WHITTAKER and Another v SOPER and Another [2001] EWCA Civ 1462

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL
AND A STAY OF EXECUTION WITH APPEAL TO FOLLOW
IF GRANTED APPLICATION FOR THE REMOVAL OF A STAY OF EXECUTION AND EXPEDITION
[2001] EWCA Civ 1462Case No No A2/2001/1599Venue Royal Courts of Justice, Strand, London WC2, Friday, 28th September 2001
Between
WHITTAKER and AnotherApplicantSOPER and AnotherRespondent
Before
Lord Justice AldousLord Justice RixMR S LENNARD (Instructed by Paul Fallon & Co of Watford) appeared on behalf of the AppellantMR A PARSON (Instructed by Bretherton Price Elgoods of Cheltenham) appeared on behalf of the RespondentDate 28 September 2001

Lord Justice Rix:

This

[1]is an application for permission to appeal, with the appeal to follow if permission is given, from a judgment of Mr Mawrey QC, sitting as a deputy high court judge given on 9 July 2001. In that judgment the judge held(i) that the defendants' defence had been struck out under an order which Morland J had given on 15 March 2001;(ii) that no relief should be given from that sanction under the powers of the court to grant such relief pursuant to CPR 3.9; and(iii) that in any event he would himself strike out the defendants' defence on his own initiative, irrespective of the debarring order contained in Morland J's order, because of the defendants' breaches of that order set against their previous conduct in the litigation.[2]The essential burden of the defendants' application for permission to appeal is that the judge was wrong to find that there had been any breach of Morland J's order which had triggered off any automatic strike out; and that in any event the judge had been wrong to hold that the circumstances warranted either upholding or imposing a strike out. On the contrary, justice required that the trial which had been due to take place on the day of the judge's judgment (and succeeding days) should have been allowed to take place. If it had done, the claimants would have suffered no prejudice.[3]The essential burden of the claimants' opposition to that application is that the judge had been right in each aspect of his judgment; and that his decisions not to give relief against the strike out sanction, and to consider the defendants' conduct in any event worthy of a strike out order of his own, were case management decisions within his discretion which the court of appeal would not and should not touch, since they were within an entirely appropriate range of responses to the circumstances. The litigation[4]I need to set out the background to the litigation. Mr Whittaker, the first claimant, and Mr Soper and Mr Smith, the first and second defendants, had been equal shareholders in a company called Paramount Industrial Contracts Ltd (the "company"), which they had formed as a vehicle through which they had the opportunity to put some particularly profitable contracts. The three shareholders entered into a shareholders' agreement and a distribution of profit agreement, both dated 12 August 1996. In due course, Mr Whittaker felt that he had not received his due proportion of the profits of the company and this led to the issue of his writ on 12 February 1999. His claim, which was based on the agreements of 12 August 1996, was originally in the sum of £257,038 (assuming tax and national insurance had been paid on his salary, otherwise in the sum of £313,038). The defendants' original defence, served on 26 March 1999, was that the defendants had no personal liability, and that in any event Mr Whittaker had received everything to which he was entitled and more, and there was also an unparticularised counterclaim to the effect that Mr Whittaker had prevented the company from carrying on its business.[5]On 19 May 2000, which was the date for exchange of the parties' expert accountants' reports, and at a time when Mr Whittaker's expert, Mr Randle, had written a preliminary report for exchange, the defendants, instead of exchanging reports, served an application to strike out the claim. At that time there was a trial window fixed for mid October 2000. The defendants' application was heard on 3 October 2000, and was dismissed. Morland J referred to that application as being, on the face of it, spurious. It led to the loss of the parties' first date for trial.[6]Subsequently a new trial date was obtained for 19 March 2001 and a new deadline for exchange of experts' reports was fixed for 16 February 2001. On that day the claimants' solicitors were informed by the defendants' new solicitors that they were not ready to exchange reports. On 23 February 2001 the defendants did serve an experts' report from a Mr Rodney Jackson. Previously the defendants' expert had been a Mr David Lackmaker, whom Mr Randall, the claimants' expert, had met and with whom he had agreed the basis of an approach to the calculations which had to be made, premised on the company's management accounts. However, the defendants' new expert, Mr Jackson, now put forward in his report an entirely new approach to the calculations, based on the company's audited accounts. Also on 23 February 2001 the defendants served an amended defence and counterclaim in which Mr Jackson's new approach was pleaded, Mr Randall's calculations were disputed, and for the first time a number of specific accountancy points were taken, no doubt with the assistance of Mr Jackson. The previous counterclaim was abandoned, and a new counterclaim to the effect that Mr Whittaker had been overpaid £88,017 was pleaded. I cannot find that leave has ever been given to the defendants to amend their defence and counterclaim in this way: but that is not a point on which this court has been addressed, and I leave it out of account.[7]It appears that instead it was the defendants' need to obtain permission to call Mr Jackson as their expert that was the trigger to events that then ensued. On 6 March 2001 the defendants served their application for permission to call Mr Jackson. On 8 March 2001, a second report from Mr Jackson was served, followed later on the same day by a revised version of that second report. On 9 March the defendants' application came before Morland J. He was clearly shocked by the defendants' conduct. A very brief and unapproved note of his judgment has been put before us, and no objection has been taken to it. It reads as follows:
"This is a deplorable story. The way the case has been conducted so far does the defendants no credit whatever. It is almost an abuse of process – there has been a flagrant disregard of the rules. On the face of it there was a spurious application to strike out. Then a perfectly proper arrangement between Lackmaker and Randle has been torpedoed by somebody. The overriding objective is the achievement of justice. So long as it does not seriously affect other litigants and the proper administration of justice, I am satisfied that it would be wrong to shut out the evidence of Rodney Jackson. I must also ensure that the Claimants suffer no significant prejudice([Morland J then stated the provisional terms of an order which he was minded to make and heard further submissions. He then concluded:] This is a draconian order but in view of the conduct of the defendants it is not unjust."
Morland J's order of 9 March 2001 (the "9 March order")[8]The essence of the 9 March order was that the defendants (both defendants) had to pay £100,000 into court by 10 am on 16 March 2001 in order to earn permission to call Mr Jackson as their accountancy expert at trial. If they did that, then the then current trial date of 19 March would be vacated and the trial would be relisted for the week commencing 9 July. If, however, they did not, then the trial would proceed on 19 March without Mr Jackson. Supplemental directions were given in either event: for instance, if the payment in were to be made with the consequence that permission to call Mr Jackson was granted and the trial date relisted, then the defendants had to disclose by list within 14 days further documents properly disclosable pursuant to any notice of Mr Whittaker's solicitors given by 23 March. The order required "strict compliance" with such directions. The defendants were ordered to pay the costs of the litigation to date on an indemnity basis, to be assessed forthwith.[9]On 14 March the defendants applied to vary the 9 March order. Their application was accompanied by Mr Soper's witness statement to the effect that he and Mr Smith had been unable to raise £100,000 in time, but instead offered a second charge over his home, known as Chittinghurst Farm, which he said he wished to sell in the near future. He said that the property was subject to a first charge (to Kensington Mortgage Company) in the sum of £468,557 with arrears as of 28 February of £20,908, and was worth over £900,000. He exhibited a letter from estate agents whom he had instructed to sell the property. The letter disclosed that the property put up for sale, apart from immediate gardens of some 6 acres, included additional parcels of land amounting to some 60 acres. It emerged that these parcels were in the separate ownership of a company owned by Mr Soper called Paramount Farm Services Limited ("PFSL"), and were not subject to the first charge.[10]The parties came back before Morland J on 15 March 2001, on which occasion Mr Whittaker filed evidence disputing the safety of the estate agents' valuation, which was only for marketing purposes. Morland J's order of 15 March 2001 (the "15 March order")[11]Morland J was prepared to accede to the defendants' application, but only on terms that by 4 pm on 6 April 2001 both Mr Soper and PFSL executed charges over their respective properties in the sum of £200,000. Thus – "1. Paragraph 1(2) of the order dated 9 March 2001 [that was the paragraph of that order requiring payment in of £100,000 by 16 March] be varied by substituting an order that by 4 pm on 6 th April 2001 both the First Defendant and [PFSL] must execute legal charges upon the properties mentioned above(to each secure the sum of £200,000 such sum to stand as security for all monies owed and hereafter adjudged to be owed in this action (including damages, interest and costs) by the Defendants to the Claimants."[12]That was the essence of paragraph 1 of the 15 March order. If there was compliance with that paragraph, then the trial on 19 March would be vacated, and the directions for trial in July contained in the 9 March order would apply (paragraph 7). However, failure to comply fully with that paragraph 1 would result in the defendants being "debarred from defending" (paragraph 8). That was the strike out provision built into the order. The sum of £200,000 represented a substantial portion of Mr Whittaker's claim and costs. In addition paragraph 2 of the order provided as follows:
"2. Pending registration of such charges the First Defendant is forbidden from causing or permitting any other new charge to be secured on either property or any tenancy being granted in respect of either property or otherwise dealing with either property."
Thus, although paragraph 1 of the order did not require registration of the charges, as well as their execution, by 6 April, Morland J was concerned to protect the security in favour of the claimants with the injunction contained in paragraph 2 of his order. Events between 15 March and the trial date of 9 July 2001[13]On 29 March the defendants' solicitors, Messrs Paul Fallon & Co, sent to the claimants' solicitors, copies of two charges dated as of that date, one in respect of the Farmhouse, and the other in respect of the adjoining land. Mr Whittaker's solicitors were asked to confirm that the court's order had been complied with.[14]The copy charges sent were in a standard form appropriate to mortgage lending. They referred to a "Borrower" and "Mortgagee", and to a "Mortgage Debt". The charging clause (clause 3.1) was in these terms:
"3.1 IN consideration of the Initial Advance the Borrower with full title guarantee hereby charges the Property which is vested in him for the estate or interest specified in the Schedule by way of legal mortgage with the payment to the Mortgagee of all principal interest and other monies payable by the Borrower hereunder or under the Rules..."
[15]The covenant to pay was in clause 5.1, in these terms:
"From and after such date as the advances hereunder to the Borrower amount to the Total Advance the Borrower shall pay to the Mortgagee the Instalments referred to in the Schedule on the Payment Dates and continuing until the whole of the Total Advance and of all other principal sums which may be advanced or re-advanced to the Borrower on the security hereof with interest at the Ruling Rate and all other monies covenanted to be paid by the Borrower have been fully paid and satisfied."
[16]The Schedule referred to Mr Soper (or PFSL) as the "Borrower", did not identify the "Mortgagee" (although Mr Whittaker's name was mentioned as a party to the charge at its commencement), and referred to both "Initial Advance" and "Total Advance" as meaning £200,000.[17]The defendants' solicitors' letter of 29 March was received by the claimants' solicitors on 2 April, and they replied by means of a fax wrongly dated 28 March, which this court was informed was sent on 5 April. The fax complained that the charges had been executed without sending drafts for approval, and said that a number of points would need to be addressed before the charges could be accepted. Five points were then made, of which the first two were drafting changes requested. Thus:
"1. You have clearly used a standard instalment repayment mortgage draft which is inappropriate in these circumstances. Paragraph 5.1 should therefore be substituted with the words `that the Borrower will pay to the Mortgagee the Total Advance on the date of judgment in favour of the Mortgagee in proceedings in the High Court of Justice Queen's Bench Division between (1) Peter James Whittaker (2) Alan Frank Gaylor, Claimants and (1) Clive Alexander Soper (2) Brian Smith, Defendants, case number HQ0003334'. 2. The name of Peter Whittaker should be included in the details of `Mortgagee' in the schedule to the legal charge."
[18]At 1140 on 6 April the defendants' solicitors faxed back their response to say that they disagreed with the drafting changes required in points 1 and 2, but suggested that the claimants' solicitors inserted the proposed amendments with their authority. This could not of course be done, as only copy charges had been sent. As a result there were a number of telephone conversations between the solicitors. At 1719 on 6 April - that is to say shortly after the expiry of the 4 pm deadline contained in paragraph 1 of the 15th March order - the defendants' solicitors sent a further fax in these terms:
"We confirm that we are now effecting the amendments as discussed and also confirm that we have our clients authority to initial those amendments. We will forward to you copies together with the hard copy of this letter and attend to registration."
[19]On 11 April the defendants sent copies of the amended charges. Clause 5.1 in Mr Soper's charge had been altered to meet the request made, but inaccurately, so that it read "(will pay to the Mortgagee a total advance of the date of judgment("; but no change at all had been made in clause 5.1 of PFSL's charge.[20]On 17 April the claimants' solicitors replied to note such errors and to require them to be rectified forthwith. The letter concluded:
"In any event, we reserve our position as to whether your clients have complied with the terms of the Order in this regard."
[21]Despite that reservation, the claimants took no further steps at that time either to police the 15 March order in that respect, or to claim that the defendants had been debarred from defending under paragraph 8 of that order. Both parties continued to prepare for trial on 9 July.[22]For some reason or other which has not been properly explained, the two charges were not registered. Mr Stephen Lennard, who has appeared on behalf of the defendants, has told the court that the task of registration was delegated to another firm of solicitors, Messrs Seakens, the defendants' previous firm on the record of this litigation, and a firm which appears to have continued to play some role in looking after Mr Soper's interests. However, a witness statement from the senior partner of that firm, Mr David Bultitude, which Mr Lennard asked this court to read, is consistent only with there having been no such delegation of the task of registration to his firm.[23]The absence of registration is important for reasons which will appear below.[24]On 22 June Mr Whittaker made his third witness statement. It was served on the defendants, as this court has been informed, within a few days of its making. At paragraph 48 of the statement there is a passage headed "Continued default by the Defendants". There is no assertion there that paragraph 8 of the 15 March order had come into effect to strike out the defence, only (at paragraph 54) an incidental assertion, by reference to the correspondence concerning the charges, that "The Court will see from the requests that we were not satisfied that the charges the Defendants had been ordered to execute provided adequate security". The main complaints in this passage are about the defendants' failure to provide further information and discovery pursuant to the directions given in the 9 March order. Mr Whittaker expressed his concern both that the failure in disclosure was prejudicing his expert's ability to respond to the defendants' new case, and also that the defendants were playing for time and that "at the end of the day I will have a judgment against them that is worth nothing". He concluded with these paragraphs:
"81. What I would really like now is for judgment to be entered against the Defendants without further delay. I am told by my solicitors the Court does have power to do this summarily in the light of the Defendants' further default. 82. If the Court decides a trial is necessary, I want it to go ahead as planned next month. On no account do I want the trial to be aborted for a third time."
[25]That remained the position at the end of June and into the first days of July. It was on 4 July, however, that the position seems to have begun to change, for it was on that day that the claimants' solicitors learned from the Land Registry both that the two charges executed pursuant to the 15 March order had not yet been registered and that Mr Soper was in the process of entering into a third charge, in favour of the National Westminster Bank (the "NWB charge"). This information apepars to have come to light as a result of the combination of some enquiry to the Registry on the part of NWB and the cautions that the claimants had put on the Registry in respect of the properties concerned. On 4 July the claimants' solicitors wrote by fax to the defendants' solicitors requiring the original charges to be forwarded to them so that they could proceed with their registration. In a later fax on the same day the claimants' solicitors reminded the defendants' solicitors that paragraph 2 of the 15 March order "specifically forbids Mr Soper entering into any such arrangement". They also wrote to Messrs Seakens in the same terms.[26]On 5 July the defendants' solicitors couriered to the claimants' solicitors the originals of the two charges executed pursuant to the 15 March order and advised that "it is correct that there is a Third Charge to be registered in favour of the National Westminster Bank". On 6 July the claimants' solicitors requested a written undertaking from Messrs Seakens not to register the NWB charge or any further charge against the properties. By reply Messrs Seakens said that they would withdraw the search initiated (apparently on 18 June) in respect of the NWB charge "limited to the extent required to give priority to the Charge ordered by the Court". On the same day Ms Clare Ornan, an assistant solicitor with the claimants' solicitors made a witness statement complaining that the defendants were in breach of the 15 March order in having "failed to perfect the charges" and were also in contempt of court. She concluded: "In the circumstances, I would request that the Court considers debarring the Defendants from defending for failing to fully comply with paragraph 1" of the 15 March order. No notice of that application was then given to the defendants.[27]This was the somewhat confused position when the date for trial dawned on Monday 9 July. On that morning an application for the defendants' solicitors to come off the record was withdrawn, apparently (as emerged later in argument before the deputy judge) because they were satisfied that their fees would be met from the advance from the NWB which was to be supported by the NWB charge. In the meantime, there had been no prior warning of the imminent application to strike out the defendants, or to say that they were barred under paragraph 8 of Morland J's order, until immediately before entering court.[28]The judge was clearly outraged by the clear and admitted breach of paragraph 2 of the 15 March order. But he made or was led into a serious error of fact. He appears to have been misled by the terms of the defendants' solicitors' fax of 6 April ("we regret that there was insufficient time to seek your approval of the draft Charges") to conclude not only that the documents were not in final form but that they were being treated only as drafts. He therefore held that the charges had not been executed by the 6 April deadline and that the debarring required by paragraph 8 of the 15 March order had automatically come into effect at the expiry of the deadline. He also appears to have considered that the charges, even if executed before the deadline, were not in such a form as would amount to compliance with paragraph 1. He appears to have considered that - "Because the charges were not in due and appropriate form, they were not registered." It is not clear why he said that. In this court it has remained in dispute whether the charges could have been registered in the form in which they were left on 6 April. As for why they were not registered, there is no satisfactory explanation.[29]The judge then considered whether he would give relief (under CPR 3.9) against the effect of Morland J's para 8 strike out of the defence and concluded that he should not. He put the matter as follows:
"In my judgment, I would be clearly failing to carry out any proper case management of this case if I were to overlook these serious breaches of Morland J's order and to allow these defendants to continue to defend. They have had chance after chance after chance and they have simply flouted the orders of the court. Therefore I do not exercise my discretion to relieve these defendants from the penalty imposed by Morland J. in para.8 of the order of 15th March. They are debarred from defending. Furthermore, even to the extent that I have myself the power and right to impose a penalty on these defendants for failing to comply with the clear order restraining them from charging or dealing with the property, I would consider that the only appropriate way in which I could deal with this would be to debar them from defending. Therefore I would order that they are debarred under Morland J.'s order and that I would myself debar them for their breach of para.2 of the order of 15th March. In those circumstances, they are debarred."
[30]It would seem therefore that his decision was taken very much against the background of the previous loss of two trial dates and the serious breach of paragraph 2 of the 9 March order.[31]The judge did not expressly refer to the wording of CPR 3.9, but I would for myself infer that he had that wording in mind. Even so, this court has made it clear that it is necessary to consider each matter listed under the rule: see Keith v CPM Field Marketing Limited (unreported, 11 July 2000) at para 36. It is therefore important to set out the terms of the rule:
"(1) 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 including - (a) the interests of the administration of justice; (b) whether the application for relief has been made promptly; (c) whether the failure to comply was intentional; (d) whether there is a good explanation for the failure; (e) the extent to which the party in default has complied with other rules, practice directions and court orders and any relevant pre-action protocol; (f) whether the failure to comply was caused by the party or his legal representative; (g) whether the trial date or the likely date can still be met if relief is granted; (h) the effect which the failure to comply had on each party; and (i) the effect which the granting of relief would have on each party."
[32]Now I put on one side just for the moment the separate breach of paragraph 2 of the order, because the question of relief against sanctions only operates in respect of paragraphs 1 and 8. The difficulty which arises with those paragraphs is that it is now clear, and is not disputed, that the charges of 29 March were executed on that date, however unsatisfactory their form, and were not mere drafts. Unless, therefore, their form was so unsatisfactory as to deprive them of effect for the purpose for which they were intended, charges over the properties concerned in favour of the claimants were executed in time. It is true that the claimants did not formally accept the charges as having been executed in accordance with the order, they reserved their position: but they did not reject them, they asked them to be changed, they could have pursued the matter promptly, they could have returned to court, but instead the matter drifted off in the way I have described above, while both sides turned to the pressing and no doubt costly matters of preparing for trial. It was only in the very run up to the trial date that the matter of the charges was alluded to, and only on the first day of the three-day trial itself that the claimants sought to say that the defence had been struck out already as of the 6 April deadline.[33]It is not easy on the information and argument before this court to say whether the charges were an adequate compliance with the order. The real dispute could come not so much between these parties, who would know of the background to the charges, but vis a vis a third party who might seek to say that the charges were ineffective. For my part, I would be inclined to say that the charges which Morland J visualised by the terms of his order were charges which would expressly refer to themselves as being intended to secure anything up to £200,000 adjudged to be due to the claimants from the defendants whether by way of damages, interest or costs. I would be inclined therefore to say that the charges were not, technically, an adequate compliance with paragraph 1 of the order. I am prepared to assume, without deciding, that that is so. Even so, however, I cannot agree that this defect, by itself, would justify a refusal to give relief against the strike out sanction. The attempt to provide the charges had been made. The defect in the charges which I have assumed to exist, is the fault, if it is a fault, of the defendants' solicitors, not of Mr Soper personally. It was plainly not the fault of Mr Smith, who was not personally subject to paragraph 1 of the order, even though his defence depended on Mr Soper's compliance with it. CPR 3.9(1)(f) specifically requires the court to consider whether the failure was caused by the party or his legal representative. To the extent that the charges were defective, the point was apparent to the claimants, but the matter was not pursued. In the meantime the costs of trial were incurred. The attempt to rely on paragraphs 1 and 8 of the order was only resurrected at the very last moment, and, unfortunately, without adequate warning to the defendants or their legal representatives, with the effect no doubt that argument before the judge on 9 July was not as well focussed as it might otherwise have been. In the circumstances the parties were (adequately or not) ready for trial and at trial: the trial could have gone ahead. If necessary, new or amended charges could have been entered into that very morning. The court could have protected the claimants' position in the Registry as may have been necesaary, for it appears that neither the NWB charge nor any other charge has actually been registered, and that NWB always accepted that its charge would come behind those in favour of the claimants. Sub-rule (g) therefore militated very much in favour of giving relief. That being the case, the interests of the administration of justice (sub-rule (a)) and the overriding objective also favoured relief. After all, the claimants' claim was one of several hundred thousand pounds. As for sub-rule (b), the claim for relief was immediate upon the defendants' realisation that the claimants were applying for relief under paragraph 8; as for sub-rule (c), the failure to comply, if any, appears to have been a result of incompetency rather than deliberate intention; as for sub-rule (d), the explanation of incompetency is not in any sense a good explanation; but it goes for to mitigate any personal fault on the part of Mr Soper; and in all these circumstances the defendants' abysmal record in the litigation (see sub-rule (e)) becomes of less importance. Similarly, the sub-rules (h) and (i) are covered by such considerations: the effect of any failure did not prejudice the trial date, but relief could be given in a way which would protect the claimants without penalising the defendants with the loss of their defence.[34]So far I have not considered the admitted breach of paragraph 2 of the 15 March order. There are no contempt of court proceedings. Outside that context, on the extremely limited evidence before the court, I would be prepared to make no inferences in favour of Mr Soper personally, for instance that in this respect he was again the victim of his solicitors' confusion, eg as to whether the registration of the ordered charges was being handled elsewhere. Mr Lennard invites me to draw an inference in Mr Soper's favour, but I decline to do so. Mr Soper has presented no evidence to the court in this regard. The breach is clear. Mr Soper at the very least should have checked with his solicitors before entering into the NWB charge. For all I know, he knew that the ordered charges had not been registered. I therefore deal with the breach of paragraph 2 on the assumption that Mr Soper's responsibility for it is as serious as it could be. Nevertheless, there was no evidence before the deputy judge, and there is no evidence even before this court, that the NWB charge has in fact prejudiced the claimants: and in the light of paragraph 2 of the 15 March order, the court had and has power to ensure that it does not.[35]At the end of the day, therefore, however deplorable the breach of paragraph 2 might be, it has not in fact prejudiced the claimants, other I suppose than to lead them into the application to strike out the defence on 9 July, and it does not seem to me to alter fundamentally the injustice to the defendants of preventing them from defending the claim against them on the morning of trial itself. What the merits of that defence and counterclaim turn out to be it is impossible to say. However, the striking out of their defence has certainly had potentially serious consequences for them, for the judge went on to give judgment against them, after hearing evidence of the claimants' claim including evidence from Mr Randall, in the sum of some £241,000 plus interest of nearly £63,000 and further costs.[36]Mr Parsons, who has appeared on behalf of the claimants, has sought to rely in addition on the defendants' allegedly defective discovery. However, there was no submission to the deputy judge that such default would prevent a fair trial, and it therefore seems to me impossible to use this argument to support the grounds on which the judge was at the time invited to act and did act.[37]It follows that I cannot see either in the previous history of this litigation nor in the breach of paragraph 2, seriously as I view both, a reason, in the interests of justice, why the defendants should have been barred from defending on the first day of trial.[38]Mr Parsons submits that this court should not interfere with an exercise of case management by the judge, and that his discretion should not be interfered with. However, it seems to me that the judge erred factually in regarding the charges as mere drafts, and further erred in being drawn by the unpalatability of the breach under paragraph 2 to overlook two critical facts: first, the utmost seriousness of debarring a defendant on the day of trial itself (whether by a refusal of relief or by exercising his own powers under CPR 3.4), and secondly, in connection with that, whether the claimant would suffer any prejudice if the trial went ahead without such a strike-out. He did not adequately consider the factors highlighted in CPR 3.9 nor stand back and consider whether a strike out was ultimately proportionate to the circumstances. This court is therefore required to exercise its own discretion. The importance of the flexibility of the powers granted under the CPR is that the ultimate sanctions of strike out should be viewed against the backdrop of the other powers and sanctions available to the court: see Biguzzi v. Rank Leisure Plc [1999] 1 WLR 1926 . At any rate in these circumstances, the judge should not have barred the defence on the day of trial itself, unless he felt that the claimants could not have a fair trial on that occasion or were otherwise prejudiced in ways that he could not correct by the use of the powers at his disposal.[39]his morning Mr Parsons has also sought to place weight on his submissions that there is potentially, if not in fact, evidence that Mr Soper was comtemplating or may even have executed at some time a replacement of the NWB charge which this court was informed had in the meantime been lost. Mr Parsons submitted that this was potentially a further breach of paragraph 2 of the 15 March order or, alternatively, if such a further NWB charge had been entered into after the execution on 17 July 2001 of a further charge in favour of the claimants pursuant to the judge's final order, a breach of clause 4.1 of that charge. It seems to me however, first of all, that this court really has no evidence at all as to whether any further replacement NWB charge has been entered into and, secondly, that in any event Morland J.'s order of 15 March had been discharged by the time the judge had made his own order in respect of the claimants' claim and, as part of that order, required the making of a further charge by the defendants in favour of the claimants in respect of the damages, interest and costs which he had entered into his order.[40]Having said all that, I have considerable sympathy for the position of the claimants, who have now lost their third date for trial. It seems to me that it is only fair and just that they should be protected as fully as this court can ensure to see that they are secured as Morland J intended that they should be, and that a new trial date should be found for them as soon as possible. Permission to appeal will therefore be granted and the appeal allowed. I would for myself hear any submisisons as to the terms which are to accompany such an order.

LORD JUSTICE ALDOUS:

[41]I agree. Permission to appeal will be granted. The appeal will be allowed.

Order

Application is granted. Appeal allowed

Cited in 1 later judgment