DEFAULT AND RELIEF FROM SANCTIONS: ARTICLE 6 IS NOT A TRUMP CARD FOR A LITIGANT IN DEFAULT

In  McKnight v Chelsea Football Club Ltd [2024] EWHC 2884 (KB) Mr Justice Saini refused a defendant’s appeal against a decision where he was refused relief from sanctions when a defence had not been filed in time.  The judge observed that arguments about Article 6 rights in this context were misfounded.  A party whose own proedural defaults means that the court does not determine the issue on the merits does not have Article 6 as a “trump card”.

“Article 6 is not a trump card to play whenever a litigant’s own defaults mean their case will not reach a decision on the merits.”

Limitation, default and sanctions – The key cases of 2024; Webinar 27th November 2024

his webinar looks at the key cases relating to limitation, default and sanctions that have occurred in 2024.  The aim is to look at problem areas to help litigators avoid problems in the future. Booking details are available here.

Issues looked at in the webinar include:

• Where have things been going wrong in 2024
• Limitation issues in 2024
• Key cases on relief from sanctions
• Default judgments and relief from sanctions (McKnight -v- Chelsea Football Club, MBS Recovery -v- Quinney, Redmond -v- O’Hara, Gallani -v- Sartori)
• Late service of witness statements (Kent -v- Apple Inc)
• Relief from sanctions and unless orders (Kerillee Investments -v- International Tin, Lloyds Developments)
• Appeals and delay (Choudry -v- Mukherjee)
• Late service of expert evidence (Palmali Shipping)
• Disputing the Court’s jurisdiction (Ibrahim -v- AXA Belgium)
• Failure to comply with orders and relief from sanctions (Winchester Park)
• Appeal, fresh evidence and relief from sanctions (Achille -v-Calcutt)
• Late service of the Particulars of Claim (Bangs -v- FM Conway Ltd)
• Setting aside a default costs certificate (Willis -v- GWB Harthills LLP)
• Non payment of Court fees (Jaiyesimi -v- Kukoyi)
• Extensions of time and experts Yesss(A) Electrical -v- Warren
• Late amendment of claim to show dishonesty (AXA -v-Kreyeziu)

THE CASE IN CHELSEA

The claimant issued proceedings against the defendant.  The defendant did not file a defence in time and the claimant applied for a hearing for judgment in default. At that hearing the claimant made an application for relief from sanctions and sought permission to file a defence late. The Master refused that application. The defendant appealed that decision.

THE DEFENDANT’S UNSUCCESSFUL APPEAL

Mr Justice Saini refused the defendant’s appeal.  Amongst other things he observed that a litigant cannot properly argue that their own procedural defaults, which have led to a loss of ability to pursue or defend the action, means that there Article 6 rights have been impinged.

THE JUDGMENT ON THIS ISSUE

The judge rejected the argument that the Master was wrong in the exercise of his discretion. Further he dismissed the argument that there had been a serious procedural irregularity.

1. 1. As I have already noted, there is force in Chelsea’s submission that there are essentially two points in this appeal. The first issue for my determination is whether the Master was wrong in the exercise of its discretion to refuse the application for relief from sanctions, because he failed to take into account the arguments made on behalf of Mr McKnight. Related to this is a complaint of a failure to give reasons. The second point for determination is whether the Master’s decision was unjust because of a serious procedural irregularity. This relates to the failure to provide an opportunity to reply.

V. Analysis and Conclusions

1. 1. Counsel for Chelsea and Mr McKnight have referred me to a number of authorities. However the relevant legal principles are well established. The test for an appeal under CPR Rule 52.21(3) provides that an appeal court will allow an appeal where the decision was either wrong, or unjust because of a serious procedural or other irregularity in the proceedings in the lower court. I am not helped by seeing how other courts in other cases on different facts have applied that test. It is a fact-specific matter.

Discretion

1. 1. I turn then to the first matter, which is whether there was an incorrect exercise of discretion. I have set out in some detail what the Master said in his reasons for refusing to grant relief from sanctions. In my judgment (and putting to one side the issue of the impact of a default judgment on the ET proceedings) there was ample material before the Master justifying the exercise of the discretion in the way he exercised it. It is clear that the Master considered Mr McKnight’s witness statement, draft Defence, and the oral arguments that Counsel made at the hearing. It is of particular importance that Mr Coulter accepted that the breach was a serious one for which, in his own Counsel’s words, there was no good reason. Mr Coulter’s arguments focused entirely on the third stage of the Denton guidance. The points he made in that regard were unconvincing.

1. 1. I turn to Article 6 which simply reflects (in the present context) the right to a fair hearing which is no different to what the common law requires. The fair trial argument was not framed in terms of Article 6 below but was presented before the Master as follows. First, Mr McKnight said he was not responsible for the anonymous emails or the anonymous website and that if the matter went to trial, he would produce evidence of this. Secondly, a default judgment would be relied upon in the ET proceedings as evidence that he was responsible for the campaign of harassment against Chelsea, and would be likely to have a detrimental effect on the outcome. This was the point most forcefully made. Thirdly, that he should be allowed – notwithstanding that there was no good reason for the delay and that the breach was a serious one – to defend himself. The note of the hearing shows that Mr Coulter said whatever could be said on behalf of Mr McKnight in relation to mental health issues as justification. I have referred to this earlier.

1. 1. Not only were these arguments fully ventilated during the hearing, but the Master took time to consider them and the written evidence. It is not arguable that there was any breach of Article 6 or any unfairness in the hearing, subject to the point to which I will come in a few moments concerning the failure to afford a reply. The Master considered all the circumstances of the case when deciding not to exercise his discretion in favour of Mr McKnight under the Denton guidance. Indeed, I would go further than saying there was no error: on the material before the Master, this was a hopeless application for relief from sanctions.

1. 1. I would add, having now had the benefit of the ET’s judgment, that it is clear that the default judgment played no role in the ET’s findings of fact. The ET noted the judgment existed but recorded it was subject to appeal (the appeal before me). It is significant, that the ET’s own factual findings were reached on the evidence heard by the ET over the course of a four-day hearing. Mr McKnight had a full opportunity to defend himself in relation to the anonymous emails during the ET proceedings, and ultimately that defence was unsuccessful. Indeed, it seems obvious to me that the ET would have had to come to its own decisions: the default judgment was not a determination of any factual issue.

Article 6

1. 1. For completeness, I need to return to the Article 6 arguments which I found difficult to follow. As I have already said, it was not clear to me how it was precisely argued that Article 6 was engaged. I have sought to unpack the arguments as follows. Ultimately, as I understood the submissions, two different points were being made. One was the point that by refusing to allow Mr McKnight to defend the High Court proceedings that in itself was a breach of Article 6 in the High Court proceedings. The other argument was that the entry of a default judgment in the High Court proceedings would defeat or interfere with Mr McKnight’s rights to a fair trial in the ET proceedings (because of some form of prejudice to them). Neither way of putting the case has merit.

1. 1. As to the first way in which the case seemed to be put (that being debarred from defending the High Court case through procedural failures is itself a breach of Article 6 in the High Court case), a party who fails without proper justification to comply with the rules and serve a Defence in civil proceedings will of course be deprived of the opportunity to defend themselves. That does not mean that their Article 6 rights are infringed. That is simply the result of the application of procedural rules which provide an Article 6 compliant medium for progress of civil litigation. Article 6 is not a trump card to play whenever a litigant’s own defaults mean their case will not reach a decision on the merits.

1. 1. As to the second way of relying on Article 6 (negative effect of the High Court judgment on the ET proceedings), a party who fails to comply with civil procedural rules and suffers entry of a judgment against them, has only himself to blame if that judgment has an adverse effect on him in other proceedings (such as ET proceedings). That did not in fact happen: there was no prejudice and indeed I agree with the Master that on the facts before him such a suggestion would have been fanciful. However, even if there had been prejudice to the ET proceedings, it is not arguable within the schema of Article 6 that a judge in a civil case must deny a claimant the benefit of a default judgment in order to protect the defaulting defendant from the consequences of such a judgment in proceedings over which the judge has no control. I do not accept that this leads to a breach of Article 6 rights of the defaulting defendant in the other proceedings. Finally, I would repeat that I failed to see how invoking Article 6 in this case added in any way to the power (such as it was) of the arguments: that provision in the present context does no more than reflect rights our common law has long recognised.

The reply point

1. 1. I turn then to the Master’s failure to give a chance to Mr Coulter to reply to the submissions of Counsel for Chelsea. I accept the submission that the Master should have provided Mr Coulter with that opportunity. I reject the submission for Chelsea that “robust case management” justified the Master not providing a reply. But standing back from that procedural failing, I do not consider that that matter on its own (when assessed against the remainder of the hearing and the particular facts) would be a justification for allowing this appeal. The part of the reasoning that the Master excised from his reasons was in my judgment a freestanding point and the Master’s other reasons for refusing relief from sanctions provided a sufficient basis for his decision. This was a hopeless application for relief.

Reasons

1. 1. Turning finally to the ground concerning reasons. I have set out the agreed note of the reasons given by the Master. It is clear to me that the Master complied with the duty at common law to give reasons explaining why the application of Mr McKnight had been unsuccessful. The Master was not required to identify either what the law was, or every factual matter. Reasons must indicate why a party has won or lost and the essential reasoning, in brief terms, leading to that conclusion. The reasons in this case easily met that standard.

VI. Conclusion

1. 1. For these reasons, the appeal is dismissed. I should also indicate in conclusion that Mr McKnight took me to a number of documents during his oral submissions this morning which concerned matters predating his failure to serve a Defence, in particular concerning some of the background issues which led to his grievance with Chelsea and which were considered in the ET proceedings. As I sought to indicate to Mr McKnight during the hearing (and also to his fiancée when she addressed me) the focus on this appeal has to be on the Master’s order of 18 May 2023. In an appeal of the present type, the High Court is concerned with whether that order was incorrect as opposed to the merits or legitimacy of earlier grievances.

Order: Application dismissed.