(1) Chelsea Bridge Apartments Ltd and (2) Alan Ward v (1) Old Street Homes Ltd and (2) Anthony Donnellan (4/9/2017) 

The facts

This case is another reminder of the importance of parties complying with rules, practice directions and court orders.

In this case, the claimants had been ordered to serve their draft particulars of claim by 6 January 2017 but did not do so until 30 March 2017. Also, the claimants did not make an application for an extension of time until 22 March 2017 despite having been in breach of the court order for a period of nearly three months.

The claimants were litigants in person between 6 January and 7 February 2017 but after 7 February 2017 they were represented by solicitors.

The claimant’s application for relief from sanctions was made on 30 March 2017 and was heard at the same time as the defendant’s application for security for costs.

Decision

The court referred to the three stage test as set out in Denton v TH White Ltd [2014] EWCA Civ 906, in respect of relief from sanctions. In relation to the first stage of the test, it was concluded that there had been a serious and significant breach as the claimants had served their particulars of claim nearly three months late.

In respect of the second stage, it was held that the failure of the claimants to appreciate the requirement to serve the particulars of claim by the date specified in the court order was not a good reason for the breach.The court specifically noted that following the claimants instructing solicitors, there had been considerable tardiness in them serving the particulars of claim.

In respect of the third stage, it was held that the claimants had not conducted the litigation efficiently or at proportionate cost and had apparently refused to mediate. Also, it was noted that the claimant had embarked upon the litigation with “… an ill-thought out and precipitated application…” that had unsuccessfully sought a freezing order on a without notice basis. Further, it was held that the claimants had provided inadequate reasons for why there had been a breach of the court order and they had substantially delayed in making the application for relief from sanctions.

The court considered the criteria under CPR, r. 3.9 in respect of the need for litigation to be conducted efficiently and at proportionate cost and for there to be compliance with rules, practice directions and court orders. In respect of these points, the court concluded that the litigation had not been handled efficiently or at proportionate cost. Also, it was noted there had been insufficient regard to the court order by the claimant.

The court refused the claimants’ application for relief from sanctions and the case was struck out.

In respect of the defendant’s application for security for costs it was concluded that this no longer served a practical purpose because the claim was struck out. However, the court stated that if the decision in respect of relief from sanctions was overturned then the defendant could obtain an order for security for costs as both claimants had provided no explanation as to how they proposed to fund the litigation and were impecunious.

What this means for you

This case highlights the importance of complying with court orders, rules and practice directions as a failure to do so carries with it the real risk of strike out. It can be seen that the court has the power under CPR, r. 3.4 to strike out a case in the event of non-compliance even in cases where there is no provision for strike out in the specific rule, practice direction or court order.

This has been recently evidenced by the High Court case of Gladwin v Bogescu [2017] EWHC 1287 (QB), where the express sanction in the court order for failure to serve a witness statement was for the witness to be prevented from giving oral evidence at trial. However, the High Court struck out the case on the basis that the express sanction in the court order would not have resulted in a satisfactory outcome and would have caused significant prejudice to the non-defaulting party.

Here, the claimants were initially litigants in person but it was seen that they had embarked upon litigation “… with an ill-thought-out and precipitate application on a without-notice basis…” It can be seen that the claim did not have reasonable prospects of succeeding, which the court took into account under stage three of the Denton test when assessing the application for relief from sanctions.

This decision highlights the importance of the parties making an application for an extension of time as soon as it becomes apparent that they will not be able to comply with a court order, rule or practice direction. Also agreement should be sought from the opponent and there should be good reason in respect of why the extension is needed.

In addition, any application should be made prior to the date for compliance with the court order elapsing. In the event that the deadline for compliance has elapsed then an application should urgently be made for relief from sanctions accompanied by supporting evidence.