Devon & Cornwall Autistic Community Trust (t/a Spectrum) v Cornwall Council [2015] EWHC 129 (QB)

Case No HQ12X02958[2015] EWHC 129 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 29/01/2015
Before
MR JUSTICE GREEN
Between
Devon & Cornwall Autistic Community Trust (a company limited by guarantee) trading as SpectrumClaimantCornwall CouncilDefendant
Edward Pepperall QC (instructed by 2 nd Opinion Now) for ClaimantJames Ramsden (instructed by Cornwall Council) for DefendantHearing Hearing dates: 16 th January 2015
JudgmentMr Justice Green :
[1]There is before the Court (in January 2015) an application by the Claimant (“the Claimant” or “Spectrum”) for permission to serve witness statements and to vacate a trial date upon the basis that time is now needed to draft and serve the statements. The application is made even though the Applicant is in breach of prior court orders requiring the service of witness statements in December 2014. The trial date is in fact imminent. This case raises issues concerning the scope and effect of the judgments of the Court of Appeal in Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1537 (“Mitchell”), and, Denton v TW White Limited [2014] EWCA Civ 906 (“Denton”). In particular, it concerns issues relating to the burden of proof upon an Applicant for relief from sanctions and as to the type of evidence required to discharge that burden. It concerns the types of explanation that should be given to a Court when the reasons advanced involve an allegation (express or implied) that prior legal advisors have acted improperly. And it raises an issue about legal privilege. The case also raises the issue of how a Court should react when a consequence of a refusal to grant relief is likely to mean the collapse of the defaulting side’s case in its entirety. What is “proportionate” in such circumstances?[2]At the culmination of the hearing in this case I ruled that I would not vacate the trial date but would permit witness statements and oral evidence from the Claimant. I gave directions for the conduct of the case to trial. I indicated that I would give reasons later. These are those reasons. B. Facts[3]The Claimant provides residential care facilities as a contractor to Cornwall Council and to other local authorities. That provision includes homes located in Cornwall in which individuals funded both by Cornwall Council and other authorities reside either permanently or periodically. Each individual has a statutory care plan to which funding is applied. Residential fees are reviewed and set out annually by the local authority. The process that is followed seeks to ensure that fees are set at a level which is sufficient to meet the assessed care needs of supported residents in the accommodation. In setting and reviewing fees the authority is required to have regard to the “actual” costs of providing care and to other local factors and considerations. To facilitate the process of review the authority requests data from care home owners in respect of the cost of care. The providers are, it is said by the Defendant, often reluctant to provide detailed information. However there is a consultative group known as the Care Homes Working Group which meets with the council upon a regular basis in order to provide information to the council and which has as one of its purposes the aim of improving working relations between the two groups. The Claimant has had a representative upon this group since 2011. The Claimant is one of 150 providers for residential accommodation in Cornwall and owns or operates 21 homes in West and Mid Cornwall. It also operates premises in other counties. The majority of placements to the Claimant are either from local or health authorities. Ms Maria Harvey, the Senior Manager of Contracts and Service Improvement within Cornwall County Council, explained in her witness statement that the relationship between the Defendant and Claimant over fees had been difficult with the Claimant seeking to impose unilaterally an annual percentage uplift over and above any tariffs set by the Defendant and also disputing amounts that apparently appeared to have been owed to them. In her statement, Miss Harvey stated as follows about the difficult relationship which has historically existed between the parties: “16. I have also had real concerns in respect of Spectrum’s business practice over the years. Spectrum have been notoriously difficult to engage and even when they have engaged in discussion, it has been difficult to satisfactorily conclude matters. In particular, there has been real difficulty in finding out the level of provision for individuals in houses because the houses will often be populated by other individuals placed by other Authorities and we will have no understanding as to the level of support that they are also receiving. It has been very difficult to identify whether the provision paid for has in fact been provided. I have also had concerns in respect of some of the financial information sent to me and raised concerns with our Audit Section in respect of Spectrum’s accounts when I became aware that Spectrum were showing as income to the organisation “mobility allowance” totalling £173,787 for 2012 and £165,819 for 2011. The Business Audit Manager wrote to Spectrum’s auditors on 23 August 2013 but has never received a response. I further believe having looked at the 2013 accounts of Spectrum that this practice is continuing. My concern in respect of this practice is the mobility component of disability living allowance is paid directly to the individual as part of their benefits and income. Whilst individuals with capacity may hypothetically choose to enter into some form of scheme whereby the sums are used jointly to purchase a vehicle or run a vehicle, I would expect that scheme to sit outside an income stream for the provider of accommodation and would expect an audit trail evidencing consent to such a scheme. It is even of more concern that individuals who lack capacity may have had their mobility component used in this way particularly if the mobility component is used by the organisation who are also the appointee for that person’s finances. I cannot envisage a circumstance wherein those funds are shown as an income to the provider upon which they are also presumably taxed. In addition to this, Spectrum show as a core cost to the commission of services to justify their fees, the cost of transport. This is at the very least double-charging. Spectrum also appear to be including costs, such as mobile phones and other personal items which if they are for the individual service users would certainly be expected to be funded not from fees but from an individual’s personal income. All of the individual service users will have their own income, usually from benefits. Given that the individuals will have most of their daily costs paid for where the only deduction being a capped contribution to their accommodation, residents should have a reasonably healthy sum to purchase items that fall outside the funding of their eligible needs. It is indeed not in the service user’s best interests to build up a treasure chest of money as this will affect the benefits that they receive in the future”.[4]This is an illustration of the difficulties that the Defendant has explained has characterised its relationship with the Claimant. Miss Harvey, in paragraph 17 of her statement, also explains that there had been a number of “safeguarding alerts” in relation to Spectrum placements. In particular there were 11 alerts over the previous 10 years which had, upon occasion, resulted in the suspension of new placements whilst service improvements were implemented. These safeguarding alerts are said to be related to alleged inadequate levels of staff being paid for by individuals.[5]All this is relevant because it impacts upon the manner in which, so it presently seems to me, the trial is likely to be conducted. The claim concerns a disagreement between the parties as to whether the Defendant has properly paid the Claimant for services said to have been provided by the Claimant to various individuals in its care homes. As I explain below, the heart of the issue is one of quantum meruit. The Claimant will, at least in significant part, need to tender oral evidence in order to substantiate its claim. For its part, the Defendant wishes vigourously to test the reliability and indeed integrity of the Claimant’s case. In the absence of a right to adduce oral evidence the Claimant is therefore unlikely to be able to advance a realistic case at all. It is in this context that the present dispute arises. C. The procedural history[6]There is no doubt that the Claimant is in material breach of court orders laying down the principal steps to be taken to bring this matter to trial. In particular the trial is listed to be heard in a 7 day trial window commencing Monday 16th February 2015, just over 4 weeks away. There is also no doubt but that, at least as of the date of the hearing, the Claimant is not ready to go to trial. I set out below a summary of the chronology which has led to the present unsatisfactory state of affairs.[7]The claim was issued on 20th June 2012. It was issued under a Notice of Funding under the pre-April 2013 costs regime and the Claimant therefore has the benefit of a 100% CFA of a type which is no longer available. The claim was set at a level exceeding £2.5m in pre-action correspondence. As pleaded the sum reduced to £2.085m plus interest. The claim as originally pleaded was said, by the Defendant, to be deficient in details and particulars. Following a hearing before Master Leslie on 17th December 2013 the Claimant was required to reformulate the claim as one of quantum meruit.[8]A draft amended pleading prepared by Mr Philip Coppel QC, dated 31st January 2014, quantified the claim at just in excess of £700,000. This was considered at a resumed CMC on 15th April 2014. The draft amended pleading was consented to by the Defendant but subject to the provision of certain additional particulars.[9]An unsuccessful mediation occurred on 25th June 2014.[10]The matter returned to Court on 1st August 2014. Mr Coppel QC appeared for the Claimant, which had served in advance of that hearing particulars of its claim, which Mr Coppel QC described as a “travelling draft”. At that hearing the Claimant was ordered to produce detailed particulars of key aspects of its claim (under the heading “weekly shortfall”).[11]The timetable was subsequently varied by consent. The latest (and pivotal for the purpose of this application) order of the Court, sealed on 25th November 2014, made provision for the remaining steps needed to prepare the case for trial. It laid down a timetable for such elementary matters as the provision of proper particulars of the claim, the service of a counter-schedule, disclosure, and the service of witness statements. In particular the time for witness statements of fact and all notices relating to evidence were to be served by both parties on 12th December 2014.[12]I have already set out above the historical relationship difficulties which existed between the parties. Throughout 2014 the Defendant became aware of certain new and particularly troubling events relating to the senior employees of the Claimant. These were described by Mr James Ramsden, Counsel for the Defendant, in the following way in his skeleton argument: “Spectrum is a substantial and well-resourced organisation. It is also litigious, having previously been involved in substantial and failed High Court litigation. Cornwall Council and other public authorities with whom Spectrum contracts for its services have been concerned for some time about its standards of governance and the Care Quality Commission (“CQC”) is actively engaged at present in an assessment of those concerns. The relevance of those concerns to this claim is limited to the reliability of the records and evidence which are said to justify the very substantial additional sums claimed by Spectrum from Cornwall Council. Specifically, Debbie Matthews, who was Chief Financial Officer of Spectrum throughout the period relevant to this claim, was sentenced to a term of imprisonment for offences of dishonesty in July 2014. As presently understood those offences did not relate to her role within Spectrum. Until her imprisonment she was, with Mary Simpson, Spectrum’s CEO, the “face” of Spectrum in these proceedings and was a major participant at the court ordered mediation on 25th June 2014. Mary Simpson, who remains CEO of Spectrum, is currently on Police bail. Her bail is in relation to an allegation of perverting the course of justice. The allegation concerns her apparent attempt to discredit and discourage a “whistle blower” previously employed by Spectrum. Unlike Ms Matthews, Ms Simpson has not been charged or convicted and her present status is not therefore of direct evidential relevance to the issues in this claim. It is however necessary current background to the difficulties encountered in extracting explanation, details and evidence of the claim. Ms Matthews’ status is directly relevant in relation to the reliability of such evidence as does exist. In this claim, Spectrum invites the Court to repose considerable trust and confidence in un-evidenced assertion. The Council has paid and continues to pay considerable sums to Spectrum in return for its provision of residential care services. In several instances this is in excess of £2,000 per week for each individual resident. It disputes any liability to pay the excessive additional sums now claimed by Spectrum”.[13]I should add and make clear that although I have noted the criticisms made by the Defendant of the Claimant I make no findings whatsoever about the underlying facts.[14]The legal team who appeared before me upon this application for the Claimant are new to the case. The first solicitors instructed by the Claimant, Follett Stock, were subject to a Law Society Intervention in the summer of 2013. Pursuant to a fresh Notice of Funding dated 18th December 2013 Follett Stock were replaced by Kitsons.[15]The Claimant’s problems have, however, now been further compounded by the fact that on 3rd December 2014 both Kitsons and Leading Counsel purported to terminate their retainer and instructions with the Claimant, it is said, without prior notice. Mr Chaman Lal Salhan, the Claimant’s newest legal representative, explains in his Witness Statement dated 9th January 2015 that, as he understands matters, this is due to the Defendant placing reliance on the arrest of the Claimant’s CEO: “1. The Claimant had originally been represented by Messrs Follett Stock solicitors in these proceedings. Unfortunately they were intervened by the Solicitors Regulatory Authority (SRA) which resulted in the Claimant transferring their instructions to Messrs Kitsons Solicitors who acted, together with Leading Counsel Mr Coppel QC, under a conditional fee agreement (CFA). 2. On 3rd December 2014, Messrs Kitsons terminated the CFA. They did this on the basis that they had been told by the Defendant, that the Defendant sought to place reliance on the arrest of the Claimant’s CEO, Mrs Mary Simpson, as evidence of financial impropriety. But for this Messrs Kitsons Solicitors and Mr Coppel QC would not have terminated the CFA. They also refused to release the case papers or to assist the Claimant in complying with court directions. Their termination of the CFA will be the subject of dispute which is highly likely to end up in contested litigation itself. The termination is believed to be in breach of contract and is to be the subject of complaint with the Legal Ombudsman. As a consequence the Claimant does not have a large part of their case papers which have been retained by Messrs Kitsons who continue to maintain a lien over them. The withdrawal of Messrs Kitsons Solicitors and Mr Coppel QC is directly linked to the Defendant’s decision to rely upon the arrests of Mrs Simpson which has caused the Claimant to fail in its obligation to comply with Court directions. The costs claimed by Messrs Kitsons are vast and no indication has been given prior to the receipt of their latest invoices that the costs would be anywhere in the region of what has been claimed. The costs are disputed”.[16]The upshot of these events is that as of the date of the hearing of this application the Claimant says that it is unprepared for trial, is in breach of court orders, does not have access to all relevant papers because of the lien exercised by Kitsons and nor does it have available to it the fruits of such labours (such as draft witness statements or particulars) as the previous lawyers produced. Mr Edward Pepperall QC, who now appears for the Claimant, has frankly conceded that the Claimant is in a “parlous” state. D. The law[17]The application now made by the Claimant to serve evidence out of time and vacate the trial date engages (as the Claimant concedes) the principles in Mitchell and in Denton. An application for permission to rely upon late evidence pursuant to CPR 32.10 is, in substance, an application for relief from a sanction pursuant to CPR 3.9: see by way of example Chartwell Estate Agencies Ltd v Fergies Properties [2014] EWCA Civ 506 paras [25] – [27]. CPR 3.9 provides as follows: “3.9 –(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 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.(2) An application for relief must be supported by evidence”.[18]The Court of Appeal first gave guidance as to the approach which should be adopted by courts in circumstances such as the present in paragraphs [40] and [41] of Mitchell. This led other, inferior, courts to apply the rules in, what turned out to be, a draconian manner or at least in a manner which suggested that lower courts had misunderstood the message sought to be conveyed in Mitchell. The Court of Appeal, accordingly, in Denton took the opportunity to clarify the principles to be applied. It made clear that a court should address the issue before it in three stages. Paragraph [24] of Denton provides: “The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice, direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”.[19]I propose now to examine the facts of this case in accordance with the three postulated stages.

(a) Stage 1: seriousness

[20]Mr Pepperall QC concedes that the breach is serious. Denton made clear that I should not only characterise the breach (i.e. as serious) but also assess the breach. As to this it seems to me that the following features make the breach which has arisen in the present case especially serious. The order of November 2014 entered into by consent provided for the service of witness statements by an agreed date in circumstances where the trial was scheduled to take place in the near future and where oral evidence was a fundamental part of the trial process. The failure to serve statements, furthermore, is an ongoing breach and remains so with only 4 weeks to go before trial. This is not a case, for instance, of a failure to comply by a short period of time with a time limit or of a failure to provide disclosure of a small number of disclosable documents, or of a partial failure to provide particulars. The failure in this case impacts directly and adversely upon the efficiency of the litigation. Indeed the candid acknowledgement made by Mr Pepperall QC for the Claimant is that the failures go to the root of the very ability of the trial to be conducted fairly or at all. I therefore start with the proposition that the failure in this case is very serious.

(b) Stage 2: reasons

[21]I turn to the second stage of the analysis. The burden of proof lies with the party seeking relief from sanctions: Mitchell para [41] (cited below at para [25]). Here I must consider the reasons given for the failure. As matters stand, I find the reasons advanced to be opaque. I know that the Claimant may have experienced internal difficulties as a result of the engagement of senior personnel with the police, to which I have already alluded (see paragraph [12] above). However, there is no evidence before me to explain how or why these events actually caused the failure on the part of the Claimant to comply with the court orders. As for the reasons why Kitsons and Leading Counsel withdrew I have been provided with no direct evidence. It is suggested in the witness statement of Mr Salhan (see para [15] above) that it was the communication by the Defendant to the Claimant’s legal representatives of the police involvement that led to the lawyers terminating their retainer and instructions and that this termination was unjustified. However, this is, in my view, a deeply unsatisfactory manner in which to advance an explanation. On the face of it, I can see no reason why the mere communication of that information would cause the Claimant’s legal advisors to refuse to continue to act unless there were some other, additional, facts, of which I am unaware, that gave rise to serious professional embarrassment on the part of those legal advisors. In my judgment, the reasons which explain why matters have come to this pass cried out for proper and detailed explanation. In circumstances such as this, I would have expected a detailed witness statement from senior employees of the Claimant setting out, with full particulars, the precise events which have led to the present situation and, for reasons set out below, a waiver of privilege thereby permitting the legal advisors to explain themselves.[22]I do not consider that any issue relating to privilege can amount to an obstacle to the provision of such a proper explanation. The position of the Claimant now is to blame the conduct of its prior legal advisors which, it is said, could lead to regulatory complaints and litigation. I do not accept that a claimant can hide behind privilege as a reason for not providing an explanation to the court which justifies such an assertion which is advanced by way of exculpatory justification. The situation which has arisen in this case is by no means unprecedented. For example, it is relatively common place in the Court of Appeal Criminal Division (“CACD”) for appellants who have been convicted to instruct new legal representatives for the appeal and then to blame their predicament upon the alleged misconduct and/or breach of duty of previous legal representatives. In such circumstances, the CACD will not, ordinarily, entertain such an appeal without the appellant having waived privilege and without the previous legal representatives having had an opportunity to explain their position to the Court: see e.g. R v Cook [2014] EWCA Crim 734. In the present case, as I have observed, no adequate explanation has been provided by any employee of the Claimant and all that I have before me is a series of unsubstantiated assertions of a particularly serious nature about the conduct of previous legal advisors.[23]In paragraph 13 of his skeleton argument Mr Pepperall QC sought to advance a more limited explanation (and thereby retract from the explanation given by Mr Salhan). He stated as follows: “As a matter of fact, the Court is invited to accept that the reason that the Claimant failed to file evidence as directed was its former solicitors’ actions in terminating the retainer without notice and very shortly before the deadline without first ensuring that they had either complied with the court’s order or provided the Claimant with their working papers”.[24]I am conscious of the difficulties which Mr Pepperall QC now confronts. His invitation to me seeks to avoid reliance upon the underlining reasons which led to the termination of the retainer by the Claimant’s previous solicitors and to focus solely upon the simple fact of the departure of the previous solicitors as good reason. No reference however is made in the skeleton to the fact that Leading Counsel also terminated his retainer. I do not accept that the mere fact that previous representation has ceased to act is or can be an adequate explanation in circumstances where the reasons for that occurrence require elucidation.[25]My conclusion is reinforced by the fact that in Mitchell (para [41]) the Court of Appeal made clear that the burden of proof lay upon the applicant and that the proffering of an explanation based upon the failure of legal representatives may well not be a sufficient explanation: “If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted. For example, if the reason why a document was not filed with the court was that the party or his solicitor suffered from a debilitating illness or was involved in an accident, then, depending on the circumstances, that may constitute a good reason. Later developments in the course of the litigation process are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable, although the period seemed to be reasonable at the time and could not realistically have been the subject of an appeal. But mere overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason. We understand that solicitors may be under pressure and have too much work. It may be that this is what occurred in the present case. But that will rarely be a good reason. Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all. This may seem harsh especially at a time when some solicitors are facing serious financial pressures. But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue. We should add that applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event”.[26]In paragraph [43] of Mitchell, the Court stated that good reasons are likely to arise from circumstances outside the control of the party in default and in so saying the Court was indicating that the conduct of lawyers was a matter within a party’s control.[27]In Denton (at paragraph [30]) the Court of Appeal added the following rider to the observations made in Mitchell: “30. It would be inappropriate to produce an encyclopedia of good and bad reasons for failure to comply with rules, practice directions or court orders. Para 41 of the Mitchell case gives some examples, but they are no more than examples”.[28]I do not read Mitchell as precluding in all cases reliance upon the conduct of present or past legal advisors. However, the suspicion I harbour, which I freely acknowledge may be wholly unjustified, is that in this case the reason for the breakdown in relations between the Claimant and its previous legal advisors and which has led to the latter’s departure had some connection to the problems which the Claimant’s senior employees were then facing in relation to investigations being conducted by the police and/or the Care Quality Commission (“CQC”). It is for this reason that, as I have already explained, this case cried out for a full, detailed and candid explanation of the relationship between the Claimant and the previous legal advisors. Although criticism is essentially directed at the conduct of Kitsons I cannot ignore the fact that Mr Philip Coppel QC also no longer appears for the Claimant. I can at least make the prima facie assumption that both Kitsons and Counsel were aware of their professional duties and will not have acted lightly. This is a further reason which compels me to the conclusion that the explanations presently proffered fall far short of being adequate.[29]I have therefore come to the conclusion that no good reason has been advanced to explain away the serious failure. (c).

(i) The relevant law

[30]Before I apply the third stage test to the facts I will start by setting out relevant legal principles.[31]I start by explaining what weight should be attached to the two factors (a) and (b) set out in CPR 3.9(1) (set out at paragraph [17] above). In Denton (para [31]) the Court of Appeal stated, of the Mitchell case, as follows:
“31. The important misunderstanding that has occurred is that, if (i) there is a non-trivial (now serious or significant) breach and (ii) there is no good reason for the breach, the application for relief from sanctions will automatically fail. That is not so and is not what the court said in the Mitchell case: see para 37. Rule 3.9(1) requires that, in every case, the court will consider “all the circumstances of the case, so as to enable it to deal justly with the application”
. We regard this as the third stage”.[32]Paragraphs [35] and [36] of Mitchell were in the following terms:
“35. The “extreme course” to which [Lord Justice Jackson] was referring was that non-compliance would no longer be tolerated, save in “exceptional circumstances”
. Instead, he recommended that sub-paragraphs (a) to (i) of CPRr3.9 be repealed and replaced by the wording that is to be found in the current version of the rule. He said that the new form of words “does not preclude the court taking into account all of the matters listed in the current paragraphs (a) to (i). However, it simplifies the rule and avoids the need for judges to embark upon a lengthy recitation of factors. It also signals the change of balance which I am advocating”. 36. As Sir Rupert made clear, the explicit mention in his recommendation for the version of CPRr3.9 of the obligation to consider the need (i) for litigation to be conducted efficiently and at proportionate cost and (ii) to enforce compliance with rules, practice directions and court orders reflected a deliberate shift of emphasis. These considerations should now be regarded as of paramount importance and be given great weight. It is significant that they are the only considerations which have been singled out for specific mention in the rule”. “does not preclude the court taking into account all of the matters listed in the current paragraphs (a) to (i). However, it simplifies the rule and avoids the need for judges to embark upon a lengthy recitation of factors. It also signals the change of balance which I am advocating”.[33]The reference to “paramount importance” was further explained in Denton in paragraph [32] thereof: “32. We can see that the use of the phrase “paramount importance” in para 36 of the Mitchell case has encouraged the idea that the factors other than factors (a) and (b) are of little weight. On the other hand, at para 37 the court merely said that the other circumstances should be given “less weight” than the two considerations specifically mentioned. This may have given rise to some confusion which we now seek to remove. Although the two factors may not be of paramount importance, we re-assert that they are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered. That is why they were singled out for mention in the rule. It is striking that factor(a) is in substance included in the definition of the overriding objective in rule 1.1(ii) of enabling the court to deal with cases justly; and factor(b) is included in the definition of the overriding objective in identical language at rule 1.1(ii)(f). If it had been intended that factors (a) and (b) were to be given no particular weight, they would not have been mentioned in rule 3.9(1). In our view, the draftsman of rule 3.9(1) clearly intended to emphasise the particular importance of these two factors”.[34]In Denton at paragraphs [31] – [38] the Court of Appeal clarified more generally the position. Subsequent decisions have provided yet further glosses. I would summarise the present stage 3 position, in so far as it relates to the present case, as follows: i) The need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with the rules, practice directions and court orders are matters of particular importance. This does not mean that other factors are of “little weight” and courts should not construe the reference to these factors as being of “paramount importance” in Mitchell as suggesting otherwise. ii) The factors to which “particular weight” should be attached include the interests of justice in a particular case. The interests of justice include fair trial considerations inherent in Article 6 ECHR and the HRA 1998. These also involve considerations of proportionality: See e.g. Cutler v Barnet LBC [2014] EWHC 4445 (QB) at paras [28] – [29]; and Stolzenberg v CIBC Mellon Trust [2004] EWCA Civ 827 at para [161] per Arden LJ. If a refusal to grant relief entails the effective end of the defaulter’s case, then this is a consideration relevant to proportionality. iii) The requirement for litigation to be conducted efficiently and at proportionate cost means that the court must examine the effects of the breach. Where a breach has prevented the court or the parties from conducting the litigation efficiently and at proportionate cost that would be a factor weighing in favour of the refusal of relief. This aspect of the analysis has received insufficient attention in past cases and courts must always bear in mind because that what the Court of Appeal has perceived to be the “old lax culture of non-compliance” is no longer to be tolerated. iv) In balancing all of the surrounding circumstances the more serious the breach (stage 1) the more compelling or convincing must be the explanation given (stage 2): see Denton para [35]. v) The burden of proof is on the defaulting party to persuade the court to grant relief: Mitchell para [41]. This means that the party seeking relief must satisfy the court with sufficient evidence that the surrounding circumstances are such that relief should be granted. Where a serious breach is not explained or justified properly the burden under stage 3 may be especially high. But stage 3 is free-standing and relief can nevertheless be granted notwithstanding negative conclusions at stages 1 and 2. vi) A court must examine all the surrounding circumstances including the history of past non-compliance. (i.e. the conduct of the person seeking relief other than in respect of the specific breach in issue: see Denton paras [27] and [36]), and the promptitude of the application for relief. vii) A court should also consider the availability of a claim by the (ex hypothesi) unsuccessful applicant for relief against its legal representatives. Being denied relief does not necessarily strip the litigant of all remedies if a party can sue its lawyers. However, as was recognised by Lord Justice Mance in Welsh v Ali Parnianzadeh [2004] EWCA Civ 1832, to relegate a litigant to a claim against its advisers involves leaving the litigant to a claim based upon loss of a chance and this may be an unsatisfactory end-result: ibid para [32]. viii) It would not ordinarily be appropriate or practicable to form any view of the merits of the case under stage 3: See per Lord Neuberger in Global Torch Ltd v Apex Global Management Ltd [2014] UKSC 64 at paras [28] – [30]. ix) Finally, I take note of the observation of the Court of Appeal in Denton, which was no doubt inserted with a view to injecting some common sense into the analytical process, that the court expects parties to cooperate and agree sensible extensions of time and not seek to adopt an opportunistic and overly aggressive approach to seeking sanctions and opposing relief.[35]With that summary in mind I now turn to the assessment of the third stage in the particular circumstances of this case.[36]I start by considering whether I should vacate the trial date in order to give extra time for the drafting and service of witness statements. I consider that the issues of trial date and permission to serve statements are interlinked so I will assess them together, in the round.[37]First, the breaches of court orders in this case are not only serious in and of themselves but they are the combination of approximately two years of inadequate conduct of the case by the Claimant as evidenced by the fact that even as late as November 2014, and in addition to the failure to serve witness statements, key particulars of the claim had still not been provided despite numerous forays into the Master’s corridor.[38]Secondly, as matters stand, and notwithstanding the valiant efforts of Mr Pepperall QC for the Claimant, I am far from satisfied that the full story has been placed before the Court and therefore that I am in possession of all the surrounding circumstances. I do not consider that I can do justice to the Defendant if I simply accept the account of the relevant circumstances said to favour the Claimant without being able properly to evaluate those explanations. This means that there is nothing to balance against my prior conclusion that the breaches are particularly serious. And this means that there has to be some fairly strong and compelling counterweight to warrant the grant of relief.[39]Thirdly, it is submitted that a vacation of the trial is a moderate step and involves a delay of only four months which is reasonable. I do not accept this. I must consider the two factors (a) and (b) set out in CPR 3.9 and referred to explicitly in Mitchell at paragraph [36]. These are not paramount but they carry particular import. It is true that in many, if not most, cases a failure to observe a rule can be remedied by an extension of time permitting the defaulter to “have another go” or “get its act together”. However the Court’s timetable is congested and all adjournments have consequences. A climate in which it could be said that a serious, ill-explained, breach should be overcome through an extension of time in which to comply or an adjournment as a matter of routine runs counter to the very change of ethos that the Court of Appeal in Mitchell and Denton was so anxious to bring about. This is why, although a court should not be reluctant to afford extra time in proper cases, it cannot be an automatically acceptable default position. In any event, in the absence of a proper explanation to account for the present failure, and, in view of the evidence given by the Claimant, that it is likely to be in litigation with its previous solicitors who retain a lien over papers, I can have absolutely no confidence that adjourning this case will have the desired effect. In any event, if I vacate the trial there is also no guarantee that it can be listed for June (the Claimant’s suggestion). More likely it would be adjourned for a much longer period.[40]Fourthly, in Mitchell, the Court of Appeal made clear that the failure of solicitors would not, ordinarily, be accepted as an adequate reason for granting relief from sanctions. In the present case, as I have observed, the Claimant seeks to lay the blame at the door of its previous advisors. Mr Pepperall QC accepts that the default on the part of legal advisors is, at least prima facie, not a point that he can pray in aid. But he submits that the case is exceptional and that a refusal to grant relief would leave the Claimant with a remedy only against the previous lawyers which relegates the claim to one of loss of a chance. He cited Welsh (see para [34(vii)] above) and submitted that a denial of relief was tantamount to a rejection of the claim and the Claimant would then be left with such claim as it had against its past lawyers for loss of a chance. I do not accept the analysis. The underlying premise that the lawyers are at fault (even prima facie) is unproven. I am not, in any event, satisfied that refusing an adjournment will mean that the Claimant is in fact limited to any remedy that it may have, in negligence or breach of contract or otherwise, against its previous lawyers. The nub of the issue is what I should do about witness statements under the current timetable.[41]Fifthly, in my judgment there is, in all these circumstances, no justification for vacating the trial date. The decision that I have taken not to vacate the trial, however, creates a conundrum. If I force the Claimant to proceed, at double quick time, to trial but without the ability to adduce witness evidence this will dramatically curtail the ability of the Claimant to advance a serious case. It will render the trial process highly artificial and in all likelihood futile. On the other hand, the logic of my analysis leading to a refusal to adjourn the trial might be said to lead, inevitably, to the conclusion that the Claimant should also be prevented from adducing evidence. I am conscious that an underlying theme behind the clarification of the Court of Appeal in Denton was the need to enable justice to occur and that this involves an assessment of proportionality. It seems to me therefore that the proper and proportionate balance to be struck in this case is to require the Claimant to proceed to trial but not artificially to tie its hands by preventing it from calling witness evidence in a case which will, on my analysis of the pleadings, require witnesses to be cross-examined. I will therefore permit witness statements to be served within a tight timetable backed by an unless order prohibiting the Claimant from relying upon witness evidence at trial in default of due service. E. Conclusion[42]The trial will not be vacated. The Claimant will be allowed to serve witness statements subject to an unless order. The Claimant is to pay the entirety of the Defendant’s costs of this application. Other directions have already been given to facilitate the passage of the case to imminent trial. These have been made upon the basis of my conclusion that, although very demanding, compliance with an exacting timetable is possible and the parties can be ready for trial in February 2015.

Cited in 4 later judgments