Davies v Liberty Place (Sheepcote Street) Management Co [2014] EWHC 2115 (QB)

[2014] EWHC 2115 (QB)IN THE HIGH COURT OF JUSTICECase No MB40028ACase No (APPEALS)Civil Justice CentreBull StreetVenue BirminghamDate 16 th April 2014
Before
MR JUSTICE LEGGATT
B e t w e e n:
Between
PAUL DEAN DAVIESAppellantLIBERTY PLACE (SHEEPCOTE STREET) MANAGEMENT CORespondent
Transcribed by Cater Walsh Reporting Limited(Official Court Reporters and Audio Transcribers)1 st Floor Paddington House New Road Kidderminster DY10 1ALTel. 01562 60921: Fax 01562 743235: info@caterwalsh.co.uk
MR BASTIN appeared for ClaimantMR MARSHALL appeared for Defendant
JUDGMENT (2)Wednesday 16 th April 2014PAUL DEAN DAVIES– v – LIBERTY PLACE (SHEEPCOTE STREET) MANAGEMENT COJUDGMENT
[1]MR JUSTICE LEGGATT: This second part of the defendant’s appeal relates to an order made by his Honour Judge Worster on 23 January 2014 by which he refused permission to serve further witness statements. The chronology, briefly, is that an order for directions was made on 23 July 2013 which contained a direction that witness statements were to be exchanged by 4pm on 4 November 2013. The order also included a reminder that the court may refuse to admit as evidence witness statements which fail to comply with the requirements of the Civil Procedure Rules and that costs sanctions may be imposed. As part of the same order, disclosure was ordered to be given by 7 October 2013.[2]In the event, those dates were not adhered to in that I am told that some documents were disclosed by the claimant only on 30 October 2013 and a short extension of time was mutually agreed for the exchange of witness statements until 8 November 2013. Witness statements were exchanged on that day. However, 10 days later, on 18 November 2013 (a date which in the order for directions had been set as the date for filing pre-trial checklists) the defendant issued an application (foreshadowed by a letter dated 15 November 2013) to rely on a further witness statement from Ms Rhiannon Penny. This additional evidence is potentially of considerable significance to the defendant’s case at trial since Ms Penny recounts in her statement dealings that she says she had with various directors of the claimant company from which it was clear that they well knew that the defendant was conducting a business from his flat.[3]In addition to Ms Penny’s statement, a further witness statement from the defendant himself was served on 27 November 2013 and an application was also made to rely on that statement. I should also mention that at the time when all this was happening, the pleadings had not in fact closed because a counterclaim had been served at the same time as the defence and a reply and defence to counterclaim was not served by the claimant until 18 December 2013.[4]The original trial window started at the end of November 2013 but the effect of the application to rely on additional evidence, the application for security for costs which the defendant also made and which was the subject of the first part of this appeal, and the fact that the statements of case had still not been completed, was that the trial window had to be postponed with a new starting date of 28March 2014.[5]The claimant objected to the service of further evidence and has taken its stand on the by now very well-known case of Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, arguing that the application is one for relief from sanctions and that the criteria established by the Mitchell case have not been met.[6]His Honour Judge Worster refused the application to rely on both additional witness statements taking the view that the Mitchell criteria applied and that they were not be satisfied in this case. In particular, he considered that the defendant’s default could not be described as trivial in circumstances where there had been an order for exchange of witness statements by 8 November 2013 and the statement of Ms Penny was not served until 10 days after that. Furthermore, no reason, let alone a good reason, had been put forward for the late service of Ms Penny’s evidence and there were no circumstances which, in his view, justified departing from what the Mitchell case indicates should be the ordinary result in such a situation, namely that relief from sanctions is refused.[7]No appeal is made against the judge’s decision to refuse to admit the further statement made by Mr Davies but on this appeal Mr Marshall argues that the judge was wrong to refuse to allow Ms Penny’s evidence to be relied on.[8]If the judge was correct to approach the matter on the basis that Mitchell applies, then I can see no basis for saying that his decision was wrong. It is clear that he applied the Mitchell criteria faithfully, and I am unable to say that the view taken by the judge that the default in this case was not trivial within the meaning given to that expression in the Mitchell case was a view which he was not entitled to take. Similarly, I cannot see any basis on which it could be held that the judge made any error of principle or otherwise exercised his discretion improperly in refusing to grant relief from sanctions, if that was indeed what the defendant was seeking.[9]Mr Marshall, however, makes a further argument, which is that the judge was incorrect to treat the matter as one in which relief from sanctions is required.[10]CPR 32.10 states:
“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.”
Mr Bastin, on behalf of the claimant, submits that the effect of that provision is that, as soon as the date by which the court has required witness statements to be served has expired, there is then a sanction which takes effect, namely, an inability to call a witness to give oral evidence. That sanction can only be dispensed with if the court gives permission - which requires an application for relief from the sanction.[11]There is, however, an alternative view of CPR 32.10 suggested in the notes to it in the Civil Procedure Rules. That view is that relief from sanctions is not required unless and until the sanction has taken effect, which will only occur when a witness who would otherwise have been called cannot by reason of CPR 32.10 be called to give oral evidence at the trial. Certainly, it would be an unusual situation, and so far as I am aware a unique one, if relief from a sanction is required at a stage of the proceedings before the consequence which the relevant rule or order imposes for non-compliance has yet arisen.[12]The authorities on the point are of little direct assistance. The first three cases cited were all decided before this question assumed the importance which it now has. Two of those cases - Primus Telecommunications Netherlands BV v Pan European Ltd [2005] EWCA Civ 274, a decision of the Court of Appeal, and Papa Johns (GB) Ltd v Doyley [2011] EWHC 2621 (QB), a decision of Leighton Williams J, sitting as a judge of the High Court - both concern a situation in which an application was made at trial to call evidence from witnesses in respect of whom statements had not been served before the trial. These cases, therefore, involved a situation in which the consequence set out in CPR 32.10 had been engaged unless the court was willing to grant relief from that consequence.[13]The earlier case of Beechley Property Ltd v Edgar [1997] PNLR 197, another decision of the Court of Appeal decided shortly after the introduction of the CPR, seems to me not to assist on this particular point as no argument was directed to it - although the case does contain dicta from the then Master of the Rolls, Lord Woolf, emphasising the importance of complying with rules and directions given by the court in relation to the service of witness evidence.[14]Since the Mitchell case was decided and the point has assumed much greater importance, the issue has been mentioned by Globe J in the case of Chartwell Estate Agents Ltd v Fergies Properties SA [2014] EWHC 438 (QB). At paragraphs 28 and 29 of his judgment in that case Globe J referred to the possibility that rule 32.10 does not require an application for relief from sanctions to be made provided that an application to extend time for service and exchange of witness statements (or, I would interpose, an application for permission to serve an additional witness statement) is made before the time has arrived at which the witness would be called. He also alluded to the contrary argument but did not find it necessary to decide the point because he held that on the facts of that particular case, even if the Mitchell criteria were applied, it would be appropriate to grant relief from sanctions.[15]The last case to which I have been referred is a decision of Turner J given on 20 January 2014 in MA Lloyd & Sons Ltd v PPC International Ltd [2014[ EWHC 41 (QB). There was in that case an application to serve late witness evidence and Turner J treated that application as one involving relief from sanctions. However, it does not appear from the judgment that any argument was directed to that question. The argument seems simply to have proceeded on the footing that relief from sanctions was required. I should say that on the facts of that particular case there had been very serious default by the party who was seeking to rely on the late evidence and it must be highly questionable whether permission would have been granted to rely on the additional evidence whichever test had been applied.[16]It seems to me that there is, therefore, no binding authority on the point which arises now. So I must approach the matter as one of principle. CPR 3.8(1) states:
“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 may consider on an application to grant relief from a sanction.)”
[17]It seems to me that CPR 3.8(1), and hence also CPR 3.9, is dealing with a situation where, in the absence of that rule - and the inherent jurisdiction of the court which it regulates, the party in default would be without a remedy because the sanction imposed for non-compliance has taken effect and prima facie left no escape to the party in default. It is not dealing with a situation where the sanction is only contingent because the rule or order specifying the sanction provides a route by which the sanction can be avoided. CPR 3.8(1) serves no purpose and is not apt in such a case.[18]Where a rule or order provides that a particular consequence will ensue “unless permission is granted”, the consequence only operates if and when permission is sought and refused. It is only if and when that happens, as I see it, that CPR 3.8(1) becomes apposite and an application for relief from sanctions is required. Hence the fact that a witness statement is served after the date specified in directions given by the court does not mean that the party in default is automatically precluded from relying on the statement unless the party applies for and is granted relief in accordance with CPR 3.9.[19]I am fortified in this view by the heavy burden imposed by CPR 3.9. Particularly given the strictness of the Mitchell criteria, it would, in my view, be a strong thing to treat the rules as having the effect that whenever a witness statement is served after the date when exchange was ordered, an application for permission to rely on the statement must be approached on the basis of the criteria in the Mitchell case.[20]I do not consider that the rules need to be interpreted in a way which has that draconian consequence. Doing so would, moreover, treat late service of a witness statement differently and much more severely than late failure to serve a statement of case, or to give disclosure, or to comply timeously with other directions given by the court. In all those cases default does not lead immediately to a situation where the party in default has to apply for relief from sanctions. Rather, the next step is for the other party to apply for an “unless” order, and it is only if such an “unless” order is not complied with that the regime dealing with relief from sanctions comes into play. I can see no principled reason why the late service of a witness statement should be dealt with differently and why the same “two strikes” approach should not apply.[21]Moreover, in my experience at least late service of witness statements is not dealt with differently. I have never previously encountered a case where it has been suggested that an application to rely on evidence served after the date set for exchange must be approached on the basis that relief from a sanction is being sought. To the contrary, the normal approach, in my experience, if a party fails to serve its evidence on time, is for the other party to seek a debarring order to the effect that, unless the evidence is served by a further date, the party will be debarred from adducing witness evidence. Certainly, if the evidence is not then served by the relevant date, an application for relief from sanctions will be required. However, if the interpretation of the rules contended for by the claimant in this case were correct, the practice of seeking debarring orders when witness statements are not served on time is entirely unnecessary because a simple order that statements must be served by a particular date is tantamount in its effect to a debarring order. Not only would that interpretation create a trap for the unwary, but I consider that it would also be unfair.[22]For these reasons I conclude that the application in this case for permission to rely on an additional witness statement was not one which fell within CPR 3.9 and that the judge was therefore wrong to apply the Mitchell criteria.[23]Even though this is not, in my view, an application for relief from sanctions, there is no doubt that in the era in which we now live since the Mitchell decision any application to take a step out of time has to be viewed with greater scrutiny than might previously have been the case, and it should certainly not be assumed that it is simply sufficient for a party to argue that no real prejudice will be caused if new evidence is introduced in order to justify allowing that evidence to be introduced.[24]However, looking at the matter afresh, as I consider I must do in this case in view of my conclusion that the judge approached it on what I consider to be an incorrect legal basis, I consider that the just order is to permit the evidence of Ms Penny to be relied upon. I have in mind, amongst other things, the fact that at the time when that evidence was served the statements of case had not yet been completed so that the case was still to some extent evolving and that discovery had been completed only around a week before the date for exchange of witness statements. Moreover, there is no suggestion that the fact that this statement was served ten days late has disadvantaged the claimant or in itself caused any disruption to the trial timetable.[25]On top of all that, it is apparent that the evidence given in the statement is of considerable significance to the merits of the case and it would be a very harsh result indeed and an undesirable one if this trial had to be conducted on a basis where one of the parties is precluded from relying on evidence which could potentially make a substantial difference to the outcome of the case.[26]For those reasons, exercising my discretion on what I consider to be the proper basis, unrestricted by the Mitchell criteria, I allow the appeal.