Venulum Property Investments Ltd v Space Architecture Limited [2013]

Radd Seiger and Helen Morris revisit the issue of what the consequences of failing to comply with the Civil Procedure Rules (CPR) and court orders should and will be in the Jackson era.

In October 2010 we commented on the implications of the Court of Appeal decision in the case of Dixie v British Polythene Industries Plc [2010], a case we handled on behalf of the Defendant. We argued then that it was an abuse of process for the Claimant to pursue an identical claim to that which had previously been struck out following the Claimant’s failure to serve his claim form within the four month period prescribed by CPR 7.5 due to an error on the part of his solicitors. The Claimant argued that notwithstanding his solicitors’ oversight, he should be allowed a second ‘bite of the cherry’. The Court of Appeal accepted that in principle a claim could be struck out as an abuse of process but concluded on the facts that no abuse was present. The judgment made it clear that failure to serve a claim form in accordance with the CPR provisions would not in of itself amount to an abuse of process. This was a disappointing further example of the Court’s failure to take a hardened stance when faced with claimants flouting procedural time limits, case management directions and Court orders, which was succinctly described by Lord Jackson in Mannion v Ginty [2012] as “the culture of toleration of delay and non compliance with orders”.

Lord Justice Jackson’s reforms, the majority of which came into force on 1 April 2013, purported to address this issue and in the run up to their implementation parties and practitioners were warned to expect a more robust approach to be adopted by the courts. Indeed, the Master of the Rolls, Lord Dyson, warned parties that they could “no longer expect indulgence if they fail to comply with procedural obligations.” However, it remained to be seen to what extent this would be embraced by the courts.

In Venulum we received our answer. Mr Justice Edwards-Stuart became the first judge to consider the new CPR provisions and the failure of parties to comply with procedural deadlines. In doing so Edwards-Stuart J maintained the strict approach to time limits referred to in Jackson LJ’s reforms. It is now abundantly clear that changes are afoot in the courts’ approach and application of the CPR, to the extent that if the Dixie claim were heard now, almost inevitably a different conclusion would be reached.

Venulum: case facts

  • The Claim related to the purchase of land in Northamptonshire which the Claimant intended to develop into 152 residential units and 171 parking spaces. Exchange of contracts for the purchase of the land took place in September 2006. In February 2007 the Claimant became aware that the supporting pillars in the car park contained on the architect’s plans were insufficient to support the weight of the proposed building. The pillars had to be increased in size, reducing the number of car parking spaces. This constituted a breach of the planning conditions which required that the original number of car parking spaces had to be provided and the development could not proceed.
  • The Claimant pursued ten different Defendants, who were a mixture of architects, estate agents and the vendors of the land in a professional negligence claim. Despite the Claimant being aware of their loss in February 2007, proceedings were not issued until 12 November 2012, (with limitation due to expire in February 2013).
  • The claim form was served on the Defendants towards the end of the four month service period, the Claimant’s solicitors incorrectly believing that they had a further 14 days to serve the particulars of claim in accordance with CPR 7.4(1)(b), irrespective of the fact that this was outside of the four month service period.
  • The Claimant applied for permission to extend time for service of its particulars of claim pursuant to CPR 3.1(2)(a), which allows a court to extend or shorten the time for compliance with any rule or practice direction even where the time for compliance had expired. Two of the Defendants (the estate agents) contested the application.
  • The Court accepted the transitional rules for the implementation of the Jackson Reforms dictated that as the application was issued prior to 1 April 2013 a court could still have regard to the old version of CPR 3.9, which provides nine factors for a court to consider when faced with an application for relief from sanctions. However, it was also accepted that consideration had to be given to the new overriding objective contained in CPR 1.1 (being applicable to any hearing post 1 April 2013), which had been amended to include specific reference that cases be dealt with at proportionate cost and to enforce compliance with rules, practice directions and orders.
  • Edwards-Stuart J refused the Claimant’s application. He accepted that the Claimant’s particulars of claim were served only a few days late, the application was made promptly and that if the application failed the Claimant would have no recourse against the Defendants contesting the application, the limitation period having expired. However, taking into account the weakness of the claim against the Defendant’s contesting the application, the unreasonableness of the Claimant’s solicitors in leaving both issue and service of proceedings until the last minute and in particular the stricter approach provided for in the CPR he had to refuse the application:

“in the light of the stricter approach that must now be taken by the courts towards those who fail to comply with rules following the new changes to the CPR, this is a case where the court should refuse permission to extend time. The Claimant has taken quite long enough to bring these proceedings and enough is now enough.”

Comment

The decision of Edwards-Stuart J is clear notice to all parties that the courts are embracing the ethos of the Jackson reforms and are no longer willing or able to tolerate delays and non compliance with rules and directions. Edwards-Stuart J’s judgment itself acknowledges that the court’s discretion under CPR 3.1.(2)(a) to allow extensions has been “radically amended”.

Litigants should now take notice that any party seeking the court’s permission for an extension of time will face an uphill battle. This is an approach that was echoed by His Honour Justice Walton at a court users group meeting on 24 April 2013 where he stated that the judges have been directed to start with a hard approach to compliance and that there would not be any flexibility.

Parties should also note that in Venulum, Edwards-Stuart J was not required to consider the new version of CPR 3.9 which now provides that in assessing an application for relief from sanctions a Court must consider:

“all of the circumstances of the case so as to enable it to deal with justly with the application including the need for:

  1. litigation to be conducted efficiently and at proportionate costly; and
  2. to enforce compliance with rules, practice directions and orders”.

There is therefore the possibility that an even stricter approach will emerge in due course with the courts no longer giving significant, if any, weight to factors previously listed in CPR 3.9, such as prejudice; the focus having shifted to proportionality and compliance.

Parties should also be aware that the amendments to the overriding objective in CPR 1.1 and the attitude of the court will have wider implications than in requests for extensions and relief from sanctions. In the case of Berg v Blackburn Rovers Football Club & Athletic Plc (2013) it was suggested that such would also impact on the courts’ considerations when assessing applications to resile from admissions, particularly where those admissions have been made by formal and experienced advisors. Further, a strict approach is also anticipated when considering late amendments to pleadings, this having been alluded to in Jackson LJ’s final report and in costs budgeting as suggested by Lord Dyson in his lecture on the implementation on the reforms in March 2013.

Whilst we await further case law on these issues the adherence of Edwards-Stuart J to the robust approach advocated by Jackson LJ provides an insight into how the reforms have been accepted by the judiciary and how such will be applied moving forwards. Defendants should now proceed on the basis that relief from sanctions and extensions will only be granted in narrow circumstances. It is therefore imperative that defendants ensure that their practices reflect the new measures and CPR provisions and the following should be remembered:

  • It is not just claimants who can fall foul of the strict approach emerging from the Courts. The courts will take an equally robust approach to defendants’ failings. Defendants will need to ensure that any directions provided for in a claim are realistic and attainable and that all steps to ensure compliance with directions are clearly documented.
  • The time limits provided in the CPR (including service dates) and case management directions will become increasingly important. It would therefore be prudent for defendants to review these along with the rules for how to calculate time limits to avoid mistakes such as the one in Venulum occurring.
  • Where it is anticipated that a deadline will not be met, an application for relief from sanctions or to extend a time limit should be made as early as possible and in any event ahead of the time limit for compliance. Further, whilst CPR 3.9 has been amended to remove reference to factors such as prejudice this can still form part of the Court’s consideration of “all the circumstances of the case”. The factors previously listed under CPR 3.9 should not be forgotten and steps should still therefore be taken to minimise any prejudice to parties where delays in compliance with directions cannot be avoided. Given the limited costs that claimants will now be able to recover under the Jackson reforms it is anticipated that claimant’s solicitors will focus on increasing volumes of cases but will spend reduced time working on each file, in order to maximise profits. This approach creates the potential for mistakes on the part of claimants’ solicitors and missed deadlines. What may previously have been seen as minor delays, insufficient to merit an application for compliance given the courts’ approach, may now allow a defendant to strike the claim out and/or undermine the claimant’s claim, for example by debarring them from relying on certain evidence. Defendants should therefore be extremely alert to strike at the claimant’s failing.
  • With the advent of qualified one way cost shifting, a defendant will, of course, only be able to recover costs from the claimant in limited circumstances. However, an application forcing compliance with a direction for example, which is now more likely to be successful, may provide the defendant with an opportunity to recover at least some costs.

Dixie alas came too early. However, it is comforting at least to know that the approach we took on the behalf of the Defendants was the right one and that the principles of adhering to rules and time limits strictly have now been adopted by the Jackson reforms and are being implemented by the courts.