Hytec Information Systems Ltd v Council Of City Of Coventry [1996] EWCA Civ 1099

EWCA-Civ
Hytec Information Systems Ltd v Council Of City Of Coventry
[1996] EWCA Civ 1099 · 1996-12-04
[1]An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party's last chance to put his case in order;[2]Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed;[3]This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure;[4]It seems axiomatic that if a party intentionally or deliberately (if the synonym is preferred), flouts the order then he can expect no mercy;[5]A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order;[6]The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice;[7]The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weigh very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two; I turn to the third particular issue, whether or not this defendant is exonerated because the fault was not his personally but that of his legal representatives? In support of that submission, Mr Williamson, for whose arguments and skeleton arguments I am indebted as I am to Mr MacGregor QC, submits that the true rule is encapsulated in that sentence of the Vice Chancellor that:
"in my judgment in cases in which the court has to decide what are the consequences of a failure to comply with an unless order the relevant question is whether such failure is intentional and contumelious."
He submits, secondly, that there is no additional requirement of extraneous circumstances. I cannot accept those submissions. The judgment of the Vice Chancellor must be read as a whole. It is quite plain that there are difficulties in giving a narrow meaning to intentional linked as it is with contumelious. The submission wholly fails to have regard to the broader terms in which he expresses the basis of the rule and the limited circumstances in which a failure can be exonerated. Mr Williamson's second submission is rejected by the judgment of this court in the Frizzell case and the passage from the judgment of Leggatt LJ to which I have already referred. He relies upon the decision at first instance in Pereira v Beanlands [1996] 3 All ER 528 and the judgment of Robert Walker J. I would not wish to express any disagreement with either the statement of the principle or the application of it in the particular facts of that particular case. He held that there was no binding principle which fettered the broad discretion he had to exercise that a default, whether an act or omission of the litigant's solicitor, should always be visited on the litigant himself. This is a perfect example of the exigencies of justice coming to do justice in a particular case. Ordinarily this court should distinguish between the litigant himself and his advisers. There are good reasons why the court should not: firstly, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent (as Mr MacGregor eloquently put it) were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself. In my judgment, on the facts of this case, the City of Coventry cannot escape the quite manifest failings of counsel who was instructed on its behalf. She displayed, as I have said, an arrogant disdain to the court's authority. Her sending her pupil was in my judgment contumaciously disrespectful. She had manifestly failed to fulfil her duty to her client and her duty to the court, to settle particulars which were intelligible and her client must pay the penalty for that failure. Turning to the exercise of discretion, whilst not bound by the views expressed by His Honour Judge Havery on 28 July when he looked at the merits, I would certainly pay regard to them. In fact I agree with them. I agree that counsel was contumacious; I agree that solicitors and counsel were negligent in their conduct of the litigation on their own client's behalf; I agree that the defendant had been given ample opportunity to remedy the defects. There had been four orders made, none of which had been properly complied with. As the judge robustly said, "The defendants had been playing around for too long. Enough is enough". There is no adequate excuse proffered. In those circumstances, I agree with the approach of the judge that the court's authority has now to be stamped upon this litigation with the result of the orders that he made must be upheld. I would not wish it to be thought that charm is incapable of diffusing this atomic weapon in judicial armoury. Had counsel appeared before the learned judge with sufficient humility, making respectful submissions that it was considered that the order had been complied with, throwing himself or herself on the mercy of the court, and offering to comply with its order if that view was wrong, then I imagine that the quality of mercy would not have been utterly dead in a judge's bosom. In this case that was not the course followed by these defendants. It is too late for them to come to this court with blandishments of that kind. I would dismiss the appeal. LORD JUSTICE AULD: I agree and wish only to add a few words about the test to be applied by a court in deciding whether to strike out a claim or defence because of failure to comply with an unless order. Such an order is, by its nature, intended to mark the end of the line for a party who has failed to comply with it and any previous orders of the court. In Jokai Tea Holdings Limited , in the passage read by My Lord, Lord Justice Ward, at page 1203 in the report, Sir Nicolas Browne-Wilkinson, VC, as he then was, took as a useful test of the limit of the court's patience the question whether such failure has been intentional and contumelious. That was the formulation of Lord Diplock in the context of the dismissal of an action for want of prosecution, sitting as Diplock LJ in Allen v Sir Alfred McAlpine & Son Ltd , and as Lord Diplock in Birkett v James . In the passage cited by My Lord from the speech of Lord Diplock in the latter case, his Lordship stated that it was one of two alternative circumstances, coupled with prejudice, in which a court could dismiss an action for want of prosecution even where no previous peremptory order had been made. The other was inordinate and inexcusable delay. Sir Nicolas Browne-Wilkinson, in borrowing the words of one of Lord Diplock's alternative tests in that context, clearly did not intend to make it the only trigger for exercising the equally or more rigorous jurisdiction to strike out a pleading for failure to comply with a peremptory order. He also clearly had in mind failure to comply where it could not be shown to be due to "extraneous circumstances". There is inevitably some scope for overlap between the two separate notions for an applicant seeking to avoid a strike out. In showing that his failure was due to extraneous circumstances, he would in ordinary circumstances demonstrate that it was not intentional. Lord Justice Megaw at 1207A-B, again a passage cited by my Lord, put the test in a different way, namely, whether it could be shown that there is a perverse and obstinate resistance to authority. As Beldam LJ observed in R G Carter (West Norfolk) Limited v Ham Gray Associates Ltd , it is wrong to regard guidelines such as this as a statutory formula. He and Leggatt LJ demonstrated that approach two years before, in Caribbean General Insurance Limited v Frizzell , cited by My Lord. There, Leggatt LJ, in a passage at page 40, immediately following the references to Jokai Tea Holdings and Costellow v Somerset County Council read by My Lord, continued with these words:
"Those approaches indicate the need for a defaulter, if he is to escape the consequences of failure to comply with a peremptory order, to show that in the circumstances the relevant breach was excusable if not unavoidable."
Beldam LJ on the same page, in a passage similar to that cited by My Lord from his judgment in the case of Carter, said:
"Final, peremptory or ´unless´ orders are only made by a Court when the party in default has already failed to comply with a requirement of the rules or an order, and the Court is satisfied that the time already allowed has been sufficient in the circumstances of the case, and the failure of the party to comply with the order is inexcusable."
Neill LJ agreed with both judgments in that case. I respectfully agree with him, Leggatt and Beldam LJJ that the essential notion in play is whether a party's failure to comply with an order is without fault or is inexcusable, the latter in the sense of being without a reasonable excuse. In my judgment, there is no need to confine the test to that of an intentional disregard of a court's peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise. Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction. But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise. It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out. THE MASTER OF THE ROLLS: I agree with both judgments. I add a footnote to those judgments in order to attempt to indicate the proper context of the decision which this court has given. The Supreme Court's Rules Committee has wide powers of rule making. This enables the Rules Committee, not only to make the rules themselves, but from time to time to amend those rules when, in the light of experience, modification of those rules prove necessary so as to make the civil justice system work effectively. There are, however, situations where this court makes remarks in the course of a particular judgment which were intended to be, or are taken to be, the source of general guidance as to how a particular discretion given to the courts by the rules in wide terms should normally be exercised. Such guidance is extremely helpful since it allows courts up and down the country to achieve greater consistency which is an important feature of justice. However these remarks are usually either obiter or no more than an indication of the reasons for a decision in a particular case. The comments which are made in such a case are frequently picked up and repeated in judgments by other divisions of this court and that gives them greater authority. This is all to the good subject to two qualifications. The first is the guidance may become treated with excessive respect so that they are regarded as exhaustive and enunciating principles of law. If this happens, there can be unfortunate consequences because situations which were not contemplated when the guidance was given might arise. If the courts follow the guidance blindly, it can result in decisions which are not in accordance with the requirements of justice where a decision which is in accordance with that requirement could otherwise be given if the general discretion which the rules confer were to be exercised. This is a situation which may have gone wrong as a result of the remarks of Sir Nicolas Browne-Wilkinson, VC, as he then was, which have been referred to by my Lords. If that happens, it is the responsibility of this court to make the true effect of the remarks clear. That is what this court has sought to do today and what, as I understand it, Beldam LJ was doing in the case of Carter in the passages to which my Lord, Lord Justice Ward, has referred, passages which I would personally endorse. The second qualification is that the rule in relation to which guidance is given, notwithstanding that the guidance no longer achieves its purpose satisfactorily, may remain an unsatisfactory rule. Where this happens, the Rule Committee cannot assist. Furthermore, the House of Lords is unlikely to assist because cases involving procedural issues of the sort that have been considered by this court today are rarely considered by their Lordships. In addition, with respect to their Lordships, often they are not in the ideal position to give practical guidance as to the day to day conduct of litigation, they being necessarily divorced to some extent from what is happening day in and day out in the courts up and down the land. It is because of this that it is important that where a situation occurs where the guidance which has been given is shown by cases coming before this court not to be working well, fresh guidance should be given. I therefore draw judges' and practitioners' attention to the principles set out in the judgment of Lord Justice Ward which for the future should be regarded as stating the general guidance which should normally be applied in this area, but subject to the qualifications which he made clear. The only other matters to which I would refer is the case of Pereira v Beanlands [1996] 3 All ER 528 which was decided by Robert Walker J earlier this year. Like my Lord, Lord Justice Ward, I would in general endorse the judgment of the judge. However, I would emphasise that judgment has to be considered in the context of its facts which included a defendant who was acting in a fiduciary capacity and therefore likely to be treated sympathetically by the courts. So far as the merits of this case are concerned, I appreciate that the consequence of our decision is that the Council is deprived of a substantial Counterclaim. In the course of his very able submissions, Mr Williamson referred to the jurisprudence which is now developing, which indicates that if a second action is brought where a first action has been struck out, there is a danger of a second case being treated as an abuse of the court. In circumstances such as existed in this case, I am sure that Mr Williamson was right to draw attention to that danger. It is always difficult to anticipate all circumstances which can arise. However, speaking for myself, I would doubt that there could be circumstances where in this situation the Council would be able to proceed in a fresh action with that Counterclaim. The decision is therefore hard on the Council. In that regard, I draw attention to the fact that if they had the very substantial Counterclaim which they indicate they do have, then they were remarkably cavalier in trusting the conduct of that Counterclaim, first of all to an in-house lawyer of very limited experience and, secondly, to counsel who obviously were not of sufficient experience to conduct the litigation of that scale. To that extent they were the authors of their own misfortune. In those circumstances, it follows that this appeal must be dismissed.

Order

Appeal dismissed with costs. © 1996 Crown Copyright

Cited in 3 later judgments