Krasniqi v Watford Timber Company Limited (2016) 13 April, CLCC DJ Parfitt, as yet unreported [Refer to the judgment]

This is an example of a case in which the Court refused to grant an “in time” application for an extension of time, made before the expiry of the deadline in an unless order, despite there being no trial date listed and this being a liability admitted multi-track claim for a six-figure sum. The effect of the refusal was that the claim remained struck out and the Claimant was ordered to repay £21,000 in interim payments and make a payment on account of costs of £25,000.

A separate relief from sanctions application was also refused, thought to be one of the first applications of the Court of Appeal’s latest decision on CPR 3.9, British Gas Trading Ltd. v Oak Cash and Carry Ltd. [2016] EWCA Civ 153, stressing the seriousness and significance of failing to comply with an unless order and that a lack of promptness in applying for relief is a critical factor.

The case also provides an interesting analysis of:

  1. whether a Part 18 Request for further information which seeks both an explanation, as well as documents, is properly complied with by provision of a written reply, or whether compliance requires the documents requested as well; and
  2. whether a standard provision in an order made without a hearing, requiring an application to vary it to be made within 7 days, meant that a later application prior to the deadline for compliance with the terms of the order was to be treated as an “out of time” extension application, akin to relief from sanctions or as an “in time” application to be considered as a matter of open discretion bearing in mind the overriding objective.

Background

The Claimant suffered an accident at work in which he sustained a serious comminuted leg fracture and psychiatric symptoms. Following surveillance, an issue arose about the extent of the Claimant’s incapacity in the period since the accident and the amount of foreign travel he had been able to do. The Defendant served a Part 18 request for further information, dated 5 December 2014, which included a mixed request for details of bank accounts in the Claimant’s name as well as disclosure of the bank account statements, to identify potential transactions abroad. 

An application to compel a response followed and at a CMC on 9 February 2015, the Court made an unless order for a reply to the Part 18 Request by 2 March 2015 and ordered costs against the Claimant.

The Claimant served a reply confirming he held a bank account and providing some of the bank statements for the relevant period. Despite various assurances that the matter was being followed-up with the bank and repeated chasing, the claimant did not produce the balance of the account statements. The Defendant made another application and the Court made an unless order on 2 July (drawn 17 July), without a hearing, requiring the outstanding statements to be served by 4pm on 5 August 2015, in default of which the claim would stand struck out without the need for further order. The order contained the familiar rubric that any application to have the order varied, set aside or revoked should be made within 7 days of service.

There was evidence that from 13 July to 7 September, the Claimant and his Solicitors lost touch with each other due to a mix-up over a change of address not being recorded by his Solicitors. In the absence of any instructions, the Claimant’s Solicitors applied on 5 August 2015 to extend time to comply with the unless order.

The Defendant’s Solicitors wrote to the Court, on 11 August, copied to the Claimant’s Solicitors, to say that the Claimant had not complied with the unless order and so the action stood struck out. The Defendant did not know about the Claimant’s application for an extension of time until a listing notification was received on 2 November 2015.

On 16 December 2015 the remaining bank statements were served on the Defendant and the Claimant made an application for relief from sanctions. The timing of the relief application was premised on the Claimant’s Solicitors not wanting to make it until the Claimant had provided the documents.

The applications were heard on 18 March 2016 with judgment handed down on 13 April 2016.

A summary of the decision on the contested points

The Defendant argued that the Claimant had in fact been struck out twice. There had been a failure to comply with the earlier unless order requiring a reply to a Part 18 Request by 2 March 2015. That document contained a mixed request for details of any bank accounts but also disclosure of bank statements. The Defendant argued that the failure to provide the bank statements, required in the Request, by the deadline for a Reply meant that the claim had been struck out at that point. The Court decided that the order could have specified that the reply had to produce the documents sought but it did not do so. A written reply was sufficient to meet the requirements of the unless order of 9 February 2015. The draconian sanction of a strike-out points to a construction of any unless order which errs on the side of compliance rather than setting traps for inadvertent non-compliance.

The Defendant’s argument that the application was not made “in time”, because that the relevant deadline was the 7 day time limit after service for applying to vary the unless order made on 2 July, without a hearing, was not accepted. The Court determined that the application had been made “in time”, i.e. before the deadline for compliance with the substantive part of the unless order. The 7 day limitation did not apply to an application to extend time and in substance that was what the Claimant’s application sought.

The 5 August 2015 application was an “in time” application for an extension of time. It was common ground that such an application must be dealt with under the general discretion informed by the overriding objective and was not to be equated with relief from sanctions, even by analogy. The application was refused. There was no sufficient explanation why it took the Claimant so long to provide the missing statements to justify an extension from 5 August to 16 December for a simple task. The effect had been to increase costs and time spent by the parties and the court. It had involved three separate applications. The fact that the Claimant had remedied the failure weighed in his favour. No fixed trial date had been lost but the likely resolution of the claim had been delayed. When the lack of adequate explanation and effect on the due management of litigation was balanced against the other factors informing the overriding objective, the refusal of a 19 week extension for something so apparently simple was inevitable. Where the Court is satisfied that the failure is significant then there is nothing inherently wrong in the consequences of refusing a time application being the strike out of that parties’ claim or defence. It remains a balancing exercise.

The Court went on to consider the separate relief from sanctions application, dated 16 December 2015, the day when the Claimant served the remaining bank statements. Not surprisingly, in view of the refusal of the time extension, the Court refused relief. The outcome of the refusal of relief being to deprive the Claimant of whatever damages he might have been entitled to did not make the sanction disproportionate. The sanction is only the consequence of the Claimant not complying with an unless order which was not challenged as to its substance. The Court held that the Defendant was right to draw attention to British Gas Trading v Oak Cash and Carry Ltd [2016] EWCA Civ 153, where a defendant was struck out from defending a £200,000 claim because of failing to file a pre-trial checklist in time. Strike out is a serious sanction but the court’s ability to grant relief from sanctions in an appropriate case mitigates that harshness. If it is not appropriate to grant relief otherwise then it is unlikely that the mere fact of the sanction would itself justify the granting of relief.  Ultimately it will depend on the facts and in the Court’s view the facts of this case when taken as a whole did not entitle the Claimant to relief from sanctions.

Both applications were dismissed meaning that the claim remained struck out. The Claimant was ordered to repay £21,000 in interim payments of damages and to pay £25,000 on account of the Defendant’s costs, pending detailed assessment.