WHAT IS A TRIAL? AND WHY DOES IT MATTER?

February 4, 2016 · by · in Appeals, Applications, Risks of litigation, Uncategorized, Witness statements

In Pickard -v- Roberts [2016] EWHC 187 (Ch) Mr John Baldwin QC (Sitting as a Deputy Judge of the Chancery Division)  had to consider whether a hearing was a “trial” and whether this had any impact upon the decision to set aside that hearing.

” the default position with respect to whether or not what takes place at a hearing can be properly described as a trial within CPR 39.3 depends on the context, depends upon the purpose of the hearing and upon the procedural orders which have been made leading up to the hearing, rather than upon the form of whatever has been used in order to get to that hearing.”

KEY POINTS

  • A hearing in insolvency proceedings heard after the court had made directions, including directions for oral evidence to be heard was a “trial”.
  • Consequently a party who did not attend that hearing had to show a “good reason” for not attending.
  • The second respondent to this action did not have a good reason.
  • There was no reason for the court to exercise its discretion to set the order aside. An appeal was therefore allowed against a decision setting the order made at the trial aside.

THE CASE

  • The applicants were the  first respondent’s trustees in bankruptcy.
  • The applicants issued an application for a declaration that property was held by the first defendant and second defendant in equal shares.s
  • Various directions were made and the court made an order that, with the exception of the applicants, “all parties shall attend for cross examination at the final  hearing.”
  • Various applications were made by the second respondent which were struck out. An application to adjourn the hearing was lost by the court.
  • The hearing proceeded and an order was made in the applicants’ favour.
  • That order was subsequently set aside by another by another District Judge.
  • The applicants appealed against the setting aside of the order.

WAS THIS A TRIAL?

It was important to consider whether the hearing was a trial.
  1. Turning back to the issues and whether or not what took place on 26th February was a “trial” within the meaning of 39.3, that rule does not itself clarify what is meant by the word. Mr. Gale submits that the meaning of the word “trial” depends upon the context and in that respect he said he was supported by the notes in the White Book. The relevance of the hearing being a trial appears from the words of CPR 39.3 which are as follows:
“Failure to attend the trial
39.3 – (1) The court may proceed with a trial in the absence of a party but –
(a) if no party attends the trial, it may strike out(GL) the whole of the proceedings;
(b) if the claimant does not attend, it may strike out his claim and any defence to counterclaim; and
(c) if a defendant does not attend, it may strike out his defence or counterclaim (or both).
(2) Where the court strikes out proceedings, or any part of them, under this rule, it may subsequently restore the proceedings, or that part.
(3) Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.
(4) An application under paragraph (2) or paragraph (3) must be supported by evidence.
(5) Where an application is made under paragraph (2) or (3) by a party who failed to attend the trial, the court may grant the application only if the applicant –
(a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;
(b) had a good reason for not attending the trial; and
(c) has a reasonable prospect of success at the trial.”
  1. The question of what is or what is not a trial came for consideration by the Court of Appeal in Forcelux Ltd v Binnie [2009] EWCA Civ. 854. In paragraphs 18 to 49 of that judgment Warren J goes through various matters relating to what is and what is not a trial and concludes that the first hearing of a possession order under CPR 55, whatever it is, is not a trial. One of the reasons he gives is that first hearings sometimes resolve the dispute between the parties and sometimes do not and that you cannot tell beforehand what is going to happen. Therefore, it is not appropriate to consider that first hearing to be in the nature of a trial, and he gives other reasons as well.
  2. Whether a matter is or is not a trial governs or may govern the test which applies when one of the parties does not turn up, as is what happened here. If the matter is a trial the position is set out in 39.3(5) and there is authority to the effect that unless a party overcomes all three hurdles of that rule, then there is no jurisdiction to set aside the order made (Bank of Scotland v Pereira [2011] EWHC Civ 241, [24] – [26], but see paragraph 56 below).
  3. The significance in the present context is that DJ Hay concluded that there was no good reason for Mrs Roberts not attending what she called the trial (see paragraph 2 above). However, in respect of this question there has been an application to adduce further evidence. That application was not resisted and in reaching my conclusions on this matter I have taken into account Mrs Roberts’ further evidence.
  4. The position with respect to hearings such as possession hearings under CPR Pt 55 is dealt with by, in particular, Arden LJ in Hackney LCB v Findlay [2011] EWCH Civ. 8. She refers to the Forcelux case and says this:
“1. The substantial question for decision on this appeal is whether the matters listed in CPR 39.3(5) (which I set out in paragraph 3 of this judgment) are highly relevant factors to be taken into account when the court is asked by a tenant to exercise its discretion to set aside a possession order made in his absence. This question arises out of the recent decision of this court in Forcelux Limited v Binnie[2009] EWCA Civ 854. In that case, this court held that, where the court makes a possession order in the absence of the tenant, following forfeiture of a lease for non-payment of the ground rent, and the tenant subsequently applies to have that order set aside, the court has a wide discretion under CPR 3.1(2)(m) to set aside the possession order ‘if, in its discretion, it considers that the interests of justice demands it’ ([52] per Warren J, giving the judgment of this court). The court considered that CPR 39.3, that is, the rule dealing with applications to set aside judgments obtained at trial in the absence of a party, did not apply because the hearing at which a possession order is made is not a ‘trial’ for the purposes of the relevant rules. In the present case, we are concerned not with a landlord and tenant in the private sector but a local authority and secure tenant. We are told that prior to Forcelux the courts in practice applied CPR 39.3. This would require among other matters that the tenant should provide a good explanation for failing to attend the hearing. The more restricted approach in CPR 39.3 is, it is said, important for the efficient management of social housing.
2. The relevant provisions of CPR 3 are as follows:
‘3.1 The court’s general powers of management
(1) The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.
(2) Except where these Rules provide otherwise, the court may.
…
(m) take any other step or make any other order for the purpose of managing the case and furthering the overriding objective.
(7) A power of the court under these Rules to make an order includes a power to vary or revoke the order.
…
3.9 Relief from sanctions
(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 including –
(a) the interests of the administration of justice;
(b) whether the application for relief has been made promptly;
(c) whether the failure to comply was intentional;
(d) whether there is a good explanation for the failure;
(e) the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant pre-action protocol;
(f) whether the failure to comply was caused by the party or his legal representative;
(g) whether the trial date or the likely trial date can still be met if relief is granted;
(h) the effect which the failure to comply had on each party; and
(i) the effect which the granting of relief would have on each party.
(2) An application for relief must be supported by evidence.
3. CPR 39.3 provides:
‘39.3 Failure to attend the trial
(1) The court may proceed with a trial in the absence of a party …
(3) Where a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.
(4) An application under paragraph (2) or paragraph (3) must be supported by evidence.
(5) Where an application is made under paragraph (2) or (3) by a party who failed to attend the trial, the court may grant the application only if the applicant –
(a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;
(b) had a good reason for not attending the trial; and
(c) has a reasonable prospect of success at the trial.’
…
24. Thus, in my judgment, in the absence of some unusual and highly compelling factor as in Forcelux, a court that is asked to set aside a possession order under CPR 3.1 should in general apply the requirements of CPR 39.3(5) by analogy. This is in addition to, and not in derogation of, applying CPR 3.9 by analogy, as this court did in Forcelux, as that provision requires the court to have regard to all the circumstances in any event. However, in my judgment, for the reasons given above, in the absence of the unusual and compelling circumstances of a case such as Forcelux, this court should give precedence to the provisions of CPR 39.3(5) above those enumerated in CPR 3.9. Even that is subject to a qualification in the case of a secure tenant. Parliament clearly contemplated in s 85(2) of the Housing Act 1985 that the tenant should have the chance there described of persuading a court to modify an outright possession order. It follows that the requirements of CPR 39.3(5) need not be applied in such a case with the same rigour as in the case of a final order that does not have this characteristic. (It is only fair to Mr Findlay to make the point that DJ Manners expressly had the possibility of a subsequent application by him in mind when she made her order). Accordingly, the court should not decline to exercise its power to set aside a possession order if in consequence the statutory purpose in s 85(2) would be defeated. Moreover, in my judgment the court can have regard to the wider social context in which these cases come before the courts. Accordingly, in deciding whether the tenant has a good reason for non-attendance the court can in my judgment have regard to the provisions of the Rent Arrears Pre-Action Protocol and to best practice among social landlords. It may conclude that, while in the ordinary case a defendant might have had no proper excuse for not attending a court hearing at which the possession order was made, given best practice of social landlords and the provisions of that protocol, a tenant is in fact able to provide an appropriate explanation.”
  1. Paragraph 24 makes the point that in the case of possession orders the requirements of CPR rule 39.3(5) should in general apply by analogy absent some unusual and highly compelling factors such as were present in the Forcelux case.
  2. The test might be different, and I say at this stage only might be, if the application were a Part 23 application. On such an application, in Riverpath Properties Ltd v. Brammall 2000 WL 463 Neuberger J (as he then was) said the discretion to set aside is very flexible. The case was referred to more recently by Mr. Halpern QC in Yeganeh v Freese and others [2015] EWHC 2032 (Ch) as follows:
“26. CPR rule 23.11 gives the court power to re-list any application which has proceeded in the absence of a party. Ms. Kyriakides referred me to Riverpath Properties v Bramall [2000] WL 463, where Neuberger J said:

‘It would be a very rare case where the court exercised this jurisdiction to set aside an order that had been made, where it was satisfied that there was no real prospect of any new order being different from that which it originally made.’

27. She also referred me to MA Lloyd & Sons Ltd v PPC International Ltd [2014] 2 Costs LR 256, where Turner J said at [14]:

‘Of course, the court has power under CPR 23.11 to re-list an application where it has previously proceeded in the absence of one of the parties but this is a power which is likely to be exercised sparingly in the light of the specific regard with the court must now have for the need, where reasonably practicable, to allot to any given case an appropriate share of the court’s resources.’

Although that decision pre-dated Denton v TH White Ltd (Practice Note) [2014] 1 WLR 3926 and must therefore be read subject to the latter cased, I am satisfied that the general approach set out by Turner J remains good law.
28. I therefore approach the application of the power under rule 23.11 on the following basis:

28.1 The power is to be exercised sparingly and having regard to the Overriding Objective; and

28.2 The merits will be an important factor if either party can satisfy the test for summary judgment.”

THE JUDGE’S DECISION

 

  1. In my view, the default position with respect to whether or not what takes place at a hearing can be properly described as a trial within CPR 39.3 depends on the context, depends upon the purpose of the hearing and upon the procedural orders which have been made leading up to the hearing, rather than upon the form of whatever has been used in order to get to that hearing.
  2. A part of my reasoning is that trials, as distinct from interim hearings, lead to an order which carries with it finality and, if there is no appeal, the issue which has been determined will become res judicata and only in very unusual circumstances will the matter be re-opened.
  3. Looking at the procedural history of this matter and at what happened on February 26 2015, both parties had been through various procedural steps and been subject to various procedural orders so that the matter could be finally and properly and farily determined and both parties thought the matter would be finally determined on that date. In those circumstances it seems to me that what was intended to take place on 26th February 2015 was, indeed, a trial within the meaning of rule 39.
  4. I have reached this conclusion from a consideration of the context of the proceedings as a whole and the nature of the event on 26 February 2015 in particular.

WAS THERE A GOOD REASON FOR THE SECOND RESPONDENT NOT ATTENDING?

The judge considered the explanation given for not attending the hearing. He regarded these as “entirely spurious”.

A SIDE WIND (DRAFTING OF THE WITNESS STATEMENT)

An interesting minor aspect is a comment on the drafting of the witness statement.

  1. Mr. Jacob suggested that this paragraph of her witness statement might have been drafted by Direct Access counsel who thought that he was putting into good English the evidence of Mrs Roberts. I do not know anything about the drafting of this witness statement but I do know that it has been put forward as her evidence on this application. I must take it at its face value.
EXERCISE OF THE DISCRETION
  1. I think it is appropriate for me to consider this case in the light of the overriding objective. One of the matters I have to consider is use of court resources. If this matter is to go to trial then it will go back to the Croydon County Court. There will be a two-day hearing and there will be the lead up to that hearing. I am told that a further hearing may not take place for another twelve months. Thus there will be more delay in a matter which was started in 2012. Mr Gale submitted that delay itself may cause prejudice.
  2. Mr Jacobs submitted that dismissing the appeal would cause no prejudice to the trustees, that mere delay itself was not enough. I do not quite accept that, Moreover the trustees will have to go through the whole process of bringing the matter to a final hearing once more, a further two court days will be set aside and Mrs Roberts may or may not attend. Her record of complying with court orders is not good – see for example the reasons for the strike out of her TOLATA application.
  3. It was submitted for Mrs Roberts that she has a compelling case for dismissal of the appeal because otherwise she will be denied the opportunity to argue her case and the trustees will be presented with a windfall. It was submitted that I should approach the matter in what counsel said was the ‘looser’ interpretation of 3.9 in Forcelux as compared with the ‘narrower’ interpretation of 3.9 as put forward by Arden LJ in the Findlay case. I do not think there is any parallel in this case with the Forcelux case; in particular, there is no obvious windfall to the trustees.
  4. Of course, if the trustees were to win any new hearing then there is no windfall at all and if the trustees were to lose it then they would lose it. The difference in Forcelux was that there was going to be a loss of a lease which would not be lost in any event; here it is merely a disputed claim. There is nothing in the nature of ‘an unusual and highly compelling factor’ which might lead me not to follow the guidance of Arden LJ in Findlay.
  5. In those circumstances, in my judgment the appeal must succeed. This matter should have been brought to an end once and for all by the Paul order. I have reached my conclusions taking into account CPR 39(3), and the matters I have considered in relation thereto as already set out, CPR 3.9 and the overriding objective and looking at the importance of finality of proceedings, fairness to the trustees as well as to Mrs Roberts, the proportionate use of court time and resources generally. I have tried to take all matters into account.
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