RELIEF FROM SANCTIONS GRANTED: COMPLICATIONS WHEN ACTION AFFECTS PEOPLE NOT PARTIES TO THE ACTION

September 3, 2017 · by · in Relief from sanctions

In Singh & Ors v The Charity Commission & Ors [2017] EWHC 2183 (Ch) His Honour Judge Purle QC granted relief from sanctions.  The default was serious and significant and there was no good reason.   The judge was faced with a defence to counterclaim being struck out when the relief being claimed was declaratory relief.  The action had an impact upon those who were not a party to the litigation and this was relevant factor in the decision.

“I am troubled, though not over-troubled, by the form of the existing proceedings which it seems to me will have to be reconsidered to ensure that all those who have to be bound by the result, especially in relation to orders against individual committee members or purported committee members, are actually bound. The result of a trial in which one side is debarred may be less acceptable to those who are not strictly bound by it, and result in further dispute.”

THE CASE

The claimants originally brought an action against the defendants in respect of the governance of a Sikh temple. An attempt by the claimants to discontinue the action was unsuccessful. However the defendants were given the option of bringing a counterclaim, whereby the original claimants claim was dismissed.  The issue related to the “the appropriateness and lawfulness of the appointment of the management committee” following an election.

The claimants were ordered to pay the defendants £75,000 on account of costs.  This was not paid and a peremptory order was made on the 20th April 2017.  When the action was struck out the claimants raised the sums due.  An application for relief from sanctions was made

THE JUDGMENT ON THE APPLICATION
  1. The application has to be considered in the light of the of the tests which have been established by the Court of Appeal in Mitchell v Denton, and which were also more recently considered by the Court of Appeal again in Oak Cash and Carry Ltd v British Gas Trading [2016] EWCA Civ 153. It is clear from that case that I have to consider not simply the delay following on from the breach of the unless order, but I have to consider the delay under the original order which takes us back to 10th March 2017.
  2. Considering that delay, it is clear and is not disputed that the delay is serious. I am also quite satisfied that no good reason for the delay has been shown. The kindest way it is put in the claimants’ own evidence, is that the community buried their collective heads in the sand. Another way of characterising it is that they deliberately took no steps to comply with the original order to pay £40,000, though that figure was one which their own advocate espoused at the hearing at which it was ordered, whether within the time limited, or indeed the time that their solicitor advocate sought. It was not paid until they had been struck out.
  3. I must not be over-impressed either, though I have to obviously give some credit for it, by the fact that those costs and other costs have now been paid, because they remained due following the striking-out. This is not a case of a party belatedly complying with an order which it is no longer bound to comply with because of the striking-out. The £75,000 was a debt which was due and Judge Barker earmarked it as the price for continuing to defend these proceedings, and still the obligation was ignored.
  4. This is not, it is pointed out by Mr Khangure, the first occasion upon which orders of the court have been ignored. There is reason to believe, though it is impossible to make any final ruling on the matter in the absence of oral evidence and cross-examination, that steps have been taken in the past to evade the restrictions in what has been described as the banking order, by making payments out of an account not mentioned in the banking order and not revealed to the court, or indeed the other side at the time and by making payments in a series of amounts, which it was hoped would evade the banking order.
  5. Some of those sums have been recouped in the sense that they have been put back into the Barclays Bank account, or it may be another bank account. There is certainly reason to believe that this is not the first occasion upon which the claimants have adopted an inappropriate attitude towards their obligations under court orders, observations which His Honour Judge Barker QC has dealt with more fully in at least two of his judgments preceding my reinvolvement in the matter for this application.
  6. The only question that remains therefore is whether all the circumstances of the case indicate that it would be appropriate for the case now to be reinstated, and for relief against sanctions to be granted. In that connection, particular regard has to be paid to the need to conduct litigation efficiently and at proportionate cost, and the importance of enforcing court orders, which I have very much in mind. In my judgment, this is an appropriate case for relief from sanctions to be granted. I say so for the following reasons. The money the claimants have paid belatedly was paid on 26th May. Whilst that was more than two months after the order of 10th March, it was relatively soon after the claimants lost their application to vary the unless order. In addition, the disruption to the court system is minimal. Fortunately for the claimants, the trial date is still available as is the date for the pre-trial review.
  7. The dates for existing directions will need minor but not major adjustment. There will have to be a further costs and case management hearing. It seems to me that that disruption, which is something which I must take into account, is not such as to justify the continued debarring of a claim which may otherwise be good. I say ‘may’ because I am not considering the merits on this application. It appeared to be common ground before me that in the absence of either side being able to say, which either side does not claim to be able to say, that the other side’s case is so weak that it is susceptible to an application for summary judgment, the merits of the claims are irrelevant. That is undoubtedly the correct approach as appears from the case of Al Saud [2014] UKSC 64, paras. 29 and 30.
  8. In addition, the defaults though serious, are not so serious as to justify the continued disapprobation of the court, given the possibility of reconstituting the claim without too much fuss. However, I do consider that the costs thrown away by the costs and case management conference which occurred between the striking-out and the application for a relief from sanctions, ought to be borne by the original claimants; that that order ought therefore to be varied as a condition of my grant of relief against sanctions, and that those costs should be assessed. I assume no-one is ready to deal with that today, but they can be assessed summarily on the next occasion. There will have to be a further costs and case management conference to be listed in the near future.
  9. I have also taken into account, though I have not put excessive weight on the fact, that this is a claim which affects others apart from the parties immediately before the court. It may be said that the Attorney General is there to protect those others when considering the public interest, but to date the Attorney General has taken no active part, as is quite normal, as it has assumed that the parties will argue the merits out amongst themselves. That only makes sense if the parties are there to argue the case on the merits.
  10. In addition, I am troubled, though not over-troubled, by the form of the existing proceedings which it seems to me will have to be reconsidered to ensure that all those who have to be bound by the result, especially in relation to orders against individual committee members or purported committee members, are actually bound. The result of a trial in which one side is debarred may be less acceptable to those who are not strictly bound by it, and result in further dispute.
  11. In the circumstances, and by no great margin, I consider, standing back and looking at the overall justice of both side’s cases, that this is an appropriate case for relief against sanctions. I so order on the terms that I have indicated. I have said nothing about the costs of this application which remain to be considered.”
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