What factors determine whether new evidence can be adduced? What is the basis of court-imposed sanctions, and do these issues share a common root? The TCC has recently issued surprising guidance in DPM v Emerson, borrowing relevant principles from the law governing relief from sanctions.
The main issue involved a substantial counterclaim for defects in works carried out by the claimant. The claim was for £115,000 in round figures, to which the defendant responded with a £160,000 (round figures) counterclaim. The lump sum counterclaim was not broken down, and came from a quotation received many years previously.
Prior to the actual hearing, the judge had made several case management orders. One of those orders debarred the defendant from bringing new evidence at trial that had not been particularised in a Scott Schedule of Defects. Another, sought only at pre-trial review, permitted the defendant to rely on a new quantum expert’s report and, in consequence, permitted the defendant to pursue counterclaims totalling approximately £332,000, on the basis that the maximum entitlement would be the originally pleaded £160,000. The claimant appealed the latter case management order to the High Court, attempting to strike out the new quantum expert’s report in its entirety.
The argument was brought on two bases (the first having two parts): 1a) that the judge had wrongly concluded that the losses in the expert report had been particularised in the Scott Schedule of defects; 1b) that the judge failed to give effect to his earlier order by which the defendant had been debarred from adducing evidence at trial of any issue that was not particularised in the Scott Schedule; and 2) the decision to allow the defendant to advance at trial a counterclaim for losses totalling £332,000 and requiring the claimant to meet those claims despite the fact that the pleaded value was only £160,000 constituted a serious procedural irregularity and was unjust within the meaning of CPR r. 52.21(3)(a) and (b). On point 2), particular arguments included that there was insufficient allocated trial time for the larger claim to be fairly determined, and that the ruling was made very late at a pre-trial review.
Mr Justice Coulson discussed the issue of delay, noting that the judge had not expressly discussed the issue and had not, on the evidence, taken it into account (para 31). Coulson J applied the Denton test to determine that 1) the defendant’s delay in seeking permission to rely on the report was a serious and significant failure, because the judge had decided not to order the amendment of earlier reports; 2) there was no reason for the delay, whether good, bad or indifferent; 3) it was not reasonable to allow the defendant to rely on the report as the claimant would be significantly disadvantaged.
While this was enough to dispose of the appeal, Coulson J went on to consider the other arguments. The defendant had not quantified several items on the Scott Schedule, and the claimant argued that the defendant was only entitled to rely on items not marked ‘tbc’ by virtue of a debarring order. The defendant argued that the order only prevented wholly new items from being added on to the Scott Schedule. As the order had debarred items ‘whether relating to an alleged breach of duty, cost of remedial work or otherwise’, the claimant’s interpretation was preferred by Coulson J – no new evidence of costs of remedial works were allowed to be adduced.
Coulson also accepted the claimants argument on the remaining points, namely that the judge was wrong to conclude that the losses were particularised in the Scott Schedule, and that the judge was also wrong to treat the £160,000 as a cap, as opposed to the proper measure of liability. If it was a cap, the claimant would have to deal with the entire £330,000 in their response to the counterclaim, in order to defeat the claim for £160,000.
Finally, Coulson J noted that the decision was adverse to the defendant, but that it reflected the merits of the case. The claimant had made repeated efforts to pin down the respondent’s position on the details of the counterclaim, but that position is still unclear. By contrast, the defendant was clearly at fault, in delaying unreasonably in delivering a new quantum report until ‘well beyond the eleventh hour’ (Para 62).
The case is procedurally strange, as it does seem that the judge disregarded his earlier case management decision on allowing evidence of quantum to be adduced at (or after) the eleventh hour – an appeal would surely have been expected. Happily, however, Coulson J’s judgment in the appeal does not depend solely on this irregularity, and has more to say about unreasonable delay.
Interestingly, Coulson J applied the Denton principles in a novel context. Denton involved an application for relief from sanction, whereby the three stages of 1) seriousness and significance of default, 2) whether there is a good reason for it, and 3) consider all circumstances to see whether application can be dealt with justly, were required to lift a court-imposed sanction. Here the application was the opposite—in essence, the claimant was trying to effectthe earlier case management decision as a sanction, disallowing the defendant to adduce new evidence so late before the trial.
In holding that the delay meant that it would be unreasonable to allow the new quantum report to be relied upon, Coulson J in effect treated the delay as a sanctionable event and impliedly refused to grant relief (which no one had asked for). Leaving aside the fact that it may well have been a sanction that the judge forgot he had imposed, it is not obvious that Coulson J’s logic holds. The absence of factors that would justify relief does not obviously mean that a sanction is to be imposed, just as absence of an antidote does not mean that a person is necessarily poisoned.
That is unless the court views the Denton test as really being about whether the original sanction was justified in the first place, not whether relief should be granted now. On this logic, the factors in Denton are really the necessary and sufficient requirements for any sanction to be imposed. This may well be the case, but it has not been made explicit at an appeals court level