THE DANGERS OF RUNNING UP TO DEADLINES AND LEAVING MATTERS LATE FOR COMPLIANCE: DEFENDANT HAD FAILED TO FILE WITH COURT ORDERS: REFUSAL TO GRANT RELIEF FROM SANCTIONS UPHELD ON APPEAL

The judgment of Mr Justice Ritchie in Jaiyesimi v Kukoyi [2024] EWHC 164 (KB) has many important lessons for litigators. Firstly the need for the fee to be paid in order that an application is properly made.  Secondly the dangers of  leaving matters to the last minute.  The judge held that an application had not been properly made when the applicant had not paid the fee.  Relief from sanctions was refused.  The defendant had also failed to file witness statements in time and, again, relief from sanctions was refused.

 

“To suggest on appeal that solicitors should not run up to deadlines and leave matters late for compliance and that there should be some statement of principle that leaving matters to the last minute in litigation is appropriate is not an attractive argument and I reject it.”

 

THE CASE

The defendant had been ordered to file an application for permission to amend his defence and counterclaim by the 8th July 2022.  An application was made and filed on the 8th July, however no fee was offered and paid that day.  The judge at first instance found that the absence of the fee meant that the application was not made in time.  The defendant’s application for relief from sanctions was refused.  The defendant appealed. The defendant had also failed to file witness statements in accordance with time.  Again the defendant’s application for relief from sanctions was refused.

WAS THE ABSENCE OF THE FEE FATAL TO THE APPLICATION BEING MADE IN TIME?

The judge held that the application was made in time because, although an attempt had been made to pay the fee later, no fee had been paid on the 8th.

THE JUDGMENT ON APPEAL

Mr Justice Richie held that the requirement to make the application by the 8th July including a requirement to pay the fee on that date.  He upheld the decision that the payment had not been made in time.

 

    1. Pulling all these provisions together, and filling in the logical gaps, in my judgment, when the Court ordered SK to file and serve any Amendment Application by 8th July 2022, the Order and the CPR required SK to:

 

(1) Send the notice of application, with accompanying evidence, before close of business on 8th July 2022 to Central London County Court (Order of HHJ Lethem 17.6.2022);

(2) Because the notice was sent by email: outline the preferred method of payment (credit or debit card) and provide the court with a contact number to take payment over the telephone (CPR PD5B para 2.3(a)(ii));

(3) Serve the Respondent with a copy of the notice of application (CPR r.23.4) as soon as reasonably practicable but in any event by close of business on 8.7.2022 ((Order of HHJ Lethem 17.6.2022);

(4) Get the application issued and pay the fee due;

(5) Obtain a hearing date from the Court;

(6) Serve the Respondent with the issued application and evidence in support at least 3 days before the hearing (CPR r.23.7)

 

THE FINDINGS OF FACT AT FIRST INSTANCE

The findings at first instance were not appealed.

 

    1. There is no appeal as to the findings of fact. The facts were as follows:

 

(1) Requirement: send the notice of application, with accompanying evidence, before close of business on 8th July 2022 to Central London County Court (Order of HHJ Lethem 17.6.2022). Performance: this was fulfilled by the Appellant.

(2) Requirement: outline the preferred method of payment (credit or debit card) and provide the court with a contact number to take payment over the telephone (CPR PD5B para 2.3(a)(ii)). Performance: this was breached by the Appellant.

(3) Requirement: serve the Respondent with a copy of the notice of application (CPR r.23.4) as soon as reasonably practicable and in any event by close of business on 8.7.2022. Performance: this was fulfilled by the Appellant.

(4) Requirement: get the application issued and pay the fee due. Performance: this was breached by the Appellant.

(5) Requirement: obtain a hearing date from the Court. Performance: this was achieved.

(6) Requirement: serve the Respondent with the issued application and evidence in support at least 3 days before the hearing (CPR r.23.7). Performance: this was breached by the Appellant.”

 

UPHOLDING THE FINDINGS BELOW

    1. The e-mail and the covering letter sent by the Appellant to the Court in the afternoon of the very last day permitted for filing the application, did not comply with CPR part 5 practice direction 5B paragraph 2.3(a). Thus, although the notice was sent to the Court it was not properly “filed”. Para 23(a)(ii) states “must” and requires compliance for a document to be “filed”. Non-compliance therefore prevents filing occurring as the Judge found. The Appellant offered to call the Court on the 11th of July. That was too late. It is not sufficient just to rely on the telephone number on the header or footer under the Rules. The contact phone number for the Court to call should be provided with the indication of payment method by debit or credit card as required by the practice direction. The Appellant did not provide the intended method of payment by saying that the Appellant intended to pay by debit or credit-card and inviting the Court to call the telephone number of the Appellant’s solicitors. As to the relevant powers of the Court in such circumstances practice direction 5B at paragraph 2.4 empowered the Court to refused to accept the application because it had not been made in accordance with paragraph 2.3(a). The Judge found that, because the Appellant had failed to comply with the fee payment provisions in relation to the application, it was not properly filed. I do not consider that any of the grounds of appeal in relation to this finding of fact and the ruling on the law can succeed. I consider the finding was justified and the ruling on the Rules was correct.

 

 

    1. As to the Judge’s finding about whether the Amendment Application was served on the 8th of July, I do not consider that it was wrong overall. There is a difference between sending a draft notice of application to the opposing party and sending the issued notice of application to the opposing party. The importance of having an application issued is that it shows that the Court has accepted it was properly filed, is seized of the application and that it can therefore be progressed. Whilst service of the draft notice of application and evidence in support on 8.7.2022 was good professional practice and was required under CPR r.23.4, it cannot take the place of the need to serve the issued application required under CPR r.23.7. This was never done. So, my analysis of the law differs slightly from the Judge’s but the effect is the same.

 

 

    1. I understand the Appellant’s frustration over the following facts. Firstly, the Court did not call the Appellant’s solicitors to take payment at any time after the 8th of July. Secondly, the Court did not cash the cheque sent in satisfaction. Thirdly, the Court listed the hearing of the application despite the fact that the notice of application had not been issued. But it must be noted that the PD requires the court to list a hearing on receipt of the notice, not on payment of a fee. Furthermore the Court was entitled to refuse to issue the application because the fee was not properly offered. The parties believed that the hearing was to take place to determine the application. But professionally SK’s lawyers should have chased up the application to ensure it was issued. They failed to do so. It was only on the day of the hearing that the Judge raised the procedural defect points. Reading the transcript shows how this took the Appellant by surprise and allowed the Respondent to jump onto the bandwagon which was being pulled by the Judge. I also understand how the Appellant and litigants more generally would wish for a perfectly efficient Civil Justice System to the operated out of Central London County Court. However, in my judgment, the responsibility for the procedural defects in this Appeal lay with SK’s solicitors. Taking into account the long history of the two actions set out above it was wholly inappropriate to wait until the afternoon of the final day permitted for filing and serving the application to amend the pleading, particularly in the light of the strict order made on the 17th of June 2022. The provisions of r. 23.7, which required service of a notice of application as soon as practicable after it is issued, and in any event no less than three days before the hearing, were not complied with at all by the Appellant because the application was never issued and they never chased issuing. SK’s solicitor should have known of the need to file the application and pay the fee and then make sure it is issued and then serve it well before the deadline. However, SK did not do so and created his own risk as a result. He then fell foul of that very risk.

 

 

    1. Whilst in isolation, or in another well run case, the Judge’s ruling on filing and service of the notice of application could seem harsh and probably would not prevent a waiver of the defaults by the Judge, in the context of the two claims and the conduct of the litigation by SK’s lawyers and himself as a team set out above, I consider it was well within the ambit of the Judge’s discretion, having put a strict time limit on any further application to amend the defence or to add a counterclaim to require strict adherence to it. That June 2022 order was not complied with. In so far as the Judge had discretion to waive the breach, no written application was made or issued and I do not consider in the context of the conduct of SK’s team that the Court’s inherent discretion was exercised wrongly.

 

 

    1. I make no comment here on whether the Amendment Application would ever have failed or succeeded substantively in the light of it containing matters which were previously struck out in action 733. The Judge did not descend into any analysis of those matters despite the fact that the prospects of success of the amendments may well have been a further relevant consideration which might have weighed against the Appellant because the amended pleading covered many struck out matters from Action 733.

 

 

The grounds of appeal in Appeal 186

    1. Ground 1: the Appellant asserts that the Judge was wrong to declare that SK had not complied with the order of 17th June 2022 to file and serve the application to amend by the 8th of July 2022. In my judgment this ground is not made out for the reasons set out above. The letter and email covering the application did not comply with the Order.

 

 

  1. Ground 2: SK had complied with the Civil Procedure Rules for electronic filing and service and had tendered the fee for the application and that the parties had being given a hearing for the application by the Court and had prepared for the hearing so the judge should have exercised his power to overlook any procedural irregularity. In my judgment the Judge’s decision was not irrational and was not wrong in law. This ground is not made out. The CPR were not complied with by the Appellant.

 

LATE SERVICE OF WITNESS STATEMENTS

The judge at first instance also refused the defendant’s application for relief for sanctions following late service of witness statements.  This decision was upheld on appeal.

 

Analysis and applying the law to the appeals

    1. The 12 grounds can be categorised into two groups. The first relates to stage 2 of the test in Denton which asks whether there is a good reason for the breach. The second group relates to stage 3, in which the Court considers all of the circumstances of the case and, pursuant to CPR rule 3.9(1), considers the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules practice directions and orders, so as to deal with the application justly overall.

 

 

    1. Looking first at the reasons given. The Judge set out in a clear, chronological and balanced way his factual findings as a result of the evidence put before the Court. None of those factual findings is appealed. The criticisms the Judge made of SK and his lawyers in relation to the reasons for default were plain. In my judgment SK and his solicitors should have been preparing, filing and serving the lay witness evidence on which he relied for the forthcoming trial, which was listed in a window in January or February 2023, for a long time. Instead of preparing and completing these early and serving them, the Appellant did not do so early. Then the solicitor was forced to go off on compassionate leave. The Appellant’s solicitor failed to warn the locum of the urgent need to comply with the unless order by a note, conversation, e-mail, letter or “to do” list. The Appellant then sought to rely on the locum’s difficulties with the computer system which only started on the 4th of October. Thus, between the 16th of September and the 4th of October, a period of 18 days, the computer system was working properly for the locum. The Judge made findings about the locum carrying out work on the file. In summary the Judge found that family ill health and the secretarial tragedy were not good reasons, even when combined with a later computer crash, for ignoring a draconian unless order in the circumstances of this case and in the time scale permitted. The case concerned events from 2008 through to 2018 and the claim had been issued in 2019, so was four years old. In my judgment the various pleadings and amended pleadings were, or should have been, carried out in accordance with the client’s instructions and so there should have been file notes or proofs of evidence or draft witness statements. Once the Order of HHJ Lethem was made on the 30th of August the Appellant knew he only had 41 days. Of those 41 days, 16 were available whilst the solicitor was at work. 18 were available to the locum with the computer system fully operational. Only 7 were affected by the computer crash. However, once again matters were left to the last minute. For the reasons expressed by the Judge I do not consider that it was wrong to find that there was no good reason for the breach. There was a plausible reason, but it was not a good reason.

 

 

    1. Turning to the circumstances of the case and stage 3. Wisely, no attempt was made during the appeal to defend the unimpressive history of the way the litigation had been handled by SK. The Judge’s use of the words “deplorable” in relation to this history of SK’s conduct (including his legal team) was not inappropriate. The litigation had been made disproportionately costly by multiple failed applications by SK. The litigation had not been conducted efficiently as a result of the late compliance or non-compliance with orders by SK and the effect of the multiple failed applications. As for factor (b) in CPR r.3.9(1), the need to enforce compliance with rules. practice directions and orders, the overwhelming weight of that factor lies in favour of refusing relief from sanctions in the circumstances.

 

 

    1. That brings me to the root of the appeal which is the assertion that the breach did not cause prejudice to the Respondent. The argument, elegantly put by Miss Delbourgo, was constructed on various assumptions. The first was that the Judge was wrong to refuse to hear the Amendment Application. The second was that the appeal from that decision had reasonable prospects of success such that the trial should have been put back. The third was that where such an appeal from a case management decision has been made there is less need to comply with future Court Orders relating to service of evidence. The fourth was that the trial window would have been vacated because of the Amendment Appeal in any event. Logical though that argument might appear at each stage it is, in my judgment, faulted. Firstly, I have found that the decision of the Judge to refuse to hear the Amendment Application is unassailable. Secondly, the appeal against that decision had not been granted permission at the time of the hearing before the Judge. Even if permission had been granted at that time I note that no stay was requested or imposed when it finally was granted. Thirdly, it is not right in principle to say that entering a notice of appeal against a case management decision entitles any party to ignore future case management directions or stays the course of the case. A stay is not automatic under the CPR. No stay was granted. In addition the grounds for a stay may never have been made out. Fourthly, if the witness statements had been served on time there would have been no need for an application for relief and the trial could have been listed in the trial window despite the existence of the Amendment Appeal. I do not need here to analyse the various arguments which could have been made for the trial going ahead or not going ahead. They are many and varied. Suffice to say that one is that the pleaded issues related to the asserted loan by the Claimant to SK and the defence that the mortgage deed and trust deed were not knowingly signed by SK. Those limited issues could have been tried and determined. If the appeal on the Amendments had later succeeded and further issues were later permitted to be pleaded out or counterclaimed (which I doubt would have been permitted, they having been struck out in Action 733), they could have been heard at a second trial later on. I take into account that there is a public interest in finality in litigation.

 

 

    1. Overall, in my Judgment, none of the grounds of appeal satisfy the threshold test in the cases set out above. The Judge’s reasoning for rejecting the application for relief was not irrational. The Judge did not fail to take into account relevant matters or take into account irrelevant matters and the discretion the Judge exercised was within the reasonable ambit he was permitted.

 

 

Analysis of each Ground

    1. Grounds 1, 4, 8 and 12: The appeal from the Amendment Application is analysed above in the analysis section. I do not accept that the Respondent suffered no prejudice as a result of the Appellant’s breach of the unless order. It led to a relief application and a hearing and cost consequences from both. None of the previous costs orders have been paid by the Appellant, despite multiple failed applications, one of which was marked totally without merit. Failure to pay costs orders is a prejudice because it causes the Respondent to suffer financial disadvantage. In addition, in my judgment, the breach of the Order put the trial at risk because the relief application was heard in late January 2023. I do not consider that the Appellant has made out the submission that the Respondent faced no risk of prejudice as a result of the Appellant’s failure to file lay witness statements of fact in accordance with the Court’s order. In any event there are other weighty factors which go into the balance of the overall decision.

 

 

    1. Ground 2: the Judge’s decision at stage two of the test in Denton was that the Appellant’s explanation was plausible however it was not a good reason. This “plausibility” ground of appeal does not constitute a valid ground in my judgment.

 

 

    1. Ground 3: I accept the assertion in this ground that the relief application was made as quickly as possible and the Judge did too and took that into account, but that was just one of the factors in the overall decision. It is not a ground of appeal.

 

 

    1. Ground 5: there is no merit in this ground in my judgment. To suggest on appeal that solicitors should not run up to deadlines and leave matters late for compliance and that there should be some statement of principle that leaving matters to the last minute in litigation is appropriate is not an attractive argument and I reject it.

 

 

    1. Ground 6: this ground, which is based on the assertion that the locum solicitor was not aware of the importance of complying with Court orders, is perhaps the most unimpressive. I reject it.

 

 

    1. Ground 7: I do not really understand this ground. It may be that it means that the application for relief was unsigned and did not state the time estimate for the hearing but that should not matter. In so far as those failures were found as facts by the Judge I do not consider that such findings were immaterial and so find that this ground is not a valid ground of appeal.

 

 

    1. Ground 9: the Judge took into account the context of the reason for the default and set it out in extenso so in his Judgment. There is no expression in the Judgment of a desire to punish the Appellant’s solicitor, but there was reasonable and fully justified criticism of the many failures to carry out work in good time and proper criticism of the practice of leaving matters to the last minute. I do not consider this ground of appeal has any validity.

 

 

    1. Grounds 10 and 11: taking these grounds together I do not consider that the decision of the Judge was outside the reasonable ambit of discretion afforded to the Judge when case managing this case. Nor was it disproportionate or unjust for the reasons set out above. SK’s conduct of the defence to the claim and the second action he brought has been characterised by leaving important matters to the last minute or breaching Court orders or making unmeritorious applications. This has hugely increased the costs, delayed the trial and left the Respondent with unpaid costs orders.