Ignore 'unless' Orders at your Peril

The recent judgment of the Court of Appeal in British Gas Trading -v- Oak Cash & Carry Limited [2016] EWCA Civ 153 echoes the importance of the Denton principle, and the importance of applying for relief from sanctions promptly.

The Claimant succeeded in its appeal against Defendant, having been granted relief from the sanction of the Defence being struck out following the Defendant’s failure to comply with an ‘unless’ Order to file a Listing Questionnaire.

Brief Background

The Defendant failed to file comply with an Order to file a Listing Questionnaire by 3 February 2014, by an Unless Order, the deadline was extended to 19 February 2014 with the sanction of strikeout

On 18 February 2014, Solicitors acting for the Defendant filed a Directions Questionnaire, a different version of that already filed, rather than a Listing Questionnaire. 

On 20 February 2014, they were made aware of the error and thereafter filed the Listing Questionnaire two days beyond the deadline.

No application for relief from sanction had been filed, the Defence had been struck out without further order at the time of breach, and The Claimant requested Judgment in Default, giving notice of the application to the Defendant. The Defendant’s Solicitors wrote to the Court apologising for the mistake, and merely asked the Court not to grant the sanction requested by the Claimant. 

On 21 March 2014, a relief was filed by the Defendant, shortly after judgment being granted to the Claimant in the sum of £211,388.61. Evidence filed in support of the Defendant’s application explained that the acting Solicitor had been absent from the office for personal reasons and had delegated the task of filing the Listing Questionnaire to a Trainee Solicitor.

On 15 April 2014, His Honour Judge Harris QC sitting at Oxford County Court granted relief from sanction, thereafter reinstated the claim and set aside the default judgment. The Claimant appealed on the grounds that the judge had misapplied CPR 3.9 and that that he made an error in setting aside the default judgment, not withstanding there was no application to do so and more so no evidence in support. 

The Appeal Judgment

Mrs Justice McGowan having cited the CPR Overriding Objective and Rule 3.9, noted that Mitchell restated the position in a way that makes it clear in that there is to be greater penalty or sanction for failure to comply with the rules governing the conduct of litigation, and that failure to comply with a Court Order will no longer simply be met with a sanction of costs relating to some extra piece of work required by the Court or the other side, of that of a wasted hearing.

She held that while Denton restated and gave greater definition to Mitchell, it does not alter the Mitchell statement of principles.

She went on to apply the three stage approach of Denton 

(1) seriousness of breach.

(2) whether there was good reason for breach. 

(3) consideration of all of the circumstances of the case.

The first stage of the assessment, the Court explained that the Direction in Denton to focus on the seriousness of “the very breach in respect of which relief from sanctions is sought” in the context of a breach of an “unless” Order requires consideration of the failure to carry out the obligation which was 

(a) imposed by the original order or rule and

(b) extended by the “unless” order. 

The Court explained that while not every breach of an unless order will be serious or significant, the very fact that a party has failed to comply with an unless order (as opposed to an ‘ordinary’ order) is undoubtedly a pointer towards seriousness and significancein that the party is in breach of two successive obligations to do the same thing in circumstances where the Court underlined the importance of doing so by specifying an automatic sanction in default. 

At the second stage, the Court decided that while it would not be appropriate for the Court to produce an “encyclopaedia of good and bad reasons” McGowan J was correct to find that in the circumstances of this case it was not open to the Circuit Judge to find that that there was good reason for the Defendant’s default. 

At the third stage, the Court observed that, despite the facts that the breach was a serious one for which there was no good reason, had an application for relief from sanctions been made at the same time as the belated filing of the checklist (or soon after), it would have been appropriate for relief to have been granted.

In this regard, the Court observed that “To debar a party from defending a £200,000 claim because it was somewhat late in filing of a Pre Trial Checklist is not in my view required by rule 3.9, even as construed by the majority in Denton”. 

However, the Court considered that the Defendant’s lack of promptness in applying for relief was a perilous factor as to the consequence of the delay and the loss of the fixed trial date and the consequence of “only one answer to the question arising at stage 3”, that “the Court must refuse the application for relief”.

Finally, McGowan J noted that Claimant had not sought to take advantage of a paltry or trivial failing on the part of the Defendants. 

In closing, the Court held that the lower Court had misapplied the application of the CPR 3.9 rule for relief from sanction, and the absence of an application by the Defendant to set judgment aside the lower Court should not have taken the view that the application ought to have been brought and therefore would be treated as though it had been brought, certainly without any evidence in support of such application.

By Phil Bradbury - Associate & Head of Costs Management.