NON COMPLIANCE WITH PEREMPTORY ORDERS: STRIKING OUT; LATE ATTEMPTS TO COMPLY; LATE “ACCEPTANCE” OF PART 36 OFFERS AND NO RELIEF FROM SANCTIONS: ALL LITIGATION LIFE IS HERE

In Devoy-Williams -v- High Cartwright & Amin [2018] EWHC 2815 (Ch) Mrs Justice Falk upheld a decision that an action was struck out and that relief from sanctions should not be granted. It is a reminder (amongst other things)  of the point that peremptory orders take effect from the moment of breach; of the dangers of leaving matters until the last moment and of the need to make applications for relief from sanction promptly. It is also worth noting that all of the claimants’ problems could have been avoided if they had accepted a Part 36 offer promptly.

“I agree with the judge that the Part 36 offer could not be some form of trump card. As the judge said at paragraph [74], the claim was struck out and it was not for the judge to grant relief so that the Part 36 offer could be accepted, thereby thwarting the purpose and effect of an Unless Order that had been breached”

THE CASE

The claimants brought an action in professional negligence against the defendant firm of solicitors. On the 14th September 2016 a peremptory order was made that the claimants give disclosure by the 21st October 2016. In default the claim stood struck out.  The claimants took certain documents to the defendant’s solicitor on the last date for compliance, documents were copied and the copies left behind. However a review of the documents led the defendant to the view that the order had not been complied with. The defendant applied for judgment.

Initially the action was struck out.  That order was later revised to allow either party to apply to set the order aside. The claimants applied under that order.

THE DEFENDANT’S PART 36 OFFER

An added complication was that the defendant’s insurers had made a Part 36 offer to settle the claim. This was made on the 10th October 2016. The claimants sought to accept it on the the 1st November, eleven days after compliance with the unless order. It was held that the action was no longer extant and it was not possible for the claimants to accept that offer

THE HEARING BEFORE THE CIRCUIT JUDGE

The Circuit Judge found that there had been a material breach of the peremptory order. A Tomlin order with the terms of a compromise of a related action had not been disclosed.

The judge considered the test in Denton v T H White Limited [2014] EWCA Civ.906 and found that the the breach was serious and significant. There had been a serious and unexplained delay in applying for relief.

THE DECISION ON APPEAL

On appeal Mrs Justice Falk rejected the argument that there had been procedural irregularities in the hearing below.  In any event the claimants, represented by leading counsel, had not challenged the judge’s approach at the time.

“It is important to note that the appellants were represented by leading counsel and there was no challenge to the judge’s approach at the time.”

She found that the Circuit Judge entitled to conclude that there had been intentional non-compliance. The Tomlin order that was missing from the documents unhelpful to the claimants.

THE DANGERS OF LEAVING THINGS TO THE LAST MOMENT

Both judgments contain a clear warning about leaving matters until the last moment.

“The judge also made it clear that she would have reached the conclusion that there was a material breach even if she had not found there to be intentional non-compliance through deliberate removal of the schedule to the Tomlin Order. As the judge said, it was the appellants’ responsibility to comply with the order, not that of Kennedys. The appellants had left compliance until the last minute and clearly did not check that all material documents were included. A fairly cursory check of a small bundle would have determined that the schedule to the Tomlin Order was missing.”
“I also do not agree that with such a small bundle any unintentional non-compliance was not material. The schedule to the Tomlin Order was material and the content of what was provided to Kennedys should have been checked.”

THE RELIEF FROM SANCTIONS ISSUE

The Circuit Judge’s decision to refuse an application for relief from sanctions was upheld.

65. Turning to the question of relief from sanctions, I do not agree with counsel for the appellants’ submission that the judge was not entitled to have regard to the fact that relief from sanctions was applied for late. The appellants were aware by early November 2016 that the respondent’s position was that there had been breaches of the Unless Order. The Court of Appeal made it clear at paragraph [35] of the Marcan decision that the party in default must apply for relief from sanctions if it wishes to escape the consequences. The point was clearly picked up by the appellants’ own solicitors as well, as shown by a letter they wrote on 2 December 2016 which referred to the requirement to apply for relief from sanctions.
66 Although the 21 November order was in place setting aside the 11 November order, so strictly the status quo at the relevant time was that the striking out had been set aside, it is quite clear that the question of whether there had been a material breach of the Unless Order and the question of relief from sanctions would need to be dealt with by the court together. In the light of that, a prompt application for relief was needed.
67 The submission by counsel for the appellants that a prompt application was not needed, in my view, also sits very uneasily with the point that the sanction under an Unless Order takes effect without the need for a further order, so in this case as at 21 October 2016. That of course is well-established by the Marcan case.
68 Counsel for the appellants suggested that I should take account of the submission that neither part of paragraph 3.3 of the order should properly have been made the subject of an Unless Order in the first place. This was on the basis that there had been no prior order in respect of the documents and the purpose of the order was to facilitate a potential settlement. My primary response to this is that the appropriate course would have been to challenge the Unless Order when made by appealing it. This point was made very clearly in Marcan at paragraph [34].
69 I do accept that, if it was clear that the order should not have been made, that might be one of the circumstances to be considered as part of the review of all the circumstances at stage three of the Denton test, but it is far from clear to me that this is not an order that should have been made. Whilst it is certainly right that an Unless Order should not be made simply for good housekeeping purposes, and it is usual for there to have been a breach of a prior order before an Unless Order is made, the judge clearly took account of the history of the proceedings, with which she was extremely familiar, and specifically the appellants’ conduct in them. The order was made in the light of previous delays and problems in disclosure, and in the light of a clearly identified concern about the risk of double recovery.
70 Although Mr Wardell for the appellants submitted that they had bent over backwards to be cooperative, and to provide documents and information requested, it is clear that the judge did not share that view. Based on the submissions by Ms Shaldon which took me to aspects of the history of the proceedings in some detail, this was a view that I consider that the judge was entitled to reach. Based on my review, making an Unless Order was within the generous ambit of Judge Baucher’s case management discretion.
71 Counsel for the appellants submitted that Kennedys’ action in seeking a strike-out was highly opportunistic. They should have simply alerted the appellants to the missing schedule to the Tomlin Order and allowed them to supply it rather than applying to the court for a strike-out without notice to the appellants. I disagree. Kennedys made a request under CPR 3.5(2) and not an ex parte application. They notified the appellants before the Strike-out Order was made and provided a detailed witness statement with their further application on 1 December 2016. The request for judgment was made against the background of continued delays in providing documents requested, including earlier failures to comply with orders for disclosure.
72 In my view, Judge Baucher was entitled to conclude that the three-stage test in Denton did not lead to the conclusion that relief should be given. The breaches of the orders were serious, and it was wrong to test this, as counsel for the appellants sought to do, simply in the context of the Part 36 settlement offer and purported acceptance. It was also wrong to conclude that because the Unless Order required early disclosure with a view to seeking to narrow the issues and hopefully to allow settlement to occur, that that somehow made the failure to comply less serious than a failure to make standard disclosure.

 

THE SIGNIFICANCE OF ACCEPTANCE OF THE PART 36 OFFER

The claimants attempt to rely on the Part 36 offer, and purported late acceptance by them, is considered at several places in the judgment.

“I also do not agree with the submission that acceptance of the Part 36 offer was inconsistent with an intentional breach. If the appellants had wanted to accept that offer when it was first made, they could have done so at that stage rather than going to the trouble of taking steps towards complying with the Unless Order by the deadline of 21 October (the Part 36 offer having been made some days earlier on 10 October).”

[Although the claimants purported to accept the offer the judge found it was not available for them to settle]

Later in the judgment Mrs Justice Falk observed:

I disagree with the submission that the fact that a Part 36 offer was made after the Unless Order was made is an indication that compliance was not material. Disclosure would have remained material if the claim had not settled, and the fact that the order for disclosure may have been motivated by the aim of facilitating settlement does not affect the question of whether there had been a material failure to comply.
73 I agree with the judge that the Part 36 offer could not be some form of trump card. As the judge said at paragraph [74], the claim was struck out and it was not for the judge to grant relief so that the Part 36 offer could be accepted, thereby thwarting the purpose and effect of an Unless Order that had been breached. There is an element of circularity here, or at least pulling yourself up by your own bootstraps. In my view, this is quite a separate point to the judge’s obiter remarks at paragraph [77] onwards about whether relief from sanctions takes effect as at the date of the order. I accept that the correctness of those statements might well be susceptible to challenge they had been a necessary part of the decision, but they were not.