Mr Ward is not satisfied that As are creditors he may challenge their proofs; (e) R’s application (which is to adjourn the s.212 trial and not yet to withdraw her admission in those proceedings) was made at the last moment before trial, without prior warning, and has caused a delay in the order of six weeks to the trial; (f) if the admission is withdrawn the prospect of the challenge to the Consent Order succeeding is remote because the fraud claim is very weak; and, (g) balancing all of these factors against the public interest derived from the fraud unravels all principle, the administration of justice is best served by holding R to the Consent Order for the purposes of the s.212 application.
  1. In relation to possible amendment of R’s Points of Defence in the s.212 application, which is also a future application, Mr Morgan refers to Swain-Mason v Mills & Reeve LLP [2011] 1 WLR 2735. R would have to discharge a heavy onus in order to justify a late amendment; this would entail consideration not only of R’s own position, it would entail consideration of As’ position and of the cases of other litigants. Even at this late stage there is not even a draft application or a draft of an Amended Points of Defence in circulation.
  1. Overlaying all of this, Mr Morgan refers to  Mitchell  v News Group Newspapers Ltd [2013] EWCA Civ 1526 and the subsequent application of the Court of Appeal’s judgment, for example by Andrews J inDanv Lions Ltd v Bristol Cars Ltd.[7]
  1. In  Mitchell , the Court of Appeal, at paragraph 36, emphasised that the courts will treat the need for litigation to be conducted efficiently and at proportionate cost and the need for orders, rules and practice directions to be enforced as being of paramount importance to which great weight is to be given. Turning to the circumstances of R’s application to adjourn the trial of As’ s.212 application, an unheralded very late application of this nature does not fit into the very narrow gap through which trivial non-compliance may be allowed to pass. The only available explanation for the lateness of the application is recent change of legal representation; of itself that is not a sufficient reason. Following  Mitchell , the court will subject an application to adjourn a trial to rigorous scrutiny and only grant such an application where the reasons for so doing have been shown to outweigh the disadvantages of so doing, which disadvantages include the imperatives referred to above.
  1. In Danv Lions Ltd three factors are identified as material considerations in the abstract of Andrews J’s judgment: a very late application to amend, only two days before trial; no good explanation for the lateness of the application; and, the amendment sought was unarguable.
  1. Ignoring for the moment my decision on the Competent Party Issue, I attach great weight to R’s desire to raise a fraud challenge to the Consent Order, in this context I treat R’s challenge as having a real prospect of success and I disregard Mr Morgan’s submission that it is very weak; however, I attach even greater weight to the continuation of the s.212 application without further delay because (1) the present liquidator of MML, Mr Ward, endorses the call for R to explain her conduct as liquidator of MML, and (2) Mr Ward, as liquidator of MML, will be duty bound to satisfy himself that As are genuine creditors before making any distribution from MML’s assets to its creditors, not least because any distribution to As will adversely affect the distribution to MML’s undoubted creditor, HMRC.

Accordingly, my decision on the Procedural Issue is adverse to R”

POINTS TO TAKE OUT OF THE JUDGMENT

I am going to slightly reverse the order.

“Following  Mitchell , the court will subject an application to adjourn a trial to rigorous scrutiny and only grant such an application where the reasons for so doing have been shown to outweigh the disadvantages of so doing, which disadvantages include the imperatives referred to above.” 

Those imperatives are:

“... litigation to be conducted efficiently and at proportionate cost and the need for orders, rules and practice directions to be enforced as being of paramount importance to which great weight is to be given”