Relief from sanctions refused for breach of unless order
Oak Cash & Carry Limited v British Gas Trading Limited
Court of Appeal
15 March 2016
The Court of Appeal this month considered the issue of relief from sanctions following the breach of an unless order, and in doing so applied the guidance given in Mitchell and the three stage test subsequently set out in Denton. Andrew Cousins looks at the decision and highlights the practice points arising from it.
The claimant brought a claim for an unpaid debt for the supply of electricity. Proceedings were initiated in February 2013 and various directions were made by district judges in the course of the proceedings. The issue in this case revolved around the filing of the listing questionnaire:
5 November 2013: an order was made requiring both parties to file listing questionnaires by 3 February 2014.
10 February 2014: with no listing questionnaire having been filed on behalf of the defendant, the court made an ‘unless order’ stating that unless the defendant filed the listing questionnaire by 19 February the defence would be struck out without further order of the court.
18 February 2014: a trainee solicitor from the defendant’s solicitors filed a directions questionnaire, and not a listing questionnaire.
20 February 2014: the court notified the defendant's solicitors that it had received the directions questionnaire and pointed out that was not the document required and that in fact the listing questionnaire was still awaited.
21 February 2014: the defendant filed the listing questionnaire at court.
25 February 2014: the claimant applied for judgment in default of a defence (on the basis that the defence had been automatically struck out pursuant to the unless order).
27 February 2014: the defendant’s solicitors wrote to the court apologising for the mistake and simply asking the court not to grant the sanction requested by the claimant.
18 March 2014: judgment in default was granted in the sum of £211,388.61.
21 March 2014: the defendant's solicitors applied to the court for relief from sanction.
At first instance the court granted relief and set aside the default judgment. The claimant appealed the first instance decision to the High Court and the appeal was allowed so that the default judgment was restored. The defendant appealed to the Court of Appeal.
Court of Appeal findings
Jackson LJ, King LJ and Lindblom LJ dismissed the appeal with Jackson LJ giving the lead judgment. The court looked at the guidance in Mitchell v News Group Newspapers Ltd (2013) CA and the three stage test set out in the subsequent decision in Denton v TH White Ltd (2014) CA and considered the seriousness of the breach, whether there was a good reason for the breach and the overall circumstances of the case.
Seriousness of the breach
In this case the central issue relevant to this question was whether the breach of the unless order should be considered in isolation, or whether it should also take account of the fact that the defendant had three months to file its listing questionnaire and was late in doing so.
The lower courts had reached differing views on this point but the Court of Appeal considered that an unless order does not stand on its own. A party who fails to comply with an unless order is normally in breach of an original order or rule as well as the unless order. Accordingly, it was not possible to look at the unless order in isolation and the court had to look at the underlying breach. The phrase "the very breach" in paragraph 27 of the judgment in Denton, when applied to an unless order, meant the failure to carry out the obligation which was firstly imposed by the original order and secondly extended by the unless order. The fact that a party had failed to comply with an unless order indicated a serious and significant breach. Examining the chronology of the case the defendant's breach was serious and significant.
Good reason for the default
The second stage of the court’s task was to consider whether there was a good reason for the default. The explanation offered by the defendant was that the wife of the solicitor with conduct of the matter had been suffering ill health. However these health problems had been known for many months, and the defendant solicitors’ firm was of a significant size, with over 40 solicitors, and could be expected to have provided appropriate cover for the solicitor during his absence. Accordingly the reason for the default was not a good reason.
The overall circumstances of the case
Here the promptness of the application for relief from sanctions was a relevant, as had been stressed both in Mitchell and in Durrant v Chief Constable of Avon and Somerset (2013) CA. If the defendant had made an immediate application for relief at the same time as filing its listing questionnaire, or very soon after, the court would have been strongly inclined to grant relief from the sanction of striking out. The defendant's lack of promptness in applying for relief was crucial. When that delay was added to all the other factors, it could be seen that the defendant's default had substantially disrupted the progress of the action.
For further information please contact Andrew Cousins Senior Solicitor Advocate, Insurance on 0161 603 5093
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.