ACTION STRUCK OUT FOR FAILURE TO GIVE DISCLOSURE: RELIEF FROM SANCTIONS REFUSED
In Medical Supplies and Services Ltd -v- Acies & Gosling  EWHC 1032 (QB) the claimant came to grief because of a failure to comply with a peremptory order for disclosure. Relief from sanctions was refused. It provides another object lesson in the importance of compliance.
During the course of the action the District Judge made an order in relation to disclosure by the claimant. It read:
“In the event of the Claimant’s default in compliance with paragraph 1 or paragraph 2 of this order the claim shall be struck out and the Defendant shall be entitled to the costs of the substantive proceedings, such costs to be agreed if possible but failing agreement to [be] the subject of detailed assessment on the standard basis”
On appeal the Circuit Judge varied the timetable. However there was no express peremptory order in the order made on appeal.
The claimant did not comply with the extended timetable. The defendant argued that the action was struck out and obtained a default costs certificate.
WAS THERE A PEREMPTORY ORDER IN FORCE?
Judge Behrens (sitting as a High Court Judge) held that was still a peremptory order in place.
4 Was there an “unless” order in force.
- The first question to determine is whether there was in force an “unless” order in relation to the duty to give inspection on 27th September 2013. It is not in dispute that paragraph 3 of the order of 17th June 2013 was an “unless” order. Thus the failure to give inspection by 5th July 2013 would result in the claim being struck out. Mr Clark submits that my order of 5th July 2013 and Judge Saffman’s order of 22nd August 2013 did not affect the sanction. All we did was to extend the date for compliance first to 7 days after the disposal of the appeal and second until 27th September 2013. Accordingly he submits that the sanction applied to a failure to comply with the extended date.
49.Mr Sterling seeks to avoid the logic of Mr Clark’s argument by pointing out that Judge Saffman did not impose a sanction expressly in the order of 22nd August 2013. He points out that Judge Saffman provided a completely new timetable to get the action to trial and that it would have been perfectly simple for him to impose a sanction if he had intended to do so.
- I cannot accept Mr Sterling’s argument. To my mind the effect of the order raises a short question of construction. I have to determine the meaning which the orders would convey to a reasonable person with the background knowledge which would reasonably have been available to the parties at the time they were made. No doubt it would have been possible for Judge Saffman to have made a fresh order for inspection. If he had done that it would have been open to him to impose a sanction for non compliance. However that is not what Judge Saffman did. Rather than make a fresh order he extended the time in District Judge Giles’s order. Thus he left District Judge Giles’s order in tact but with an extended date for compliance. It follows, in my view that the sanction imposed by District Judge Giles also remained in force.
- It follows that the failure to give inspection by 27th September 2013 was subject to the “unless” order contained in paragraph 3 of the order of 17th June 2013.
WAS THERE A BREACH OF THE ORDER?
The judge found that there was a breach of the order. He rejected an argument that the defendant was in breach.
THE STRIKING OUT TOOK EFFECT WITHOUT THE NEED FOR ANY FURTHER ORDER
The striking out of the action took effect without the need for any further action.
6 Effect of breach
- In Marcan Shipping v Kefalas  1 WLR 1864 the Court of Appeal made clear that in accordance with CPR 3 the sanction embodied in an “unless” order took effect without the need for any further order if the party to whom it was addressed failed to comply with it in any material respect. In paragraphs 34 to 36 of his judgment of Moore-Bick LJ said:
- In my view it should now be clearly recognised that the sanction embodied in an “unless” order in traditional form takes effect without the need for any further order if the party to whom it is addressed fails to comply with it in any material respect. This has a number of consequences, to three of which I think it is worth drawing particular attention. The first is that it is unnecessary, and indeed inappropriate, for a party who seeks to rely on non-compliance with an order of that kind to make an application to the court for the sanction to be imposed or, as the judge put it, “activated”. The sanction prescribed by the order takes effect automatically as a result of the failure to comply with its terms. If an application to enter judgment is made under rule 3.5(5), the court’s function is limited to deciding what order should properly be made to reflect the sanction which has already taken effect. Unless the party in default has applied for relief, or the court itself decides for some exceptional reason that it should act of its own initiative, the question whether the sanction ought to apply does not arise. It must be assumed that at the time of making the order the court considered all the relevant factors and reached the decision that the sanction should take effect in the event of default. If it is thought that the court should not have made an order in those terms in the first place, the right course is to challenge it on appeal, but it may often be better to make all reasonable efforts to comply and to seek relief in the event of default.
- The second consequence, which follows from the first, is that the party in default must apply for relief from the sanction under rule 3.8 if he wishes to escape its consequences. Although the court can act of its own motion, it is under no duty to do so and the party in default cannot complain if he fails to take appropriate steps to protect his own interests. Any application of this kind must deal with the matters which the court is required by rule 3.9 to consider.
- The third consequence is that before making conditional orders, particularly orders for the striking out of statements of case or the dismissal of claims or counterclaims, the judge should consider carefully whether the sanction being imposed is appropriate in all the circumstances of the case. Of course, it is impossible to foresee the nature and effect of every possible breach and the party in default can always apply for relief, but a conditional order striking out a statement of case or dismissing the claim or counterclaim is one of the most powerful weapons in the court’s case management armoury and should not be deployed unless its consequences can be justified. I find it difficult to imagine circumstances in which such an order could properly be made for what were described in Keen Phillips v Field as “good housekeeping purposes”.
61. In all the circumstances I agree with Mr Clark that this claim has been struck out.”
RELIEF FROM SANCTIONS REFUSED: THE RELEVANT PRINCIPLES CONSIDERED AND APPLIED
There is a succinct summary of the law relating to relief from sanctions.
7 Relief from sanctions
- An application for relief from sanctions is, in the post Jackson era, governed by CPR 3.9 which provides:
(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need—
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence.
- In 3 recent cases – Mitchell v Newsgroup Newspapers Ltd  EWCA Civ 1537, Durrant v Chief Constable of Avon  EWCA Civ 1624 and Thevarajah v Riordan  EWCA Civ 14 – the Court of Appeal has sent out a clear message requiring a robustness of approach in granting relief from sanctions in the post Jackson era and the importance of the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules practice direction and orders.
- In Mitchell the Court of Appeal upheld the decision of a Master who had refused to grant relief from sanctions in a case where a solicitor had failed to file a costs budget on time.
- If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted. For example, if the reason why a document was not filed with the court was that the party or his solicitor suffered from a debilitating illness or was involved in an accident, then, depending on the circumstances, that may constitute a good reason. Later developments in the course of the litigation process are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable, although the period seemed to be reasonable at the time and could not realistically have been the subject of an appeal. But mere overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason. We understand that solicitors may be under pressure and have too much work. It may be that this is what occurred in the present case. But that will rarely be a good reason. Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all. This may seem harsh especially at a time when some solicitors are facing serious financial pressures. But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue. We should add that applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event.
- On an application for relief from a sanction, therefore, the starting point should be that the sanction has been properly imposed and complies with the overriding objective. If the application for relief is combined with an application to vary or revoke under CPR 3.1(7), then that should be considered first and the Tibbles criteria applied. But if no application is made, it is not open to him to complain that the order should not have been made, whether on the grounds that it did not comply with the overriding objective or for any other reason
- The Master did not misdirect herself in any material respect or reach a conclusion which was not open to her. We acknowledge that it was a robust decision. She was, however, right to focus on the essential elements of the post-Jackson regime. The defaults by the claimant’s solicitors were not minor or trivial and there was no good excuse for them. They resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants. Although it seems harsh in the individual case of Mr Mitchell’s claim, if we were to overturn the decision to refuse relief, it is inevitable that the attempt to achieve a change in culture would receive a major setback.
- In Durrant the Court of Appeal allowed an appeal where a judge a granted relief against the failure to comply with an “unless order”. The “unless order” related to the filing of witness statements and the sanction was that the Defendant would not be able to rely on any witness evidence not served in accordance with the order. In paragraph 38 of the judgment of the Court Richards LJ said:
- The judgment in Mitchell reiterated (at para 52) that this court will not lightly interfere with a case management decision. It quoted the observation of Lewison LJ in Mannion v Gray  EWCA Civ 1667, para 18, that “it is vital for the Court of Appeal to uphold robust fair case management decisions by first instance judges”. Equally, however, if the message sent out by Mitchell is not to be undermined, it is vital that decisions under CPR 3.9 which fail to follow the robust approach laid down in that case should not be allowed to stand. Failure to follow that approach constitutes an error of principle entitling an appeal court to interfere with the discretionary decision of the first instance judge. It is likely also to lead to a decision that is plainly wrong, justifying intervention on that basis too. We do not share Mr Payne’s concern about this leading to an increase in appeals and thereby undermining the efficiency benefits of the Jackson reforms. As is stated at para 48 of the Mitchell judgment, “once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture becomes accepted, there should be less satellite litigation, not more”.
- Thus, I am to assume that the sanction in District Judge Giles’s order was properly imposed and also to adopt the robustness of approach indicated by the above decisions. The breaches in this case were not trivial. As I have indicated the Claimant has still not given inspection. As Mr Clark points out the original order for inspection provided for inspection on 24th April 2013 nearly a year ago. The letter of 13th September 2013 reminded Mr Webber of the obligation to provide copies before 27th September 2013. Mr Sterling submitted that because the Defendants were able to serve their witness statements in accordance with Judge Saffman’s order of 22nd August 2013 there was no prejudice resulting from the Claimant’s breach. I do not accept that submission. It seems to me to be self evident that a party will be prejudiced in the preparation of its case by the failure of his opponent to give inspection of the documents which support or hinder his case.
- In my view there is no good reason for the failure to give inspection of the 232 documents by 27th September 2013. In my view Mr Webber’s unspoken belief that an attempt was being made to trick him into making a mistake is not a good reason. He should have raised the matter in a letter to Mr Bower. Equally, Mr Webber’s belief that the Defendants had other documents in their possession control or power that ought to have been disclosed was not a good reason for the Claimant’s breach of the order for inspection. Furthermore this application has not been made promptly. In his oral submissions Mr Sterling suggested that, as the question whether the Claimant had been struck out was in issue, it was for the Defendants to apply for a declaration that it had been struck out. I do not agree. No doubt it was open to the Defendants to make such an application, but, in my view, there was no obligation on the Defendants to do so. As Moore-Bick LJ made clear in paragraph 35 of Marcan it was for the Claimant, as the party who was potentially in default, to apply for relief from sanctions. No doubt the Claimant could have combined the application with an application for a declaration that the claim was not struck out. In addition to these matters there are a number of other factors which militate against the granting of relief. First, the Claimant was in breach of the original disclosure order and the order in respect of the filing of witness statements. Its witness statements were served 4 months late. Second, it seems to me to be inevitable that if relief is granted the trial date will be lost. It is clear that the Defendants wish to rely on expert evidence. There is, in my view, no realistic possibility that they will be able to get such evidence in time for a trial listed for 12th May 2014.
- In all the circumstances I have come to the conclusion that the application for relief against sanctions should be refused. This may seem harsh as the Claimant will now be denied a trial. It is however consistent with the order made by District Judge Giles and the firm line on enforcement required in the post Jackson regime. Whilst it is true that the three recent judgments from the Court of Appeal all postdate the breach in this case it might have been thought that the very clear judgment of Moore-Bick LJ in Marcan in 2007 should have been a clear warning on the risks involved in failing to comply with “unless” orders.
- It follows that I will declare that the claim is struck out and will refuse to set aside the default costs certificate.”
WHAT CAN WE LEARN FROM THIS?
There are many lessons that can be drawn from this case. Perhaps the three central points are:
- A peremptory order can survive a variation of the timetable on appeal.
- It is foolhardy to ignore directions.
- Relief from sanctions is hard to obtain.