In Utilise -v- Cranstoun  EWHC 834 (Ch) Judge Hodge QC, sitting as a judge of the High Court, considered another issue arising out of the Mitchell criteria – in essence what is the effect of two trivial breaches on an application for relief from sanctions?
THE ISSUE TO BE DETERMINED
The issue is summarised at paragraph 1 of the judgment.
“The novel point is this: if the breach of a court order attracting sanctions, considered in isolation, can be viewed as trivial, can another trivial breach of the same order result in the first breach being viewed as a non-trivial one?”
THE BACKGROUND TO THE APPEAL
The claimant was appealing a decision of the District Judge refusing to grant relief from sanctions.
The breaches came about because when the case was allocated to the Multi Track directions were made ordering the parties to agree directions if possible and file agreed directions. The order was silent as to the lodging of costs budgets.
THE ORDER IN RELATION TO COSTS BUDGETS
When directions were received the District Judge observed that costs budgets had not been filed and gave the parties until 4.00 pm on the 11th October 2013, “in default of which the provisions of CPR 3.14 shall apply”.
The court also ordered that by the 15th November 2013 the claimant was to notify the court in writing of the outcome of the negotiations and what, if any further directions, were required.
The defendants filed their costs budgets before 4 pm on the 11th October. The claimant filed its costs budget by fax at 4.41 on tHE 11th October (a Friday). The covering letter was received by the Court on the 14th October.
THE ORDER IN RELATION TO COSTS
The District Judge made an order that the claimant had filed to comply with the earlier order, CPR 3.14 applied and the claimant’s costs budget was treated as extending only to court fees. The order was drawn on the 18th November 2013.
THE CLAIMANT’S APPLICATION FOR RELIEF FROM SANCTIONS
The claimant made an application for relief from sanctions on the 21st November 2013. It was given a time estimate of 10 minutes.
THE APPLICATION FOR RELIEF FROM SANCTIONS BEFORE THE DISTRICT JUDGE
The District Judge held that this was not a trivial breach. The breach had occurred earlier when the parties had failed to file precedent H in accordance with the rules. The court had then given the parties additional time to comply. That order recorded the fact that the parties had failed to file forms H and gave the parties extra time. In the order she had set out the rules in order to ensure that there was no further delay and she had given the parties a significant period of time to comply.
The court had assisted the parties in ensuring that the case was properly progressed and the claimant did not comply.
Although the claimant argued triviality it offered no good reason for the breach. Further this was not an isolated breach. She refused to grant relief from sanctions.
ON APPEAL TO THE HIGH COURT JUDGE
The judgment sets out, in detail, many of the relevant decisions relating to relief from sanctions and costs budgets, including the case of Summit Navigation, which was reported after argument in the appeal had been completed.
THE DISTRICT JUDGE’S ERROR IN FINDING THAT COSTS BUDGETS WERE DUE AT AN EARLIER DATE
Judge Hodge Q.C. held that the District Judge had erred in finding that the costs budget was due at an earlier date. There had been an error in the Form 149C at the time. That form did not amount to a direction for costs budgets to be filed.
THE DISTRICT JUDGE’S DECISION WAS UPHELD BECAUSE OF THE CLAIMANT’S OTHER BREACHES
Having found that the District Judge erred in her construction of the need to file a costs budget earlier, Judge Hodge Q.C. went on to uphold the decision to refuse relief from sanctions.
- I am entirely satisfied that where the originally published form is used, then there is no requirement to file a costs budget in form H at the same time as filing the directions questionnaire. To the extent that the District Judge thought otherwise, then I am satisfied that she was wrong. Nevertheless, having said that, the District Judge was fully entitled to make the order that she did on 2nd October 2013 in the exercise of her case management powers. Effectively, she was remedying the deficiency in the original form N149C, although she did not view herself as performing that function.
- The District Judge, having made the order that she did on 2nd October 2013, the parties had either (i) to apply to vary or set that order aside pursuant to CPR 3.1(7); (ii) to appeal from that order, or (iii) to comply with it. The parties all chose to adopt the latter course; but the claimant failed to comply in the time prescribed for compliance. It was therefore in breach of the order. Absent the grant of relief, the sanction in CPR 3.14 therefore automatically applied:
“Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.”
Viewed in isolation, the breach in filing form H no more than 45 minutes late on the Friday evening was a trivial breach, even though form H was only treated as having been filed on the following Monday. However, in my judgment the District Judge was entitled to view the quality and magnitude of the breach in the context of the claimant’s non-compliance with another aspect of the court’s same order, namely paragraph 2, which had required the claimant, by 4 pm on 15th November, to notify the court in writing of the outcome of negotiations and what, if any, further directions were sought, and how such directions would further the overriding objective. That paragraph stated in terms that failure to comply with this direction might result in the application of sanctions.
- I accept Mr Tucker’s submission that Durrant, at paragraph 48, is authority for the proposition that the court may take other breaches into account when determining whether the breach which has attracted the relevant sanction, and given rise to the need to apply for relief, is trivial or not. To the extent that Mr Justice Hamblen, in paragraph 18 of Lakatamia, considered otherwise, then I consider that his view is incorrect and was expressed per incuriam. I acknowledge that the previous non-compliance in Durrant related to precisely the same direction (as to the service of witness statements) which led to the application of the sanction against which relief in that case was sought. It may be that Mr Justice Hamblen’s approach is warranted in a case, such as that before him, where the earlier defaults are wholly separate and discrete from the trivial non-compliance which the application for relief is intended to address; but that is not so, in my judgment, in the present case. Here, the claimant was in default, not of one, but of two, separate requirements of the same order by the time the application for relief came before District Judge Matharu on 2nd January 2014. Looked at separately, each of those breaches may have been trivial; but, in my judgment, viewed together, the District Judge was entitled to come to the conclusion that they merited some explanation or good reason. None was ever forthcoming.
- I accept that the District Judge erred in thinking that there had been an earlier breach of the notice in form N149C dated 9th August 2013; but; in my judgment; that error is not sufficient to vitiate the exercise of her discretion. The District Judge’s misapprehension had effectively by then been overtaken by her unchallenged order of 2nd October 2013. In my judgment; the District Judge was entitled to have regard to the non-compliance with paragraph 2 of the order of 2nd October 2013, combined with the lack of any explanation for such non-compliance. In my judgment; the District Judge was entitled to take the view that the combination of (i) a second non-compliance with the very same court order, and (ii) the complete absence of any attempt to explain either that non-compliance, or the non-compliance with paragraph 4, rendered what would otherwise have been a trivial breach a non-trivial one. In my judgment, that entitled her to enquire whether any good reason had been shown for non-compliance. On the evidence before her, there was clearly no such good reason shown. I acknowledge that the District Judge’s judgment could have been more fully and clearly expressed; but the fact that it was not is essentially the fault of the claimant (and appellant) in, first, providing a time estimate of only ten minutes and, secondly, not then asking for an adjournment of the application for relief from sanctions. I note, wistfully, that the argument on the substantive appeal in this case took over two hours before me. The claimant has only itself, or its legal representatives, to blame for the peremptory way in which the application was heard and disposed of.
- In short, therefore, in my judgment there is no good reason for me to interfere with the exercise of the District Judge’s case management discretion. If, however, I am wrong in that, and the appeal court is entitled to review the District Judge’s decision, then for the reasons that I have already given I would have come to the same conclusion.
- Further, if I am entitled, sitting on appeal, to approach the application for relief completely afresh, then it does seem to me that I am also entitled to consider whether the application for relief was made promptly. For the reasons given by Mr Tucker, I accept that the application for relief was not made promptly. I accept that Mr Boyd did not know until 28th November that the form H had been faxed to the court out of time; but, as Mr Tucker submitted, the relevant individuals at the claimant’s solicitors must have known on Friday 11th October, when they had faxed the form H through to the court after 4.00 pm. Therefore an application for relief should have been made much sooner than 21st November; and the true basis for that application should have been made clear much earlier than the date of Mr Boyd’s witness statement of 18th December.
- In my judgment, all of that amounted to a lack of promptitude which, in itself, would have entitled the District Judge to have refused the application for relief from sanctions. Even if the lack of promptitude was not such a sufficient reason, I consider that the combination of two breaches of the same order, and the complete lack of any explanation for either of them, is sufficient to refuse the grant of relief from sanctions in the present case.
- Since I have heard over two hours of argument, I clearly cannot say that this was an appeal that had no real prospect of success. I therefore give permission to appeal. But, for the reasons that I have given, I dismiss the appeal.”
SUMMARY: CUMULATIVE DEFAULTS ARE RELEVANT
- Cumulative defaults are relevant.
- A short amount of time for the breach does not render it necessarily trivial.
- Applications for relief from sanctions should be made promptly. The date runs from the date of the breach and not the date of realisation.
- There normally has to be an explanation for any breach, however short.