Establishing "good reason" for breach of order following change of solicitors may require waiver of privilege

The High Court has extended a witness statement deadline, where a party was in breach of the previous timetable, but refused to vacate the trial date to allow more time for statements to be prepared and served: Devon & Cornwall Autistic Community Trust v Cornwall Council [2015] EWHC 129 (QB).

The case is of interest both for its application of the Mitchell / Denton principles (as outlined in this post) and the court's comments on the role of privilege where a party seeks to rely on the conduct of its lawyers to justify a failure to comply with court rules or orders. Although the decision is not binding (as a first instance decision) and is based on rather unusual facts, it suggests that:

• a party will not generally be able to rely on the mere fact of a change of legal representation to justify a breach - even where it is the legal team that has terminated the retainer;
• where a party wishes to rely on the conduct of its previous lawyers as good reason for a breach, the court may expect a full explanation with a waiver of privilege for that purpose.

Background

The underlying claim was for payment for services said to have been provided by the claimant to individuals in the defendant local authority's care homes.

The claimant, who was in breach of orders requiring service of witness statements in December 2014, applied for permission to serve statements out of time and to vacate the trial scheduled for February 2015 to allow time for the statements to be prepared and served.

The claimant blamed its failure to service witness statements in time on the fact that its former solicitors and counsel had terminated the retainer without notice shortly before the deadline. The termination was said to have been in breach of contract, and prompted by information that the defendant intended to rely on the arrest of the claimant's CEO (in relation to an allegation of perverting the course of justice) as evidence of financial impropriety.

Decision

The court (Mr Justice Green) granted a brief extension of time, subject to an unless order, and refused to vacate the trial date.

Since this was an application to extend time for service of witness statements made after the deadline had passed, it was in substance an application for relief from sanctions under CPR 3.9 and Mitchell / Denton guidance applied. Therefore the court had to:

1. identify and assess the “seriousness and significance” of the breach;
2. consider whether there was "good reason" for the breach; and
3. have regard to all the circumstances of the case, giving particular importance to the two factors set out in the rule, namely (i) the need for litigation to be conducted efficiently and at proportionate cost and (ii) the need to enforce compliance with rules, practice directions and orders.

In relation to the first stage, it was conceded that the breach was serious, as it impacted directly and adversely on the efficiency of the litigation and the ability of the trial to be conducted fairly or at all.

In relation to the second, the court concluded that there was no good reason advanced to explain away the breach. There was no direct evidence as to why the solicitors and counsel had withdrawn from the case. Although it was suggested in evidence from the claimant's current solicitor that the termination was prompted by news of the police involvement and that the termination was unjustified, that was a deeply unsatisfactory manner in which to advance an explanation. On the face of it, that was not a reason to terminate unless there were additional facts that gave rise to serious professional embarrassment on the part of the legal advisors. All this cried out for proper and detailed explanation. The judge continued:

"In circumstances such as this, I would have expected a detailed witness statement from senior employees of the Claimant setting out, with full particulars, the precise events which have led to the present situation and ... a waiver of privilege thereby permitting the legal advisors to explain themselves."

The claimant could not blame the conduct of its prior legal advisors and then hide behind privilege as a reason for not providing an explanation as to that conduct.

The claimant tried to get round this difficulty by relying on the mere fact that its legal representatives had withdrawn as good reason for the breach. However, the judge did not accept that this was, in itself, good reason. In Mitchell, the court said that good reasons were likely to arise from circumstances outside the control of the party in default. Although the judge said he did not read Mitchell as necessarily precluding reliance on the conduct of present or past legal advisors, here the breakdown in relations with the claimant's legal representatives appeared to be connected to the police investigations and cried out for a full and proper explanation. Therefore, the judge concluded, no good reason had been advanced.

In relation to the third stage, the judge went on to consider all the circumstances of the case. He concluded that the trial date should not be vacated, commenting that the court's timetable is congested and all adjournments have consequences. He added:

"A climate in which it could be said that a serious, ill-explained, breach should be overcome through an extension of time in which to comply or an adjournment as a matter of routine runs counter to the very change of ethos that the Court of Appeal in Mitchell and Denton was so anxious to bring about. This is why, although a court should not be reluctant to afford extra time in proper cases, it cannot be an automatically acceptable default position."

However, he did allow witness statements to be served, with a tight timetable backed by an unless order. This, he said, was the proportionate response, as allowing the trial to proceed without evidence from the claimant would render the trial process "highly artificial and in all likelihood futile".