COURT OF APPEAL OVERTURNS REFUSAL TO SET ASIDE JUDGMENT AFTER DEFENDANT FAILED TO ATTEND TRIAL

Given the many strictures relating to the sanctity of the trial date the decision of the Court of Appeal in TBO Investments Ltd -v- Mohun-Smith [2016]  EWCA Civ 403 may be viewed as a surprising one. The defendant failed to attend trial and an adjournment was refused,  bu tthe defendant  was then successful in setting aside that judgment. It is important to bear in mind that the court was not critical of the original decision to refuse an adjournment, but was considering an application under CPR 39.3.

“It is a fundamental principle of any civilised legal system, enshrined in the common law and in article 6 of the Convention for the protection of human rights and fundamental freedoms that all parties in a case are entitled to the opportunity to have their case dealt with at a hearing at which they or their representatives are present and are heard. If the case is disposed of in the absence of a party, and the party (i) has not attended for good reasons, (ii) has an arguable case on the merits, and (iii) has applied to set aside promptly, it would require very unusual circumstances indeed before the court would not set aside the order.”

KEY POINTS

  • A judge hearing an application under CPR 39.3 should consider the guidance given in Bank of Scotland Plc v Pereira [2011] 1 WLR 2391
  • In the current case there was, at the time of the CPR 39.3 application, evidence of a good reason not to attend trial; the application was made promptly and the defendant had an arguable case.
  • The judge should, therefore, have set aside the judgment.

THE CASE

The claimant was bringing an action for £2 million against the defendant for professional negligence. The claim was listed for 7 days in a 5 day trial window starting 23 June 2014. The defendant was unable to put its solicitors in funds and they became litigants in person shortly before the trial started. On the 27th June the trial was listed to start on the 30th June.

THE APPLICATION FOR AN ADJOURNMENT

On the morning of the trial the judge was sent a letter.
“The Trial Window is now into its second week and on Friday (27th June), Mr Robinson was obliged to attend his GP practice for a Medical assessment, due to the arising stress and pressure of the pending proceedings.
Following that appointment, Mr Robinson has been instructed to rest for at least a week and to report back to the Surgery on Friday of this week for a review of the condition. His GP issued a Statement for Fitness to Work certificate and this is enclosed.
For the avoidance of doubt, the company has no other representation. Mr Robinson is the only feasible witness able to stand on behalf of TBO Investments Ltd, therefore we respectfully seek an adjournment of the case, until he is able to deal with the proceedings.”
  1. The statement of fitness for work or “sick note” issued by Mr Robinson’s GP recorded that:
“I assessed your case on 27/06/2014 and, because of the following condition: family stress, I advise you that: you are not fit for work.”

As the judge said, the indication on the document was that Mr Robinson would not be fit for work for the period 27 June to 4 July.

JUDGMENT ENTERED FOR THE CLAIMANT

The judge dismissed the application for an adjournment. Dismissed the defence and entered judgment for £2,135.676.

THE DEFENDANT’S APPLICATION TO HAVE JUDGMENT SET ASIDE

The defendant made an application to set aside the order. Further medical evidence was put in to show that the defendant’s representative could not have attended. The judge found that the defendant did not have good grounds for not attending the trial and had not acted promptly once it was aware of the judgment. The application was dismissed.

THE APPLICATION UNDER CPR 39.3

It is important to recognise that the defendant’s application, and the subsequent appeal, were not in relation to the judge’s refusal to grant an adjournment.  There was no appeal against that decision.  The appeal related to the defendant’s application under CPR 39.3 – to set aside the order made

“(3) When a party does not attend and the court gives judgment or makes an order against him, the party who failed to attend may apply for the judgment or order to be set aside.……
(5) Where an application is made under paragraph (2) or (3) by a party who failed to attend the trial, the court may grant the application only if the applicant:
(a) acted promptly when he found out that the court had exercised its power to strike out or to enter judgment or make an order against him;
(b) had a good reason for not attending the trial; and
(c) has a reasonable prospect of success at the trial.”

By the time the application under CPR 39.3 was made the medical evidence was fortified and stronger than in the note placed before the judge at the application for an adjournment.

THE APPROPRIATE APPROACH TO APPLICATIONS UNDER CPR 39.3

  1. The general approach to be adopted in relation to applications under rule 39.3(3) is not in dispute. In Bank of Scotland Plc v Pereira [2011] 1 WLR 2391 Lord Neuberger MR said:
“24. First, the application to appeal Judge Ellis’s refusal under CPR 39.3 to set aside the Order. An application to set aside judgment given in the applicant’s absence is now subject to clear rules. As was made clear by Simon Brown LJ in Regency Rolls Ltd v Carnall[2000] EWCA Civ 379, the court no longer has a broad discretion whether to grant such an application: all three of the conditions listed in CPR 39.3(5) must be satisfied before it can be invoked to enable the court to set aside an order. So, if the application is not made promptly, or if the applicant had no good reason for being absent from the original hearing, or if the applicant would have no substantive case at a retrial, the application to set aside must be refused.
25. On the other hand, if each of those three hurdles is crossed, it seems to me that it would be a very exceptional case where the court did not set aside the order. It is a fundamental principle of any civilised legal system, enshrined in the common law and in article 6 of the Convention for the protection of human rights and fundamental freedoms that all parties in a case are entitled to the opportunity to have their case dealt with at a hearing at which they or their representatives are present and are heard. If the case is disposed of in the absence of a party, and the party (i) has not attended for good reasons, (ii) has an arguable case on the merits, and (iii) has applied to set aside promptly, it would require very unusual circumstances indeed before the court would not set aside the order.
26. The strictness of this trio of hurdles is plain, but the rigour of the rule is modified by three factors. First, what constitutes promptness and what constitutes a good reason for not attending is, in each case, very fact-sensitive, and the court should, at least in many cases, not be very rigorous when considering the applicant’s conduct; similarly, the court should not pre-judge the applicant’s case, particularly where there is an issue of fact, when considering the third hurdle. Secondly, like all other rules, CPR 39.3 is subject to the overriding objective, and must be applied in that light. Thirdly, the fact that an application under CPR 39.3 to set aside an order fails does not prevent the applicant seeking permission to appeal the order. It is not very convenient, but an applicant may be well advised to issue both a CPR 39.3 application and an application for permission to appeal at the same time, or to get agreement from the other party for an extension of time for the application for permission to appeal.”

THE COURT OF APPEAL OVERTURNED THE JUDGE’S DECISION.

  1. I recognise that an appellate court should be slow to interfere with a decision of a lower court on the question of whether a litigant had a good reason for not attending a trial. Such a decision is a fact-sensitive evaluation made in the light of all the circumstances. It is the kind of decision that an appellate court will only strike down for reasons analogous to those which justify interfering with an exercise of discretion. But in making that assessment, the judge must have regard to the guidance given in Pereira and Estate Acquisition and the need, when applying rule 39.3(5)(b), to seek to give effect to the overriding objective of dealing with cases “justly” and to comply with article 6 of the European Convention on Human Rights (“the Convention”). This is particularly important where, as in the present case, the party has a reasonable prospect of success at the trial. In such a case, the court should usually not adopt a very rigorous approach to the question whether the litigant has shown a good reason for not attending.
  2. At first sight, it might appear that there is a conflict between the Pereira guidance (which is similar to that given in Estate Acquisition) on the one hand and the guidance given in Levy on the other hand. Nothing that I say in this judgment should be interpreted as casting doubt on the guidance given in Levy. Generally, the court should adopt a rigorous approach to scrutinising the evidence adduced in support of an application for an adjournment on the grounds that a party or witness is unfit on medical grounds to attend the trial. In Denton v TH White Ltd [2014] EWCA Civ 906,[2014] 1 WLR 3926 at para 89, Jackson LJ emphasised the general undesirability of adjourning trials in the context of applications under CPR 3.9. I entirely agree with what he said.
  3. But I accept the submission of Mr Burgess that there is a material distinction between an application under rule 39.3(3) and an application for an adjournment of a trial. If the court refuses an adjournment, there will usually be a trial and a decision on the merits, although the unsuccessful applicant will be at a disadvantage, possibly a huge disadvantage, by reason of the absence of the witness or the party himself. Despite their absence and depending on the circumstances, it may still be possible for the disadvantaged claimant to prove the claim or the disadvantaged defendant to resist it. I accept that, in some cases, the refusal of an adjournment will almost inevitably lead to the unsuccessful applicant losing at trial. That is a factor that must be borne in mind when the court exercises its discretion in deciding whether or not to grant an adjournment. But if the application to set aside a judgment under rule 39.3(3) fails, the applicant will have had no opportunity whatsoever to have an adjudication by the court on the merits. This difference between an application under rule 39.3(3) and an application for an adjournment of the trial is important. Although it has not been articulated as the justification for generally adopting a more draconian approach to an application for an adjournment than to an application under rule 39.3(5), in my view it does justify such a distinction. It follows that the judge should have applied the Pereira guidance rather than theLevy guidance in so far as there is a difference between the two.
  4. Although the judge correctly referred to the Pereira guidance, it seems to me that he lost sight of it when he came to consider whether there was a good reason for Mr Robinson not attending on 30 June. He made no mention of it when he came at para 21 to make his overall assessment of whether a good reason had been established. At para 18 he said that the fact that the GP’s initial diagnosis was made over the telephone and in advance of any physical examination “does not encourage confidence in the accuracy of the diagnosis”. But he rightly went on to consider the rest of the medical evidence, including the opinion expressed by the doctor after she had seen Mr Robinson. The unequivocal effect of all the evidence was that, in the opinion of the doctor, Mr Robinson was suffering from stress and on that account he was not fit to attend court during the week commencing 30 June. The judge did not say in terms that he rejected this opinion. He expressed misgivings about it. I accept that it would have been better if the evidence had been more comprehensive in the respects suggested by the judge. The evidence might not have sufficed to persuade the judge on the basis of the Levy guidance to accede to an application to adjourn the trial on 30 June. But that was not the application that the judge had to deal with on 31 July. He had already refused the application for an adjournment on 30 June and there was no appeal from that decision.
  5. Having identified shortcomings in the defendant’s evidence, the judge should have reminded himself of the general need not to adopt a very rigorous approach and to have regard to the overriding objective of dealing with cases “justly” and in accordance with article 6 of the Convention. This was particularly important in a case where (i) the claim was for approximately £2 million; (ii) the defendant had a defence which had reasonable prospects of success; and (iii) it must have been apparent that a refusal to set aside the earlier decision would be likely to have very serious consequences for the defendant. The judge knew that this was a small company. In my view, he adopted too rigorous an approach to his assessment of the medical evidence. If he had kept the Pereira guidance in mind, he could not reasonably have rejected the doctor’s opinion. If the sick note had stood alone, I do not consider that, even in the context of an application under rule 39.3(3), the judge could have been criticised for dismissing it. But there was evidence that the doctor’s opinion was based on an examination of Mr Robinson. The opinion expressed in the sick note was confirmed by the doctor in her letters dated 25 and 30 July. I do not consider that there is much force in the point made by Mr Lazarus about the different causes to which the defendant attributed Mr Robinson’s stress. The differences do not cast doubt on the medical opinion that Mr Robinson was suffering from stress and unfit to attend the trial. More importantly, the judge did not take these inconsistencies into account in reaching his decision.
Conclusion on the good reason for not attending trial issue
  1. I would, therefore, reject both reasons given by the judge for holding that the defendant did not have a good reason for not attending the trial on 30 June. I wish to emphasise that it does not follow that any assertion by a party, supported by a sick note, that it did not attend the trial for reasons of ill health will be accepted by the court. Far from it. Neither the overriding objective of the CPR nor article 6 of the Convention requires the court to adopt such an approach. But for the reasons given in Pereira and Estate Acquisition and which I have elaborated above, the court should not generally adopt too rigorous an approach in its assessment of the evidence adduced in support of an application under rule 39.3(3).
  2. I accept that the court should not overlook the position of the opposing party (the claimants in the present case). If the court is satisfied that the conditions in rule 39.3(5) are met and that it is right to exercise its discretion to grant the application, it will often be appropriate to allow the application on condition that the applicant pays the other side’s costs and pays a sum on account of those costs within a short period.

MAKING THE APPLICATION PROMPTLY

The Court of Appeal held that the application had been made promptly.

  1. I accept that there is some force in the points made by Mr Lazarus. He has raised questions which it is not possible to answer on the material before the court. But in my judgment, the judge adopted too draconian an approach to the question of promptitude in the context of this case. Even if the defendant did not act with alacrity by taking between 10 and 15 days to file the application, the judge failed to have regard to the statement inPereira that the court should not, at least in many cases, be very rigorous when considering the applicant’s conduct. He did not mention the Pereiraguidance in paras 15 and 16 of his judgment. Having regard to that guidance and the fact that (i) this was a complex and very substantial claim and (ii) the period of time taken to file the application was only a matter of days, I do not consider that, if the judge had applied the Pereira guidance, he could reasonably have concluded that the defendant failed to act promptly.

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