The case of Thevarajah –v- Riordan has been discussed before. Initially relief from sanctions was refused, however it was then granted at a second application. Here we look at the decision in more detail, in particular the CPR 3.9 criteria; whether a second application for relief from sanctions can be made and what the effect is of striking out a defence when the claimant still has to prove his claim.
Is now reported as 2013 EWHC 3179 (Ch) and available on Bailli. The background has been discussed in previous posts (see the links below).
THE SECOND APPLICATION FOR RELIEF FROM SANCTIONS
The second application for relief from sanctions was made on the 1st October 2013 and heard on the first two days of the trial, which started on the 7th October. The defendants’ Defence and Counterclaim were struck out by order on the 19th August 2013. They did not appeal that order but instructed new solicitors who prepared a lengthy affidavit in support of the second application.
There were a number of central submissions.
- That the disclosure requirements which had been breached had now been complied with.
- There was no prejudice to the claimant which had not already been visited upon the claimant in costs
Andrew Sutcliffe QC, sitting as judge of the High Court, considered the arguments in relation to the criteria to be applied under CPR 3.9:
“I have been referred to Lord Justice Jackson’s interim and final reports which indicate that in proposing the amendment to CPR 3.9 he considered whether to recommend an approach to the effect that non-compliance with deadlines would no longer be tolerated save in exceptional circumstances but concluded (in para. 6.5 of the final report cross- referring to para. 4.21 of the interim report) that he did not advocate such an “extreme course or any approach of that nature.”
28 The following principles can be derived from two recent decisions of the Commercial Court on the application of the amended CPR 3.9, namely Rayyan al Iraq Co Ltd v Transvictory Marine Inc, an unreported decision of 23rd August 2013, and Wyche v Care Force Group plc, an unreported decision of 25th July 2013. The principles that can be gleaned from those cases are as follows. First, the matters contained in the old checklist in CPR 3.9 remain of relevance to an application for relief from sanction. Second, the change in CPR 3.9 did not mean that relief should be refused where that would be a disproportionate response and would give the opposing party an unjustified windfall. Third, that the court should not apply the new rules unthinkingly and should make allowance for human error. Fourth, that the amended Rule should not be permitted to encourage parties to exploit minor errors for tactical gain. These decision show in my judgment that the court in each case while accepting that the purpose of the amended Rule is to counter a culture of deliberate delay still had principal regard to the requirement to do justice between the parties.”
HOW RELEVANT IS RELIANCE UPON SOLICITORS?
The judge considered whether it was relevant for a defaulting party to rely upon the default of their solicitors. He stated:
“37 Whether a failure to comply with a court order was caused by the party or his legal representative was a relevant circumstance when considering an application for relief from sanction under the pre-amendment CPR 3.9(1)(f). The courts have continued to have regard to the factors under the pre-amendment rule after 1st April 2013, as Mr Justice Hildyard himself accepted at the application hearing on 9th August. In Perreira v Beenlands  3 All.E.R 528 Mr Justice Robert Walker held that the court.s discretion to decide the consequence of non-compliance with an unless order was not fettered by any binding principle that the default, whether an act or omission, of a litigant’s solicitor should always be visited on the litigant himself. This statement of principle was accepted by the Court of Appeal in Hi Tech Information Systems Ltd v Coventry City Council  1 WLR 1666 at 1675 as a perfect example of the exigencies of justice coming to do justice in a particular case.. I accept that in circumstances in which wide-ranging disclosure obligations were imposed by the court.s orders, affecting both assets and liabilities, the Defendants were justified in relying on their solicitors to ensure that they had complied with those orders.”
THE EFFECT OF THE DEBARRING ORDER ON THE DEFENDANT
The Judge also considered the effect of the debarring order. The Defendants stood debarred from defending the claim. However the Defendant could still play a part in the trial.
40 I consider that, notwithstanding the fact that they are currently debarred from defendingthe claim and subject to the court’s inherent jurisdiction to regulate its own process, the Defendants are entitled at trial to require the Claimant to prove his claim, to cross- examine and to make submissions.
It was because the Defendant had a part to play at trial that the Judge granted relief from sanction. There was no clear guidance as to the course a judge should take when a defendant was debarred from defending the claim but a claimant was still required to prove the claim. The Judge had to consider the overriding objective and the need to achieve a fair result.
THE ARGUMENT THAT THE SECOND APPLICATION FOR RELIEF WAS AN ABUSE OF PROCESS
The Judge rejected the argument that the second application was an abuse of process. He considered the decision in Woodhouse –v- Consignia PLC  1 WLR 2558 where the Court of Appeal held that a court had power to grant relief from sanction on a second application for relief where an earlier application had been granted.
In all the circumstances of the case the judge was persuaded that the discretion under CPR 3.9 should be exercised. The trial went off so that, among other things, the Claimant could give further disclosure.
AN INTERESTING QUESTION: WHAT IS THE EFFECT ON A DEFENDANT WHEN A DEFENCE IS STRUCK OUT?
The judgment also considers some interesting questions as to what part a defendant can play in a trial when the defence is struck out. In a liquidated claim the answer is obvious since the claimant will probably be entitled to judgment. But what about circumstances where the claimant is still required to prove their case in damages? The case law was considered in detail by the Judge:
“41 In Culla Park Ltd v Richards, unreported,  EWHC 1687, the court held that striking out the defence to a claim for malicious falsehood did not prevent the Defendants from participating at trial or from testing the allegation of malice which the Claimant was required to prove against them. Mr Justice Eady said this at paras. 11 and 12:
“11. When I adjourned the trial on 1st December 2006 I ordered inter alia the Defence of Mr and Mrs Kristaps be struck out unless they complied with certain outstanding costs orders. That order was not complied with and accordingly Ms Skinner’s primary submission is the Defence was automatically struck out. On 16th February 2007… I declined to enter judgment against the Kristaps upon condition that the unpaid costs order was complied with within seven days. Since finally the costs were paid within the time specified, Mr Kristaps submits the Defence was reinstated. There is of course a difference between striking out a Defence and entering judgment. Although I did not allow a judgment to be entered, the Defence remained struck out as a result of the earlier unless order.
12.This means that the Claimants will still need to establish their case in relation to each pleaded publication and to adduce evidence in relation to such matters as aggravated and special damages. The plea of aggravated damages in this case largely overlaps with the plea of malice which is an essential ingredient in support of the claim for injurious falsehood. Even though some defences have been struck out, it seems to me that the Defendants would still be entitled to test the case in relation to such matters and in particular to resist allegations of dishonesty introduced in support of the plea of malice. This relies on evidence as to their respective states of mind at various points over a considerable period of time.”
42. A similar conclusion was reached in the case of JSC BTA Bank v Ablyasov (No 8) 2013] 1 WLR 1331 where Lord Justice Toulson in a dissenting judgment – the only judgment to consider the effect of the debarring order on the conduct of the trial – stated at p. 1397:
“I would not expect the court to allow Mr Ablyasov to give evidence at the trial from some place of hiding but it is another matter to debar him through counsel from seeking to test the bank’s claims and perhaps call other evidence.”
43Mr Bailey relied on the case of Momson v Azeez as authority for the submission that once debarred from defending a claim the Defendant had a right to be present in court but no right to test the Claimant’s case. I reject that submission. As Mr Davenport submitted, there was no analysis in those judgments of the effects of a debarring order. It is necessary to refer to the passages in the judgments relied on by Mr Bailey to see precisely what this authority establishes. At first instance ( EWHC 623), Mr Justice Briggs said at para 26:
“I bear in mind of course also the consequence of not granting relief to the Defendant which was that he was unable to attend a trial in which the principal plea in issue was whether there had been between him and the Claimant an agreement or an understanding that properties purchased during their relationship together should be jointly owned.”
44. Then on the application for permission to appeal ( EWCA Civ 829), which came before Lady Justice Arden and Lord Justice Wall, Lady Justice Arden referred at para. 5 to the fact that: “The judge, therefore, made a barring order at the start of the trial and the effect was that the appellant was present during the trial but took no part., and at para. 9 she continued:
“The judge bore in mind that the consequence of not giving relief was that the defendant was not able to attend the trial in which the principal plea in issue was whether there had been between him and the claimant an agreement or an understanding that the properties purchased during their relationship should be jointly owned, but of course the defendant was not debarred from attending, only debarred from defending, and he did as I understand it attend the trial.”
45. Permission to appeal was given, and on the appeal itself ( EWCA Civ 202) Lord Justice Rimer in his judgment stated in para. 3 as follows:
“We have the benefit of Judge Marshall’s extempore judgment delivered after the trial on 30th January 2007. We must however put it out of our minds. The relevant question that was before Judge Marshall and is now before us is whether on the morning of 29th January 2007 immediately before the trial it was or was not just to relieve Mr Azeez from the bar preventing his further defending and counterclaiming.”
46. At para. 27 Lord Justice Rimer referred to the fact that on 29th January Mr Azeez attended the court in person; the court was told of the bankruptcy and that the bankruptcy debts had been paid. Mr Azeez did not ask for an adjournment for legal representation. Then at para. 28 Lord Justice Rimer continues:
“Since Mr Azeez was out of time for complying with Judge Cowell’s unless order, Judge Marshall treated his application as one for relief from the debarring sanction it imposed. Having heard his representation, Judge Marshall gave her reasons for refusing to grant any relief. To do so would involve adjourning the trial and there was no excuse for Mr Azeez’s failure to comply with the consent and “unless” orders. The fact of his bankruptcy played no part in her reasoning. She then proceeded with the trial over the remainder of 29th and 30th January which inevitably involved hearing only Miss Momson’s case, being one untested by cross-examination although it was subject to questioning by the judge.”
47. I do not regard any of the observations by their Lordships at various stages in that case as giving me any particular guidance as to the course a judge should take in circumstances where a Defendant has been debarred from defending a claim but the Claimant is nevertheless still required to prove his claim.”
THE OPEN QUESTION: WHAT CAN A DEBARRED DEFENDANT DO AT TRIAL?
This remains an open question. The ambiguity over this, and the practical difficulties it could pose at trial, certainly played a part in the Judge’s decision to grant relief from sanctions.
- The “strictness” of the CPR 3.9 criteria remain open (but will probably be determined next month by the Court of Appeal).
- A “second” application for relief from sanctions is possible.
- There are open questions about the effect of the striking out of a defence in a case where the claimant still has to prove a case at trial.
This case has been discussed before at
The decision itself is now reported on Bailli at http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2013/3179.html&query=thevarajah&method=boolean