“THE DOG ATE MY HOMEWORK” EXCUSE DOESN’T WORK WELL IN COURT: THE JUDGE MAY HAVE BEEN WRONG ABOUT THE WAY “SIGNED FOR 1ST CLASS” OPERATED BUT THEY WERE RIGHT TO REFUSE RELIEF FROM SANCTIONS: COURT OF APPEAL DECIION

In Diriye v Bojaj & Anor [2020] EWCA Civ 1400 the Court of Appeal held that the judges who heard a relief from sanctions hearing below were in error about the way that “Signed for 1st class” post operated, however the decision to refuse relief from sanctions was upheld.  There are important points made in this judgment about the need for compliance with orders and the need to “prove things”.

“… the submission seemed to be based on the incorrect notion that a claimant was entitled to advance a rubbishy case in stages, from pleading to witness statement to trial, presumably in the hope that, by the time the trial came on, there was a commercial imperative on the part of the respondents to settle the case.”

THE CASE

The claimant was bringing a case including a claim for car hire.  An Unless Order was made that the claimant file a reply setting out details of impecuniosity and, in default, be debarred from relying on impecuniosity in relation to the claim.  The steps were to be taken by the 18th April 2018.

The relevant documents were put in the post “Signed for 1st class” at 17.36 on 4th April 2018.   The defendant’s solicitors did not sign for the documents until the 9th April 2018.  In a letter on the 17th April 2018 the claimant’s solicitors conceded that an application for relief from sanctions was needed but did not make that application until the 31st May 2018.

THE HEARINGS BELOW

The District Judge refused to grant relief from sanctions, that decision was upheld by the Circuit Judge.

THE DEEMED DATE OF SERVICE

There was an issue in relation to the correct date of service when “Signed for 1st Class post was used.”

  1. By the time the application for relief from sanctions was heard by the DJ on 21 August 2018, it was conceded on behalf of the appellant that, pursuant to CPR 6.26, even if it was found that service had been by First class post “or other service which provides for delivery on the next business day”, the deemed date for service in accordance with that rule would be the second day after it was posted, namely 6 April 2018. Accordingly, on any view of r.6.26, there had been a failure to comply with the Unless Order.
  2. There were a number of substantive issues between the parties, one being the appellant’s failure to make the application for relief from sanctions for a period of two months after the need for it was or should have been known, and another being the respondents’ underlying submission that, even in August 2018, the claim remained unsatisfactory because there was nothing to support the appellant’s assertion that he was impecunious.
  3. The DJ held that service effected by “Signed For 1st Class” post was not the equivalent of First class post, because the mechanism required that the document be signed for before it was delivered, and was therefore outwith the deemed service regime. She therefore found that service did not occur until 9th April.

THE COURT OF APPEAL ON THE “SIGNED FOR 1ST CLASS SYSTEM”

The Court of Appeal disagreed with the judges below on the relevant date for service when this method was used.

THE FIRST ISSUE: SERVICE
    1. Neither the DJ nor the judge had a copy of the Royal Mail Scheme. I respectfully consider that, without sight of it, they reached the incorrect conclusion that the Royal Mail’s “Signed For 1st Class” service was not either First class post, or alternatively, another “service which provides for delivery on the next business day“. There are several reasons for that.
    2. First, there is Royal Mail’s own description of the “Signed For 1st Class” service in the Scheme. They describe it as First class post: it is simply a version which is signed for. In every other way, particularly in respect of delivery, both services are described using the same words. It would be very difficult to suggest that “Signed For 1st Class” post was not simply a species of First class post, and therefore to be treated as such by r.6.26.
    3. Secondly, I am in no doubt that, even if it was not First class post as such, it was – in the words of r.6.26 – “another service providing delivery on the next business day”. That is the delivery date which Royal Mail aims to deliver both First class post and “Signed For 1st Class” post: see paragraph 9 above. Therefore, both are services which are “providing delivery on the next business day“.
    4. Thirdly, I consider that any attempted distinction between the two First class services based on actual delivery would be wrong in principle. That would ignore the concept of “deemed service” in r.6.26, and the effect of the decisions in Godwin and Anderton. I note that, at paragraph 31 of his judgment, the judge said:
“The whole purpose of Rule 6.26 in so far as it relates to 1st class post is to eliminate arguments about whether a document was actually delivered on the following day or the day after or the day after that, because of the vicissitudes in the way in which the postal system works. Essentially, it provides a simple solution to that form of dispute.”
I respectfully agree with that analysis. As a matter of logic, that analysis demonstrates why questions of actual delivery must be irrelevant to the “Signed For 1st Class” service. As the authorities make clear, it was to get round the sorts of difficulties that can arise in proving actual service or delivery that r.6.26 was created in the first place. Service deemed to have occurred on the second business day after posting avoids the need for the court to have to explore when the document was in fact served/delivered/signed for/acknowledged. The deeming provision is there to provide certainty, and to make the actual circumstances of delivery or receipt irrelevant.
  1. In his submissions, Mr Fardy repeatedly referred to the way in which a ‘signed for’ delivery service “rectified the problems” with First class post. However, the deemed service provisions mean that in reality there are no “problems” with First class post. On the contrary, the deemed service provisions were themselves designed to get round the problems of proving delivery.
  2. Fourthly, there is nothing in r.6.26 that refers to items being “signed for”. That is not a concept recognised by the CPR. Although there is a reference later in r.6.26 to “delivery of the document to or leaving it at the relevant place” (paragraph 20 above), I am satisfied that that envisages the personal delivery of the item to the relevant place by the litigant or his/her representative. It does not envisage delivery by any kind of postal or third party carrying service.
  3. That leads on to the point made by my Lady, Lady Justice Rose, during the course of argument. As she pointed out, the rules work on the basis that an item is served either by way of First class post (or a similar service) or alternatively, by actual delivery. The latter must have the restricted meaning to which I have referred, because otherwise it could be said that every item is “delivered” to the relevant address, including those items sent to that address by post. In order to give effective meaning to the “delivery” section of the table at r.6.26, it must mean actual delivery as opposed to an item sent in the post or via a similar carrying service.
  4. Fifthly, solicitors serving documents need to know that, when they put something in the First class post, the deemed service provisions of the CPR have been triggered. It makes no sense to suggest that, by using the “Signed For 1st Class” service, a solicitor is in a worse position than if he or she had used ordinary First class post; that, although they had posted the document in time, they were obliged constantly to check with the intended recipient that it had actually been received and signed for within the time limit prescribed by the rules or the court’s order.
  5. Finally, I would be concerned that any other result would mean that an unscrupulous intended recipient could evade service altogether, simply by refusing to sign for the document in question. Solicitors use the “Signed For 1st Class” service presumably for added protection, because they obtain a record of receipt. It would be entirely counterproductive to conclude that the use of this service had the opposite effect and could allow an intended recipient to avoid service altogether.
  6. For all those reasons, therefore, I conclude that the Royal Mail’s “Signed For 1st Class” service is caught by r.6.26, either because it is included within the rubric “First class service” or because it is “another service which provides for delivery on the next business day”. Either way, the same deemed service provision set out in r.6.26 applied to the service of the Reply in this case. The Reply was deemed to have been served on the second day after it was posted, namely 6 April 2018.
  7. In those circumstances, the appellant failed to comply with the mechanics of the Unless Order, albeit the default was one of two days’ duration, rather than the five days identified by the DJ and the judge. Whether that makes any difference to the result, of course, depends on a consideration of the three-stage test in Denton v White.

THE CLAIMANT’S UNSUCCESSFUL APPEAL AGAINST THE DECISION TO REFUSE RELIEF FROM SANCTIONS

Although the Court of Appeal found that the breach was for two days and not the extended period found below the Court declined to interfere with the District Judge’s order refusing relief from sanctions. Coulson LJ considered this issue:-

THE SECOND ISSUE: THE EXERCISE OF THE DJ’S DISCRETION
    1. As is often the way in this sort of appeal, I consider that there is a short answer and a long answer to this issue, although they both give rise to the same result. The short answer is that, in my view, even allowing for the necessary adjustment from 5 days delay down to 2 days, the DJ considered all the relevant matters required by r.3.9 and Denton and reached conclusions that she was quite entitled to reach. Applying the test set out at paragraph 18 above, it would therefore be impermissible to interfere with her exercise of that discretion, even if this court might have approached some of the material in a slightly different way. The long answer involves looking at the matters that the DJ considered and, on a detailed analysis, concluding not only that they were findings under the Denton test open to her, but that they were also the correct findings.
    2. I therefore propose to go at what I hope is a reasonable pace through the three-stage test. However, this process will take a little longer than I would have wished, because a number of points of principle were raised in argument which are by no means confined to this case, but which I consider to be flawed. I therefore need to explain why.
    3. The first thing to do is to identify the nature of the breach. Mr Peter accepted that there was a breach because the Reply was not served in time, and he agreed that the breach was serious. Although he sought to argue that it was not perhaps as serious as some breaches in other cases, I consider that there is no room in this part of the test for such fine gradations. All that matters is that the breach in failing to serve the Reply on 4 April was (and is agreed to be) serious.
    4. Mr Peter did not accept that there was any other breach of the Unless Order and maintained that the breach that he did accept, although serious, was not significant. But in my view, there was a more fundamental breach of the Unless Order than the delay in service.
    5. I consider that, on analysis, the Reply, even when served, did not comply in substance with the Unless Order[1]. That Order required the Reply to set out “all the facts” relied on in support of the assertion of impecuniosity. The appellant was a minicab driver, and that was the source of his income. So, the Reply needed to set out what his income was and what his expenditure was, and how those figures meant that he could not afford to hire a replacement vehicle. Yet all the Reply said on this topic was at paragraph 5, which stated simply that “As he earned cash as a minicab driver, he expended the same on bills and daily living allowances for his family”. Nothing else of relevance was provided. No figures for income were pleaded at all.
    6. For completeness, I should say that this position was not improved by the appellant’s subsequent witness statement for the trial, served well before the hearing before the DJ in August 2018, where on the same subject, the appellant just said:
“I had no money to repair or buy another car and all my accounts were close(d) to their overdraft limits and my credit cards had reached the maximum credit card limit. I have a bad credit rating as I have outstanding credit card bills so I could not get a loan.”
    1. Although this issue was dealt with by the DJ and by the judge under stage 3 of Denton (in particular the DJ’s comments which I have set out in italics at paragraph 14 above), I consider that they may arise more conveniently under stage 1, particularly given Mr Peter’s focus on the question of the significance of the breach. If I am right and the Reply did not comply with the substance of the Unless Order in any event, the significance of the breach could hardly be greater[2].
    2. Mr Peter disagreed with that analysis of the Reply and repeatedly drew a distinction between a pleading and the evidence required to support it. Stripped of its repetition, that argument was to the effect that a claimant in the position of the appellant was entitled to assert impecuniosity by way of a bald statement, and then seek to adduce evidence later on to embellish it. He said that, although that might mean the case would go badly for the appellant at trial, he should not be shut out from pursuing his claim for credit hire in court.
    3. I consider that there are a number of fundamental errors in that submission. The first is that it seeks to get around the clear wording of the Unless Order, which required the pleading of “all facts in support of any assertion” of impecuniosity. On this issue, therefore, there was no room for any gap between the pleading and the statement. Secondly, the submission seemed to be based on the incorrect notion that a claimant was entitled to advance a rubbishy case in stages, from pleading to witness statement to trial, presumably in the hope that, by the time the trial came on, there was a commercial imperative on the part of the respondents to settle the case.
    4. Thirdly, Mr Peter’s approach ignored the respondents’ position. They are entitled to know the case they have to meet. They should not be expected to have to prepare for a trial where the critical item of claim depends on a one line assertion, and hoping that, as a result of the cross-examination of the appellant, the judge will reject the claim. That is not how civil litigation is supposed to work post-CPR. And fourthly, the argument was unsupported on the facts. I have already set out the one line assertion in the Reply (paragraph 48 above) and the equally unrevealing evidence in the witness statement (paragraph 49 above). So the Reply did not in fact herald a witness statement with more detailed support for the impecuniosity claim.
    5. Accordingly, I consider that, even if the Reply had been served on time, the document itself failed to comply with the substance of the Unless Order. Even if it is taken together with the witness statement, the Reply created precisely the situation that the Unless Order was designed to avoid: a simple assertion of impecuniosity, with no facts set out to support it. The breach of the Unless Order was therefore serious and significant.
    6. In the light of my conclusions under stage 1 of Denton, it is perhaps unnecessary to deal in detail with the other submissions that Mr Peter made as to the significance of the breach. But I should briefly address two points of principle that he raised because I consider that each derived from a misunderstanding of the law.
    7. Mr Peter submitted that, because the default period – on my finding that the deemed service provision applied – was only two days and not five, that could not be a significant breach. In this context, he relied on Khandanpour v Chambers [2019] EWCA Civ 570, where the delay was one of seventeen hours, a delay described by this court as ‘minor’. However, there were in that case a number of compelling mitigating factors (such as the relevant party being the victim of a knife attack at the time the order expired, and the fact that a major part of the court’s order was complied with in time) which do not arise here. More generally, seriousness and significance can never be a simple function of the period of default. It would be wrong in principle to suggest a sort of sliding scale that automatically allowed defaults of, say, 2 or 3 days, but not defaults of, say, a month. The period of default is a factor to be considered when assessing seriousness and significance, but it is no more than that.
    8. Mr Peter also submitted that the failure to comply with the Unless Order was not significant because it had no effect on the court proceedings. In my view, there are two answers to that.
    9. I consider that, in advancing this submission, Mr Peter misread paragraph 26 of Denton. It is certainly right that Lord Dyson MR and Vos LJ said that there are many circumstances in which materiality, which they define as having an effect on litigation generally (not only the litigation in which the application is made), will be the most useful measure of whether a breach is serious or significant. But they were very clear that it cannot be limited to that consideration, because they immediately went on to say that there will be breaches which are significant or serious even though they have no effect on litigation, such as a failure to pay court fees. They expressly rejected the submission that seriousness and significance could only be measured by whether the breach had imperilled the timetable or affected the course of the litigation. Thus, the effect of the breach on litigation generally is just one way in which significance can be measured: it is not the only way.
    10. If a breach was required adversely to affect the court timetable before it could be called serious or significant, that would be uncomfortably and unacceptably close to the pre-CPR regime, where the defaulting party could get away with repeated breaches of court orders simply because the other side could not show that they had suffered specific prejudice as a result. That is not now the law.
    11. Moreover, as a matter of fact, I consider that, in the present case, the failure did have an effect on the course of the litigation. First, if the appellant had properly addressed the question of his impecuniosity before or in accordance with the Unless Order, the trial would have gone ahead as scheduled in November 2018. The breach might therefore be said to have had a calamitous effect on this litigation.
    12. Even if the breach in this case had been confined to the delay in service, that would not make it insignificant. Parties to civil litigation need to make clear the important elements of their respective cases at an early stage. Gone are the days of ambush and keeping important points up your sleeve. The aim of much civil litigation is to bring about a cost-effective settlement. If a claimant delays in providing critical information, particularly where he has been ordered to provide it by way of an Unless Order, that delay adversely affects the other side’s ability to a take a view about the strength or weaknesses of the claim they face. The effect on the ligation in question should not be measured simply by whether or not the trial date can still be met; in properly run litigation, the aim must be to avoid having a trial date altogether.
    13. For all these reasons, I conclude that, given the background to the making of the Order, and the fact that it was an Unless Order with which the appellant failed to comply, the breach was serious and significant.
    14. Stage 2 of Denton requires a consideration of whether or not there were good reasons for the default. The DJ rightly found that there were no such reasons here. One explanation offered in the application form was that the appellant’s solicitors mistakenly thought that they could rely on CPR 7.5 and that by completing the step prescribed there (of posting the document before midnight on 4 April), they had served the Reply on that day and therefore in time. That was wrong on two counts: first, because the rule applies only to the service of claim forms; and secondly because service is not effected on the date the step is taken but on the second business day after the step is taken). The other explanation was a reference to the difficulties of getting the appellant to come into their office to finalise the necessary instructions. With great respect, those excuses are of ‘the dog ate my homework’ variety and cannot possibly explain or justify why the Unless Order was unnecessary, let alone why it was not subsequently complied with.
    15. In those circumstances, having found a serious and significant breach and no reason or excuse for it, stage 3 of Denton, namely a consideration of all the circumstances of the case, becomes critical.
    16. The first matter relevant to stage 3 was the delay in the making of the application for relief from sanctions (as per Oak Cash & Carry). Here there was a total delay of two months in the making of this application (6 April to 5 June 2018). That is despite the fact that the appellant’s solicitors knew, and acknowledged on 17 April, that such an application was required. The need to act promptly if a party is or might be in breach of a Court Order is axiomatic: 23 PDA 2.7 requires action when that party knows the application is “necessary and desirable”. In my view, in the present case, that was before and certainly not later than 17 April. In a case with a trial date fixed for November, to allow weeks and months to go by before even making the application for relief from sanctions was unsupportable. The delay in making the application therefore militates strongly against granting relief from sanctions.
    17. The most significant element of the stage 3 review in this case comes back to the appellant’s consistent failure to grapple with the issue of impecuniosity, which was a critical part of his case. District Judge Walder made the Unless Order to avoid the appellant simply coming to court at trial and saying: “I didn’t have any money”. For the reasons I have set out at paragraphs 48 – 54 above, the Reply merely perpetuated that stance. This was the point being made by the DJ at paragraphs 13-16 of her judgment, set out at paragraph 14 above.
    18. Therefore, in considering all the circumstances of this case, I conclude that the appellant and his solicitors have never engaged with the need properly to plead and prove his impecuniosity in support of the claim for credit hire charges. They did not do that at the outset of the claim; they did not do so when the subject of an Unless Order; and they have not done so subsequently. In those circumstances, there was no basis on which the court could grant the appellant relief from sanctions.
    19. Finally, for completeness, I should deal with Mr Peter’s submission that, in reliance on the passages in Denton set out at paragraph 28 above, the delay was the responsibility of the respondents, because of their unreasonable refusal to allow an extension of time in respect of the Unless Order. It follows from the preceding paragraphs that I do not consider that the respondents acted in any way unreasonably in this case; on the contrary, they were entitled to require the appellant to make the necessary application and then to oppose it.
    20. However, I should also say that, in my view, Mr Peter considerably over-stated what the court said in Denton about the need for restraint on the part of the innocent party. Lord Dyson MR and Vos LJ were careful to say at [41] that mistakes should not be taken advantage of in circumstances where the failure was neither serious nor significant, where a good reason was demonstrated, or where it is otherwise “obvious that relief from sanctions is appropriate”. That is a relatively high bar. It was emphatically not designed to give carte blanche to a defaulting party to blame the other side for the delays caused by its own breach.
CONCLUSION
  1. Although I consider that the DJ and the judge were wrong about the status of “Signed For 1st Class”, it makes no difference to the outcome of this appeal. In my view, for the reasons I have given, they were right to refuse the appellant relief from sanctions. If My Ladies agree, this appeal will therefore be dismissed.