In Castle Trustees Ltd -v-Bombay Palace Restaurant Ltd  EWHC 3893 (TCC) Mrs Justice Jefford allowed the defendant’s application for relief from sanctions when the defendant served witness and expert evidence late. This case is interesting for a number of reasons:
The defendant’s sensible decision to serve the witness evidence and attempt to agree a timetable in relation to expert evidence. (This is far more prudent than promising the court that any breach will be remedied if relief from sanctions is granted).
The difficulty in pointing to “precedent” in relation to relief from sanctions applications. Each case has to be assessed on its own individual facts.
The judge took into account that there was an explanation for the default, even if that explanation did not amount to a “good reason”. Explaining the reason for default is important.
The action concerned building work carried out in 2012. Proceedings were issued in 2014. There had been an Early Neutral Evaluation, which was not successful. Directions were given in November 2016 for a trial in July 2017. Witness statements were due to be served on the 27th March and 19th May respectively. The claimant sought an order for summary judgment when the defendant failed to comply. At that application the defendant was given permission to defend subject to making a payment into court and making an application for relief from sanctions. The claimants were given further time to serve expert evidence.
THE HEARING FOR RELIEF FROM SANCTIONS
The hearing took place on the 21st June 2017.
THE DEFENDANT’S “SENSIBLE APPROACH”
Rather than remaining passive the defendant served the witness evidence on which they intended to rely and attempted to arrange meetings of expert. This approach was described as “sensible” by the judge.
16. In the meantime, the defendant has taken what in my view is plainly a sensible approach. They have “served” (in quotation marks as Mr. Williamson put it) the one witness statement on which they rely. They did so on 9th June 2017. That is a statement of a Mr. Stephen Brown, the defendant’s monitoring surveyor, who has been involved throughout this matter. I have been invited to review that statement. No detailed submissions about its contents have been made to me but it seems, on its face, to give evidence that supports the pleaded case. To that extent, its content is not surprising and it is not new in that sense to the claimants. Mr Parker QC made no substantive submissions on that statement: he said that he had not read it because he had not been instructed to do so.
The claimants had obtained an extension of time for service of their expert’s report. The defendant had not and was in default (this was part of the application for relief from sanctions).
18. The defendant has only one expert on both matters. They say that theyare in a position to serve on the same date. That does not mean that they are somehow not in breach of the existing order to serve by 19th May because they have not sought or received until today’s date any corresponding extension but it is something that I should take into account in considering the overall circumstances of this action.
19. In the meantime, the defendant has offered again a sensible approach namely that their expert attends without prejudice meetings. The first such offer was made on 1st June. It was repeated on 15th June. The claimants’ experts have declined to meet on the basis, principally, of lack of time given the deadline for the preparation of their reports
THE DENTON CRITERIA CONSIDERED
It was common ground that the defendant’s breach was serious and significant. The judge found that there was no good reason for the breach.
“25. I take into account the following circumstances. First, I repeat what Coulson J has said about the relatively straightforward nature of this case. Second, this matter has been on foot for a considerable time. The issues have been canvassed in adjudication in 2012, 2013, and in an Early Neutral Evaluation in 2016. Unless there is some significant change in the defendant’s case which could have been the subject of separate complaint, I can see no reason why matters cannot be ready for trial in July without any prejudice to the claimants.
26. The sole witness statement relied upon, which covers, as I have already said, the pleaded issues, has already been served, about 10 days ago. The expert’s report or reports can be served at the same time as the claimant’s reports, that is by the extended date already given to the claimants. The defendant has been offering to meet in the interim; that offer has not been taken up; but the probability is that there will be without prejudice meetings between the experts in order to narrow the issues between them after the service of the reports, and well in time for matters to be narrowed, if they can be, before the trial in July.”
DIFFICULT TO RELY ON “PRECEDENT” IN RELIEF FROM SANCTIONS CASES
The claimant pointed to apparently similar cases where relief from sanctions had been refused and that decision upheld by the Court of Appeal. The judge did not accept this line of argument.
Mr. Parker, on behalf of the claimants, in seeking to persuade me to take a different view, relied heavily on the Court of Appeal decision in Clearway Drainage Systems Limited v Miles Smith Limited, in which the judge’s refusal to grant relief from sanctions was upheld. He said there were clear similarities with the present case, in particular, a failure of over two months to serve statements, the impact of the failure on the efficient conduct of the litigation, and a failure to make the application for relief promptly. Those are matters that he relies upon in opposition to this application.
28. Mr. Williamson says, in my view rightly, that the Clearway Drainage case is an example of the application of the principles in Denton v White and that each case must be seen on its own facts. In that context, it seems to me that there are significant differences between the position in Clearway Drainage and the present case.
29. First, there was no similar background to the case in terms of time and previous dispute resolution procedures which do seem to me to be material, not least to the resourcing of the truncated timetable which was a concern in Clearway. Even if there is a truncated timetable, it is to deal with issues which have been, to a greater or lesser extent, ventilated in previous dispute resolution forums and should already have been addressed in the claimant’s evidence.
30. Second, in Clearway there was little or no explanation for any delay. There is here. It may not be a good reason, in the sense that I do not even reach the point of considering the third stage of the test, but it is a matter that I should, it appropriate, take into account.
31. Mr. Parker, in fact, argues that the reason for delay is something that should count against the defendant and cause me not to grant relief from sanctions. That is because he says Mr. Eyre, in his evidence to this court on this application, has positively sought to mislead the court as to the reasons why the directions as to service of witness statements and experts’ reports were not complied with. In short, he says that Mr. Eyre seeks to give the impression that it was purely a question of not being able to obtain funding, whereas Mr Parker contends that the evidence is clearly that funding has always been available but that the company that was funding the defendant, that is Readymight, withdrew its funding when it became aware, as a result of legal advice, that it might not or was unlikely to recover any costs which were found to be payable to it if the defendant was successful in this litigation. In short, he says that the failure to comply is nothing to do with funding but was a cynical decision to seek to protect the defendant’s position (having transferred the lease from the defendant) and that the defendant then revived its defence when it realised that one of the outcomes of failing to defend this action might be that the lease could be clawed back into the defendant company for the purposes of enforcement. Mr Parker described that as disreputable conduct or a disreputable reason for non-compliance….
33. However, I do not accept that Mr. Eyre has been less than candid with the court and I certainly do not find that he has sought positively to mislead this court. On the contrary, as I have already said, his third statement, which was the one served in opposition to the application for summary judgment, was the very statement which disclosed the content of the Director’s statement. It did so not just by reciting its content but by annexing a copy of it. It is a careful analysis of that Director’s statement and inferences drawn from it which lies behind Mr. Parker’s submissions. …
36. I have spent a little time on that topic not least because it appeared to bulk large in the claimants’ submissions. There is, as I have already, said no good reason why the defendant did not comply with these orders. There is an explanation and that is lack of funding. That may be related to Readymight’s financial position but may also have come about by reason of a decision taken by the defendant for what might be regarded as commercial rather than tactical reasons. That is not, therefore, a strong point in the defendant’s favour but I do not accept that it amounts to “disreputable” which should outweigh all other factors. I have to take it into account in the round with all the other circumstances.
37. Those other circumstances are the background to this action, which I have already referred to, and which I consider to be a significantly different from the position in Clearway, and the future impact on this litigation.
38. So far as the latter is concerned, the future impact on this litigation must be seen in the context of this application being made shortly before the trial is due to commence. The claimants argue that the defendant’s position amounts to saying that if it is possible for the trial to go ahead, and to go ahead without prejudice to the claimants, then relief from sanctions should, as it were, automatically be given. That they say is going back to “the bad old days” and does not reflect the current position and the Court of Appeal’s guidance in Denton v White.
39. In my judgment, however, at this stage of the proceedings, whether the trial can proceed without prejudice must be a highly material factor under CPR 3.9(1)(a), even if it is not the sole factor, and as I have said I place some considerable weight in terms of other factors on the background to this case. I have already said that it seems to me that the trial can go ahead without prejudice to the claimants. Mr Parker QC did not identify any specific difficulties that would be caused by Mr Brown’s statement or by defendant’s expert evidence being exchanged with the claimants. The only matter specifically identified by the claimants which was said to cause prejudice was in respect of further disclosure which, it was said, had not been pursued when it did not appear that the defendant would serve evidence. I do not see that there is any prejudice to the claimants in the manner in which they argue in respect of disclosure. Further disclosure, if there is any issue about it, could have been sought at any time: an application for specific disclosure could have been made. There is simply no evidence before me that there is any difficulty for the experts, in particular, in concluding their reports and proceeding to trial without a further disclosure application.
40. Mr. Parker also relies heavily on the fact that the application could have been made earlier, again drawing a comparison with Clearway. He is right that it could have been made earlier but Messrs. Glovers came back on the record on 19th May, which was the original date for expert evidence, a week before the hearing of the summary judgment application. It was at the hearing of that application that an order was made as to the timing of this application; it was duly made in accordance with that order; and indeed the defendant’s sought to have the application heard on proper notice nearly two weeks before this hearing.
41. Therefore, taking account of, as I have to do, all the circumstances of the case and dealing with it justly, I conclude that there should be relief from sanctions in respect of both the witness evidence and experts’ reports. I say that taking into account, and I am summarising I hope at this point what I have already said, first, that the trial can proceed without adjournment and without prejudice to the claimants (which must remain a significant factor even in the brave new world) against the background of this action, which is different and distinguishable from the position in Clearway. I say that taking into account and balancing that against the reasons for non-compliance with the court’s directions, which, whilst not being a positive factor in the defendant’s