Commercial Court "driven" to strike out claim despite view that such a sanction was unjust and disproportionate

The Commercial Court has, with obvious reluctance, struck out a claim on the basis that the claimant was 20 days late in serving particulars of claim:  Associated Electrical Industries Limited v Alstom UK [2014] EWHC 430 (Comm).

The judge commented that, if his decision had depended only on what was just and fair between the parties, he would have considered it unjust and disproportionate to refuse an extension and strike out the claim. However, he had to balance this view against the Court of Appeal's emphasis in Mitchell on enforcement of the Civil Procedure Rules (CPR) in order to encourage procedural discipline and, ultimately, reduce satellite litigation. That consideration drove the judge to conclude that he should strike out the claim in this case.

It is worth noting the judge's view that the Mitchell guidance does not strictly apply to a retrospective application to extend time where, as here, there is no automatic sanction imposed by a rule or court order in the event of a breach. Given the judge's conclusion, however, this distinction might not make a lot of difference in practice.

The judgment also contains an interesting discussion of whether a fresh action, if brought by the claimant, would be liable to strike-out as an abuse of process, though it does not reach a conclusion on the issue.

Background

The relevant CPR amendments introduced from 1 April 2013 are:

• An amendment to CPR 3.9 which requires the court to consider, on an application for relief from sanctions: “all the circumstances of the case, so as to enable it to deal justly with the application, including the need – (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders”; and
• An amendment to the “overriding objective” at CPR 1.1 to add a new sub-paragraph (f) which makes it clear that dealing with cases justly includes “enforcing compliance with rules, practice directions and orders”.

In its November decision in Mitchell, the Court of Appeal said that the new CPR 3.9 reflects a deliberate shift of emphasis. The two considerations which were singled out for specific mention in the rule should be regarded as of paramount importance and be given greater weight than all other circumstances. The court gave guidance on the proper approach to an application under CPR 3.9, stating that where non-compliance is “trivial” and an application for relief from sanctions is made promptly, the court will usually grant relief. Otherwise the defaulting party must persuade the court that there was good reason for the default.

In the present case the claimant served its claim form on the defendant, stating (in accordance with Commercial Court procedure) that particulars of claim would follow if the defendant filed an acknowledgement of service indicating an intention to defend the claim.

The defendant filed its acknowledgement of service on 1 October 2013. The claimant then had 28 days (until 29 October 2013) to serve particulars of claim. However, the claimant only found out on 8 October 2013, when the solicitors' court clerk made enquiries of the court, that the acknowledgement of service had been filed, as the court had failed to notify the claimant of that fact in accordance with the applicable rules.

On 29 October the claimant's solicitors sent an email to the defendant's solicitors at 5.20 pm asking for a 14 day extension to finalise and serve particulars of claim. The defendant's solicitors (who were under the misapprehension that time had expired on 8 October 2013) reserved the defendant's position that failure to serve particulars in time meant the claim was out of time and, on 13 November, applied to strike out the claim.

The claimant served its particulars of claim on 18 November, i.e. 20 days after the deadline. 

Decision

The court (Andrew Smith J) refused the extension and struck out the claim.

Given the Court of Appeal's approach to non-compliance, he could not accept that a default of 20 days in serving particulars of claim was to be categorised as trivial. He referred to his own decision in Raayan al Iraq Co Ltd v Trans Victory Marine Inc [2013] EWHC 2696, where he granted a retrospective extension of time to serve particulars of claim that were two days late, and his decision was criticised in Mitchell. The failure to request or apply for an extension of time before 29 October reinforced the judge's view that this was not a case where the de minimis doctrine applied.

The judge also was not satisfied that there was good reason for the non-compliance. He was not persuaded that there was insufficient time to draft and check the pleading after learning that an acknowledgment of service had been filed. Even if the delay between 1 and 8 October 2013 was the court's fault, no good reason had been shown for not serving the particulars by 29 October 2013. Even if difficulties in investigating the claim did justify the particulars being late, the claimant should have requested an extension from the defendant in a timely manner and, if necessary, made a timely application to the court.

The judge said that if his decision depended only on what would be just and fair between the parties, he would consider an order striking out the claim form to be a disproportionate response to the claimant's non-compliance, given that the delay in serving the particulars was remedied after 20 days and did not disadvantage the defendant. 

However, the court must seek to give effect to the overriding objective, including the aspects of it emphasised in CPR 3.9. The judge referred to the Court of Appeal's statement in Mitchell that:

"...once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture is accepted, there should be less satellite litigation, not more".

Balancing that consideration against his conclusion that, as between the parties, it would be disproportionate and unjust to strike out the claim, he said the Court of Appeal's emphasis on enforcement of the CPR in order to encourage procedural discipline drove him to conclude that he should strike out the claim.

Comment

It is interesting to contrast this case with another recent Commercial Court decision, Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA [2014] EWHC 298 (Comm) (see post). In that case Leggatt J said that even if the guidance in Mitchell applied, and the default could neither be categorised as trivial nor excused by good reason, he would still have considered it just to grant the relief sought because the default itself had no impact on the efficient conduct of the litigation. Those comments were however obiter, as the judge had already concluded that, if Mitchell applied, the default could be described as trivial and there was good reason for it.

In the present case, Andrew Smith J appears to have been heavily influenced by the Court of Appeal's criticism in Mitchell of his decision in Raayan al Iraq to grant an extension for particulars of claim two days after the deadline expired. There is however some debate as to whether the Court of Appeal's criticism was directed at the decision itself, or rather his more general comment in that case that relief from sanctions would not be refused where injustice would result, without recognising that regard must be had to the "wide range of interests" affected by non-compliance. The claimant submitted that it was the latter, but the judge concluded that it was decision itself that was criticised.

Interestingly, in the present case the judge expressed the view that the Mitchell guidance does not strictly apply to a retrospective application to extend time where, as with a failure to serve particulars of claim, there is no automatic sanction imposed by a rule or court order. Although there is an analogy between applications for relief from sanctions under CPR 3.9 and retrospective applications to extend time, the two are distinct. On this view, where it is not an application under CPR 3.9, Mitchell does not require the court to give more weight to the considerations specifically identified in that rule (i.e. the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance) than to other aspects of the overriding objective and other relevant circumstances of the case.

However, given the judge's conclusion that the Mitchell emphasis on procedural discipline nonetheless drove him to strike out the claim in circumstances where he considered that to be an unjust and disproportionate sanction as between the parties, it may not be thought that the distinction has great practical significance.

The judgment is also of interest for its consideration of the claimant's argument that, if the claim was struck out or dismissed, it could simply bring new proceedings. The judge referred to Birkett v James [1978] AC 298 in which the House of Lords decided that, in the absence of contumelious conduct by a claimant, the power to dismiss proceedings should not be exercised before the limitation period had expired, because the claimant could issue a new claim and it would only aggravate delay and costs to dismiss the claim. However, the judge noted, in Birkett v James the focus was on how disputes could fairly be resolved between the parties, and now the courts adopt a different approach - in particular, taking into account the need to allot the court's limited resources to other cases.

Still, the judge said, he could not properly assume that if the claimant brought a new action it would be struck out as an abuse. The court dealing with that action would have to examine the circumstances of the particular case, including not only whether a claimant would use a disproportionate share of court's resources but justice between the parties and any unfairness to them. However, he acknowledged that if the claim was struck out there was a real prospect that it would result in further costly satellite litigation between the parties, so that the substantive dispute would eventually be determined at more cost and after more delay - the result that the House of Lords in Birkett v James sought to avoid. That reinforced his view as to what would be the proportionate response to the non-compliance as between the parties. However, as noted above, the ultimate conclusion was swayed by other considerations.