The decision of the Court of Appeal in Chartwell Estate Agents Limited –v- Fergies Properties  is now available on Bailli. This is the first case in which the Court of Appeal have upheld a decision of a judge to grant relief from sanctions.
During the course of proceedings the claimant made repeated requests for full disclosure, threatening an application for specific disclosure. The claimant argued that disclosure was required in order to allow them to draft their witness statements.
• The claimant informed the defendant that witness statements could not be served on the date required by the court order.
• The Defendant subsequently disclosed the documents requested, but the claimant did not make an application for specific disclosure.
• The defendant refused to agree to an extension of time for service of witness evidence.
• Several weeks after the expiry of the deadline, the claimant made an application for permission to serve the witness statements out of time.
THE INITIAL HEARING
Globe J granted the claimant relief from sanctions. He considered that although the breach could not be classed as trivial, there was nothing to prevent the trial window being maintained. Both parties had been at fault. The Defendant subsequently appealed the decision.
THE LEGAL FRAMEWORK
The Court of Appeal began by considering the legal framework for relief from sanctions applications
“22. The rules of particular relevance for present purposes are as follows.
23. CPR 32.10 is in these terms:
“If a witness statement or a witness summary for use at trial is not served in respect of an intended witness within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission.”
CPR 3.1(2)(a) provides:
“Except where these Rules provide otherwise, the court may –
(a) extend … the time for compliance with any rule, practice direction or court order (even if an application for extension is made after the time for compliance has expired)”.
CPR 3.8(1) and (3) state:
“(1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction.”
(Rule 3.9 sets out the circumstances which the court will consider on an application to grant relief from a sanction.)
“(3) Where a rule, practice direction or court order –
(a) requires a party to do something within a specified time, and
(b) specifies the consequences of failure to comply,
the time for doing the act in question may not be extended by agreement between the parties”.
CPR 3.9(1), as substituted by the Civil Procedure (Amendment) Rules 2013, states:
“On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, 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.”
The overriding objective provisions of the Civil Procedure Rules (themselves revised by the Civil Procedure (Amendment) Rules 2013) are too familiar to require repetition here.
23. It can therefore be seen that CPR 32.10 provides its own sanction for failure to serve a witness statement within the time specified by the court: that is, that the witness may not be called to give oral evidence unless the court gives permission. Since the rules have determined the applicable sanction (unless the court gives permission) there can accordingly be no available argument that the sanction prospectively to be imposed is of itself unjust or disproportionate. As stated in paragraph 45 of Mitchell (cited below):
“On an application for relief from a sanction, therefore, the starting point should be that the sanction has been properly imposed and complies with the overriding objective.”
The question thus is not whether the sanction prescribed by CPR 32.10 is of itself disproportionate or unjust but whether the sanction should be disapplied in the particular case.
24. For this purpose, the phrase “unless the court gives permission” as contained in CPR 32.10 cannot, in my view, be applied in a free-standing way, leaving the exercise of judicial discretion at large. In deciding whether to give permission, the court has to have regard to and give effect to other relevant rules such as CPR 3.1. It also seems to me inescapable that, for this purpose, the court must likewise give effect to CPR 3.8 and CPR 3.9: just because CPR 32.10 is demonstrably imposing a sanction in the event of failure to serve a witness statement within the time specified.
DOES CPR 3.9 APPLY TO APPLICATIONS TO EXTEND TIME FOR WITNESS STATEMENTS?
The Court of Appeal then dismissed the argument that CPR 3.9 does not apply to applications concerning witness statements as the sanction in CPR 32.10 does not come into affect until trial.
26. “I observe that in the notes to CPR 32.10 in the White Book (2014 ed.) it is suggested that:
“However, where before trial a party requests the court to exercise its powers under r.3.1(2)(a) to extend the time for serving their witness statements it could be argued that r.3.9 does not apply because at that stage the sanction imposed by r.32.10 has not had ‘effect’ within the meaning of r.3.8.”
27. I can see the argument on a narrow and literal approach to the wording. But in my view it is not correct: a broader reading is called for. Were it otherwise, an application to extend time for service of a witness statement made before trial could stand on a significantly different footing from an application for extension and relief from sanction made at trial when the witness is actually to be called. In my view, the sanction provided in CPR 32.10 is to be taken as having effect once the time limit for serving the witness statement has expired. It would be contrary to the overall purpose of the rules, and could lead to arbitrariness, were it otherwise.”
THE CHANGES TO CPR 3.9
Davis LJ went on to consider the changes to CPR 3.9 brought about by the Jackson Reforms and the case of Mitchell :
“32. But the interpretation of, and the approach required under, CPR 3.9 is now subject to the decision of the Court of Appeal in Mitchell v News Group Newspapers Limited  1 WLR 795,  EWCA Civ 1537, with which all those specialising in litigation will by now be familiar. The decision is of the utmost importance. In all these cases of applications for relief from sanction the starting point has to be the terms of CPR 3.9 itself; and CPR 3.9 has itself to be read, and applied, in accordance with what is said in Mitchell.
33. That decision makes quite specific that the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with rules, practice directions and court orders are now “to be regarded as of paramount importance and be given great weight”: paragraph 36. Further, the other “circumstances of the case” referred to in CPR 3.9 are, subject to the guidance set out in the decision, to be given less weight than the two considerations specifically mentioned in the rule: paragraph 37. The emphasis thus under the new CPR 3.9 is not to be placed simply on the interests of the parties in the individual case; a wider approach is mandated, calling for protection of the position of court users generally. As is stated at paragraph 41:
“… the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner.”
Laxity in compliance by the parties and laxity in enforcement by the courts will accordingly not be acceptable. A tougher and more robust approach is called for.”
THE GUIDANCE FROM MITCHELL
“34. Regard must of course be had to the totality of the decision in Mitchell. But the guidance can, I think, for present purposes be summarised as follows:
i) It is necessary to consider whether the nature of the non-compliance is such that it can be regarded as trivial.
ii) If the non-compliance is not trivial, it is necessary to consider whether there is a good reason explaining the non-compliance.
iii) The promptness (or otherwise) of an application to court for an extension of time and relief from sanction for these purposes will be material.
iv) If the non-compliance is not trivial and if there is no good reason for the non-compliance then the “expectation” is that the sanction will apply. The court has power to grant relief but, if the non-compliance is not trivial and if there is no good reason for it, the expectation is that the factors mentioned in (a) and (b) of the rule will “usually trump other circumstances”.
See, in particular, paragraphs 40-41 and 58 of the judgment of the court. It is also stated (at paragraph 46):
“The new more robust approach that we have outlined above will mean that from now on relief from sanctions should be granted more sparingly than previously.”
35. One other point at this stage may be noted from Mitchell. It is stated in paragraph 52 of the judgment – reflecting what is recommended by Sir Rupert Jackson in his Report – that “this court will not lightly interfere with a case management decision”.
THE DEFENDANT’S ARGUMENTS
The Defendant did not dispute Globe J’s findings of fact, nor did they dispute that he had been entitled to take into account the factors which he had listed. However they argued that he had been incorrect in relation to the weight he had given to those factors and failed to give proper effect to the decision in Mitchell.
THE CLAIMANT’S RESPONSE
The Claimant responded by emphasising that this was a matter for the evaluation and discretion of the judge. They submitted Globe J had paid due regard to Mitchell and that the Defendant’s themselves had been in fault. Both had effectively been granted relief from sanctions.
THE COURT OF APPEAL’S CONCLUSION
The Court of Appeal dismissed the appeal and upheld the decision to grant the claimant relief from sanctions. They held that the judge was entitled to decide the matter as he did.
THE REASON FOR THE BREACH
“47. The judge was justified in finding that the non-compliance on the part of Chartwell was not trivial. He also was justified in finding that there was no good reason advanced to explain the non-compliance. It is right to say and to bear in mind that this was not a case of there being no reason advanced at all. That reason really is self-evident from the contemporaneous correspondence. There is no question of styling this as a deliberate “flouting” of the rules. But that said, the correspondence shows a lack of real understanding of the requirements of the revised rules. No doubt there is sense in parties to litigation trying to sort out matters of this kind consensually. Indeed, that is to be encouraged. But here the dispute had antedated the case management conference; it had continued for weeks thereafter; and yet no application to court was made until 27 January 2014. This was tantamount to reverting to the old, and long exploded, notion of parties setting their own timetable for the conduct of court process. As rule 3.8(3) itself makes explicit, moreover, the courts’ control cannot in this context be ousted by the parties’ agreement. Further, as the judge himself had pointed out, Chartwell could have lodged witness statements by the specified date: even if needing to supplement them later in the light of subsequent disclosure. The default cannot be entirely explained away as justifiable by virtue of the defendants being to a degree party to it.
48. To the extent, therefore, that Mr De Gregorio challenged the judge’s conclusion that no good reason was shown, I reject that challenge. Nor was I much impressed by Mr De Gregorio’s extensive trawl through the correspondence in an attempt to claim the moral high ground for Chartwell. As the judge found, both sides were at fault for what happened, with greater fault to be attributed to Chartwell.
THE OTHER CIRCUMSTANCES OF THE CASE
“49. The judge nevertheless was still required, by the provisions of CPR 3.9, to consider “all the circumstances of the case” so as to enable him to deal with the application justly.
50. Those circumstances included the important fact that the trial date would not be lost if relief were granted and a fair trial could still be had; and the fact that no significant extra cost would be occasioned if relief were granted. But a further circumstance which the judge was, in my view, also justified in taking into account, and to which he was entitled to attribute importance, was that refusal to grant relief from the sanction stipulated in CPR 32.10 would effectively mean the end of the claim: since the burden of proof was on Chartwell to prove its case and it would have no evidence.
51. In this regard, Mr Deacon objected that the judge had erred in relying on the prospective termination of the claim as giving rise to “too severe a consequence” (in the judge’s words). He submitted that was simply a consequence of the sanction provided by CPR 32.10 itself, which is to be taken to be a proportionate sanction. I see some force in that submission. But it is to be remembered that CPR 32.10 does not provide, as the stipulated sanction, that failure to serve a witness statement by the specified time results in the pursuit of the claim or the defence, as the case may be, being struck out or debarred (unless the court grants permission). Rather, the sanction is that that particular witness may not be called (unless the court gives permission). Thus by no means in every case would the sanction for failure to serve a witness statement by the specified date result in the effective termination of the claim or defence, as the case may be. But in this case it would. Mr De Gregorio did not seek to rely in argument on Article 6 of the Convention or on any of the case law arising thereunder and I therefore express no view on any possible implications of that jurisprudence for present purposes. Nevertheless, it would be unreal, in my view, not to have regard to such a de facto consequence of termination of the claim as arises in the present case. That therefore is a relevant circumstance, in my view: and that is so even if it can forcefully be said that such a consequence was at least foreseeable in this case, in the event of non-compliance, and so should have meant that there was all the more reason to comply in the first place with the order for exchange by the stipulated date.
52. That of course, for Chartwell, would indeed be a very grave consequence. I can accept, all the same, that that cannot necessarily be regarded as, in itself, a determinative factor in favour of Chartwell. It cannot just because of the requirements laid down in Mitchell. What are of paramount importance, and to be accorded great weight, are the matters specified in (a) and (b) of CPR 3.9. As Mitchell lays down, other circumstances are ordinarily to be given less weight than those two specific considerations. Thus the fact, in any given case, that refusal to grant relief from sanction imposed by CPR 32.10 in circumstances of failure to serve witness statements within the specified time would in practice mean the end of the claim or the defence will by no means of itself necessarily warrant the grant of relief from sanction.
THE DECISION IN DURRANT
“53. An illustration of the approach to be taken in the context of failure to serve witness statements can be found in the case of Durrant (cited above). That case in fact had a number of features distinguishing it from the present case. Unlike the present case, for example, the failure in that case by the defendant (the claimant had not herself defaulted) to serve the witness statements – which ultimately were provided piece-meal – followed not simply non-compliance with an initial order but further non-compliance with a subsequent specific “unless” order stipulating the sanction. Moreover, in that case the resulting applications for relief from sanction were very late, being made shortly before trial and heard on the first day of trial: thereby necessitating an adjournment when granted. The Court of Appeal, in reversing the first instance decision to grant relief from sanction, understandably emphasised the importance of adopting the approach laid down in Mitchell. Relief was thus refused, notwithstanding that the result would be that the defendant would be unable to call any witness evidence.
54. Mr Deacon submitted that at all events only limited weight could be attached to the potential consequential effects of refusal to grant relief from sanction. He relied on paragraph 44 of the judgment in Durrant for that purpose. But in my view that is a misreading of the judgment. Ms Durrant was making strong allegations of misfeasance in public office, racial discrimination, inhumane treatment and the like against police officers. One argument raised on behalf of the defendant in support of the application for relief from sanction had been the potential effect on the careers and reputations of individuals and the police force if the officers concerned were unable to give evidence: as well as the public interest in proper scrutiny of their actions. It was those considerations which the court thought, in the circumstances of the case, could not properly “carry much weight” in deciding whether to grant relief. The court, however, was not stating the position as an invariable proposition of general application with regard to the consequences of a refusal to grant relief going beyond the specified sanction. It may also be noted, in fact, that at paragraph 55 of the judgment the court found that the defendant Chief Constable had a real prospect of successfully defending the case at trial even without witness evidence of his own.
55. I should nevertheless add that the notes to CPR 32.10 in the White Book (2014 ed.) continue to suggest that where a witness statement is served after the specified date, it would be unjust to exclude the party from adducing the evidence at trial “save in very rare circumstances” (examples given being of deliberate flouting of court orders or if an adjournment of the trial would be necessitated). In the light of the revised CPR 3.9 and the decision in Mitchell I think that that may state the position rather too broadly and may pay insufficient regard to the altogether more rigorous approach now required in the case of non-compliance; albeit I can accept that whether or not there has been deliberate flouting of court orders and whether or not a trial date will be required to be adjourned are most certainly circumstances to be taken into account in deciding whether permission should be given.
GLOBE J’S DECISION
“56. Reverting to the present case, Globe J did not, in my view, misdirect himself. He did not, moreover, decide to grant Chartwell relief from sanctions solely because refusal to do so would result in a disproportionately severe consequence in its being unable to pursue the claim. On the contrary, he reached his conclusion that it would be too severe a consequence when set against all the background history and the other matters listed by him.
57. In my view, that background – that is, all the circumstances of the particular case – entitled the judge in this case to depart from the expectation which otherwise ordinarily would arise. It must not be overlooked that the Court of Appeal in Mitchell did not say that the two factors specified in CPR 3.9 will always prevail, as a matter of weight, over any other circumstances in a case where the default is not trivial and where there is no good justification. It is true that it later stated that the expectation is that the two factors mentioned in CPR 3.9 will “usually” trump other circumstances. But it did not say that they always will. That, with respect, must be right. It must be right just because CPR 3.9 has required that all the circumstances are to be taken into account and has required that the application be dealt with justly.
THE EFFECT OF REFUSING RELIEF
“58. In the present case, if relief from sanction were refused Chartwell’s claim would in practice indeed come to an end. I do not think that circumstance can be entirely subordinated to the consideration that Chartwell might then have a prospective claim against its solicitors (which, ironically, would then potentially involve further satellite litigation). If, on the other hand, relief from sanction were granted, a fair trial could still be had, without any adjournment of the trial date being required and with no additional cost for the parties arising. And there was more. For one further particular factor, albeit to be coupled with the other factors listed by the judge, was the default of the defendants. There was designed to be simultaneous exchange on 22 November 2013: but the defendants themselves (as found) were not in fact ready to exchange on that date. They did not, for example, seek to lodge at court at that time their own witness statements. In fact, their witness statements were not even finalised as at 21 January 2014, they having participated in the debate on disclosure matters in the interim. They – as much as Chartwell – also needed relief from sanction if they were to rely at trial on their witnesses. They had made no application of their own. In the event, the application eventually issued by Chartwell had sought an order in this regard relating to both parties: an order the judge in the result made. It is not, in fact, difficult to deduce that the defendants ultimately never themselves filed their own application for relief just because of the calculation that if Chartwell, as claimant on whom the burden of proof lay, was knocked out from relying on any witness evidence it would not then matter to the defendants if they were likewise knocked out. (The calculation also no doubt would have been that if Chartwell obtained relief from sanction then the defendants inevitably would also.) That, when set also in the light of the intervening correspondence, would be a most unattractive result. Overall, the judge was, in my view, entitled to attach importance to the fault of the defendants in this regard.
59. Given that, and given all the other factors, this was one of those cases in which, notwithstanding the paramount importance and the great weight to be given to the two matters specified in CPR 3.9, those two matters could reasonably be assessed as outweighed by all the other circumstances. There is, in my view, no proper basis for interfering with the judge’s evaluation of the position and his exercise of discretion.
THE COSTS OF THE ORIGINAL APPLICATION
“60. Mr Deacon did also, as a further ground of appeal, object to the judge’s decision to make no order as to costs. He submitted that, even if he were justified in granting relief from sanction, the judge should still have ordered Chartwell to pay the defendants’ costs of the application. In my view, however, the order as to costs made by the judge was, given the circumstances, well within the range of a proper exercise of discretion.”
THE INCREASE IN SATELLITE LITIGATION
“61. One of the further stated aims of the new culture evidenced in the new CPR 3.9, is the avoidance of satellite litigation. It is an unfortunate – although it is to be hoped temporary – by-product of the new rule that satellite litigation thus far seems not to have been avoided but if anything seems to have been promoted. The present case is an example. The advantages to the defendants, if their opposition to the grant of relief from sanction succeeded, would have been enormous: the entire disposal of a doubtless unwelcome, as well as costly, legal action against them. For Chartwell, on the other hand, the consequence would in practice have been the entire loss of its claim against the defendants. With the possibilities afforded by the new CPR 3.9, and when the stakes can be so high, satellite litigation such as has occurred here is therefore perhaps not wholly surprising: albeit most unfortunate. But the one sure way to circumvent such satellite litigation is for parties to comply precisely with rules, practice directions and orders: and, where that really is not capable of being done, to seek from the court the necessary extension of time and relief from sanction at the earliest moment.”
THE COURTS WILL NOT INTERFERE WITH CASE MANAGEMENT DECISIONS LIGHTLY
“62. I would also wish to repeat the point emphasised in Mitchell that appellate courts will not lightly interfere with a case management decision. Robust and fair case management decisions by first instance judges are to be supported. In the present case, Globe J had directed himself correctly. Mr Deacon’s submission that the judge had failed to adopt the necessary robust approach ultimately was an exercise in, as it were, self-certification. It in essence founded itself on the proposition that the judge had not been robust in the way enjoined by Mitchell just because the judge had not found in favour of the defendants and refused relief from sanction. That will not do. There may be cases where, although a judge purports to direct himself in accordance with Mitchell, his approach thereafter does not comply with it. But that is not this case. The appellate courts will not interfere if a judge has correctly directed himself, has adopted the correct approach in principle and has taken all the circumstances into account. It is also to be emphasised that the courts in considering applications under CPR 3.9 do not have and should not have as their sole objective a display of judicial musculature. The objective under CPR 3.9 is to achieve a just result, having regard not simply to the interests of the parties but also to the wider interests of justice. As has been said by the Master of the Rolls (in his 18th lecture), enforcing compliance is not an end in itself. In the well-known words of Lord Justice Bowen: “The courts do not exist for the sake of discipline”. Such sentiments have not been entirely ousted by CPR 3.9, as to be interpreted and applied in the light of Mitchell.
63. Accordingly, the enjoinder that the Court of Appeal will not lightly interfere with a case management decision and will support robust and fair case management decisions should not be taken as applying, when CPR 3.9 is in point, only to decisions where relief from sanction has been refused. It does not. It likewise applies to robust and fair case management decisions where relief from sanction has been granted. If parties understand this then at least satellite interlocutory appeals should be avoided and at all events will get no encouragement from the appellate court.
• The only prudent thing to do is serve witness statements on time.
• The decision in Chartwell (as outlined by Law LJ para 66) was based on the particular facts of the case.
• It is unlikely to mean that relief from sanctions will be given more readily.
• Higher courts will be reluctant to interfere with case management decisions. The best approach is always to try avoid the need to make application for relief from sanctions.