RELIEF FROM SANCTIONS AFTER BREACHING A PEREMPTORY ORDER AND FAILING TO PLEAD A CASE PROPERLY: CLAIMANT ALLOWED TO CONTINUE (IN PART)

We are looking again at the judgment in  Michele Carrington v American International Group UK Limited [2025] EWHC 1010 (TCC).  This time in relation to the issue of relief from sanctions.  The claimant had failed to comply with a peremptory order  to plead her case properly and required relief from sanctions.  The claimant succeeded in obtaining relief. However the parts of the pleaded case that were not compliant were struck out and could not be pursued.

“As the guidance in Denton makes clear, the court should consider whether the sanction imposed is proportionate to the breach in question. In my judgment this is the strongest point in the Claimant’s favour. The non-compliance can, and will be, sanctioned, without the need for any further application by the Defendant or any further delay through the already-determined consequence of striking out the offending claim. The Claimant will not therefore have a further chance to re-plead this claim; she has irretrievably lost that opportunity as a direct result of her non-compliance.”

KEY PRACTICE POINT

This case is about the need to plead the case fully. It is also wise to have a back up argument, that is an application for relief from sanctions, if a peremptory order has been made and there are issues as to whether a party has complied or not.

THE CASE

The claimant brought an action for breach of duty against the defendant, the insurer of an architect who was involved in construction work at the claimant’s home.  The judge had earlier found that the claimant’s case was inadequately pleaded and ordered that the Particulars had been revised and made a peremptory order requiring the claimant to plead the case properly. The judge found that the amended Particulars were largely compliant but one aspect of the pleaded case was not.

THE JUDGMENT ON RELIEF FROM SANCTIONS

The judge held that the amended Particulars had not been fully compliant.  The sanction had automatically come into effect. The question was whether the claimant should be granted relief from sanctions.

123.For reasons which I have explained, the bare allegation in paragraph 28V, whilst notionally setting out a positive case on causation and loss, cannot be regarded as substantial compliance with the order because it plainly does not explain the basis how it can be said that the pleaded breaches of inspection and certification could have caused all of the remedial works and costs identified in Appendix 4.

124. I thus have to proceed on the basis that the unless sanction ought to come into effect unless the Claimant is entitled to seek and to obtain an order for relief from sanctions.

125. Before turning to address this fundamental point I should make clear that I regard the minor question of mathematical recalculation in a different category. It is not a non-compliance, technical or substantial, but rather a simple error which was not the subject of submission or complaint in the correspondence following service of the Amended Particulars of Claim and only became apparent during the course of questions from me during the hearing. If, however, it does amount to a technical or substantial breach, then in my judgment this would be a clear case for granting relief from sanctions on an application of the principles discussed below.

126.Returning to the more substantial question, the first point to make is that neither party made submissions in relation to the effect of non-compliance as to part on the whole of the claim in their evidence or skeleton arguments, save for Ms Boon’s general submission, recorded above, that the Claimant had complied with the form but not the substance of the unless order. In particular, the Defendant did not, either in its application or through Ms Boon’s skeleton argument, set out an analysis of the lack of a pleaded causative link between the pleaded breaches and the pleaded losses equivalent to that conducted during the hearing itself, initially, as a result of my raising the point with Mr Newman, nor submit that by reason of this lack of pleaded linkage and without more the Claimant was in breach of the unless order. Nor has the Defendant made an application for an order that the claim has been or should be struck out, as provided for by paragraph 1 of the order made 11/10/24.

127. It was only during the hearing that I raised the specific point as to whether or not the consequence of non-compliance in relation to the duty to inspect case was such that the whole of the claim should be struck out and, if such was the case, whether I could consider and decide whether or not the Claimant should have relief from sanctions without the need for a formal application supported by evidence. Mr Newman submitted that I could and I should and that it would be perverse to strike-out the whole claim on this basis. Ms Boon did not submit that I should not decide the question without an application or evidence in support. Instead, she submitted that what had happened here showed that the Claimant was “beyond the last chance saloon” and that the court should not give the Claimant another opportunity even in relation to the compliant sections of the Amended Particulars of Claim.

128. Ms Boon was right not to take the procedural objection, since there is Court of Appeal authority (Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463) that the court has jurisdiction to grant relief from sanctions without an application having been made, although “the jurisdiction is one which is likely to be exercised only rarely because it will usually be necessary for evidence to be placed before the court to enable it to consider the various matters to which rule 3.9 refers” (paragraph 33).

129. I am satisfied that it is in the interests of justice to consider and decide the question of relief from sanctions in this judgment on the basis of the material before me, albeit without speculating in the Claimant’s favour as to what she might have said had she made a formal application or addressed this point in evidence.

130. Applying the well-known three stage test set out in Denton v TH White Ltd [2014] EWCA Civ 906, it is plain that the breach is, in the context of the history of this case, both serious and significant.

131. It is also plain that there is no good reason for the breach. I should remind myself that I gave the Claimant a very generous extension of time in which to serve both the first and the second Amended Particulars of Claim because I recognised that it would be necessary for the Claimant and her legal and professional advisers to spend a significant amount of time in ensuring that the legal, factual and expert opinion basis for pleading the claim was marshalled.

132. What has clearly happened is that after 11/10/24 the Claimant and her team have spent that time in marshalling and pleading a coherent case in relation to breach of duty to review but have failed to do likewise in relation to breach of duty to inspect and certify. The Claimant clearly took the opportunity to instruct Mr Smart in relation to the issues raised in Ms Boon’s skeleton argument for the previous hearing, which included the issue raised in relation to the duty to inspect argument, but his report does not address this issue specifically nor consider the causal consequences of the alleged breach, save in the limited respect identified by Ms Boon as noted above. In the absence of any proper pleaded or evidential basis for this the Claimant and/or her advisers appears to have believed that this alternative claim could be maintained on the basis that the consequences of the failure to inspect could be equated with the consequences of the failure to review, when that is plainly not the case in the absence of a proper pleaded or evidential basis. The Claimant, properly advised, could not reasonably have believed that this was acceptable and, as I have said, did not accept the point when asked the pertinent question by the Defendant’s solicitors in correspondence.

133. I thus have to consider all of the circumstances of the case, including the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders.

134. Point (a) clearly goes against the Claimant here. The best point in mitigation for her is that she has done the hard lifting necessary to get the primary duty to review claim into proper pleaded order and that the claim can now go forward on the basis of that claim alone (as well as the separate freestanding interim certificate case, as to which no objection has been taken). Insofar as the Defendant seeks to rely on the further delay from the adjourned hearing of 3/2/25, it may be said that this was at least as much the consequence of the Defendant’s decision to seek to have the whole claim struck out or made the subject of summary judgment than this discrete point.

135. Point (b) also clearly goes against the Claimant here, given her previous failing to plead the case properly from the outset and to comply with my first order to rectify the defects in her pleaded case. Again, the best points in mitigation are as made above in relation to point (a).

136. As the guidance in Denton makes clear, the court should consider whether the sanction imposed is proportionate to the breach in question. In my judgment this is the strongest point in the Claimant’s favour. The non-compliance can, and will be, sanctioned, without the need for any further application by the Defendant or any further delay through the already-determined consequence of striking out the offending claim. The Claimant will not therefore have a further chance to re-plead this claim; she has irretrievably lost that opportunity as a direct result of her non-compliance. The more substantial element of the claim, i.e. the duty to review claim, can, however, go forward as anticipated by the order of 11/10/24 without the need for any further action, save only to correct the mathematical error.

137. In my judgment it would in all the circumstances be disproportionate to strike out a claim, which has now been properly pleaded and which has survived a heavily contested strike-out / summary judgment application, only because the Claimant also pleaded a non-compliant claim which is now the subject of strike out. I accept that the Claimant may count herself lucky in this respect. However, I am entitled and do have regard to the fact that the Claimant is a private individual in poor health and of modest means who, if she is right, has suffered badly due to the breach of Godfrey, as the construction professional on whom she placed reliance. Whilst I must also counter-balance Mr Godfrey’s own age, he is not the subject of any direct claim which will, if valid, be met by insurers alone. It must also be noted that the Architects Registration Board did conduct an investigation into the Claimant’s complaints against Mr Godfrey and, in a detailed decision made on 9 June 2020, concluded that there was a case to answer in relation to many of them, including those relevant to this claim. As I understand it, the only reason these disciplinary proceedings did not proceed further was due to Mr Godfrey’s retirement from practice.

138.Although the Claimant may be criticised for not having made an application for relief from sanctions, this factor is in my judgment offset by the fact that this point has, as I have said, assumed far greater importance in the course of the hearing than it did before, especially in the absence of any application for an order for judgment pursuant to the unless order from the Defendant and, perhaps more substantially, the absence of this as a specified standalone basis for saying that the unless order has come into effect regardless of the other matters relied upon. It may also be observed that where there is a contested hearing in a case such as this, where the complainant is applying for separate relief as well as alleging that the defaulting party is in breach of an unless order for unparticularised reasons, it is rather difficult for the defaulting party to do any more than make an application saying that if and to the extent that they are in breach they seek relief from sanctions.

139. I should also bear in mind that the Claimant has already been penalised in costs for the previous pleading failures and, pursuant to paragraph 2 of the order made 11/10/24, the costs of and occasioned by the amendments are already to be paid by the Claimant in any event.

140. Insofar as justified, the Defendant will also have the opportunity to seek recovery of its costs to the extent that the Claimant has obtained the indulgence of the court in securing relief from sanctions.

141. Taking all these factors into the balance, overall, in my judgment the appropriate course is to grant relief from sanctions and thus to allow the claim to proceed on the basis specified in the directions order of 23/1/24.

142. The Claimant should of course be under no illusion as to the consequences of any further significant non-compliance for the future.

143. In summary, however, my decision is that the Claimant should have a reasonable period of time, no more than 14 days from the making of the order following this judgment, to file and serve a final Amended Particulars of Claim which amends paragraph 28AJ(d) and deletes paragraphs 28AR to 28AV, following which the transfer to the Bristol TCC should take effect and, following a suitable pause for a mediation, the directions in paragraphs 10.3 onwards to have effect and a revised PTR and trial dates should be set by reference to that timetable.