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Chartwell Estate Agents v Fergies Properties SA & Anor, Court of Appeal, 16 April 2014

1 May 2014

The issues
Jackson – Mitchell – non-compliance – extensions of time.

The facts
The claimant was an estate agent. The defendants owned a property in Knightsbridge. The action related to the claimant’s claim for commission on the sale of the property in April 2013. The claim form had been issued in May 2013. The defence was dated the 20 May 2013. A reply had been served in July 2013. The defendant’s issued a Part 18 request for further information and on the 24 July 2013 the defendant replied to the Part 18 request.

In October 2013 the matter came before Master Lesley for case management. The case was listed for a trial window between March and May 2014, with a time estimate of four days. Subsequently, it had been listed for the 29 April 2014. The Master’s Order included provision for service of witness statements, simultaneously by 4pm on the 22 November 2013.

The matter had not been back to court between the hearing before the Master and the hearing before the judge. There had been issues in the interim relating to disclosure. The claimant said the defendant had not given full disclosure. The claimant said, until disclosure had been completed, witness statements could not be finalised. The defendant disputed the latter and said that it was too late for the claimant to argue about non-disclosure. The claimant’s solicitors said that they would make an application for specific discovery, but they did not.

Two days before the date on which witness statements were to be exchanged, the defendants asked the claimants if they were ready to do so. The claimant replied that full disclosure had not been provided and consideration was being given to an application for specific discovery and that until then, it was impossible for either party to finalise witness statements. Still no application was made, nor was any application made for an extension of time in respect of service of witness statements. Neither party were ready on the 22 November 2013 to exchange. The claimant’s solicitors continued to complain about disclosure and threatened an application, but none was made. This unsatisfactory state of affairs continued into January 2014.

Eventually, on the 21 January 2014, the defendant’s solicitors said that they would finalise their witness statements and would be in a position to exchange by the end of the week. The claimant then issued an application for an extension of time to serve witness statements and to obtain relief from sanction.

The matter came before the High Court Judge who granted relief from sanction and an extension of time to both sides.

The defendants appealed to the Court of Appeal.

The decision
The new approach was designed to change a litigation culture, perceived in many quarters to be unsatisfactory, and to require greater observance of Rules, Practice Directions and Orders, with a view to protecting the wider interests of justice, including the interests of other court users. The old CPR 3.9 required “consideration of all the circumstances”, but then listed nine matters to be included in that consideration, but without making it clear what weight was to be accorded to each factor. Certainty could have been achieved by making time limits in rules, practice directions and orders entirely mandatory, with no prospect of extension or relaxation. That was considered too draconian to be acceptable. Moreover, a test prohibiting the grant of relief from sanction “save in exceptional circumstances” was also considered not acceptable. The new Rule still required “all the circumstances” to be considered and required the court to “deal justly with the Application”. All the circumstances were specifically to include the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance with Rules, Practice Directions and Orders. Again, the Rule gave no obvious steer as to the importance of or the weight to be given to those matters.

However, the interpretation and the approach required was now subject to the decision of the Court of Appeal in Mitchell v News Groups Newspapers Ltd. That “circumstances of the case” referred to in CPR 3.9 were to be given less weight than the consideration specifically mentioned above. A tougher and more robust approach was now called for.

In this case, the judge had been justified in finding that the non-compliance on the part of Chartwell was not trivial and also in finding that there was no good reason advanced to explain the non-compliance. The correspondence showed a lack of real understanding of the requirements of the revised Rules. There was sense in parties to litigation trying to sort out matters of this kind consensually, and that was to be encouraged, but here the dispute had antedated the case management conference and yet no application to court was made until weeks thereafter. This was the equivalent of reverting to the old and long exploded notion of parties setting their own timetable. Rule 3.8(3) explicitly stated that the court’s control could not be ousted by the party’s agreement. The judge was still required to consider “all the circumstances of the case” so as to enable him to deal with the Application justly. Those circumstances included the important fact that the trial date would not be lost if relief were granted and a fair trial could still be had; and the fact that no significant extra cost would be occasioned if relief were granted.

The judge was also justified in taking into account the importance of the fact that refusal to grant relief would effectively mean the end of the claim, since the burden of proof was on Chartwell to prove its case and it would have had no evidence.

The court would express no view on the possibility of argument under Article 6 of the Convention or any of the case law arising from that Article, but it would nonetheless be unreal not to have regard to the de facto consequence of termination of the claim. It would be of very grave consequence for Chartwell, although it could not be regarded as a determinative factor because of the requirements laid down in Mitchell. The judge had not misdirected himself. He had not granted relief solely because refusal to do so would result in disproportionately severe consequences; he had reached the conclusion that it would be too severe a consequence when set out against all the background history and the other matters listed by him, including the fact that in his view, and rightly, there was fault on both sides. It should not be overlooked that the Court of Appeal in Mitchell did not say that the two factors specified in CPR 3.9 would always prevail over any other circumstances in a case where the default was not trivial and where there was no good justification. It could not be right that it would always do so, because CPR 3.9 required that all the circumstances were to be taken into account and required that the Application be dealt with justly. There was no proper basis for interfering with the judge’s evaluation of the position and his exercise of discretion.

It should be added, that the notes to the White Book, which suggested that where a witness statement was served after the specified date, it would be unjust to exclude the party from adducing the evidence at trial, “save in very rare circumstances”, stated the position too broadly in the light of the revised Rule.

It was also an unfortunate consequence of the new reforms – although it was hoped a temporary one – that satellite litigation so far seemed not to have been avoided, but if anything, had been promoted. This was not surprising where the stakes were high and given the possibilities of the new CPR 3.9. The way however to circumvent satellite litigation were for the parties to comply precisely with Rules, Practice Directions and Orders.

It should also be emphasised that, as had been said in Mitchell, appeal courts would not lightly interfere with case management decisions by judges, if the Judge had correctly directed himself, had adopted the correct approach in principle, and had taken all the circumstances into account. It also had to be emphasised that the courts should not have as their sole objective, a display of judicial musculature. As had been said by Lord Justice Jackson, enforcing compliance was not an end in itself. In the well known words of Lord Justice Bowen, “the Courts do not exist for the sake of discipline”. Such sentiments have not been completely ousted by CPR 3.9 as applied in the light of Mitchell.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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