Cases relating to relief from sanctions are being reported on a daily basis. Here we look at the decision yesterday of Mr Justice Smith in Associated Electrical Industries Ltd –v- Alstom Ltd  EWCA Civ 4330 (Com). A case where the claimant was 20 days late in serving the particulars of claim and, consequently, the action was struck out.
THE FACT S OF AEI
This was a claim brought by the claimant for a contribution following their payment of damages in a mesothelioma claim. The claim form was served on the 20th September 2013. The Particulars of Claim were not served until the 18th November 2013. They were served 20 days late. The claimant made an application for an extension of time, the defendant made an application to strike out the claim.
THE FINDINGS OF SMITH J.
THE DEFAULT WAS NOT “TRIVIAL”
“However, I cannot accept that, given the approach to non-compliance that decisions of the Court of Appeal require, a default of 20 days in serving particulars of claim is to be categorised as trivial. In Mitchell itself the claimant was five days late with the costs budget but was not considered to have missed the deadline narrowly. In Raayan al Iraq Co Ltd v Trans Victory Marine Inc,  EWHC 2969, I granted an application for a retrospective extension of time when particulars of claim were served two days late, and my decision was criticised in Mitchell (at para 51). Mr Corby submitted that this was only because I said that relief from sanctions would not be refused where injustice would result and did not recognise the regard to be had to the “wide range of interests” affected by non-compliance, but in Thavarajah v Riordan,  EWCA Civ 14Richards LJ (who was party to the judgment in Mitchell) made it clear (at para 35) that the criticism was directed to my decision. In any case, the application of the de minimis doctrine in these circumstances does not depend only on the length of a failure to meet a deadline but (to use the Court of Appeal’s word) its nature. AEI’s failure to apply for an extension before 29 October 2013, or even to ask Pinsent Masons for one, reinforces my view that this is not a case where the de minimis doctrine applies.”
THERE WAS NO GOOD REASON
The judge was not persuaded that there was a “good reason”, some of the delay was caused by the court. However the fundamental point in answer to all the claimant’s submissions was:-
“But there is another answer to the submission that there was an acceptable explanation for the non-compliance, to which I have already referred. If difficulties in investigating the claim do justify the particulars being late, a timely request for an extension should have been sought from Alstom and if necessary a timely application to the court should have been made”
COULD A SECOND SET OF PROCEEDINGS BE ISSUED?
There is an interesting consideration of whether a second set of proceedings could be issued if the current action was struck out.
37. Nevertheless, in this case I cannot properly assume that, if AEI brought a new action, it would be struck out as an abuse. First, the position is complicated by the uncertainly about whether the proper claimant is English Electric or AEI, and Mr Benzie acknowledged that Alstom would find it more difficult to strike out a claim by English Electric than to challenge new proceedings by AEI. Moreover, in the Securum case Chadwick LJ said (at para 31) that “when considering whether to allow the fresh proceedings to continue, the court must address the question whether that is an appropriate use of the court’s resources having regard (i) to the fact that the claimant has already had his share of those resources in the first action and (ii) that his claim to a further share must be balanced against the demands of other litigants”. As I have said, AEI has not used significant court resources in this action. Further, in Wahab v Khan (loc cit) Briggs J recognised that it is necessary on an application to strike out a second claim as an abuse to examine the circumstances of the particular case, including not only whether a claimant would actually use a disproportionate share of court’s resources but justice between the parties and any unfairness to them. Allowing the second action to continue, he considered it relevant (inter alia) that:
i) In the first action Court resources were used in three short interim hearings (which were unlikely to be repeated); and
ii) The first claim had been struck out for “a relatively technical breach of the rules … coupled with a delay of only some seven months”.
If this claim is struck out and new proceedings brought, AEI would appear to have stronger arguments than Mr Wahab.
38. It is not for me to determine whether or not a second action, if brought, should be struck out as an abuse. But I must acknowledge that, if I grant Alstom’s application, there is the real prospect:
i) That it will result in further litigation between the parties which would be less than straightforward, would be costly for the parties, would demand court resources and would be “satellite” in that it would not engage with the question where liability to Mrs Oliver should fall under the 1989 agreements; and
ii) That the result might well be that the substantive dispute between the parties will eventually be determined at more cost and after more delay, the result that the House of Lords in Birkett v James sought to avoid.
WAS THE POSSIBILITY OF ISSUING A SECOND SET OF PROCEEDINGS RELEVANT TO THE EXERCISE OF THE DISCRETION?
“39. Is it permissible to take this into account in determining these applications? In Ian Wyche v Careforce Group Plc,  EWHC 3282, when granting relief from sanctions for non-compliance with an “unless” order, Paul Walker J expressed concern about substantial amounts of time and money being wasted on preparation for and conduct of satellite litigation. In Mitchell the Court of Appeal criticised his decision (as Richards LJ made clear in Thevarajah v Riordan (cit sup) at para 35), saying:
“We share the judge’s desire to discourage satellite litigation, but that is not a good reason for adopting a more relaxed approach to the enforcement of compliance with rules, practice directions and orders. In our view, once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture becomes accepted, there should be less satellite litigation, not more.”
40. In the Ian Wyche case the concern was about satellite disputes in the litigation before the Court, and not subsequent litigation that might be brought. On an application under CPR 3.9 the court is required to consider “all the circumstances”, and it should, surely, likewise consider all the relevant circumstances on an application under CPR 3.1(2) to extend time or exercise other case management powers. I recognise that the approach adopted by the Court of Appeal discourages judges from giving too much weight to the prospect of unprofitable hearings which do not engage with the underlying dispute. But I do not understand Mitchell to decide that this concern is never a relevant circumstance and must always be entirely disregarded.”
THE APPROACH ADOPTED BY THE JUDGE
Paragraphs 41 onwards of the decision need to be read carefully. They are of considerable importance.
1. If the judge’s decision depended only on what was “just and fair”, the judge would not strike out the action.
2. Looking at the position simply between the parties it would be disproportionate to strike out the action.
3. There was nothing in the judgments of the Court of Appeal in Mitchell which means that the court should disregard justice between the parties altogether.
CONSIDERATION OF CPR 3.9 AND THE OVERRIDING OBJECTIVE
44. Explaining the proper approach to applications under CPR 3.9, the Court of Appeal endorsed (at para 39) what Lord Dyson said extra-judicially in the 18th implementation lecture on the Jackson reforms delivered on 22 March 2013:
“The revisions to the overriding objective and to rule 3.9, and particularly the fact that rule 3.9 now expressly refers back to the revised overriding objective, are intended to make clear that the relationship between justice and procedure has changed. It has changed not by transforming rules and rule compliance into trip wires. Nor has it changed it by turning the rules and rule compliance into the mistress rather than the handmaid of justice. If that were the case then we would have, quite impermissibly, rendered compliance an end in itself and one superior to doing justice in any case. It has changed because doing justice is not something distinct from, and superior to, the overriding objective. Doing justice in each set of proceedings is to ensure that proceedings are dealt with justly and at proportionate cost. Justice in the individual case is now only achievable through the proper application of the CPR consistently with the overriding objective.”
The reason that CPR 3.9 is said to refer expressly to the revised overriding objective is, I take it, this: first, the objective of the CPR is now stated in CPR 1.1 to be to enable the court to deal with cases not only justly but “at proportionate cost”, an expression echoed in the language of CPR 3.9(1)(a); and secondly the explanation in CPR 1.2 of the overriding objective has been revised to add that it includes “enforcing compliance with rules, practice directions and orders”, which is echoed in the revised CPR 3.9. When the court exercises any power given to it by the rules (including the powers under CPR 3.4 and CPR 3.1(2)(a)), it must seek to give effect to the overriding objective. It must therefore (i) seek to deal with the case at proportionate cost (as well as justly), and (ii) recognise that this includes enforcing compliance with rules, practice directions and orders. But this does not mean that, when exercising all powers under the CPR, the court must give more weight to the considerations specifically identified in CPR 3.9 than to other aspects of the overriding objective and other relevant circumstances of the case. As I understand Mitchell, the guidance about the weight to be given to the considerations specifically mentioned in CPR 3.9 is directed to applications under CPR 3.9, and is based on the interpretation and implication of that particular rule. The Court of Appeal said (at para 42) that the proper approach under CPR 3.9 is similar to that which has been adopted to applications to extend the validity of a claim form, but not that it is similar to that to be adopted for all extensions (or all retrospective) extensions of time.”
DOES THE CPR 3.9 CRITERIA APPLY TO ALL APPLICATIONS TO RETROSPECTIVELY EXTEND TIME?
There is a detailed consideration of the criteria to be applied.
“45. I therefore consider that it would be taking too far the analogy between CPR 3.9 and retrospective applications of time to conclude that the Court of Appeal meant that in the case of retrospective extensions of time the two considerations specifically mentioned in CPR 3.9 are of greater weight than other considerations involved in dealing with cases justly and at proportionate cost. The Court of Appeal in Sayers v Clarke Walker,  EWCA Civ 645 encouraged consideration of the check-list in the old version of CPR 3.9 on an application for permission to appeal “in a case of any complexity” as preferable to “judges [making] their own check-lists for cases where sanctions are implied but not expressly imposed”, the implied sanction being that an application for permission to appeal could not otherwise be made. The guidance was, as I have said, repeated in Price v Price, a case about an application to extend time for service of particulars. But I understand that this is simply guidance about how the court might go about dealing with cases of this kind in accordance with the overriding objective.
46. But it does not much help AEI even if I am right that the considerations specifically identified in CPR 3.9 are not to be given more weight than other relevant matters. The court must still seek to give effect to the overriding objective, including the aspects of it emphasised in CPR 3.9. As I see it, the requirement to deal with cases at proportionate cost is not in point here: AEI’s non-compliance did not aggravate the costs (and indeed, as Mr Preston explained, Clyde & Co adopted the course that they did with the aim of saving unnecessary costs). Alstom’s real argument is the importance of enforcing the requirements of the CPR.
47. One reason that dealing with a case in accordance with the overriding objective includes enforcing compliance with rules, practice directions and orders is to enable the courts’ resources to be shared fairly between litigants, and to prevent a defaulting party from using them excessively. As I have said, AEI’s non-compliance with the CPR did not have a significant impact on resources. However, there is a more general reason that the Court of Appeal has emphasised: it is considered that “once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture is accepted, there should be less satellite litigation, not more”: Mitchell (loc cit) at para 48, and see para 60. I must balance this against my conclusion that as between the parties it is a disproportionate response and unjust to refuse an extension and strike out the claim form. The emphasis that the Court of Appeal has given to enforcement of the CPR in order to encourage procedural discipline drives me to conclude that I should grant Alstom’s application and refuse that of AEI.
48. This conclusion is, I think, confirmed by what the Court of Appeal has said about the Raayan al Iraq case. As here, the non-compliance in that case did not attract an automatic sanction, and no significant court resources were used because of the breach. As here, the probable result of refusing the extension would have been satellite litigation and the amount in issue was relatively modest in relation to the costs that it would involve. However, Raayan al Iraq Co Ltd was, I think, in a stronger position than AEI: its particulars were only two days late; they were served late, as I concluded, because of an unfortunate oversight on the part of its solicitor despite his careful system for avoiding such errors, not because of indifference to compliance with the CPR; and the application for an extension of time was prompt. Nevertheless, as I said at para 28 above, my decision in Raayan al Iraq was criticised by the Court of Appeal, and not only the observation to which specific reference was made in Mitchell. The result in this case seems to me to follow a fortiori.”
THE RESULT: APPLICATION TO EXTEND TIME DISMISSED APPLICATION TO STRIKE OUT GRANTED
The judge felt that this was the only appropriate conclusion following the decision in Mitchell.
WHAT CAN LITIGATOR’S LEARN FROM THIS?
- It is unlikely that the decision in Summit can be viewed as a “new dawn”.
- Applications for extensions of time must be made in advance of the date for compliance (It was common ground in the AEI case that, in all probability, an application for an extension would have been granted).
- Applications for extensions/relief from sanctions remain problematic.