THE SERVICE OF WITNESS STATEMENTS LATE: CLAIMANT REFUSED RELIEF FROM SANCTIONS: DEFENDANT GRANTED RELIEF FROM SANCTIONS: EQUALITY IS NOT ALWAYS EQUITY

It is quite possible that both parties in an action could be in default.  One party could be granted relief from sanctions for that default and the other refused. This is precisely what happened in Shill Properties Ltd v Bunch [2023] EWHC 478 (Ch) where Master Clark refused the claimant’s application for relief from sanctions in relation the late service of witness evidence. The defendant’s application was allowed.  The case is an important example of the need for a party to supply an explanation for a failure to comply with court orders.

“The second factor relied upon by the claimant was that the trial would not be imperilled by the granting of relief and there was no discernible prejudice to the defendant. This factor is to be weighed in the balance, but is not sufficient in itself to justify the grant of relief. Similarly, the fact the refusal of relief would result in the claimant being unable to make out its case is not sufficient to justify granting relief – that consequence is implicit in the application of the sanction in CPR 32.10.”

THE CASE

The claimant brought an action seeking specific performance of a contract of sale of a property. The defendant defended on the basis that the contract was void and procured by misrepresentation.

THE PROCEDURAL HISTORY

The claimant had failed to meet earlier procedural deadlines and a trial date had to be vacated.

Witness statements were to be exchanged in September 2022 with a PTR in October 2022.

The defendant, served a statement and witness summary in October 2022 and issued an application for relief from sanctions in relation to late services.

On the same day the claimant’s solicitors issued an application which, among other things, sought relief from sanction sanctions in relation to witness statements.  The trial date was adjourned, because of concerns about the defendant’s capacity.

The claimant then served its witness statements on 14th February 2023.

On 17th February 2023 the defendant served revised versions of her trial witness statements, to comply with PD 57AC, with some further additions. The defendant’s counsel made an oral application for permission to rely on the revised statements.

THE CLAIMANT’S APPLICATION

The judge refused the claimant’s application. There was no explanation for a substantial period of delay.

    1. As noted, the claimant’s application notice seeks on its face an extension of time for filing and service of its witness statements until 13 October 2022. That date is long gone. The claimant’s counsel nonetheless applied to extend time until 14 February 2023 (and grant relief in respect of the failure to serve until that date).
    1. Equally, the claimant has not filed any evidence since Mr Godden’s witness statement of 7 October 2022 in support of the application. The result is that the court has no explanation at all for the 4 month period of delay in serving the statements.
    1. Turning to the application of the Denton guidance, in this case plainly the breach is serious and significant, and the claimant’s counsel did not seek to argue otherwise.
    1. Insofar as the period between 21 September and 7 October is concerned, the reasons put forward by Mr Godden are not in my judgment good reasons. The fact that the parties are negotiating or seeking, as here, to arrange a mediation is not a good reason for not progressing preparation of witness statements in order to comply with a court order. As to the issue that arose as to the defendant’s capacity, this was capable of disrupting finalisation of her witness statement, but should not reasonably, in my judgment, have had any impact on preparation of the claimant’s witness statements.
    1. So far as the period from 7 October 2022 to 14 February 2023 is concerned, as noted, no reason or explanation has been provided.
    1. I turn therefore to all the circumstances of the case. The claimant’s counsel relied upon the following factors. First, he said, the defendant was in the same position as needing to seek relief from sanctions. I deal with the defendant’s application below, and I reject the submission that her position is the same as the claimant’s.
    1. The second factor relied upon by the claimant was that the trial would not be imperilled by the granting of relief and there was no discernible prejudice to the defendant. This factor is to be weighed in the balance, but is not sufficient in itself to justify the grant of relief. Similarly, the fact the refusal of relief would result in the claimant being unable to make out its case is not sufficient to justify granting relief – that consequence is implicit in the application of the sanction in CPR 32.10.
    1. The factors relied upon by the claimant are to be counterbalanced in my judgment against the following:
(1) the claimant’s previous breaches
(i) its complete failure to engage with providing the disclosure required by para 3 of my order of 21 September 2021 (“the first breach”);
(ii) its failure to carry out proper searches for documents so that it failed to comply with its disclosure obligations when giving Extended Disclosure (“the second breach”) – so that it had in its application of 7 October 2022 also to seek relief from sanctions in respect of that failure;
(2) the fact that the first breach resulted in the trial listed on 21 June 2022 having to be vacated and re-listed;
(3) there is no evidence before the court that, despite the statement in Mr Godden’s witness statement that the claimant’s witness statements would be ready on 13 October 2022, the claimant took any significant steps towards complying with its obligations until the very last minute;
(4) assuming the court were willing to accede to an extension of time until 13 October 2022 (and corresponding relief from sanctions), as sought in the claimant’s application notice, the claimant’s informal application to further extend time to 14 February 2023 was not made promptly, and there is no evidence to support that application.
    1. I have considered carefully whether the refusal of relief would be a disproportionate response to the breach, and concluded that the gravity and significance of the matters listed in paragraph 31 above mean that it would not. I therefore dismiss that part of the application.

 

THE DEFENDANT’S APPLICATION

The judge granted the defendant’s application.
    1. I turn therefore to the defendant’s applications.
    1. As to the application dated 7 October 2022, I consider that the delay of 16 days in filing and serving the statements is serious and significant, albeit at the lower end of seriousness. However, there was in part a good reason for this delay. The correspondence shows that the defendant’s daughter was obstructing Mr Aaron’s access to her. As to all the circumstances, the application was made promptly, and there have been no previous defaults in compliance with court rules or orders by the defendant. I would grant relief from sanctions in respect of that failure.
    1. As to the defendant’s application to rely on her revised witness statements, CPR PD 57AC provides at para 5:
Sanctions
5.1 The court retains its full powers of case management and the full range of sanctions available to it and nothing in paragraph 5.2 or paragraph 5.3 below confines either.
5.2 If a party fails to comply with any part of this Practice Direction, the court may, upon application by any other party or of its own motion, do one or more of the following –

(1) refuse to give or withdraw permission to rely on, or strike out, part or all of a trial witness statement,

(2) order that a trial witness statement be re-drafted in accordance with this Practice Direction or as may be directed by the court,

(3) make an adverse costs order against the non-complying party,

(4) order a witness to give some or all of their evidence in chief orally.”

    1. The defendant’s application for permission to rely on her revised statements is therefore also an application for relief from sanctions. She may also require permission under CPR 32.10 since the witness statements she seeks to rely upon were not served until 17 February 2023.
    1. The wholesale disregard of CPR PD 57AC must in my judgment be considered serious and significant. The only reason for this, put forward by counsel, namely that the defendant’s solicitors do not normally practise in the Business and Property Courts, is plainly not a good reason. I turn therefore to all the circumstances of the case. Firstly, with minor exceptions, the substance of the witness statements remains the same, so that the defendant has been in substantial compliance with the order of 26 May 2022 since 10 October 2022. Secondly, the sanctions set out in para 5 of the Practice Direction are directed towards inclusion rather than exclusion of evidence – even the reference to refusing to give permission for reliance on a witness statement refers to a non-compliant witness statement. Here, I am being asked to give permission to rely upon compliant statements.
  1. In this case, had the defendant not taken the necessary steps to render her trial witness statements compliant, then I would have made an order under para 5.2(2) that she do so. In my judgment, it would be disproportionate and contrary to the purpose of the Practice Direction not to allow her to rely upon them. I will therefore grant her permission to do so. As to the additions to her statement, they are relatively minor and I would therefore also grant relief in respect of them.