Civil procedure – out of excuses | Feature

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The message is clear: court orders, rules and practice directions must be strictly complied with.

The Court of Appeal’s decision in the landmark case of Andrew Mitchell MP v News Group Newspapers Ltd [2013] EWCA Civ 1537 has been well publicised, although not necessarily well received by some. Despite this, Mitchell has been followed and applied in a number of recent cases, one of which is Karbhari v Ahmed [2013] EWHC 4042 (QB). That case concerned the failure of the defendant to serve a witness statement in time.

The facts were straightforward. The claimants allege that they handed over to the defendant millions of pounds in cash and cheques pursuant to an agreement that the defendant would repay the monies after a fixed period together with a guaranteed return. A typical transaction would involve the payment of a sum of tens of thousands of pounds to be repaid in 18 months together with an uplift of 100%. The judge, Turner J, noted the unrealistic nature of these transactions when he stated: ‘The sceptical observer might readily have formed the conclusion that all this was far too good to be true. He would have been right.’

By 2013 it was clear that the investments would not come to fruition and the claimants commenced proceedings against the defendant in the High Court. The defence was a bare denial of the claimant’s allegations. However, on the first day of the trial, the defendant purported to serve an amended defence which sought to strike out the original defence and which included an admission that the defendant did, in fact, receive a number of cheques from the claimants. The amended defence was also supported by a supplemental witness statement which contradicted the original defence.

In the supplemental witness statement the defendant attempted to justify his change of position by arguing that initially he was concerned that others would be implicated in money laundering if the ‘full facts’ had been made clear in the original defence but that now he was in a position to provide those ‘full facts’. The claimants argued that the defence should be struck out.

Turner J considered the consequences of the late filing of witness statements under Civil Procedure Rule 32.10 and the pre-Jackson case of Boyle v The Commissioner of Police of the Metropolis [2013] EWCA Civ 1477, in which the Court of Appeal upheld Turner J’s decision not to allow expert evidence which had been served just a few days before the trial was due to commence. The Court of Appeal in Boyle endorsed Tuner J’s approach in applying the relevant factors under the old CPR 3.9 (relief from sanctions). The judge then turned to Mitchell and set out the Court of Appeal’s guidance regarding the application of CPR 3.9.

Due to its significance, it is worth setting out in full the guidance provided by Lord Dyson in Mitchell, who held: ‘(40) We hope that it may be useful to give some guidance as to how the new approach should be applied in practice. It will usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly. The principle de minimis non curat lex (the law is not concerned with trivial things) applies here as it applies in most areas of the law.

‘Thus, the court will usually grant relief if there has been no more than an insignificant failure to comply with an order: for example, where there has been a failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms. We acknowledge that even the question of whether a default is insignificant may give rise to dispute and therefore to contested applications. But that possibility cannot be entirely excluded from any regime which does not impose rigid rules from which no departure, however minor, is permitted.

‘(41) If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted. For example, if the reason why a document was not filed with the court was that the party or his solicitor suffered from a debilitating illness or was involved in an accident, then, depending on the circumstances, that may constitute a good reason.

‘Later developments in the course of the litigation process are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable, although the period seemed to be reasonable at the time and could not realistically have been the subject of an appeal. But mere overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason. We understand that solicitors may be under pressure and have too much work. It may be that this is what occurred in the present case. But that will rarely be a good reason. Solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all. This may seem harsh, especially at a time when some solicitors are facing serious financial pressures.

‘But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue. We should add that applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event.

‘(46) The new more robust approach that we have outlined above will mean that from now on relief from sanctions should be granted more sparingly than previously.’

Applying the Mitchell guidelines, Turner J did not hesitate in finding that the defendant’s breach of the court timetable was far from trivial. The delay of over seven months and the timing of the application on the second day of trial amounted to a serious departure from the terms of the order of the court relating to the service of witness statements. The supplementary witness statement which extended to a length of 32 paragraphs was no mere formality but sought to introduce wholly new (and inconsistent) material to the case as originally presented.

As to the issue of ‘good reason’, Turner J held that he was entirely satisfied that no good reason had been made out. Money laundering was a serious criminal offence and omitting until the very last moment large volumes of evidence in order to protect those guilty of this offence was an extremely bad reason. The judge not only refused permission for the defendant to rely on his supplemental witness statement, he struck out the defence and referred the matter to the Economic Crime Unit.

Apart from the serious issues concerning money laundering and failure to provide full and complete evidence, Karbhari further reinforces judicial attitudes towards relief from sanctions post-Jackson and Mitchell. The message is clear: court orders, rules and practice directions must be strictly complied with. The courts will be unsympathetic to excuses for failure to comply unless these can be justified within the guidance provided by the Court of Appeal in Mitchell.